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Courts and Alternative Dispute Resolution
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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?
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It must have jurisdiction over the person (or company) against whom the suit is brought or over the property involved in the suit.
Internet is open network and has no boundaries. It is spread in many countries. As per traditional jurisdiction Venue is one of the essential requirements of Jurisdiction. Generally, a venue is a place where the crime has been conducted or the party who has filed the case belongs to this place. Now in Internet context Jurisdiction does not fulfil "Venue" requirement. To do so "The Sliding Standard" has been developed.
According to this contract courts identified three types of business contracts
1. Whether the business is of substantial amount and has been done thru sales and contracts
2. Whether all has been done thru using web site.
3. Whether same has been done thru passive advertising. That is people have reached to the web site by themselves.
World's courts are indicating that if minimum contacts requirement is fulfilled then it is enough to compel the defendant to appear in the court while physical presence is not required.
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Critical Legal Thinking. Suppose that a state statute requires that all civil lawsuits involving damages of less than $50,000 be arbitrated and allows such a case to be tried in court only if a party is dissatisfied with the arbitrator's decision. Suppose further that the statute also provides that if a trial does not result in an improvement of more than 10 percent in the position of the party who demanded the trial, that party must pay the entire costs of the arbitration proceeding. Would such a statute violate litigants' rights of access to the courts and to trial by jury? Would it matter if the statute was part of a pilot program and affected only a few judicial districts in the state?
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If state statute is providing the facility of arbitration to all those cases which are of civil in nature and damages are of less than $50000, then it's a good idea as trial will be fast. There are some issues like will there be some arbitration fee or it will be free. It is not mentioned in the case.
As already there are problems in civil cases that many people do not get access to justice as court fees are high. They are not able to pay and authorities do not give them the exemption in court fee. It is clearly a case of violation of "Right of Access" to the court. Authorities are facing the issue of making the balance between paying court fees and rights of access to the courts. If it happens in this case, then arbitration court could not serve the much purpose other than fast decisions. These will be a type of "Special Arbitrary Courts" for specific types of trial.
But a clause that a party will pay the entire cost of the arbitration if the result in court is improved more than 10% of the decision of arbitration court. This clause seems like a threat or a step to discourage people to not go in court or we can say that people will be discouraged to do appeal in the court. This will be clearly a case of violation of access to the court.
If it is a part of a pilot program then also it will be having the same impact that is violation of rights of access" to the court. During pilot programs the cases which will be dealt with will have the same complaints. Yes, reaction of the people can be taken in this regard.
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Hypothetical Question with Sample Answer. Marys Callais, a citizen of Florida, was walking along a busy sheet in Tallahassee when a large crate flew off a passing truck and hit her, causing numerous injuries to Callais. She incurred a great deal of pain and suffering plus significant medical expenses, and she could not work for six months. She wishes to sue the trucking firm for $300,000 in damages. The firm's headquarters are in Georgia, although the company does business in Florida. In what court may Callais bring suit-a Florida state court, a GeorgiaSS t C court, or a federal court? What factors might influence her decision?
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She can bring the case in Florida state court as well in Federal court. Company has head quarter in Georgia but the company has dealings in Florida also. Therefore, if company qualifies the minimum contact test then Florida court can exercise the jurisdiction over the company. She can file case in federal court as well. Both the conditions are satisfied
1. Plaintiff (Florida) and defendants (Georgia) are of different states.
2. Also the $ amount in controversy is more than $75,000.
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Stan Garner resides in Illinois and promotes boxing matches for SuperSports, Inc., an Illinois corporation. Garner created the promotional concept of the "Ages" fights-a series of three boxing matches pitting an older fighter (George Foreman) against a younger fighter, such as John Ruiz or Riddick Bowe. The concept included titles for each of the three fights ("Challenge of the Ages," "Battle of the Ages," and "Fight of the Ages"), as well as promotional epithets to characterize the two fighters ("the Foreman Factor"). Garner contacted George Foreman and his manager, who both reside in Texas, to sell the idea, and they arranged a meeting at Caesar's Palace in Las Vegas, Nevada. At some point in the negotiations, Foreman's manager signed a nondisclosure agreement prohibiting him from disclosing Garner's promotional concepts unless they signed a contract. Nevertheless, after negotiations between Garner and Foreman fell through, Foreman used Garner's "Battle of the Ages" concept to promote a subsequent fight. Garner filed a lawsuit against Foreman and his manager in a federal district court in Illinois, alleging breach of contract. Using the information presented in the chapter, answer the following questions.
1. On what basis might the federal district court in Illinois exercise jurisdiction in this case?
2. Does the federal district court have original or appellate jurisdiction?
3. Suppose that Garner had filed his action in an Illinois state court. Could an Illinois state court exercise personal jurisdiction over Foreman or his manager? Why or why not?
4. Assume that Garner had filed his action in a Nevada state court. Would that court have personal jurisdiction over Foreman or his manager? Explain.
DEBATE THIS In this age of the Internet, when people communicate via e-mail, tweets, FaceBook, and Skype, is the concept of jurisdiction losing its meaning?
