Basis of American Law - Constitutions Part 1

Study Guide Business Law Chapter 1 Basis of American law – Constitutions  “The Constitution” usually refers to the United States Constitution, which governs entire U.S.  All laws in the U.S. must comply with the U.S. Constitution since it is “the supreme law of the land” - Any statute (federal or state) that conflicts with U.S. Constitution is unconstitutional (invalid). - Any state statute that conflicts with federal statute is preempted (invalid).  However, each state has its own state constitution, which often provides additional rights or an alternative way to have rights; e.g., establishment of religion clause in recent “Ten Commandments” case in Oklahoma.  Constitutions are usually generally worded and can even be vague.  Two purposes for any constitution: - Create government powers/structure. - Guarantee individual rights. Basis of American law –Statutes     Laws created by federal, state and local legislatures. Also called ordinances, regulations and codes. Often very detailed. Many areas of law governed by statutes. Basis of American law- Administrative Law  Decisions and rules of federal, state and local administrative agencies.  Important since many laws require a hearing by an administrative agency before being able to file a case in court.  Since administrative agencies specialize in a certain field ( e.g., IRS, DMV), courts often give great deference to administrative agency’s decision so take administrative proceedings seriously. Common Law –History  1066 – Norman Conquest  1215- Magna Carta  America’s legal system is based on England’s common law system brought to the colonies.  Civil law is also found within state legal traditions.  Common Law Exceptions- Louisiana and southwestern states (including California) Basis of American law- Common or Case Law  U.S. legal system is a “common law” system.  Case LW- Judge is required to interpret constitutions, statutes, regulations and/or prior cases (“precedent”) in order to make decision of current dispute.  Stare Decisis (“ to stand on decided cases”) ordinarily requires judges to follow past decisions, which facilitates predictability and stability in legal and business matters.  Binding Authority- a source of law a court must follow when deciding a case/  Public Policy  Common Law only governs those areas not covered by statutory or administrative law.  Restatements – Secondary sources that summarize the common law rules followed by most states. Ex: Restatement of the Law of Contracts. Sources of American Law- Summary     Constitutional Law Statutory Law Administrative Law Case Law and Common Law Doctrines Equitable Maxims  General statements of what is fair and just.  While these are statements of equity, laws often based on them as well. Ex: p.7  exhibit 1-2 - Focus on last example- “Equity aids the vigilant, not those who rest on their rights” which is the basis for statute of limitations and laches. Categories of law  Substantive law vs. procedural law - Substantive law defines legal rights; most would just call this “the law.” - Procedural law provides the methods for prosecuting or defending legal rights.  Public law vs. private law - Public law involves matters of public interest. - Private law pertains to the parties to a dispute only.  Civil law vs. criminal law - Civil law relates to duties between individuals, businesses and/or government; usually only money involved. Criminal law relates to wrongs against society and is investigated, prosecuted and administered by government.  Law vs. equity - Action at law is when plaintiff is seeking money; right to jury trial. - - Action in equity involves non-monetary relief; cannot have jury trial (specific performance, rescission, injunction). Legal Reasoning –Brief a Case  IRAC - Issue - Rule - Analysis - Conclusion Legal Opinions  Most decisions by reviewing or appellate courts are contained in written opinions - Court’s reasons - Rules of law that apply - Judgment Finding Case Law  Federal Cases - U.S. Supreme Court and Federal Courts  State Cases - State Supreme Court and state appellate courts (usually not trial level courts)  Published Opinions - Citable  Unpublished Opinions - Non-Citable Parties in a Civil Lawsuit  Parties in the Trial Court - Plaintiff - Defendant - Cross-complainant - Cross defendant - Party can be more than one; examples include:  Business dispute- partners suing each other.  Construction defect case- HOA, general contractor and sub-contractors suing each other based on problems at a housing development.  Parties on Appeal - Appellant. - Appellee or respondent. Possible cross-appellant, cross appellee or cross-respondent (if crossappeal) but this is rare since usually clear winner and loser in trial court. Some terminology for a civil lawsuit    Attorney or lawyer (synonymous words) –person licensed to practice law. Lawsuit (aka suit, claim or case) –the litigation or court process. Judgment, order or ruling are all decisions by a court; order or ruling usually preliminary; judgment is final. Chapter 2 / 3 Judicial Branch of the Government Interprets the Law Reviews the laws and actions of the other 2 branches of government (Executive & Legislative)  Marbury v. Madison- 1803 - Case decided by US Supreme Court - - Federal and State Courts have the power to: o Determine the law and o Decide between conflicting laws ( Constitution or federal/state law) o This is the “… very essence of judicial duty.” Basic Judicial Requirements - Jurisdiction Venue Standing to Sue Introduction to Jurisdiction  “Jurisdiction”- the power of a court to make a decision (to speak the law) - Personal Jurisdiction (over person or property) - Subject Matter Jurisdiction  The merits of the case (who should win) are not relevant when determining whether a court has jurisdiction.  If a court acts without jurisdiction, any such action (e.g., judgment, order or other ruling) is void and can be set aside by subsequent motion in trial court or reversed by appellate court. Personal Jurisdiction  “in personam” Jurisdiction = Court’s power to decide case involving certain party –is it fair for the court to proceed against this party (due process)? - General Jurisdiction = Jurisdiction for all matters. - Specific Jurisdiction = Jurisdiction for matters arising out of activities conducted within state.  “Court will have personal jurisdiction when: -  Personal Jurisdiction over a Corporation o o o  Presence –served with summons and complaint while physically present in the forum jurisdiction. Residence –person or business may be sued in their state of permanent residence. Consent –Party can voluntarily appear and submit to jurisdiction. Minimum Contacts -Out-of-state defendants based on activities that took place within the state. Corporations are considered legal persons under the law. Same principles that apply to individuals apply to corporations. Corporation Place of Incorporation = Resident Location of Principal Office = Resident Minimum Contacts Test Minimum Contacts - Under State’s Long Arm Statute (CA Code of Civil Procedure, §410.10.) - Parties “could reasonably expect to be haled into court” in that state and it does “not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington326 U.S. 310 (1945). o Defendant’s activity in the state is continuous and systematic and the cause of action is related to that activity. (“Specific Jurisdiction”) o Sporadic or casual activity (single activity) is not enough when the cause of action is not related to the activity within the state. o State may assert jurisdiction over a defendant whose continuous activities in the state are unrelated to the cause of action sued upon when the defendant’s contacts are sufficiently substantial and of such a nature as to make the state’s assertion of jurisdiction reasonable. (“General Jurisdiction”) o Sporadic or single activity is enough for personal jurisdiction when the cause of action arises out of that activity or act, however Defendant must have “purposefully directed” activities at residents of forum state or “purposefully availed” itself of benefits and protections of laws of forum state . (“Specific Jurisdiction”) Worldwide Volkswagen Corp. v. Woodson 44 U.S. 286 (1980).  Minimum Contacts - Stream of Commerce o Voluntarily or purposefully directed their actions towards the forum state. Asahi Metal Industry Co. Ltd. V. Superior Court 480 U.S. 102 (1987). - Internet o Enter into contracts with residents of other states involving knowing and repeated transmission of information over the internet. o More than just a passive website. o Zippo Manufacturing Co. v. Zippo Dot Com, Inc. 952 F.Supp. 1119 (1997). Cyberspace Jurisdiction  Sliding Scale Standard (Zippo Manufacturing Co. v. Zippo Dot Com, Inc. 952 F.Supp. 1119 (W.D.Pa 1997.) - Substantial business conducted Some interactivity (maybe, depending upon circumstances) Passive advertising not enough Personal Jurisdiction  Personal Jurisdiction over Property (“in rem”) - A Court may exercise jurisdiction over property located within its boundaries even though the people are not. o Dispute regarding ownership of real property (i.e., land, house) o Dispute regarding ownership of personal property (i.e.,boat, airplane) Subject Matter Jurisdiction  Subject matter jurisdiction is the power of a court to decide a particular type of case; e.g., contract dispute, violation of free speech rights under federal or state constitutions, violation of federal, state or local statute.  California state courts are courts of “general” jurisdiction since they can decide almost all types of cases unless federal statute says only federal court can decide the certain type of case.  Federal courts are courts of “limited” jurisdiction since they are limited in the types of cases they can decide. Must be either: Federal question –plaintiff’s case must raise issue of federal law; OR - Diversity of Citizenship– o Case based on state law claims only if no common state of “domicile” between any plaintiff and any defendant –domicile is individual’s state of residence or business’ place of incorporation and principal place of business; and o Dollar amount must exceed $75,000. - Concurrent or Exclusive Jurisdiction Multiple courts may have jurisdiction over a case (“concurrent” jurisdiction), but certain cases can be heard in a specific court system only (“exclusive” jurisdiction); see Exhibit 2-1 on page 31.  Examples - Breach of contract case where plaintiff lives in Fullerton and defendant lives in Arizona and plaintiff suing for $85,000. - Breach of contract case where plaintiff lives in Fullerton and defendant lives in Arizona and plaintiff is suing for $51,000. - Employment discrimination that happened in Fullerton.  - Violation of free speech rights that happened in Fullerton. Patent infringement case Corporate bankruptcy case Basic Judicial Requirements, Cont.  Venue -  Concerned with the most appropriate location for the trial. Generally, proper venue is where the injury occurred. Standing - A party must have “standing” to bring a lawsuit. o Harm o Causation o Remedy Civil Lawsuit Chronology  Motion for summary judgment (“MSJ”) –granted only if no triable issue of material fact and moving party entitled to judgment as a matter of law; therefore, difficult to win. Introduction to Alternative Dispute Resolution (“ADR”)     ADR is just that –alternatives to resolving a dispute without the need for a court, judge or jury to make the decision for you. While the American court system provides a setting for dispensing justice in a fair way, the reality is that the vast majority of legal disputes are resolved out of court. In fact, many disputes resolved without even filing a lawsuit. Three major types of ADR are–negotiation, mediation, and arbitration. Why Use ADR Instead of the Court System?  Time and expense –a result in ADR is usually achieved in less time and with less expense than result in court.  Flexibility/control –parties can use their own rules (substantive and procedural) in ADR; court has many rules that are imposed on all participants.  Certainty–settlement permits parties to know their result; plaintiff can plan on receiving certain amount of money and defendant can budget for paying certain amount of money.  Emotional cost –protracted court proceedings can exact heavy emotional cost; sort of like being in a bad relationship.  Cost to business –instead of working to grow your business, you will be working on a lawsuit, which is not a money-making venture.  Better outcome? – some maintain that the result obtained due to early settlement can have same or better economic value than result after trial. How to Voluntarily Get to ADR  Most parties choose ADR to attempt to resolve their disputes; ordinarily, ADR cannot be forced on the parties though there are exceptions.  The ADR agreement may be made before or after any dispute arises.  Note that some parties may not realize they are agreeing to ADR in predispute agreement though ADR clauses are common in employment, real estate, and many other types of contracts; e.g., contract to buy car from dealer usually includes arbitration agreement. How to Involuntarily Get to ADR  Court can order parties to ADR - Court can order parties to nonbinding ADR –negotiation, mediation, and even nonbinding arbitration; order can be formal or informal. Court may be asked by a party to an arbitration agreement to enforce it by ordering the parties to go to arbitration instead of court to resolve their dispute (motion to compel arbitration made in court).