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Equitable Remedies—This form of relief originated in England from a different court system that
was able to provide relief not available in the common-law, called Curia Regis, court system.
These remedies have been taken over by the courts of law, which now have powers in equity
when monetary damages are not adequate or appropriate. Courts have a wide range of powers in
this regard.
Specific Performance. The court orders a party to complete a contract or other duty as promised.
Not used a lot because of the incentive problems created.
Injunction. An order directing someone to do something or, more often, not to do something or
face more severe sanctions. A temporary restraining order is short term, usually pending a
hearing to consider a motion. Preliminary injunction is longer term; in force until matter is
resolved. Permanent injunction is a final order, perhaps as part of a settlement, and may be in
force indefinitely. Courts use this when monetary damages are not adequate.
CASE: Pre-Paid Legal Services v. Cahill (E.D., OK, 2013)—Pre-Paid sells legal service plans
for monthly fees. Cahill was a successful sales rep for Pre-Paid. He quit and moved to a
competitor firm and tried to get other sales reps to move to the other firm with him. Pre-Paid
sued for breach of contract and tort and moved for an injunction to stop Cahill from exploiting
information he had from Pre-Paid. The Magistrate recommended the injunction be granted.
Decision: Injunction granted. Preliminary injunctions are not lightly granted. The moving party
must show that it will likely prevail on the merits, will suffer irreparable harm without the
Questions: 1. Assuming PPLSI is correct, and might win a damage award for Cahill’s actions,
what difference does the preliminary injunction make?
If not restrained from recruiting other sales associates at PPLSI that he knows are top performers
2.Would an injunction be a limitation on Cahill’s right to engage in free speech by talking to
other sales associates?
There is no right to engage in “free speech” of a commercial nature that violates a contractual
agreement. When lawsuits are settled out of court it is common to include a clause that the
Add. Case: Georgia State Licensing Board for Residential and General Contractors v. Allen
(Sup. Ct., GA, 2010)—State legislature required contractors to have a license issued by the
Board. If a county has requirements at least as strict as the state, the county may take care of the
matter. Muscogee County issued licenses, but had standards lower than the state. The Board held
the contractors did not have proper licenses and told them to cease working as contractors until
they got a state license. They protested, saying they were misled by the County and sued for
injunctive relief as their livelihood would be harmed by the lack of work. Trial court granted
preliminary injunction against enforcement. Board appealed.
Decision: No relief. Ignorance of the law is no excuse. Granting an injunction oppressed the
Appellate Stage—If one of the parties believes that an error of law has been made, that party
may appeal the decision. The principal function of the appellate courts is to ensure the fairness of
the trial—that the trial court correctly applied the law.
Add. Case: Bourke v. City of South Portland (Sup. Ct., Maine, 2002)--Some residents of
South Portland, Maine, were in a dispute with the city's planning board. The residents appealed
a board decision to the trial court, which upheld the decision of the board on January 17. Copies
of the judgment were to have been mailed to attorneys for both parties, but the clerk failed to do
so. The residents did not get a copy of the decision until their attorney obtained one on March
17. The residents then filed a notice of appeal of the trial court's decision to the state's high
court on April 8.
Decision: Dismissed. “The plaintiffs’ appeal is untimely. A notice of appeal must be filed within
twenty-one days from entry of judgment.” The parties did not receive notice of the judgment due
to the court clerk’s error, but “Lack of notice of the entry by the clerk does not affect the time to
Arguments Before Appeals Court—The parties present their arguments through briefs and oral
arguments.
Add. Case: LaFollette v. Savage (7th Cir., 1995)--LaFollette sued Savage over a business deal
that went bad. Jury found for Savage; trial judge denied plaintiff’s request for j.n.o.v.; plaintiff
appealed.
Decision: “Plaintiffs now renew the argument that they are entitled either to judgment as a
matter of law or to a new trial on [certain claims]. They argue that the record includes no
credible evidence to support the jury’s verdict in defendant’s favor. We review the denial or a
motion for judgment as a matter of law de novo. ...we will reverse the denial of the motion only if
Decisions by Appeals Courts—An appellate court may decide to affirm, reverse, and/or remand
the trial court decision. In reaching their decisions, appellate judges will write an opinion. The
majority opinion represents the court’s decision. Judges may write concurring or dissenting
opinions.
