CHAPTER 4
The American Legal System
Chapter Goals
Chapter Four follows a well-trod path. Here, as in all other undergraduate law texts of this general
character, an outline in very broad strokes has been given of the nature of the law and of the legal system
that has been erected to process that law. The chapter is important in establishing a foundation and in
setting in place many key definitions. However, the work here proceeds so conventionally that little
explanation is required. The author’s judgment is that the law is best learned in context. Therefore, undue
attention to the rules, definitions, and processes of this chapter would be unwise. A relatively cursory
inspection of the legal system here will provide a springboard by which to proceed to much more detailed
investigations of the law in specific factual settings. For example, as the student learns products liability
law, he or she inevitably acquires a more intimate understanding of the judicial procedure and of the
larger notion of justice. Judicial procedure and justice are both introduced in this chapter; but rather than
dwelling upon them here in the abstract, those topics will best be understood and retained if raised
indirectly in the “substantive” chapters that follow. Naturally, the chapter would not have been written had
the author thought it was unimportant. It is suggested that this chapter should serve as an introduction to
what follows, rather than as the centerpiece for the book. Obviously, the instructor will do as she or he
thinks best.
Chapter Learning Objectives
After completing this chapter, students will be able to:
1. Describe the importance of law to private enterprise.
2. Compare and contrast the objectives of law in society.
3. Differentiate the elements of a case brief.
4. Distinguish between substantive and procedural law.
5. Differentiate constitutional law; case law, and statutory law.
6. Compare and contrast civil and criminal law.
7. Describe the elements of the basic court system structure.
8. Explain the purposes of subject matter and personal jurisdiction as requirements for a court’s power
to hear a dispute.
9. Describe the typical steps in the civil trial process.
10. Distinguish trials and appeals.
11. Identify dispute resolution alternatives to trials.
Chapter Outline
I. Introduction
This chapter begins the discussion of the legal regulation of business with a brief outline of the American
legal system. The chapter also looks at alternative conflict resolution processes such as negotiation,
mediation, and arbitration that do not resort to the court system.
Law and the Market
Whatever one may think about lawyers, judges, and America’s dispute resolution methods, the
crucial role of a reliable legal system in fostering and maintaining capitalism is indisputable.
Reading: The Importance of Law to the Private Enterprise System, by Deb Ballam
Nobel economist Frederich von Hayek describes the theoretical importance of law to private
enterprise. According to Hayek, law that secures property rights in modern society is a prerequisite
to private enterprise. Without the order of law enforcing private property ownership and facilitating
the transfer of property rights, business enterprise in a complex, heterogeneous culture is simply
infeasible.
Part One—Legal Foundations
I. Objectives of the Law
One expects the law to maintain order, in this diverse, rapidly changing society. Of course, one relies on
law to peacefully, fairly, and intelligently resolve conflict. The law also serves to preserve dominant values.
Law is a vital force in guaranteeing freedom.
A. Justice
People count on the law to achieve and preserve justice. The pursuit of justice often relies on
honorable, efficient government. The World Justice Project’s 2013 “Rule of Law Index” ranks
governmental quality by such measures as criminal and civil justice, order and security, open
government, and limited corruption. Among the 97 countries studied, Sweden ranked particularly well.
In most categories, the United States ranked in the bottom half of the 29 high-income nations studied.
[For a daily update of legal news see John R. Allison, “Five Ways to Keep Disputes Out of Court,”
Harvard Business Review, Jan.-Feb.1990, p. 166.
Cyberbullying
The Tyler Clementi Higher Education Harassment Act, reintroduced in Congress in February 2013,
would require colleges and universities receiving federal student aid funding to have and distribute a
policy prohibiting harassment. Prohibited harassment would include cyberbullying of enrolled students
by other students, faculty, and staff based on, among other things, actual or perceived, sexual
orientation.
II. Primary Sources of Law
U.S. law is a vast, constantly growing, and mutating body of rules and reason. That law is derived from
four primary sources: constitutions, statutes, regulations, and cases.
