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COURTS AND ALTERNATIVE
ANSWERS TO LEARNING OBJECTIVES/ FOR REVIEW QUESTIONS
AT THE BEGINNING AND THE END OF THE CHAPTER
Note that your students can find the answers to the even-numbered
For Review questions in Appendix F at the end of the text.
We repeat these questions and answers here as a convenience to you.
1A What is judicial review? The courts can decide whether the laws or actions of
the legislative and executive branches of government are constitutional. The process
for making this determination is judicial review. The doctrine of judicial review was
established in 1803 when the United States Supreme Court decided Marbury v.
2A Before a court can hear a case, it must have jurisdiction. Over what must
it have jurisdiction? How are the courts applying traditional jurisdictional concepts to cases involving Internet transactions? To hear a case, a court must have
jurisdiction over the person against whom the suit is brought or over the property
involved in the suit. The court must also have jurisdiction over the subject matter.
Generally, courts apply a “sliding-scale” standard to determine when it is proper to
exercise jurisdiction over a defendant whose only connection with the jurisdiction is
3A What is the difference between a trial court and an appellate court? A trial
court is a court in which a lawsuit begins, a trial takes place, and evidence is
presented. An appellate court reviews the rulings of trial court, on appeal from a
judgment or order of the lower court.
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 2
4A What is discovery, and how does electronic discovery differ from
traditional discovery? Discovery is the process of obtaining information and
evidence about a case from the other party or third parties. Discovery entails gaining
access to witnesses, documents, records, and other types of evidence. Electronic
discovery differs in its subject (e-media rather than traditional sources of information).
5A What are three alternative methods of resolving disputes? The traditional
method of resolving a legal dispute is through litigation. Alternative methods include
negotiation, mediation, and arbitration. In negotiation, the parties attempt to settle their
dispute informally without the involvement of a third party acting as mediator. In
mediation, the parties attempt to come to an agreement with the assistance of a
neutral third party, a mediator, who does not, however, make a decision in the
dispute. In arbitration, a neutral third party or a panel of experts hears a dispute and
renders a decision.
ANSWERS TO CRITICAL THINKING QUESTIONS
AT THE ENDS OF THE CASES
CASE 2.1—FOR CRITICAL ANALYSIS—LEGAL ENVIRONMENT CONSIDERATION
What impact will the court’s decision most likely have on the parties to the
dispute? Granting a motion to dismiss in a case dismisses all or part of the suit
without necessarily resolving the dispute. In this case, for example, the effect of the
court’s granting the appellants’ motion to dismiss was a ruling that the venue for any
action relating to a controversy under the parties’ agreement “shall be the State of
Illinois.” This means that the appropriate forum for resolving the parties’ dispute is a
court in Illinois (not in Florida, where this suit was filed). When a court grants a motion
to dismiss, the party against whom it is entered is given time to file an amended
complaint. Thus, here, the appellees may have an opportunity to amend their
complaint. Ultimately, however, it is not likely that this suit will continue in a Florida
court. And the appellees’ vigorous objection to the motion suggests that Illinois is not
a convenient location for these parties. This suggests that they may seek to resolve
the dispute through means other than litigation—negotiation, mediation, or some other
form of alternative dispute resolution—or avoid resolving the dispute at all.
CASE 2.2—FOR CRITICAL ANALYSIS—ETHICAL CONSIDERATION
Does Winstead have an ethical duty to comply with the defendants’ discovery
request? Discuss. Yes, Winstead has an ethical duty to comply with the defendants’
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 3
discovery request. At a minimum, there is a legal duty to comply with discovery
requests. A court can sanction a party who does not comply. Compliance with the law
is the least an ethical businessperson can do.
