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Business Law Chapter 3 Homework The Chief Judge Pointed Out That There

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Business Law: Text and Cases 14th Edition
Frank B. Cross, Kenneth W. Clarkson, Roger LeRoy Miller
Chapter 3
Court Procedures
This chapter continues the opportunity begun in the previous chapter to make students aware of the
functioning of the judicial branch of our government. The previous chapter outlined the theoretical framework of our
court system. This chapter covers the nuts and bolts of the process.
An important step in the judicial process is the application of procedural rules in a case. The goal of this
chapter is to give students an understanding of what happens before, during, and after a civil trial.
I. Procedural Rules
Procedural requirements are introduced in the text, principally through a brief discussion of the Federal Rules
of Civil Procedure (FRCP).
Most cases follow the same basic steps, from the pleadings through the appeal (if any). The text uses a
hypothetical to illustrate various stages in litigation.
The text outlines what an attorney might tell a client about a lawsuit, including the probability of success,
and the procedures, money, and time involved. How an attorney’s fees may be calculated and who
might be liable for them is explained. It is also noted that an attorney’s fees do not include other costs
related to a case, such as court fees.
1. Types of Attorneys’ Fees
An attorney may charge
Fixed fees
Hourly fees
Contingency fees
Who Pays an Attorney’s Fee?
Generally, unless statutorily or contractually authorized, attorneys’ fees are not awardable to a winning
party. Thus, the basic answer is that everyone pays his or her own attorney’s fee. There are exceptions. In
some circumstances (for example, in certain cases involving indigent criminal defendants), the government
pays, win or lose. Fees may be awarded if the losing party acted in bad faith, vexatiously, wantonly, or for
oppressive reasons, or if the litigation confers a substantial benefit on the members of an ascertainable class
2. Settlement Considerations
Factors that determine whether to pursue or settle a claim include
A client’s willingness to devote time, effort, and funds to a case
II. Pretrial Procedures
In a civil case, the pleadings inform each party of the other’s claims and specify the issues. The
pleadings consist of a complaint and an answer.
1. The Plaintiff’s Complaint
The complaint (or petition or declaration) is filed with the clerk of the trial court. It contains a
statement alleging jurisdictional facts; a statement of facts entitling the complainant to relief; and a
statement asking for a specific remedy.
a. Service of Process
A copy of the complaint and a summons is served on the party against whom the complaint is
b. Method of Service
Corporate defendants can be served by delivering process to their registered agents.
c. Waiver of Formal Service of Process
In federal cases, service can be waived.
2. The Defendant’s Response
The defendant’s answer admits or denies the allegations in the complaint and sets out any de-
fenses and counterclaims (the plaintiff can file a reply to any counterclaim).
1. Motion to Dismiss
A defendant’s motion to dismiss may be based on any of several grounds. A motion to dismiss for
Case 3.1: Espresso Disposition Corp. 1 v. Santana Sales & Marketing Group, Inc.
Espresso Disposition Corp. 1 and Santana Sales & Marketing Group, Inc., entered into an agreement that
included a mandatory forum selection clause. The clause stated that “the venue with respect to any action
pertaining to this Agreement shall be the State of Illinois.When Santana filed a suit against Espresso in a
Florida state court, the defendant filed a motion to dismiss based on the clause. Santana responded that the
clause was a mistake made at the time the agreement was draftedan agreement between different parties
had been copied, and by mistake, the venue provision had not been changed from Illinois to Florida. The
court denied Espresso’s motion to dismiss. Espresso appealed.