A. Constitutions
These are the supreme expressions of law at both the federal and state levels of government. All other
law is subordinate to federal constitutional law. Constitutions prescribe the general structure of
governments and provide protection for individual rights.
B. Statutes
These are laws that are adopted by legislative bodies, particularly Congress and the state legislatures.
City councils enact statutes that usually are called ordinances.
C. Regulations
Administrative agencies include such bodies as the Federal Trade Commission and the Securities and
Exchange Commission at the federal level, and a Public Service Commission and a Human Rights
Commission at the state level. Among other duties, they produce and oversee regulations that add the
details needed to implement the broader mandates provided by federal and state statutes.
D. Common Law (Also Called Case Law or Judge-Made Law)
The English case law has its roots in the early English king’s courts where rules of law gradually
developed out of a series of individual dispute resolutions. That body of law, the common law, was
imported to America where it is has grown and evolved as the courts address the constantly changing
legal requirements of the complex society.
The development of English common law and American judicial decisions into a just, ordered package
is attributable in large measure to reliance on the doctrine of stare decisis (let the decision stand). That
is, judges endeavor to follow the precedents established by previous decisions. Following precedent,
however, is not mandatory. As societal beliefs and practices change, judges are called on to not only
interpret precedent, but to create new law as cases reflecting these changes are brought.
E. The Case Law: Locating and Analyzing
The study of law is founded largely on the analysis of judicial opinions. Except for the federal level and
a few states, trial court decisions are filed locally for public inspection rather than being published.
Appellate (appeals court) opinions are generally published in volumes called reports. [For broad
databases of law topics, see http://www.findlaw.com, http://www.yahoo.com/government/law, or
http://www.justia.com]
F. Briefing the Case
The preparation of case briefs (outlines or digests) to be helpful in mastering the law. The case brief
usually comprises of the following parts: parties, facts, procedure, issue, holding, and reasoning.
Legal Briefcase: Nichols v. Niesen, 746 N.W.2d 220 (Wisc. S. Ct. 2008)
III. Classifications of Law
Substantive and Procedural Law
Substantive laws create, define, and regulate legal rights and obligations. While procedural law
embraces the systems and methods available to enforce the rights specified in the substantive law.
Law and Equity
Following the Norman conquest of England in 1066, a system of king’s courts was established in
which the king’s representatives settled disputes. The king’s courts became known as courts of
law, and the remedies were labeled remedies of law.
Typically the chancellor, an aide to the king, would hear these petitions and, guided by the standard
of fairness, could grant a remedy specifically appropriate to the case. The chancellors’ decisions
accumulated over time such that a new body of remedies—and with it a new court system, known
as courts of equity—evolved.
Public Law and Private Law
Public law deals with the relationship between government and the citizens. While private law
regulates the legal relationship among individuals.
Civil Law and Criminal Law
Civil law addresses the legal rights and duties arising among individuals, organizations such as
corporations, and governments. While criminal law involves wrongs against the general welfare as
formulated in specific criminal statutes.
Crimes
Crimes are of three kinds. In general, felonies are more serious crimes, as murder, rape, and
robbery. Misdemeanors are less serious crimes, such as petty theft, disorderly conduct, and
traffic offenses. Treason is the special situation in which one levies war against the United
States or gives aid and comfort to its enemies.
Elements of a Crime
In a broad sense, crimes consist of two elements, a wrongful act or omission (actus reus) and
evil intent (mens rea). Intent is a state of mind, so the jury or judge must reach a determination
from the objective facts as to what the accused’s state of mind must have been.
Criminal Procedure
In general, following an arrest, and an initial appearance before a magistrate, is structured as
follows: criminal procedure proceeds as follows:
For misdemeanor cases, prosecutors typically file what is called an information, a formal
expression of the charges. The information may be reviewed by a magistrate before
issuance.
