Business Law Chapter 2 Homework Clearly One Could Argue That The Injuries

1

CHAPTER 2

COURTS AND ALTERNATIVE

DISPUTE RESOLUTION

ANSWERS TO CRITICAL THINKING QUESTIONS

IN THE FEATURE

MANAGERIAL STRATEGY—BUSINESS QUESTIONS

1A. If you were facing an especially complex legal dispute—one involving many facets

and several different types of law—would you consent to allowing a U.S. magistrate

judge to decide the case? Why or why not? Yes. U.S. magistrate judges are selected by

federal district court judges through a merit selection process. Applicants are interviewed by a

2A. If you had to decide whether to allow a U.S. magistrate judge to hear your case,

what information might you ask your attorney to provide concerning that individual?

Applicants for the position of magistrate judge include attorneys, administrative law judges, state

court judges, and others. Important information concerning a judge who hears a specific case

2 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

ANSWERS TO QUESTIONS

AT THE ENDS OF THE CASES

CASE 2.1—LEGAL REASONING QUESTIONS

1A. What is “diversity of citizenship? Diversity of citizenship exists when the plaintiff and

defendant to a suit are residents of different states (or similar independent political subdivisions,

2A. How does the presence—or lack—of diversity of citizenship affect a lawsuit? A fed-

eral district court can exercise original jurisdiction over a case involving diversity of citizenship.

3A. What did the court conclude with respect to the parties’ “diversity of citizenship”

in this case? In the Mala case, the court concluded that the parties did not have diversity of

CASE 2.2—CRITICAL THINKING

WHAT IF THE FACTS WERE DIFFERENT?

Suppose that Gucci had not presented evidence that Wang Huoqing had made one actual

sale through his Web site to a resident (the private investigator) of the court’s district.

Would the court still have found that it had personal jurisdiction over Wang Huoqing?

Why or why not? The single sale to a resident of the district, Gucci’s private investigator,

helped the plaintiff establish that the defendant ’s Web site was interactive and that the defend–

CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 3

LEGAL ENVIRONMENT

Is it relevant to the analysis of jurisdiction that Gucci America’s principal place of busi–

ness is in New York state rather than California? Explain. The fact that Gucci’s headquar–

ters is in New York state was not relevant to the court’s analysis here because Gucci was the

CASE 2.3—CRITICAL THINKING

LEGAL ENVIRONMENT

Who can decide questions of fact? Who can rule on questions of Law? Why? Questions

GLOBAL

In some cases, a court may be asked to determine and interpret the law of a foreign

country. Some stats consider the issue of what the law of a foreign country requires to

be a question of fact. Federal rules of procedure provide that this issue is a question of

law. Which position seems more appropriate? Why? Proof of what a foreign law states,

and possibly its translation, may be appropriate for a jury to decide, based on a submission of

such evidence as a foreign publication of statutes or case law, or the testimony of an expert wit–

ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER

1A. Federal jurisdiction

The federal district court exercises jurisdiction because the case involves diversity of citizenship.

Diversity jurisdiction requires that the plaintiff and defendant be from different jurisdictions and

4 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

2A. Original or appellate jurisdiction

Original jurisdiction, because the case was initiated in that court and that is where the trial will

3A. Jurisdiction in Illinois

No, because the defendants lacked minimum contacts with the state of Illinois. Because the

defendants were from another state, the court would have to determine if they had sufficient

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 defend-

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, texts, 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 communica-

tions. 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.

CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 5

ANSWERS TO ISSUE SPOTTERS

AT THE END OF THE CHAPTER

1A. Sue uses her smartphone to purchase a video security system for her architectural

firm from Tipton, Inc., a company that is located in a different state. The system arrives a

month after the projected delivery date, is of poor quality, and does not function as ad-

vertised. Sue files a suit against Tipton in a state court. Does the court in Sue’s state

have jurisdiction over Tipton? What factors will the court consider in determining juris–

diction? Yes, the court in Sue’s state has jurisdiction over Tipton on the basis of the company’s

minimum contacts with the state.

Courts look at the following factors in determining whether minimum contacts exist: the

quantity of the contacts, the nature and quality of the contacts, the source and connection of the

cause of action to the contacts, the interest of the forum state, and the convenience of the par-

2A. The state in which Sue resides requires that her dispute with Tipton 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, if the dispute is not resolved, or if either party disagrees with the decision of the

ANSWERS TO BUSINESS SCENARIOS

AT THE END OF THE CHAPTER

2–1A. Standing

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

6 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

2–2A. Venue

The purpose behind most venue statutes is to ensure that a defendant is not “hailed into a re–

mote district, having no real relationship to the dispute.” The events in dispute have no connec–

tion to Minnesota. The Court stated: “Looked at through the lens of practicality—which is, after

ANSWERS TO BUSINESS CASE PROBLEMS

AT THE END OF THE CHAPTER

2–3A. Arbitration

In many circumstances, a party that has not signed an arbitration agreement (Kobe in this case)

cannot compel arbitration. There are exceptions, however. According to the court, “The first re–

lies on agency and related principles to allow a nonsignatory (Kobe) to compel arbitration when,

2–4A. SPOTLIGHT ON NATIONAL FOOTBALL LEAGUE—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 deci–

sion. 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.

CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 7

2–5A. 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

2–6A. Arbitration

Yes, a court can set aside this order. The parties to an arbitration proceeding can appeal an ar–

bitrator’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 pow-

2-7A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Corporate contacts

No, the defendants’ motion to dismiss the suit for lack of personal jurisdiction should not be

granted. A corporation normally is subject to jurisdiction in a state in which it is doing business.

A court applies the minimum-contacts test to determine whether it can exercise jurisdiction over

an out-of-state corporation. This requirement is met if the corporation sells its products within

the state or places its goods in the “stream of commerce” with the intent that the goods be sold

in the state.

8 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

2–8A. Appellate, or reviewing, courts

Yes, the state intermediate appellate court is likely to uphold the agency’s findings of fact.

Appellate courts normally defer to lower tribunals’ findings on questions of fact because those

forums’ decision makers are in a better position to evaluate testimony. A trial court judge or jury,

for example, can directly observe witnesses’ gestures, demeanor, and other nonverbal conduct

during a trial. A judge or justice sitting on an appellate court cannot.

2–9A. A QUESTION OF ETHICS—Agreement to arbitrate

(a) 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 pre–

sumed in valid contracts that arbitration clauses will be upheld unless there is a violation of pub-

(b) 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

CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION 9

ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS

AT THE END OF THE CHAPTER

2–10A . Access to courts

(a) The statute violates litigants’ rights of access to the courts and to a jury trial be–

cause the imposition of arbitration costs on those who improve their positions by less than 10

percent on an appeal is an unreasonable burden. And the statute forces parties to arbitrate be–

(b) The statute does not violate litigants’ constitutional right of access to the courts be–

cause it provides the parties with an opportunity for a court trial in the event either party is dis-

satisfied with an arbitrator’s decision. The burdens on a person’s access to the courts are rea–

mental interest of attaining speedier and less costly resolution of disputes.

(c) The determination on rights of access could be different if the statute was part of a

pilot program and affected only a few judicial districts in the state because only parties who fell

under the jurisdiction of those districts would be subject to the limits. Opponents might argue

that the program violates the due process of the Fifth Amendment because it is not applied fairly

throughout the state. Proponents might counter that parties who object to an arbitrator’s deci–