Enforcement Stage—If there is no appeal, or if appeal is unsuccessful, the judgment is final.
Under the doctrine of res judicata, the case cannot be considered again.
Enforcing Judgments—Plaintiffs are responsible for collecting monetary awards from
defendants. If defendant does not pay, the court can issue a writ of execution allowing an official
to seize property, if necessary, to satisfy the judgment.
Add. Case: New Maine Nat. Bank v. Nemon (Sup. Ct., Me., 1991)--Nemon borrowed $125,000
from the bank. The note stated he would be responsible for paying all costs of collecting the note.
He defaulted, the bank sued and judgment was entered for the bank. It obtained a writ of
execution against Nemon who was ordered to make weekly payments. He missed payments. He
was ordered to appear in court and failed to appear. He was ordered to produce documents and
failed to produce them. He was found in contempt of court and ordered to jail. His sentence was
stayed to allow him to “purge himself of contempt. He failed to do so.” An arrest warrant was
issued. Nemon then paid the balance due on the loan. The bank sued for the attorney’s fees it
incurred throughout this process. Nemon argued that any additional sums should not be
awarded.
Decision: The trial court has discretion to award attorney’s fees in such cases. The bank
submitted affidavits detailing its collection efforts against Nemon. The issue of attorney’s fees is
not barred by res judicata because Nemon’s actions prevented the bank from correctly estimating
Add. Case: Aqua Sun Invest. v. Henson (Ct. App., Tenn., 1993)--Aqua Sun sold time-share
condos in Florida. Henson, a TN resident, bought one but stopped making payments. Aqua sued
in FL, won a judgment and secured a writ of execution. A notice of sheriff’s sale was published
in a FL newspaper. A copy was sent certified mail to Henson. The sale was conducted and Aqua
submitted a winning bid of $100 and back taxes. It tried to enforce the judgment in TN. Denying
the relief sought by Aqua, the court held “this Court finds that it is not obligated to give full faith
and credit to the Florida Judgment in this case and further finds that to do so would be shocking
to the conscience of the Court under the facts and circumstances of this case and would further
violate the strong public policy of this State and would be offensive to the traditional notions and
Constitutional guarantees of substantial justice and fair play.” Aqua appealed.
Decision: Reversed. Tennessee follows the rule that Article 4, Section 1 of the U.S. Constitution
does not require that full faith and credit be given to foreign judgments that violate public policy.
International Perspective: German Trial Procedure
German rules of civil procedure give judges much more control over trial processes, as is true in
most countries. The judge decides what witnesses to call and questions them personally. The
whole procedure is less formal than in the U.S.
ALTERNATE DISPUTE RESOLUTION—Many disputes, especially in standard business
transactions, are resolved by ADR. Arbitration is the most formal and is often required by
standard form contracts.
Arbitration—Arbitration is a legal process in which the two or more persons agree to allow a
neutral person (arbitrator) to resolve their dispute. The advantages are: (1) because she is agreed
upon by the parties, the arbitrator has their trust; and (2) because the arbitrator is an expert in the
subject, less time is needed to educate her about the dispute. The Federal Arbitration Act states
that when parties agree to arbitrate, the decision is binding and may only be appealed under
limited circumstances.
Add. Case: EEOC v. Waffle House (Sup. Ct., 2002)--Baker signed an employment agreement
at Waffle House that he would arbitrate any employment dispute. Later, when he was fired for
having seizures while at work, he sued for ADA discrimination. The EEOC carried the suit
forward on his behalf and sued Waffle House in federal court. Waffle House contended that
EEOC had to arbitrate the matter.
Decision: Supreme Court held that EEOC was not bound by the arbitration agreement. Baker
Add. Case: Gilmer v. Interstate/Johnson Lane (Sup. Ct., 1991)--As a condition of employment
with a securities firm, Gilmer had to agree to arbitrate employment disputes under New York
Stock Exchange Rules. When he was fired, he sued, claiming his firing violated the age
discrimination law. Interstate moved to compel arbitration and the Federal Arbitration Act
(FAA). The trial court ordered a trial; appeals court reversed; Gilmer appealed.