A state intermediate appellate court reversed and remanded for the entry of an order of dismissal. Under
Florida law, a forum selection clause is only considered unjust or unreasonable if a party establishes that
Notes and Questions
What impact will the court’s decision most likely have on the parties to this dispute? Explain. The
effect of the court’s granting Espresso’s motion to dismiss was a ruling that the venue for any action relating
to a controversy under the parties’ agreement “shall be the State of Illinois.” This means that the appropriate
forum for resolving the parties’ dispute is a court in Illinois (not in Florida, where this suit was filed). Santana
may have an opportunity to amend its complaint, but it is not likely that this suit will continue in a Florida
How could the parties, particularly the defendant, have avoided this dispute? The parties could
have avoided this dispute by drafting their agreement more carefully. The court points out that some of the
steps in document preparation have been eliminated by computers but what has not been eliminated is the
need to actually read and analyze the text * * * , especially where it is to have legal significance.”
Did the court grant or deny the appellants’ motion? Why? In this case, the court granted the
appellants’ motion to dismiss. The parties’ contract contained a forum-selection clause. The law in Florida,
which is where this suit was filed, presumes that a forum-selection clause is valid. If the clause clearly
Motions to Dismiss and Other Pre-Answer Motions
Besides a plaintiff’s failure to state a claim on which relief can be granted, a defendant’s pre-answer
motion to dismiss may be based on the court’s lack of subject matter or personal jurisdiction, improper
venue, insufficiency of process or service of process, and the plaintiff’s failure to join a party needed for a just
adjudication of the controversy. Or the defendant may raise these defenses in his or her answer. In fact,
some of these must be raised at this stage, or they are deemed waived. A defendant may also move for
dismissal on the ground of the plaintiff’s failure to diligently prosecute his or her claim, or to comply with
procedural rules or a court order.
Other pre-answer motions include: a motion for a more definite statement (which may be made if a
pleading is so vague or ambiguous that a response cannot reasonably be framed); a motion to strike such
2. Motion for Judgment on the Pleadings
After the pleadings are filed, if no facts are in dispute and only questions of law are at issue, either
party can file a motion for judgment on the pleadings. A trial might be avoided if no facts are in
dispute and only questions of law are at issue.
Motions for Judgment on the Pleadings and
Other Motions That May Be Made after the Pleadings Are Closed
A motion for judgment on the pleadings is more akin to a motion for summary judgment than it is to a
motion to dismiss for failure to state a claim on which relief can be granted. The grounds on which motions to
dismiss can be made can be divided into four categories, including challenges to the complaint itself. These
challenges point to defects on the face of a complaintthat is, a plaintiff may actually have a claim, but has
not properly phrased it. A motion for judgment on the pleadings “attack[s] the substantive sufficiency of the
Other motions that may be made after the pleadings are closed include the defendant’s motion to
dismiss on the basis of the court’s lack of subject matter jurisdiction, or the plaintiff’s failure to state a claim on
which relief can be granted or to join an indispensable party. At this point, a defendant may also move for
dismissal on the ground of the plaintiff’s failure to diligently prosecute his or her claim, or to comply with
procedural rules or a court order. At this time, a party may also object to the other’s failure to state a legal
defense to a claim.
3. Motion for Summary Judgment
Like a motion for judgment on the pleadings, after the pleadings are filed, if no facts are in dispute
and only questions of law are at issue, either party can file a motion for summary judgment. A trial
Case 3.2: Lewis v. Twenty-First Century Bean Processing
Twenty-First Century Bean Processing hired Anthony Lewis, a forty-seven-year-old African-American
male, for a warehouse position, subject to a thirty-day probationary period. At the end of the period, Twenty-
First Century fired him. Lewis filed a suit in a federal district court against the employer, alleging discrimination
The U.S. Court of Appeals for the Tenth Circuit affirmed. The evidence presented by Twenty-First Century
in support of the motion for summary judgment refuted Lewis’s claims. Any one of Lewis’s violations of
Twenty-First Century’s policies would have served as a legitimate reason for his termination, and he could not
show that this was a pretext for discrimination.
