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Chapter 3
The American Legal System
Introduction
Chapter Three addresses these questions:
• How do people know whether a particular court has jurisdiction over a case, or the power to
hear the case?
• How do people know which trial court will hear the case?
• Who are the major actors in the legal system, what do they do, and how does each actor relate
to the business community?
• What does it mean to say there is an adversary legal system in the United States?
• What are the steps in the civil litigation process? What role do businesspeople play in this
process?
• What global considerations are relevant when the structure of the American legal system is
considered?
Chapter Three is important because it explains basic principles about the American legal system
that students will refer to throughout the course. For instance, it is important for them to understand
Achieving Teaching Excellence
Recitation and Discussion
Most instructors who encourage students to talk in class believe they are promoting class
discussion. An article by J.D. Dillon is a reminder that it is difficult to engage in class discussion,
and that many instructors are not promoting discussion. Instead, they might be encouraging
recitation. This section explains the difference, and shows how instructors know whether they are
promoting discussion. This distinction is important because it relates to higher-and lower-order
thinking skills.
Dillon explains that recitation means that students “recite” what they know or are coming to
know through questioning. Instructors review, drill, and quiz. Dillon writes that discussion means
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that teachers and students “discuss” what they don’t know. He writes that discussion “involves
longer exchanges, exchanges among students and also between teacher and student, and questions
soliciting students’ thoughts, not just the right answers.”
Think about what instructors do in their own classes and see whether they are discussing
material with their students. How will instructors know? Dillon writes that when an instructor
engages in discussion, the teacher plans, but students account for 40 percent of the talk. That’s a
Chapter Overview, Topic Outline, and Discussion Questions
Chapter Overview
All people are subject to both state and federal laws. Under the United States’ dual court system,
all lawsuits must be brought in either the federal or the state court system. In some cases, an action
may be brought in either. Thus, it is important that those in the business community understand how
the decisions are made as to which court system can resolve their grievances. This chapter first
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Topic Outline
I. Jurisdiction
A. Original vs. Appellate Jurisdiction
B. Jurisdiction over Persons and Property
1. World-Wide Volkswagen Corp. v. Woodson, District Judge of Cook County
2. In Rem Jurisdiction
C. Subject Matter Jurisdiction
1. State Jurisdiction
3. Concurrent Federal Jurisdiction
a. Hertz Corporation v. Friend
II. Venue
III. The Structure of the Court System
A. The Federal Court System
1. Federal Trial Courts
3. Court of Last Resort
B. State Court Systems
2. Intermediate Courts of Appeal
3. Courts of Last Resort
IV. The Actors in the Legal System and Their Relationship to the Business Community
A. The Attorney
2. Additional Functions of the Attorney
4. The Power of Judicial Review
B. The Jury
2. Grand Juries
V. The Adversary Process
A. Criticisms of the Adversary System
VI. Steps in Civil Litigation and the Role of Businesspersons
A. The Pretrial Stage
1. Informal Negotiations
3. Service of Process
5. Pretrial Motions
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6. Discovery
7. Pretrial Conference
B. The Trial
1. Jury Selection
a. J.E.B. v. Alabama, ex rel. T.B.
3. Plaintiff’s Case
5. Conference on Jury Instructions
7. Posttrial Motions
C. Appellate Procedure
D. Class Actions
1. Wal-Mart Stores Inc. v. Dukes
VII. Global Dimensions of the American Legal System
VIII. Summary
Discussion Questions for Chapter Three
1. Explain the relationships between original and appellate jurisdiction.
One relationship between the two is that courts with original jurisdiction do their work before
courts of appellate jurisdiction. Another relationship is that courts with appellate jurisdiction
2. Explain the relationships between in personam jurisdiction and subject matter jurisdiction.
A court must have both kinds of jurisdiction before it has the power to decide a case. Before the
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3. Explain why someone might think this statement is true: Given the subject matter of state and
federal courts, it is not surprising that more cases are heard by state courts than federal courts.
The state court system has subject matter jurisdiction over all cases not within the exclusive
jurisdiction of the federal court system. Only a very limited number of cases fall within the
exclusive jurisdiction of the federal courts. The cases heard under exclusive federal jurisdiction
4. Explain why someone might think this statement is true: The attorney–client privilege is an
important feature of the adversary system.
5. Evaluate this statement: Trial court judges and appellate court judges have very similar job
descriptions.
6. Why is the jury an important part of our adversary system?
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7. Evaluate this statement: The adversary system is flawless.
Many people criticize the adversary system and point out its flaws. They argue that because
each side is searching only for evidence that supports its position, a proponent who discovers
8. Review the steps in civil litigation. Why is the discovery stage especially important?
Answers to Critical Thinking about the Law Questions, Case Summaries,
Answers to Review Questions, Review Problems, and Case Problems
Suggested Answers to Critical Thinking about the Law Questions
1. One person might be talking about in personam jurisdiction (jurisdiction over the person),
2. Numerous procedural requirements further the value of security. Procedural requirements
3. Individualism is furthered by the adversary system. Individualism is the idea that people have
what they have based upon desert. No one can take away what people have because they
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Case Summary—World-Wide Volkswagen Corp. v. Woodson, District Judge of Cook County
This case is in the book to show how long-arm statutes are used to gain in personam jurisdiction
when an out of state defendant committed a tort within a state. The case is famous for focusing on
the phrase “minimum contacts.”
The issue before the Supreme Court of the United States was whether, consistently with the Due
Process Clause of the Fourteenth Amendment, an Oklahoma court may exercise in personam
Case Summary—Hertz Corporation v. Friend
This case is in the book to show how corporate citizenship can be determined by applying the
“nerve center test.” It established that a corporation is the citizen of the state where its decision
making hub is situated.