Decision: Affirmed. The FAA was passed to overcome judicial hostility to arbitration; it places
“arbitration agreements upon the same footing as other contracts.” The Court has approved the
enforceability of arbitration agreements that arise from claims made under many federal
Add. Case: Mastrobuono v. Shearson Lehman (Sup. Ct., 1995)--Mastrobuono had a securities
account with Shearson and signed its standard agreement. He later sued, alleging Shearson
mishandled the account. The agreement contained a arbitration provision and a choice-of-law
provision (New York law). Shearson moved to stay court proceedings and to compel arbitration,
as provided by the terms of the agreement and the FAA. The court granted the motion. Under the
rules of the NASD, three arbitrators heard the case and awarded Mastrobuono $160,000
damages plus $400,000 punitives. Shearson appealed to the court to vacate the punitives. The
court vacated the punitive damages; the appeals court affirmed. Mastrobuono appealed.
Decision: Reversed; punitives should not have been vacated. The Act’s central purpose is to
ensure “that private agreements to arbitrate are enforced according to their terms.” The
Add. Info: State restrictions on arbitration—The Supreme Court struck down another state law
that was inconsistent with the FAA. In Doctor’s Associates v. Casarotto (116 S.Ct. 1652), the
Court struck down a Montana law that required that notice “that a contract is subject to
arbitration” must be “typed in underlined capital letters on the first page of the contract.” The
courts may not invalidate arbitration agreements under state laws applicable only to arbitration
provisions.
The Arbitration Agreement—Standard form arbitration clauses are often inserted in contracts.
Parties should use one written by an arbitration association, such as the American Arbitration
Association, to be sure it is a strong agreement. Most agreements are upheld.
Add Info: Challenging Arbitration Agreements—A study of hundreds of arbitration agreements
in employment dispute cases, that were challenged in state and federal court, showed that the
agreement was upheld in the vast majority of cases, whether the challenge to the arbitration
award was brought by the employer or the employee.
Add. Case: Khotka v. Geographic Expeditions (Ct.App., Ca, 2010)--Lhotka went on a
mountain climbing trip sponsored by GeoEx. The contract contained a dispute resolution clause
that stated that if a dispute arose the parties could first go to mediation. If that did not resolve
the matter, it would go to binding arbitration at the Am. Arb. Assn. under California law. It
stated that the maximum liability would be the cost of the trip purchased. Signing the dispute
resolution agreement was mandatory if one wanted to go on the trip. Lhotka died of an
altitude-related illness while on the trip. His mother sued GeoEx in California state court for
wrongful death. GeoEx moved to compel arbitration. The trial court denied the motion. GeoEx
appealed.
Decision: Affirmed. The agreement to arbitrate is unconscionable and, therefore, unenforceable.
The trial court properly declined to enforce the entire arbitration clause. The arbitration
agreement fails on both procedural and substantive grounds. The procedural element of
Selection of Arbitrators—Begins with a submission by which the parties refer a dispute to an
arbitrator (such as through the American Arbitration Assn.). After submission, the arbitrator is
selected and a hearing scheduled. Unlike court proceedings, in which case the parties are likely
to have little control over the judge assigned to the case, the parties must agree upon the
arbitrator (or panel of arbitrators). Most arbitrators are experts in the area of law that applies to
their cases. If they have a conflict of interest that they do not reveal, it may be fraud.
Add. Info: Judges go private—The growth of ADR has increased demand for those with the skill
and respect needed to make the process work. In arbitration, since the arbitrator has the power
to decide the matter, the parties have less control than in other ADR forms, so respect for the
arbitrator is crucial. In California, many retired judges, including members of the supreme
court, now work in ADR, most for arbitration firms. Able to charge as much as $500 an hour,
they do better than in public service.
Selection of Arbitrators—Most agreements specify how arbitrator(s) will be selected. Usually
one, but panels of three not uncommon. Many are attorneys, but that is not required—may be an
expert in the field, such as construction or labor.
