Chapter 2
Courts and Alternative
Dispute Resolution
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
A1. Federal courts are superior to state courts.
A2. The courts can decide whether the other branches of government have acted within
the scope of their constitutional authority.
A3. Minimum contacts with a jurisdiction are never enough to support jurisdiction over a
nonresident defendant.
A4. Diversity of citizenship cases are only those arising between citizens of different
states.
A5. Concurrent jurisdiction exists when both federal and state courts have the power to
hear a particular case.
A6. A court cannot exercise jurisdiction over an out–of-state defendant who has only done
business in the state over the Internet.
A7. Venue is the term for the subject matter of a case.
A8. A justiciable controversy is a case in which the court’s decision—the “justice” that will
be served—will be controversial.
A9. In some states, lawyers are not allowed to represent people in small claims courts.
A10. The United States Supreme Court has original jurisdiction in rare instances.
A11. A federal case typically originates in a state court.
A12. Alternative dispute resolution refers to any method for resolving a dispute outside the
court system.
A13. Negotiation traditionally involves just the parties to a dispute without their attorneys.
A14. Negotiation is the most complex form of alternative dispute resolution.
A15. No court offers mediation as an option before a case goes to trial.
A16. Arbitration that is mandated by the courts is often binding on the parties.
A17. A court will review a contract for validity even if it contains an arbitration clause.
A18. Most online dispute resolution services apply general, universal legal principles to
resolve disputes.
A19. In early neutral case evaluation, a third party’s evaluation of each party’s strengths
and weaknesses forms the basis for negotiating a settlement.
A20. A choice-of-law clause is a provision in a contract that excuses a party from liability for
nonperformance due to “acts of God.”
MULTIPLE CHOICE QUESTIONS
A1. The Ohio state legislature passes a law to regulate local delivery services. The final
authority regarding the constitutionality of this law is
a. the judicial system.
b. the president of the United States.
c. the governor of Ohio.
d. the U.S. Congress.
A2. Ginger wants to file a suit against Fred. For a court to hear the case
a. Fred must agree.
b. the court must have jurisdiction.
c. the parties must have no minimum contact with each other.
d. the parties must own property.
A3. The case of Max v. National Credit Co. is heard in a trial court. The case of O! Boy! Ice
Cream Co. v. Pickled Peppers, Inc., is heard in an appellate court. The difference
between a trial and an appellate court is whether
a. a trial is being held.
b. the court is appealing.
c. the parties question how the law applies to their dispute.
d. the subject matter of the case involves complex facts.
A4. Rolf, a citizen of New Mexico, wants to file a suit against Sandy, a citizen of Texas.
Their diversity of citizenship may be a basis for
a. no court to exercise jurisdiction.
b. a federal court to exercise original jurisdiction.
c. a state court to exercise appellate jurisdiction.
d. the United States Supreme Court to refuse jurisdiction.
A5. Inferior Company, which is based on South Carolina, makes and sells products that are
poorly made. Jack, who is a resident of North Carolina, buys an Inferior product and
suffers an injury through its use. The diversity of citizenship between these parties
means that
a. federal and state courts have concurrent jurisdiction.
b. federal courts have exclusive jurisdiction.
c. no court has jurisdiction.
d. state courts have exclusive jurisdiction.
A6. 3D HD TV Company, a firm in Minnesota, advertises on the Web. A court in North
Dakota would be most likely to exercise jurisdiction over 3D HD if the firm
a. conducted substantial business with North Dakota residents through its Web
site.
b. interacted with any North Dakota resident through its Web site.
c. only advertised without interactivity at its Web site.
d. suddenly removed its ad from the Internet.
A7. Liu files a suit against Macro Sales, Inc., in a New Jersey state court based on a Web
site through which New Jersey residents can do business with Macro. The court will
most likely exercise jurisdiction over Macro if the interactivity of the site is seen as
a. a “substantial enough” connection with the state.
b. “downloading” from the state.
c. not connected with the state.
d. “uploading” to the state.
A8. Inferior Company sells products that are poorly made. Jock, who has never bought an
Inferior product, files a suit against Inferior, alleging that its products are defective.
The firm’s best ground for dismissal of the suit is that Jock does not have
a. certiorari.
b. jurisdiction.
c. standing.
d. sufficient minimum contacts.