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Appellate Review. BSH Home Appliances Corp. makes appliances under the Bosch, Siemens, Thermador, and Caggenau brands. To make and market the "Pro 27 Stainless Steel Range," a restaurant-quality range for home use, BSH gave specifications for its burner to Detroit Radiant Products Co. and requested a price for 30,000 units. Detroit quoted $28.25 per unit, offering to absorb all tooling and research and development costs. In 2001 and 2003, BSH sent Detroit two purchase orders, for 15,000 and 16,000 units, respectively. In 2004, after Detroit had shipped 12,886 units, BSH stopped scheduling deliveries. Detroit filed a suit against BSI-I, alleging breach of contract. BSH argued, in part, that the second purchase order had not added to the first but had replaced it. After a trial, a federal district court issued its "Findings of Fact and Conclusions of Law." The court found that the two purchase orders "required BSH to purchase 31,000 units of the burner at $28.25 per unit." The court ruled that Detroit was entitled to $418,261 for 18,114 unsold burners. BSH appealed to the U.S. Court of Appeals for the Sixth Circuit. Can an appellate court set aside a trial court's findings of fact? Can an appellate court come to its own conclusions of law? What should the court rule in this case? Explain. [Detroit Radiant Products Co. v. BSH Home Appliances Corp., 473 F.3d 623 (6th Cir. 2007)]
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Question of Ethics. Narnia Investments, Ltd., filed a 1 suit in a 'Texas state court against several defendants, including Harvestons Securities, Inc., a securities dealer. (Securities are documents evidencing the ownership of a corporation, in the form of stock, or debts owed by it, in the form of bonds.) Harvestons is registered with the state of Texas and thus may be served with a summons and a copy of a complaint delivered to the Texas Securities Commissioner. In this case, the return of service indicated that process was served on the commissioner "by delivering to JoAnn Kocerek, defendant, in person, a true copy of this [summons] together with the accompanying copy(ies) of the ['complaint)" Harvestons did not file an answer, and Namia obtained a default judgment against the defendant for $365,000, plus attorneys' fees and interest. Five months after this judgment, Harvestons filed a motion for a new trial, which the court denied. Harvestons appealed to a state intermediate appellate court, claiming that it had not been served in strict compliance with the rules governing service of process. [Harvestons Securities, Inc. v. Narnia Investments, Ltd., 2/8 S.W.3d /26 (Tex.App. -Houston 1-14- Dist) 2007))
1. Harvestons asserted that Namia's service was invalid in part because "the return of service states that process was delivered to 'JoAnn Kocerek'" and did not show that she "had the authority to accept process on behalf of Harvestons or the Texas Securities Commissioner." Should such a detail, if it is required, be strictly construed and applied? Should it apply in this case? Explain.
2 Whose responsibility is it to see that service of process is accomplished properly? Was it accomplished properly in this case? Why or why not?
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Case Analysis Question. Go to Appendix G at the end of this text and examine Case No. 1 [Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 149 I,.Ed.2d 234 (2001)1. This case has been excerpted there in great detail. Review and then brief the case, making sure that your brief answers the following questions.
1. What was Adams's primary complaint against Circuit City in the state court, and how (lid the case end up in the federal court system?
2. Did the U.S. Court of Appeals for the Ninth Circuit decide that Adams's employment contract was subject to the mandatory arbitration provisions of the Federal Arbitration Act?
3. What reasons did the United States Supreme Court cite for reversing the decision of the U.S. Court of Appeals for the Ninth Circuit?
4. How did the dissent evaluate the Court's use of the rules of statutory construction?
5. Did Adams end up having to arbitrate the case against Circuit City after all? Why or why not?
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Standing to Sue. Lamar Advertising of Penn, LLC, an outdoor advertising business, wanted to erect billboards of varying sizes in a multiphase operation throughout the town of Orchard Park, New York. An Orchard Park ordinance restricted the signs to certain sizes in certain areas, to advertising produce and services available for sale only on the premises, and to other limits. Lamar asked Orchard Park for permission to build signs in some areas larger than the ordinance allowed in those 'locations (but not as large as allowed in other areas). When the town refused, Lamar filed a suit in a federal district court, claiming that the ordinance violated the First Amendment; Did Lamar have standing to challenge the ordinance? If the court could sever the provisions of the ordinance restricting a sign's content from the provisions limiting a sign's size, would your answer he the same? Explain. [Larnar Advertising of Penn, LLC v. Town of Orchard Park, New York, 356 F.3d 365 (2d Cir. 2004)]
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Video Question. Go to this text's Web site at www, thomsonedu.com/westbuslaw/bit and select "Chapter 3." Click on "Video Questions" and view the video titled Jurisdiction in Cyberspace. Then answer the following questions.
1. What standard would a court apply to determine whether it has jurisdiction over the out-of-state computer fine in the video?
2. What factors is a court likely to consider in assessing whether sufficient contacts exist when the only connection to the jurisdiction is through a Web site? 3 How do you think a court would resolve the issue in this case?