Notes and Questions
Suppose that a defendant is unable to find evidence to support his or her claim but does not
reveal this to the court and instead attempts to delay the proceedings to gain more time in the hope
that something will appear. What could happen to parties in litigation who might be reluctant to be
truthful to the court? Those involved in litigation who might be hesitant to respond to court requests in a less
To prepare for trial, parties obtain information from each other and from witnesses through the process
of discovery. These devices save time by preserving evidence, narrowing the issues, preventing sur-
prises at trial, and avoiding a trial altogether in some cases.
Case 3.3: Brothers v. Winstead
Phillips Brothers, LP, Harry Simmons, and Ray Winstead were the three members of Kilby Brake
Fisheries, LLC, a Mississippi catfish farm. Winstead operated a hatchery for the firm, but with only two
profitable years during his eight-year tenure, he was fired. He filed a suit in a Mississippi state court against
Kilby Brake and its other members, alleging a corporate freeze-out. The defendants filed a counterclaim of
theft. From an award to Winstead of more than $1.7 million, the defendants appealed.
The Mississippi Supreme Court reversed, and remanded the case holding that Kilby Brake was entitled to
discovery regarding Winstead’s outside income—the trial court's refusal to allow discovery precluded the jury
from finding out what happened to a certain load of fish, and this issue was central to both sides' theories of
the case.
Notes and Questions
What materials might reveal the information about Winstead’s finances that the defendants want
to know? The defendants sought information about Winstead’s finances. Financial documents of any sort
could reveal this information. These include tax documents, accounting records, bills of sale and other
receipts, contracts, and bank statements. Relevant expenditures could be shown by recurring bills or
acknowledgements of payment for utilities, mortgages, and other assessments. Even phone records, e-mail,
and paper correspondence could provide proof.
Does the defendants’ request for information regarding Winstead’s finances follow the guidelines
for discovery activity? Yes, the defendants’ request for information regarding Winstead’s finances follows
the guidelines for discovery activity. Generally, discovery is allowed regarding any matter that is not privileged
and is relevant to the claim or defense of any party. In this case, Kilby Brake claimed that Winstead sold the
firm’s fish and kept the income for himself. Winstead’s tax returns and other financial documents are relevant
to this claim.
1. Discovery Rules
2. Depositions
3. Interrogatories
5. Requests for Documents, Objects, and Entry upon Land
6. Requests for Examinations
7. Electronic Discovery
Information stored electronically, such as e-mail and other computer data, can be the object of a
discovery request. This may include data that was not intentionally saved by a user, such as
concealed notes and earlier versions.
a. E-Discovery Procedures
The Federal Rules of Civil Procedure deal specifically with the preservation, retrieval, and
production of electronic data.
b. Advantages and Disadvantages
E-mail can provide useful, and sometimes damaging, information. But preserving, providing,
and reviewing e-evidence can be time-consuming and expensive.
After discovery, a pretrial hearing is held to clarify the issues, consider a settlement, and set rules for
The Seventh Amendment to the U.S. Constitutionand most state constitutions guarantee the right to a
If a jury trial is possible and has been requested, the jury is selected. Prospective jurors undergo voir
dire (questioning by the attorneys to determine impartiality).
III. The Trial
The trial begins with the attorneys’ opening statements. These statements concern facts that they ex-
pect to prove during the trial.
 
About two-thirds of all adult Internet users access social-network sites, such as Twitter and Facebook.a
Not surprisingly, jury members continue to access social media networks even when judges forbid them to do
The Federal Judicial Center queried judges about whether they could know if jurors had violated a social
media ban. Almost 80 percent said, no. Someone would have to have access to a juror’s postings and then
inform the court. When former Baltimore Mayor Sheila Dickson was being tried for corruption, five members
Many judges ban anyone from tweeting or using any type of social media while a trial is in process and
they are in the courtroom. Reporters, in contrast, advocate the use of social media to provide “play-by-play”
events for the public as they unfold. Judges argue that reporters may end up “feverishly” tweeting on their
smartphones and that such concerted action would distract jurors and witnesses. Judges do not want trials to
turn into circuses.