Hearing Procedure—The parties agree to the rules of the hearing with or without the arbitrator’s
input. The arbitrator has power to enforce those rules. The hearing is normally closed-door,
conducted much like a trial but with less rigid rules about evidence and procedure.
Issue Spotter: Are There Limits on the Terms of Arbitration?
Employment arbitration agreements are generally binding. Employers do not draft individual
agreements for various employees. However, if the agreement goes overboard, so it may not be
valid. First, WeLuvPets says it will pick the arbitrator, but fails to specify who that is. Employers
do not have unlimited rights in this regard, such as by hiring a buddy to serve in that role. The
agreement should specify a recognized, qualified arbitrator. Second, requiring the employee to
pay half of unspecified fees is not likely to hold. There is no cap on the fees and the employer
knows that fees may deter employees from making a complaint. Courts do not look favorably on
that, so you should specify not only where arbitration would take place, but specifically what
fees, if any, the employee would be required if the employee filed for arbitration. The employee
would, of course, be responsible for any legal fees the employee incurred by hiring a lawyer, but
to help insure that the arbitration agreement is not seen as unfair to low-wage employees, the
employer might offer to pay filing fees.
The Award—After the hearing, the arbitrator reaches a decision, called an award, usually within
30 days. The award is usually in writing, but no justification (legal rationale) for the award need
be given unless required by the arbitration agreement. The courts review few decisions, but will
not allow an award that requires either party to commit a crime or that undermines public policy.
Appealing the Award—After an arbitrator delivers an award, the losing party may appeal.
However, courts rarely provide review of an arbitrator's decision and overturn it unless there is
evidence of fraud, serious procedural misconduct, corruption or partiality by the arbitrator, or
exceeding authority in making an award. Arbitrators, like judges, are judicial officials; their
determinations are considered final in most cases; matters properly determined by arbitrators
cannot be litigated in court.
Cyberlaw: International Arbitration and Mediation of Domain Name Disputes
WIPO is playing an active role in offering mediation and arbitration services to settle domain
name disputes at reasonable cost. Over 1,000 disputes a year are submitted to the WIPO
Arbitration and Mediation Center; the results are generally enforceable worldwide.
Add. Info: International Arbitration: Large disputes often go to arbitration. 2007 there were 63
arbitration cases involving claims of more than $1 billion. The International Chamber of
Commerce, the London Court of International Arbitration, and the AAA’s Centre for Dispute
Resolution are favored locales.
Negotiation—The ADR process by which parties choose to work out their differences by
negotiation between themselves instead of litigation or arbitration.
Issues in Negotiation—Negotiation is bargaining, such as bargaining for a contract. A negotiated
settlement is usually a contract that is agreed upon to settle a dispute. As a contract, it is
enforceable in court; attorneys are usually involved in negotiations. Proper negotiations usually
head off litigation.
Stages of Negotiations—Most negotiations are handled by an agent, usually an attorney, who is
less likely to be emotional than the principals to the dispute. The negotiator must follow orders of
the principal, even if the negotiator thinks the position taken by the principal is foolish. Before
negotiations, the issues are studied from both sides to understand issues and identify strong and
weak points, potential results of litigation, and the course of action planned. The parties must
exchange information and generally there is compromise in the move to settlement. Results are
memorialized in a contract.
International Perspective: Arbitration and Cotton Contracts
Most commercial cotton contracts have a standard arbitration clause sending disputes to the
International Cotton Association in Liverpool. Resolution is quick and cheap. Some parties
ignore the award even if domestic courts order payment. In sketchy legal systems, such as China,
enforcement is difficult. The ICA posts a list of parties that have ignored awards as a way to
warn merchants about the possible problems of doing business with such parties.
Mediation—Mediation involves the use of a neutral outsider who helps the parties reach a
resolution to their dispute. Mediators essentially manage the negotiation process, arranging for
scheduling, setting the agenda, and maintaining the records of the dispute. Mediators cannot
settle disputes, as does an arbitrator. Most states do not regulate who may serve as a mediator,
but the obvious preference is for an experienced party. Some states requite mediators to be
trained (a certain amount of training to be a mediator) to be able to offer their services. There are
professional organizations for mediators that set standards and procedures for the profession.
