Chapter 2: Courts and Dispute Resolution

Week 2. Chapter content to be written. The description below sets out what the chapter will cover.

This chapter explains where business disputes are decided and how they get there. Students learn that before a court can hear any case on its merits, three threshold questions have to be answered: does this court have power over the subject, over the parties, and is this the right location? From there, the chapter follows a single lawsuit from start to finish, then looks at the alternatives most businesses prefer to a trial.

2.1 Planned Sections

Jurisdiction and Venue. Subject-matter jurisdiction, personal jurisdiction, and long-arm statutes; federal question and diversity jurisdiction; exclusive and concurrent jurisdiction; venue; and standing. Jurisdiction in cyberspace, including the "sliding scale" approach for websites and the minimum-contacts test as applied to online sellers.

The State and Federal Court Systems. Trial courts, intermediate appellate courts, and courts of last resort. Specialized courts such as small claims, probate, and bankruptcy courts. How a case reaches the U.S. Supreme Court through a writ of certiorari.

Civil Procedure Step by Step. Hiring an attorney, the complaint and answer, motions to dismiss, discovery (depositions, interrogatories, and e-discovery), pretrial motions and summary judgment, jury selection, the trial itself, post-trial motions, appeal, and enforcing a judgment. A running hypothetical business dispute ties each stage together.

Alternative Dispute Resolution. Negotiation, mediation, and arbitration (binding and nonbinding), the Federal Arbitration Act, and how courts treat arbitration clauses in consumer and employment contracts. Hybrid forms (med-arb, summary jury trials), online dispute resolution, and how to draft a sound dispute-resolution clause.

2.2 Featured Case

International Shoe Co. v. Washington, 326 U.S. 310 (1945). International Shoe was a Delaware corporation based in Missouri. It had no office in Washington State but employed salespeople there who showed samples and sent orders back to St. Louis. When Washington sued to collect unpaid unemployment-fund contributions, the company argued it was not "present" in the state and could not be sued there. The Supreme Court disagreed. It held that a state may exercise personal jurisdiction over an out-of-state defendant that has "certain minimum contacts" with the state, as long as the lawsuit does not offend "traditional notions of fair play and substantial justice."

Why this case: The minimum-contacts test is still the starting point for deciding where a business can be sued, including for online sales. Students can apply a 1945 rule to modern e-commerce right away.

Discussion question: A small online shop in Ohio sells one handmade item to a buyer in Oregon through its website. Can the buyer sue the shop in Oregon?

2.2.1 Short Case Summaries

• Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). The "sliding scale" test for websites, from passive sites to interactive sites that do business. (Jurisdiction in cyberspace)
• AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). The Federal Arbitration Act preempts state rules that would invalidate class-action waivers in consumer arbitration agreements. (Alternative dispute resolution)

2.3 Planned Features

• A flowchart of a civil lawsuit from complaint to judgment.
• An exercise in which students decide whether a federal court can hear a set of fact patterns.
• Key terms: jurisdiction, venue, standing, diversity of citizenship, complaint, answer, discovery, summary judgment, verdict, appeal, mediation, arbitration, award.