CASE 2.3—FOR CRITICAL ANALYSIS—LEGAL CONSIDERATION
How would business be affected if each state could pass a statute, like the one
in Texas, allowing parties to void out-of-state arbitrations? If all states could pass
statutes like the one in Texas, many parties would probably be less inclined to
transact business. An arbitration provision allows a party to limit the burden and
expense of settling any disputes. If another party could freely void such an agreement,
there would be a greater risk of arbitration in an inconvenient forum, costly formal
litigation, or both. That risk increases the perceived costs of doing business, making
the business opportunity less attractive. Thus, many parties may decline to enter
contracts without enforceable arbitration provisions.
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Federal jurisdiction
The federal district court can exercise jurisdiction in this case because the case
involves diversity of citizenship. Diversity jurisdiction requires that the plaintiff and
defendant be from different states and that the dollar amount of the controversy
exceed $75,000. Here, Garner resides in Illinois, and Foreman and his manager live
in Texas. Because the dispute involved the promotion of a series of boxing matches
with George Foreman, the amount in controversy likely exceeded the required
2A. Original or appellate jurisdiction
Original jurisdiction, because the case was initiated in that court and that is where the
trial will take place. Courts having original jurisdiction are courts of the first instance,
or trial courts—that is courts in which lawsuits begin, trials take place, and evidence is
presented. In the federal court system, the district courts are the trial courts, so the
federal district court has original jurisdiction.
3A. Jurisdiction in Illinois
No, because the defendants lacked minimum contacts with the state of Illinois.
Because the defendants were located out of the state, the court would have to
determine whether they had sufficient contacts with the state for the Illinois to exercise
jurisdiction based on a long arm statute. Here, the defendants never came to Illinois,
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 4
and the contract that they are alleged to have breached was not formed in Illinois.
Thus, it is unlikely that an Illinois state court would find that sufficient minimum
contacts existed to exercise jurisdiction.
4A. Jurisdiction in Nevada
Yes, because the defendants met with Garner and formed a contract in the state of
Nevada. A state can exercise jurisdiction over out-of-state defendants under a long
arm statute if the defendants had sufficient contacts with the state. Here, the parties
met and negotiated their contract in Nevada, and a court would likely hold that these
activities were sufficient to justify a Nevada court’s exercising personal jurisdiction.
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
In this age of the Internet, when people communicate via e-mail, tweets,
Facebook, and Skype, is the concept of jurisdiction losing its meaning? Many
believe that yes, the idea of determining jurisdiction based on individuals’ and
companies’ physical locations no longer has much meaning. Increasingly, contracts
are formed via online communications. Does it matter where one of the parties has a
physical presence? Does it matter where the e-mail server or Web page server is
located? Probably not.
In contrast, in one sense, jurisdiction still has to be decided when conflicts
arise. Slowly, but ever so surely, courts are developing rules to determine where
jurisdiction lies when one or both parties used online systems to sell or buy goods or
services. In the final analysis, a specific court in a specific physical location has to try
ANSWERS TO ISSUE SPOTTERS
AT THE END OF THE CHAPTER
1A. Sue contracts with Tom to deliver a quantity of computers to Sue’s
Computer Store. They disagree over the amount, the delivery date, the price,
and the quality. Sue files a suit against Tom in a state court. Their state requires
that their dispute be submitted to mediation or nonbinding arbitration. If the dispute is not resolved, or if either party disagrees with the decision of the
mediator or arbitrator, will a court hear the case? Explain. Yes. Submission of the
dispute to mediation or nonbinding arbitration is mandatory, but compliance with the
decision of the mediator or arbitrator is voluntary.
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 5
2A. At the trial, after Sue calls her witnesses, offers her evidence, and
otherwise presents her side of the case, Tom has at least two choices between
courses of actions. Tom can call his first witness. What else might he do? Tom
could file a motion for a directed verdict. This motion asks the judge to direct a verdict
for Tom on the ground that Sue presented no evidence that would justify granting Jan
relief. The judge grants the motion if there is insufficient evidence to raise an issue of
ANSWERS TO BUSINESS SCENARIOS AND CASE PROBLEMS
AT THE END OF THE CHAPTER
2–1A Standing to sue
This problem concerns standing to sue. As you read in the chapter, to have standing
to sue, a party must have a legally protected, tangible interest at stake. The party
must show that he or she has been injured, or is likely to be injured, by the actions of
the party that he or she seeks to sue. In this problem, the issue is whether the Turtons
had been injured, or were likely to be injured, by the county’s landfill operations.