For felony cases, the process begins with the prosecuting officials either filing an
information or seeking an indictment by bringing their charges before a grand jury of
citizens to determine whether the charges have sufficient merit to justify a trial.
After an indictment or information, the individual is brought before the court for arraignment,
where the charges are read and a plea is entered. If the individual pleads not guilty, he or she
will go to trial, where guilt must be established beyond a reasonable doubt. If found guilty, the
defendant can, among other possibilities, seek a new trial or appeal errors in the prosecution. If
found innocent, the defendant may, if necessary, invoke the doctrine of double jeopardy under
which a person cannot be prosecuted twice in the same tribunal for the same criminal offense.
[For an extensive criminal justice database, see http://www.ncjrs.gov.]
Miranda Warnings
If the Miranda warnings are not properly provided, any statements made by the suspect and any
evidence derived from those statements cannot subsequently be used in court. The case,
Berghuis v. Thompkins, reached the U.S. Supreme Court in 2010 where the Court chipped
away at the Miranda requirements in a 5–4 reversal of the Court of Appeals ruling. The Supreme
Court further relaxed the Miranda requirements in two other 2010 decisions (Florida v. Powell
and Maryland v. Shatzer), but in 2011, the Court strengthened Miranda protection for young
people when it ruled that the police must consider the age of a suspect in deciding whether
Miranda warnings must be issued, in J.D.B. v. North Carolina.
[Teaching Note: An interesting in-class exercise would be to ask if a student could recite the
Miranda warnings, and then ask if the student to paraphrase or summarize their meaning before
a class debate on these rulings.]
Practicing Ethics: “Stand Your Ground” on a Slippery Slope?
Under Florida’s stand-your-ground law, those who “reasonably believe” that force—even deadly
force—is necessary to protect against death or great bodily harm may use such force instead of
retreating. This expanded right to defend oneself now exists in more than 30 states. As The
Wall Street Journal reported in 2012, justifiable homicide nearly doubled from 2000 to 2010,
whereas overall U.S. homicide rates declined.
Part Two—The Judicial Process
I. State Court Systems
As shown in Figure 4.1, at the base of the court pyramid in most states is a trial court of general
jurisdiction, commonly labeled a district court or a superior court. At the top of the judicial pyramid in all
states is a court of appeals, ordinarily labeled the supreme court. A number of states also provide for an
intermediate court of appeals located in the hierarchy between the trial courts and the highest appeals
court.
II. Federal Court System
A. District Courts
The Constitution provides for a Supreme Court and such inferior courts as Congress shall authorize.
Pursuant to that authority, Congress has established at least one district court for each state and
territory. The 94 district courts serve as the foundation of the federal judicial system. Most federal
cases begin in the district courts or in a federal administrative agency. [For access to all federal court
websites, see the Federal Judicial Center at http://www.fjc.gov]
B. Courts of Appeals
Congress has divided the United States geographically into eleven judicial circuits and the District of
Columbia and has established a court of appeals for each. Those courts hear appeals from the district
courts within their circuit and review decisions and enforce orders of the various federal administrative
agencies. The U.S. Court of Appeals for the Federal Circuit that hears, among others, all patent
appeals and all appeals from the U.S. Court of Federal Claims.
C. Supreme Court
The Supreme Court consists of nine justices. Those justices are appointed for life by the president and
confirmed by the Senate. Almost all of the Supreme Court’s work consists of reviewing lower court
decisions, principally from the courts of appeal with a small number from state high courts. Virtually all
parties seeking Supreme Court review must petition the Court for a writ of certiorari, which commands
the lower court to forward the trial records to the Court.
Decisions regarding those petitions are entirely discretionary with the Court. Petitions to the Supreme
Court in recent years typically total approximately 8,000 cases per year. Formal, written opinions,
however, are issued in only about 70 to 90 cases.
D. Critics
The current Court is accused of being particularly friendly to business interests and free market values.
A 2013 scholarly study ranked the 36 justices who served on the U.S. Supreme Court from 1946 to
2011 by their pro-business vote rate; the five most conservative justices on the current Court were in
the top 10.