For several years now, journalists in the United Kingdom can legally use Twitter accounts during court
proceedings without requesting permission. The Lord Chief Justicethe most senior U.K. judgeissued
Practice Guidance Notes specifically for the “use of live text-based forms of communications (including
Why is it so difficult for judges to effectively prohibit social media communications from the
courtroom? Today, just about everyone can have as many Twitter, LinkedIn, Facebook, Google+, or other
These rules ensure that evidence presented during a trial is fair and reliable.
1. Evidence Must Be Relevant to the Issues
2. Hearsay Evidence Is Not Admissible
Because the plaintiff has the burden of proving his or her case, the plaintiff’s attorney calls and examines
the first witness. This is direct examination. The defendant’s attorney cross-examines the plaintiff’s wit-
ness, after which there is an opportunity for redirect and recross-examinations.
1. Expert Witnesses
A party can present the testimony of an expert witnessone who, by virtue of education, training,
skill, or experience, has scientific, technical, or other knowledge beyond that of an average person.
Unlike other witnesses, experts can offer opinions and conclusions about evidence in their areas of
2. Potential Motion and Judgment
In a jury trial, after the plaintiff’s case is presented, the defendant can move for a directed verdict,
which the judge grants if he or she believes that the jury could not find for the plaintiff. If this motion
is denied, the defendant’s attorney presents the defendant’s case.
Motions for a Directed Verdict and Motions for Summary Judgment
Under the Federal Rules of Civil Procedure, a party may move for a directed verdict: (a) after his or her
opponent’s opening statement, (b) at the conclusion of the opponent’s case, or (c) at the close of all the
evidence. Basically, a directed verdict is proper if the party with the burden of proof has presented no or
insufficient evidence on a critical issue. A party with the burden of persuasion on an issue is rarely entitled to
a directed verdict, since the party bears the risk of nonpersuasion, and usually, reasonable jurors may differ
on what evidence to believe. Thus, even if a party with the burden of persuasion produces substantial
evidence of, for example, the other party’s negligence, so that the jury could reasonably conclude that the
other party was negligent, the motion will be denied, since the jury may also disbelieve the evidence.
A motion for a directed verdict is a procedural device available in both civil and criminal proceedings in
which the trial is by jury. Either side may move for a directed verdict whenever the other side rests--for
example, after the plaintiff presents his or her evidence, the defendant may move for a directed verdict; after
the defendant rests, the plaintiff may so move; after the plaintiff’s rebuttal; after the defendant’s rejoinder; and
so on. On determining that the evidence is such that reasonable jurors could not disagree and, thus, the
moving party is entitled to a favorable verdict as a matter of law, the judge grants the motion and takes the
case from the jury’s consideration.
A motion for summary judgment is a procedural device available only in civil proceedings. Either side
may move for summary judgment before the trial on any or all of the issues--the defendant at any time (for
example, when the pleadings do not allege a contradictory statement of material facts, and thus, there is
nothing for a jury to decide); the plaintiff not until after twenty days from commencement of the action or within
twenty days after an adverse party moves for summary judgment. On determining that there is no genuine
issue of material fact and the moving party is entitled to prevail on the issue or issues as a matter of law, the
judge grants the motion. If there is any doubt as to any of the facts necessary to determine the outcome of
the issue or issues, the court will deny the motion.
3. Defendant’s Evidence
The defendant’s attorney presents the evidence and witnesses for the defendant, after which there
is an opportunity for redirect and recross-examinations. At the end of the defendant’s case, either
party can move for a directed verdict. If this motion is denied, the plaintiff’s attorney can refute the
defendant’s case in a rebuttal, and the defendant’s attorney can meet that evidence in a rejoinder.
After both sides have rested, the attorneys present their closing arguments.
1. Jury Instructions
The jury is instructed in the law that applies to the case.
2. Verdict
The jury retires to consider a verdict, specifying the factual findings and the damages.