Mediation Process—Mediators gets the parties to agree on ground rules, such as whether the
procedure, even if unsuccessful will be confidential. If so, anything revealed is not to be used in
court later if litigation results. The mediator also gathers information from the parties, usually
keeping them separate for much of that, discusses compromises and tries to move toward a
settlement that is memorialized.
Add. Case: Vitakis-Valchine v. Valchine (Ct. App., Fla., 2001)--Kalliope and David Valchine
began divorce proceedings. They attended court-ordered mediation to attempt to resolve the
dispute. Both were represented by counsel. Mediation produced a 23 page settlement agreement
that covered all essential matters. Kalliope then moved to set aside the agreement, contending
that she had been coerced by her husband, her husband’s attorney and the mediator. The judge
rejected the motion; Kalliope appealed.
Decision: Reversed. “As a general rule ... a contract or settlement may not be set aside on the
basis of duress or coercion unless the improper influence emanated from one of the contracting
parties––the actions of a third party will not suffice. In this case, the record adequately supports
the finding that neither the husband nor the husband’s attorney was involved in any duress....”
Add. Info: Briefing clients—Mediators have found that parties to a dispute need to be briefed
before proceedings, not only so they understand how mediation works, but also so they get a feel
for what the mediator thinks is realistic in terms of settlement. That helps dash unrealistic
expectations and gets the discussion to the main points.
Add. Info: Mediator confidentiality—As in other states, the Pennsylvania Labor Mediation Act
specifically provides that “The mediator shall not produce any confidential records of, or testify
in regard to, any mediation conducted by him on behalf of any party in any type of civil
proceeding.” See Elizabeth Forward Sch. Dist. v. Pa. Labor Rel. Board, 624 A.2d 215
(Comm.Ct., Pa., 1993).
Add. Info: Mediation in the D.C. Courts—In the superior (trial) court of D.C., civil cases go to
ADR. The court determined the type at an initial conference. Mediation is chosen almost 3-1
over arbitration. Most cases are mediated in less than two hours. After an initial face-to-face
session, the mediator shuttles between the two sides to reach a compromise. The results are
non-binding, but most cases are ended this way.
Innovative Forms of ADR—Parties are free to modify traditional forms of ADR. The courts
have adopted some forms to assist in reducing the amount of litigation.
Add. Info: Minitrials—The mini-trial is not a trial, but rather a highly structured settlement
process. It is sometimes referred to as an information exchange, a mock trial, or an advisory
proceeding. The parties agree on the structure and ground rules, such as confidentiality, and
usually hire an adviser to move things along.
Add. Info: Summary Jury Trials—A summary jury trial is the jury equivalent of a minitrial.
They are structured like a trial, with presentations based on depositions and other documents
because witnesses are generally not allowed. An advisory jury is seated that does not know that
the proceedings are not binding. Each side gets a relatively short time to present its case. The
judge gives the jury a simple instruction about the law to apply and the jury reaches a verdict.
Then the parties decide if they wish to settle or go ahead with a full trial. However, of those
summary trial cases that have gone on to a full trial, the subsequent full-trial decision has been
very consistent with the summary-trial decision.
Discussion Question
Most firms find arbitration and mediation clauses to be superior to litigation, which tends to be
more costly and take longer. Of course, the potential litigant faces the same issue, so most people
think carefully before suing. Arbitration is binding through conclusion. An agreement to mediate
does not force binding resolution, but has a high success rate and has the advantage of being less
adversarial than arbitration, which tends to encourage reasonable settlements with less bitterness.
Case Questions
1. (answered on the Internet for students) Affirmed. An appellate court may direct the entry of
judgment as a matter of law when it determines that the evidence was erroneously admitted at
trial and that the remaining evidence, properly admitted, is insufficient to continue a submissible
2. (answered on Internet for students) Reversed and remanded. Trial courts have wide judicial
discretion in partition actions to use equity to make a fair and just division of property among the
parties. Great flexibility may be used in such cases. However, the equitable powers do not
3. The Supreme Court, citing the commerce clause, held that federal law controls. The Federal
Arbitration Act gives strong presumption that arbitration clauses will be upheld and that there
cannot be appeal to the courts. “Contracts to arbitrate are not to be avoided by allowing one party
4. (answer on Internet for students) The NLRB was correct. Public policy encourages mediation
5. The Supreme Court reversed the Florida high court. The claim that the contract was illegal
because it violated the Florida usury law was a matter to be determined by arbitration, not a
court. The arbitration clause included all disputes, which would include this claim. There was no
6. (answer on Internet for students) The bank requested the court do dismiss Paranzino’s case.