E. Ideological Rulings?
A study by the Brookings Institution provided “striking evidence of a relationship between the political
party of the appointing president and judicial voting patterns.” Critics say that those conservative
ideological inclinations have led the Roberts Court to at times abandon traditional judicial restraint and
decide issues that were broader than required by the case before it.
Public respect for the fairness and the rationality of Supreme Court decisions could be undermined if
they come to be viewed as the product of liberal or conservative political/ideological views, rather than
dispassionate, lawyerly analysis. [For an overview of the Supreme Court, see
http://www.supremecourt.gov/]
III. Jurisdiction
A plaintiff may not simply proceed to trial at the court of his or her preference. The plaintiff must go to a
court with jurisdiction—that is, a court with the necessary power and authority to hear the dispute. The
court must have jurisdiction over both subject matter and the persons (or, in some instances, the property)
involved in the case.
A. Subject-Matter Jurisdiction
Subject matter jurisdiction imposes bounds on the classes of cases a court may hear. The legislation
or constitution creating the court will normally specify that court’s jurisdictional authority. The federal
district courts may hear the following two types of cases:
Those involving a federal question
Those involving diversity of citizenship and more than $75,000
Federal question jurisdiction exists in any suit where the plaintiff’s claim is based on the U.S.
Constitution, a U.S. treaty, or a federal statute. Furthermore, federal and state courts have concurrent
jurisdiction for some federal questions. Thus, some federal question cases are decided in state courts
applying federal law. Under diversity jurisdiction, federal district courts may hear cases involving more
than $75,000 where the plaintiff(s) and the defendant(s) are citizens of different states.
B. Personal Jurisdiction
Judicial authority over the person is known as in personam jurisdiction. Broadly, one can say that state
court jurisdiction can be established in the following three ways:
When the defendant is a resident of a state, a summons may be served at that residence.
When the defendant is not a resident, a summons may be personally served should he or she
be physically present in the state.
Most states have legislated “long-arm” statutes that allow a state or federal court to secure
jurisdiction against an out-of-state party where the defendant has committed a tort in the state or
where the defendant is conducting business in the state.
Legal Briefcase: Arnold Schwarzenegger v. Fred Martin Motor Company 374 F.3d 797 (9th Cir.
2004)
IV. Venue
Once jurisdictional authority—that is, the power to hear the case—is established, the proper venue
(geographic location within the court system) comes into question. Ordinarily, a case will be heard by the
court geographically closest to the incident or property in question or to where the parties reside.
Sometimes one of the parties may seek a change of venue based on considerations such as unfavorable
pretrial publicity or the pursuit of a more favorable legal climate.
V. Standing to Sue
All who wish to bring a claim before a court will not be permitted to do so. To receive the court’s attention,
the litigant must demonstrate standing to sue. That is, the person must show that her or his interest in the
outcome of the controversy is sufficiently direct and substantial as to justify the court’s consideration. The
litigant must show that she or he is personally suffering, or will be suffering, injury.
Legal Briefcase: Mayer v. Bill Belichick; The New England Patriots; National Football League, 605
F.3d 223 (3d Cir. 2010); Cert. Den. 2011 U.S. LEXIS 2027
VI. Class Actions
In some instances, multiple plaintiffs may join together to represent themselves and all others who are
similarly situated to file a single lawsuit alleging similar harm arising from the same, or substantially the
same, wrong. The high cost of litigation, the great uncertainty of victory and the likelihood of small
individual recoveries have made the class action a very useful tool for plaintiffs.
Several recent U.S. Supreme Court rulings have impacted the viability of the class action in business
disputes. For example, a small group of Walmart employees sued the company for sex discrimination on
behalf of a nationwide class of 1.5 million female employees; Walmart challenged the class action
certification. The Court held that the claims against Walmart did not share enough common elements to
tie together the millions of employment decisions affecting women at Walmart.