Clearly, one could argue that the injuries that the Turtons complained of directly
resulted from the county’s violations of environmental laws while operating the landfill.
The Turtons lived directly across from the landfill, and they were experiencing the specific types of harms (fires, scavenger problems, groundwater contamination) that
those laws were enacted to address. Thus, the Turtons would have standing to bring
Marya can bring suit in all three courts. The trucking firm did business in Florida, and
the accident occurred there. Thus, the state of Florida would have jurisdiction over the
defendant. Because the firm was headquartered in Georgia and had its principal place
of business in that state, Marya could also sue in a Georgia court. Finally, because
the amount in controversy exceeds $75,000, the suit could be brought in federal court
on the basis of diversity of citizenship.
Under the work-product rule, attorneys are allowed to protect information that they
have gathered as a result of their own skill and diligence. For example, an attorney for
a party involved in an auto accident can go out to the scene of the accident and
observe the fact that there is a stop sign missing without being under any obligation to
divulge such information to his opponent in the lawsuit. Similarly, an attorney who
discovers a recently decided case decision supporting his or her theory is under no
obligation to share this discovery with the opposing attorney. If attorneys had to share
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 6
everything, they would be less inclined to expend efforts on behalf of their clients
because, in essence, they would be working for both sides at once.
The purpose behind most venue statutes is to ensure that a defendant is not “hailed
into a remote district, having no real relationship to the dispute.” The events in dispute
have no connection to Minnesota. The Court stated: “Looked at through the lens of
practicality—which is, after all, what [the venue statute] is all about—Nestlé’s motion
can really be distilled to a simple question: does it make sense to compel litigation in
Minnesota when this state bears no relationship to the parties or the underlying
events?” The court answered no to this simple question. The plaintiff resides in South
Carolina, her daughter’s injuries occurred there, and all of her medical treatment was
provided (and continues to be provided) in that state. South Carolina is the
appropriate venue for this litigation against Nestlé to proceed.
2–5A SPOTLIGHT ON NATIONAL FOOTBALL—Arbitration
An arbitrator’s award generally is the final word on the matter. A court’s review of an
arbitrator’s decision is extremely limited in scope, unlike an appellate court’s review of
a lower court’s decision. A court will set aside an award only if the arbitrator’s conduct
or “bad faith” substantially prejudiced the rights of one of the parties, if the award
violates an established public policy, or if the arbitrator exceeded her or his powers.
In this problem, and in the actual case on which this problem is based, the
NFLPA argued that the award was contrary to public policy because it required
Matthews to forfeit the right to seek workers’ compensation under California law. The
court rejected this argument, because under the arbitrator’s award Matthews could
still seek workers’ compensation under Tennessee law. Thus, the arbitration award
was not clearly contrary to public policy.
2–6A Minimum contacts
No. This statement alone was insufficient to establish that Illinois did not have
jurisdiction over the defendant. The court ruled that Med-Express failed to introduce
factual evidence proving that the Illinois trial court lacked personal jurisdiction over
Med-Express. Med-Express had merely recited that it was a North Carolina
corporation and did not have minimum contacts with Illinois. Med-Express sent a letter
to this effect to the clerk of Cook County, Illinois, and to the trial court judge. But that
was not enough. When a judgment of a court from another state is challenged on the
grounds of personal jurisdiction, there is a presumption that the court issuing the
judgment had jurisdiction until the contrary is shown. It was not.
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 7
Yes, a court can set aside this order. The parties to an arbitration proceeding can
appeal an arbitrator’s decision, but court’s review of the decision may be more
restricted in scope than an appellate court’s review of a trial court’s decision. In fact,
the arbitrator’s decision is usually the final word on a matter. A court will set aside an
award if the arbitrator exceeded her or his powers—that is, arbitrated issues that the
parties did not agree to submit to arbitration.