IV. Posttrial Motions
After the jury has rendered its verdict, either party may make a posttrial motion. The prevailing party usually
files a motion for a judgment in accordance with the verdict.
The non-prevailing party frequently files a motion for a new trial (which may be granted on the ground
that the jury verdict is the obvious result of a misapplication of the law or a misunderstanding of the
evidence, or on the grounds of newly discovered evidence, misconduct by the participants, or error by
the judge).
The nonprevailing party may file a motion for a judgment n.o.v. (or judgment as a matter of law), which
will be granted if the jury’s verdict was unreasonable ad erroneous.
V. The Appeal
To appeal, the appellant files the record on appeal, which contains the pleadings, a trial transcript,
copies of the exhibits, the judge’s rulings, arguments of counsel, jury instructions, the verdict, posttrial
motions, and the judgment order from the case below. The appellant files a brief, which contains state-
ments of facts, issues, applicable law, and grounds for reversal. The appellee files an answering brief.
The court reviews these records, the attorneys present oral arguments, and the court affirms the lower
court’s judgment or reverses it and remands the case for a new trial.
If this court is an intermediate appellate court, the losing party can file a petition for leave to appeal to a
higher court. If the petition is granted, the appeal process is repeated.
VI. Enforcing the Judgment
A judgment may not be enforceable because a defendant may not have sufficient assets to pay it. There are,
however, options available to a party to enforce a judgment. Those discussed include the collection of money
or the transfer or property to satisfy an award of damages.
1. To impress on students one of the reasons for the legal system’s observance of procedural technicalities,
emphasize the finality of courts’ rulings, that people’s lives are often changed by a court’s decision. If it were
the students’ person or their property hanging in the balance, would they prefer a series of well-
defined steps or a less formal process? What if the decision reached in the less formal process was
not binding?
2. Emphasize the factorseconomic and non-economicin deciding whether or not to pursue legal action.
Are they prepared to pay for going to court? Engaging in legal action can be expensive. A good attorney
may charge as much as $300 an hour, or more, plus expenses, and more for trial work. Do they have the
patience to pursue a case through the judicial system? Court calendars are crowded. In some cases, it
may be years before the matter comes to trialand then there is the appeal. Is there an alternative to legal
action? A settlement might be preferable to a suit, even if the former represents a lesser dollar amount, once
their bottom lines are adjusted for future expenses, time lost, aggravation, and so on. Many controversies
lend themselves to faster, less expensive methods of dispute resolution. Students should also be reminded
that a decision should only be made with the advice of a competent legal professional.
3. What do your students think that jurors discuss when they retire to consider a verdict? What
should they discuss? Research indicates that discussion in the jury room focuses primarily on what
procedures the jury should follow, their opinions about the case, and relevant personal reminiscences. Much
less time is spent discussing testimony from the trial and the judge’s instructions. In many cases, jury verdicts
are not different from the decisions that the judges would have made. Studies reveal that 80 percent of the
time, the court agrees with the jury’s verdict. In civil cases, judges and juries almost always agree; in criminal
cases, a jury is more likely to acquit a defendant than a judge is.
4. All students have different requirements in regards to the amount of study time that they need to prepare
for a class or an exam. Everyone faces the same temptation: putting off until tomorrow what should be done
today. Your students might be reminded that the best remedy for this temptation is not to give into it but to
remain disciplined. They might simply set up a schedule and make every effort to stick to it to achieve their
best results.
Cyberlaw Link
Many jurisdictions have implemented online filing systems, and some have set up cyber courts in which
part, or all, of a case may be presented online. What issues are likely to occur in these circumstances?