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What is judicial review? How and when was the power of judicial review established?
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Jurisdiction. Xcentric Ventures, LLC, is an Arizona firm that operates the Web sites RipOffReport.com and BadBusinessBureari.com. Visitors to the sites can buy a copy of a book titled Do-It-Yourself Guide: How to Get Rip-Off Revenge. The price ($21.95) includes shipping to anywhere in the United States, including Illinois, to which thirteen copies have been shipped. The sites accept donations and feature postings by individuals who claim to have been "ripped off." Some visitors posted comments about George S. May International Co., a management-consulting firm. The postings alleged fraud, larceny, possession of child pornography, and possession of controlled substances (illegal drugs). May filed a suit against Xcentric and others in a federal district court in Illinois, alleging in part "false descriptions and representations." The defendants filed a motion to dismiss for lack of jurisdiction. What is the standard for exercising juris-diction over a party whose only connection to a jurisdiction is over the Web? How would that standard apply in this case? Explain. [George S. May International Co. v. Xcentric Ventures, LLC, 409 F.Supp.2d 1052 (N.D.III. 2006)]
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In a lawsuit, what are. the pleadings? What is discovery, and how does electronic discovery differ from traditional discovery? What is electronic filing?
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Arbitration. In an arbitration proceeding, the arbitrator need not be a judge or even a lawyer. How, then, can the arbitrator's decision have the force of law and be binding on the parties involved?
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Case Problem with Sample Answer. Ms. Thompson filed a suit in a federal district court against her employer, Altheimer Gray, seeking damages for alleged racial discrimination in violation of federal law. During voir dire, the judge asked the prospective jurors whether "there is something about this kind of lawsuit for monetary damages that would start any of you leaning for or against a particular party?" Ms. Leiter, one of the prospective jurors, raised her hand and explained that she had "been an owner of a couple of businesses and am currently an owner of a business, and I feel that as an employer and owner of a business that will definitely sway my judgment in this case." She explained, "I am constantly faced with people that want various benefits or different positions in in the company or better contacts or, you know, a myriad issues that employers face on a regular basis, and I have to decide whether or not that person should get them." Asked by Thompson's lawyer whether "you believe that people file lawsuits just because they don't get something they want," Leiter answered, "I believe there are some people that do." In answer to another question, she said, "I think I bring a lot of background to this case, and I can't say that ifs not going to cloud my judgment. I can by to be as fair as I can, as I do every day." Thompson filed a motion to strike Leiter for cause. Should the judge grant the motion? Explain. [Thompson v. Altheinzer Cray, 248 F.3d 621 (7th Cir. 2001)]
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Arbitration. Alexander Little worked for Auto Stiegler, Inc., an automobile dealership in Los Angeles County, California, eventually becoming the service manager. While employed, Little signed an arbitration agreement that required all employment-related disputes to be submitted to arbitration. The agreement also provided that any award over $50,000 could be appealed to a second arbitrator. Little was later demoted and terminated. Alleging that these actions were in retaliation for investigating and reporting warranty fraud and thus were in violation of public policy, Little filed a suit in a California state court against Auto Stiegler. The defendant filed a motion with the court to compel arbitration. Little responded that the arbitration agreement should not be enforced because, among other things, the appeal provision was unfairly one sided. Is this provision enforceable? Should the court grant Auto Stiegler's motion? Why or why not? [Little v. Auto Stiegler, Inc., 29 Ca1.4th 1064, 63 P.3d 979, 130 Cal.Rptr.2d 892 (2003)]
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Standing. Blue Cross and Blue Shield insurance companies (the Blues) provide 68 million Americans with health-care financing. file Blues have paid billions of dollars for care attributable to illnesses related to tobacco use. In an attempt to recover some of this amount,-the Blues filed a suit in a federal district court against tobacco companies and others, alleging fraud, among other things. The Blues claimed that beginning in 1953, the defendants conspired to addict mil-lions of Americans, including members of Blue Cross plans, to cigarettes and other tobacco products. The conspiracy involved misrepresentation about the safety of nicotine and its addictive properties, marketing efforts targeting children, and agreements not to produce or market safer cigarettes. As a result of the defendants' efforts, many-tobacco users developed lung, throat, and other cancers, as well as heart disease, stroke, emphysema, and other illnesses. The defendants asked the court to dismiss the case on the ground that the plaintiffs did not have standing to sue. Do the Blues have standing in this case? Why or why not? [Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris, Inc., 36 F.Supp.2d 560 (E.D.N.Y. 1999)]
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The following multiple-choice question is representative of the types of questions available in one of the four sections of ThomsonNOW for Business Law Today. ThomsonNOW also provides feedback for each response option, whether correct or incorrect, and refers to the location within the chapter where the correct answer can be found. A long arm statute allows a court to exercise jurisdiction over a. an in-state resident.
B) any nonresident defendant.
C) a nonresident defendant who has minimum contacts with the state in which the court is located.
D) the citizens of any neighboring state.
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