A9. Mariah wins her suit against Variety Products Company. Variety’s best ground for
appeal is the trial court’s interpretation of
a. the conduct of the witnesses during the trial.
b. the credibility of the evidence that Mariah presented.
c. the dealings between the parties before the suit.
d. the law that applied to the issues in the case.
A10. Drummond wants to make a federal case out of his dispute with Elena. Federal cases
originate in
a. federal courts of appeals.
b. federal district courts.
c. state trial courts.
d. the United States Supreme Court.
A11. Boyd files a suit in a federal district court against Cathy. Cathy loses the suit, appeals
to the U.S. Court of Appeals for the Second Circuit, and loses again. Cathy asks the
United States Supreme Court to hear the case. The Court is
a. not required to hear the case.
b. required to hear the case because Cathy lost in a federal court.
c. required to hear the case because Cathy lost in a lower court.
d. required to hear the case because it is an appeal.
A12. Olivia files a suit against Parker. If this suit is like most cases, it will be
a. dismissed during a trial.
b. dismissed or settled before a trial.
c. resolved only after a trial.
d. settled at a trial.
A13. Shelly and Tom disagree over the amount of money due under their contract. To avoid
involving any third party in a resolution of the dispute, Shelly and Tom might prefer to
use the alternative dispute resolution method of
a. arbitration.
b. litigation.
c. mediation.
d. negotiation.
Fact Pattern 2–A1 (Questions A14–A16 apply)
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract.
A14. Refer to Fact Pattern 2-A1. The least expensive method to resolve the dispute
between Java and Kaffe may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
A15. Refer to Fact Pattern 2-A1. If Java and Kaffe have a long-standing business relationship
that they would like to continue, a preferred method of settling their dispute may be
mediation because
a. the case will be heard by a mini-jury.
b. the dispute will eventually go to trial.
c. the process is not adversarial.
d. the resolution of the dispute will be decided an expert.
A16. Refer to Fact Pattern 2-A1. Resolving the dispute between Java and Kaffe by having a
neutral third party render a binding decision is one of the advantages of
a. arbitration.
b. conciliation.
c. intervention.
d. mediation.
A17. Eden Property Sales Corporation and Dion agree to resolve their dispute in arbitration.
The arbitrator’s decision is called
a. a conclusion of law.
b. a finding of fact.
c. an award.
d. a verdict.
A18. Transnational Corporation and UniShip, Inc., agree to a contract that includes an
arbitration clause. If a dispute arises, a court having jurisdiction may
a. monitor any arbitration until it concludes.
b. order an arbitrator to rule in a particular way.
c. order a party to bring the dispute to court.
d. order a party to submit to arbitration.
A19. Vince files a suit against Will. Vince and Will meet, and each party’s attorney argues
the party’s case before a judge and jury. The jury presents an advisory verdict, after
which the judge meets with the parties to encourage them to settle their dispute. This
is
a. court-ordered arbitration.
b. early neutral case evaluation.
c. a mini-trial.
d. a summary jury trial.
A20. Kato and Leilani dispute the quality of a collection of sports memorabilia sold over the
Internet. They agree to resolve this dispute in 2BRNot2B.com, an online forum. Like
most online forums, 2BRNot2B.com applies
a. general, universal legal principles.
b. the provisions of the Federal Arbitration Act.
c. jurisprudence developed by the United Nations.
d. the law of California (or another specific U.S. jurisdiction) .
ESSAY QUESTIONS
A1. Quik Results, Inc., a Maine corporation, makes and sells Power Up!, a weight-gain and
muscle-building supplement. Orin, a citizen of New York, sees an ad for Power Up! in
WorkOut magazine and buys it in New York City at a local health club. Within ten days
of beginning to use Power Up!, Orin suffers internal injuries. Alleging that the injuries
are caused by Power Up!, Orin files a suit against Quik in a New York state court. Quik
asks the court to dismiss the suit on the ground that it does not have personal
jurisdiction over Quik. What is the court most likely to rule and why?
A2. Elle is walking to work along a sidewalk next to a road. A truck owned by Fast
Distribution Company (FDC) strikes and injures Elle, causing her injuries that result in
more than $250,000 in medical expenses. Elle is a resident of Georgia, where the
accident occurred. FDC has its principal place of business, and is incorporated, in
Delaware. In what court may Elle sue FDC?