Plaintiffs, California citizens, sued Hertz Corporation for state law violations in a California
State Court. Defendant Hertz filed a motion to remove the case to federal court on diversity of
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Suggested Answers to Critical Thinking about the Law Questions
1. In addition to fairness, Justice Breyer recognized the fact that a perfect test that would satisfy
2. There are three aspects that highlight the ambiguity of the nerve center test. It would be difficult
to ascertain the portion of business activity in the region as it comprises of a number of factors.
3. The reasoning that the light in which a corporate would be seen depends on where the case
would be tried. For instance, if the case were to be tried in the city, people would be
Case Summary—J.E.B. v. Alabama, ex rel. T.B.
This case extended the equal protection guarantee to cover gender discrimination in jury
selection. On behalf of T.B., the unwed mother of a minor child, the State of Alabama filed a
complaint for paternity and child support against J.E.B. A panel of 12 males and 24 females was
called by the court as potential jurors. After the court removed three individuals for cause, only 10
males remained. The state used its peremptory challenges to remove nine male jurors and J.E.B.
removed the tenth, resulting in an all-female jury. The court rejected J.E.B.’s objection to the
gender-based challenges, and the jury found J.E.B. to be the father.
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Suggested Answers to the Critical Thinking about the Law Questions
1. Justice Blackmun expands the application of Batson (which prohibited race-based peremptory
challenges) to gender-based peremptory challenges. He makes the decision because with respect
2. Respondent suggests that gender discrimination in this country has never reached the level of
discrimination against African Americans, so gender discrimination is tolerable in the
courtroom. To compare levels of discrimination, students could start with the number of people
3. Justice Scalia might have agreed with the majority if the facts had been such that the case
focused on excluding women from the jury. Here, men were excluded, so he can’t figure out
Wal-Mart Stores Inc. v. Dukes
This case illustrates how difficult it sometimes is to meet the standard for class certification.
Three current or former Wal-Mart employees represented 1.5 million claimants who alleged that the
company discriminated against them on the basis of sex. They claimed that local managers’
discretion over pay and promotions is exercised disproportionately in favor of men, leading to an
unlawful disparate impact on female employees, and they sought injunctive and declaratory relief,
punitive damages, and back pay.
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The district court certified the class, and a divided appellate court upheld the certification. The
majority concluded that respondents’ evidence of commonality was sufficient to “raise the common
question of whether Wal-Mart’s female employees nationwide were subjected to a single set of
Answers to Review Questions
3-1. Jurisdiction is the power of the courts to hear a case and render a decision that is binding on
the parties. The following are the different types of jurisdictions:
• Original jurisdiction—a court of original jurisdiction, usually referred to as a trial
court, has the power to initially hear and decide a case. It is in the court of original
jurisdiction that a case originates.
• Subject matter jurisdiction—this is the power of a court to hear certain kinds of cases.
Subject matter jurisdiction is extremely important because if a judge renders a decision
in a case over which the court does not have subject matter jurisdiction, the decision is
void or meaningless.
o State jurisdiction—this applies to cases that may be heard only in the state
system. Suits for breach of contract, product liability actions, and divorces are
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3-2. Concurrent jurisdiction applies to cases that may be heard in either the federal or the state
court system. The two situations that cause the state and federal courts to have concurrent
jurisdiction are:
• Federal questions cases—if a case requires an interpretation of the U.S. Constitution, a
3-3. Once it is determined which court system has the power to hear the case, venue determines
3-5. The attorney–client privilege provides that information furnished by a client to an attorney in
confidence, in conjunction with a legal matter, may not be revealed by the attorney without
3-6. The work-product doctrine provides that formal and informal documents prepared by an
attorney in conjunction with a client’s case are privileged and may not be revealed by the
Answers to Review Problems
3-7. Hasbro can remove the case if it is one of concurrent jurisdiction. The issue is whether
diversity of citizenship can be established. The amount in controversy is more than $75,000.
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3-8. In the J.E.B. v. Alabama case, the United States Supreme Court held that intentional
3-9. The issue here is whether Marx Corporation has sufficient minimum contacts with the state
3-10. This question is a venue question. The statutory laws in Nevada would need to be looked into
3-11. If the lawyer knows that the client is about to commit a crime, the lawyer may reveal
3-12. No, Watson cannot appeal to the U.S. Supreme Court. This case focuses on tort law, which is
Answers to Case Problems
3-14. In this case, the plaintiff’s appeal was reconsidered and the case was taken forward. The
3-15. The Educational Credit Management Corporation’s appeal was successful and the first
3-16. The court denied the defendant’s motion to dismiss the claim due to lack of personal
jurisdiction. The court disagreed with the defendant Gooding’s characterization of its
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3-17. The court dismissed all the constitutional claims made by EJS. The U.S. 6th Circuit Court
3-18. The court rejected the debtor’s motion for change of venue. The court noted that a case
under Title 11 may be commenced in the district in which the domicile, residence, principal
3-19. The court dismissed the action without prejudice for Advance’s failure to properly plead the
citizenship of the parties. Although Advance properly identified itself as a limited liability
3-20. The United States Supreme Court concluded that the federal courts do not have exclusive
jurisdiction in cases that involve patent law, particularly when the patent issue is not the
Thinking Critically about Relevant Legal Issues
1. The issue would have to be framed in order to determine if in fact elections keep judges who do
2. The author assumes that judges are not looking for personal gain, and that those who are will
4. The opposition here would be that an election takes away from objectivity and makes a judge
make popular decisions, which at times may not be the right one. This essay would explore the