The court found that she “willfully and deliberately disregarded the confidentiality agreement by
Ethics Question
Companies treat lawsuits in a cost/benefit analysis, not from what would provide the greatest
good. It would benefit everyone if those who bring bad suits were forced to bear litigation costs,
but that is a public good that the other side must bear for little gain and some risk that, if things
Most legal ethics experts do not think it ethical, even if legal, for law firms to accept
payments in exchange for a promise not to represent future clients against a company. The firm is
usually given the payment because it has built expertise in a difficult area and so is the firm most
Essay Questions and Answers Based on Cases:
1 Thomas sued his former employer for racial, sexual, and national origin discrimination in
violation of two civil rights laws. During pretrial negotiations, the employer offered Thomas
his job back “without prejudice,” meaning that it would not affect some of his claims in the
lawsuit, such as for mental distress, but if he returned to work, he could not claim he was
owed back wages from the date from which he could have started working. Thomas refused
the offer. The employer asserted that it should have the right to present testimony to the jury
about its offer that was rejected. Thomas said that the negotiations were completely
confidential and there could be no testimony. Who was right? [Thomas v. Resort Health
Related Facility, 539 F.Supp. 630, E.D.N.Y. (1982)]
Answer: The offer could be used in testimony in court. The Federal Rules of Civil Procedure
generally preclude information that is gleaned from negotiations from being used as evidence,
but the employment offer was not part of a bargain--that is, he was not asked to give up the
lawsuit or any part of it--it was a unilateral offer that was rejected. The offer was legally
unrelated to the other parts of the lawsuit; it only related to the length of the period during which
2 Gaeth accused Deacon of assaulting him. Gaeth’s attorney sent Deacon a letter asking him if
he had insurance coverage and if he had a lawyer. Deacon replied that he did not. Gaeth later
filed suit in Maine court, claiming that Deacon hit him in the face at a party at a college,
causing injuries. Gaeth was not able to find Deacon. A process server could not locate him.
Gaeth then published a notice in a local newspaper in Maine for three weeks notifying
Deacon of the complaint. Letters mailed to old addresses were returned by the Post Office.
The court then entered a default judgment against Deacon for failure to file a responsive
pleading to the complaint. Gaeth was awarded $75,000 in compensatory damages, $25,000 in
punitive damages, plus interests and costs. After the judgment, a new address for Deacon was
found, and he was notified of the judgment. He responded, but the trial court affirmed the
original judgment. Deacon appealed. Was the publication in the newspaper adequate notice of
the suit? [Gaeth v. Deacon, 964 A.2d 621, Sup. Ct., Maine, (2009)]
Answer: Service by publication given to an out-of-state defendant was not reasonable to give
actual notice of the lawsuit and did not meet requirements of due process. Publication was in the
county where the plaintiff lived. Defendant’s only connection with Maine was his previous
attendance at college in a different county in Maine. He had no known connection with the
Internet Assignment
Cornell University Law School, Federal Rules of Civil
Procedure:
www.law.cornell.edu/rules/frcp/
Cornell University Law School, Federal Rules of
Evidence:
www.law.cornell.edu/rules/fre/
Cornell University Law School, Federal Rules of
Criminal Procedure:
www.law.cornell.edu/rules/frcrmp/
Rules of court play a critical role in legal proceedings. The Federal Rules of Civil Procedure
govern both the trial process and the pretrial discovery process, often allowing parties to settle a
civil dispute before going to trial. Rules of evidence control what can or cannot be admitted into
trial, such as hearsay evidence. Rules of criminal procedure ensure a fair, impartial proceeding.
Browse the Web sites listed here to see key elements of the federal rules in these areas.