In this problem, Horton discharged its employee de la Garza, whose union
appealed the discharge to arbitration. Under the parties’ arbitration agreement, the
arbitrator was limited to determining whether the rule was reasonable and whether the
employee violated it. The arbitrator found that de la Garza had violated a reasonable
safety rule, but “was not totally convinced” that the employer should have treated the
violation more seriously than other rule violations and ordered de la Garza reinstated.
This order exceeded the arbitrator’s authority under the parties’ agreement. This was
a ground for setting aside the order.
In the actual case on which this problem is based, on the reasoning stated
here, the U.S. Court of Appeals for the Fifth Circuit reached the same conclusion.
2–8A CASE PROBLEM WITH SAMPLE ANSWER—Discovery
Yes, the items that were deleted from a Facebook page can be recovered. Normally,
a party must hire an expert to recover material in an electronic format, and this can be
time consuming and expensive.
Electronic evidence, or e-evidence, consists of all computer-generated or
electronically recorded information, such as posts on Facebook and other social
media sites. The effect that e-evidence can have in a case depends on its relevance
and what it reveals. In the facts presented in this problem, Isaiah should be
sanctioned—he should be required to cover Allied’s cost to hire the recovery expert
and attorney’s fees to confront the misconduct. In a jury trial, the court might also
instruct the jury to presume that any missing items are harmful to Isaiah’s case. If all
of the material is retrieved and presented at the trial, any prejudice to Allied’s case
might thereby be mitigated. If not, of course, the court might go so far as to order a
In the actual case on which this problem is based, Allied hired an expert, who
determined that Isaiah had in fact removed some photos and other items from his
Facebook page. After the expert testified about the missing material, Isaiah provided
Allied with all of it, including the photos that he had deleted. Allied sought a retrial, but
the court instead reduced the amount of Isaiah’s damages by the amount that it cost
Allied to address his “misconduct.”
CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 8
2–9A Electronic filing
No. Faden was not sufficiently diligent in ensuring a timely filing. Diligence in this
context requires carefulness and persistence. Excusable delay might be evidenced by
proof of circumstances beyond a party’s control that prevents a timely filing.
From the facts as stated, it appears that Faden attempted to file her appeal
only at the end of the relevant period when the Board’s e-filing system was down. But
there is no indication that anything prevented her from e-filing at a time when the
Board’s system was not down, or from mailing or faxing her appeal at any time, before
the deadline. Thus, Faden appears to have been neither timely nor diligent in filing her
appeal before the deadline.
In the actual case on which this problem is based, the Merit Systems Protection
Board dismissed Faden’s appeal. The board found that she was not reasonably
diligent in ensuring timely filing. On her further appeal, the U.S. Court of Appeals for
the Federal Circuit affirmed.
2–10A A QUESTION OF ETHICS—Agreement to arbitrate
1. This is very common, as many hospitals and other health-care provides
have arbitration agreements in their contracts for services. There was a valid contract
here. It is presumed in valid contracts that arbitration clauses will be upheld unless
there is a violation of public policy. The provision of medical care is much like the
provision of other services in this regard. There was not evidence of fraud or pressure
in the inclusion of the arbitration agreement. Of course there is concern about
mistreatment of patients, but there is no reason to believe that arbitration will not
provide a professional review of the evidence of what transpired in this situation.
Arbitration is a less of a lottery that litigation can be, as there are very few gigantic
arbitration awards, but there is no evidence of systematic discrimination against
plaintiffs in arbitration compared to litigation, so there may not be a major ethical
2. McDaniel had the legal capacity to sign on behalf of her mother.
Someone had to do that because she lacked mental capacity. So long as in such
situations the contracts do not contain terms that place the patient at a greater
disadvantage than would be the case if the patient had mental capacity, there is not
particular reason to treat the matter any differently