1. What are the first steps in bringing a legal action? A complaint (or petition or declaration) is filed with the
2. What are the defendant’s possible responses? The defendant files a motion to dismiss the complaint,
3. What are the contexts in which pretrial motions may be filed, and what are those motions? If the
4. What is discovery? Discovery is the process through which parties prepare for trial by obtaining information
from each other and from witnesses. What devices are used to obtain this information? Discovery can involve
5. What are the advantages of discovery? Discovery saves time by preserving evidence, narrowing the
6. How might a large corporation defend against allegations that it intentionally failed to preserve
electronic data that a party is attempting to review as part of a discovery request? A corporation might defend
7. What takes place at a pretrial conference? A pretrial conference is an informal discussion to plan the
8. Briefly, what are the steps in the course of a trial? If the right to a jury trial has been requested, the jury is
selected. Prospective jurors undergo voir dire. Once a jury is chosen, the trial begins with the parties’ opening state-
9. Who can appeal from a trial court’s decision? Either partythe party against whom the judgment of the
10. What is the primary consideration in deciding whether to settle a dispute or take the dispute to court?
Ask your students to visit a court, observe the proceedings, and report their observations. Ask them to find
out how long it might be before a petition filed in the court would be granted a hearing (that is, how clogged is the
court’s calendar) and to what any delay might be attributed.
Footnote 10: Yvette Downey called Allegiance Pest Control about bugs in her home. Edward Gordinier, a
plaintiffs named Gordinier as a witness. Bob’s argued that he could not testify about the source of the bugs because
the plaintiffs did not file a written report setting out his testimony and qualifications as an expert. The plaintiffs
countered that he had not been retained as an expert. The court limited Gordinier’s testimony to the factsno
opinions—and granted a judgment in Bob’s favor. The Downeys appealed.
In Downey v. Bob’s Discount Furniture Holdings, Inc., the U.S. Court of Appeals for the First Circuit
reversed and remanded for a new trial. Gordinier should have been allowed to offer his opinion. A written report is
If Gordinier were not licensed or experienced, would his testimony be admissible? Possibly, but his
credibility might have less weight, particularly if the basis for his statements, or his articulateness, or his demeanor,
indicated a lack of trustworthiness.
Hearsay is literally what a witness says he or she heard another person say. Suppose Gordinier could
testify only that Downey told him the bugs came from the bedroon set. What makes the admissibility of such
evidence potentially unethical? Hearsay is inadmissible as evidence in a suit when it is offered to prove the truth of
the matter asserted because it has dubious trustworthiness. When a witness repeats what another person has said,
there is a reasonable likelihood that that he or she might misinterpret the statements. There is no opportunity to verify
the accuracy of the statements because the declarant is not present in court to be questioned. These features make
the use of hearsay potentially unethical.
Why can only an expert testify about the source of a bedbug infestation? Only experts can testify about
their opinions or conclusions. Ordinary witnesses are confined to testifying about the facts of a casethat is, what
they personally observed. The reason for this is simple, experts have knowledge or experience beyond that of an
ordinary person, which enables them to make informed opinions about a particular situation. The law seeks to make
sure that the information presented in courtespecially in front of a juryis at least somewhat reliable. In the case
Is it fair to require plaintiffs who hire expert witnesses to pay for and submit written reports that
specify what the experts will say at trial? Why or why not? Yes, it is fair that plaintiffs have to pay for and
produce reports for the experts that they intend to call as witnesses at trial. After all, the rule applies not only to
plaintiffs but also to defendants who intend to have expert witnesses testify on their behalf at trial. It makes sense that
if either plaintiffs or defendants need experts to establish their claims, they should have to pay for and produce
reports of what the experts will say. Because both sides have to pay for and produce written reports specifying what
their experts will say at trial, the rule is fair.
Expert Testimony
Cases considering the written report requirement for expert testimony include the following.
Goodman v. Staples The Ofice Superstore, LLC, __ F.3d __ (9th Cir. 2011) (store patron was required to
disclose written reports for her treating physicians in her personal injury action against store when the
physicians were specifically retained to render expert testimony beyond the scope of the treatment rendered,
and, to form their opinions, the physicians reviewed information provided by patron's attorney that they had
not reviewed during the course of treatment).

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