Ch03 Civil Litigation and Alternative Dispute Resolution.docx

CHAPTER 3 – CIVIL LITIGATION AND ALTERNATIVE DISPUTE RESOLUTION A. Chapter Introduction Chapter 3 discusses the process of bringing, maintaining, and defending a lawsuit, known as litigation. The methods of alternative dispute resolution, which are being used more and more to resolve commercial disputes, are also discussed. After completion of this chapter, students should be able to: Describe and compare the state court systems and the federal court system. Apply a cost-benefit analysis for bringing and defending a lawsuit. Explain how a justice is chosen for the U.S. Supreme Court. Explain subject matter jurisdiction and venue of federal and state courts. Describe how jurisdiction of courts applies to Web site operators. Describe the pretrial litigation process. Describe how e-filings are used in court. Describe how a case proceeds through trial. Describe how a trial court decision is appealed. Explain the use of arbitration and other nonjudicial methods of alternative dispute resolution. B. Instructional Ideas 1. Ask the students if any of them have been personally involved in litigation and, if so, what were their recollections of the process. 2. Show your jurisdiction’s statute of limitations and get student opinion on whether the time limits are too long, too short, or just right. 3. Create an example of a lawsuit, perhaps with celebrities, in which the defendant would file a cross-claim against the plaintiff, with emphasis on how the defendant becomes plaintiff-like while the plaintiff becomes defendant-like. 4. Discuss the subject of frivolous litigation and ask the class what they think should make a lawsuit frivolous, going back to the John Stossel show suggested in chapter 1 of the instructor’s manual. Ask the students whether the Johnson & Johnson suit (the flammable, lamb costume case) discussed in the chapter, is an example of something that should be considered frivolous. 5. Discuss the advantages of the virtual courthouse. 6. Explain how summary judgment works, including showing the summary judgment rule for your jurisdiction. Summary judgment is a difficult concept to grasp. 7. Explain how ADR works, and contrast it with traditional litigation, highlighting its advantages and disadvantages. 8. Bring in a credit card agreement or other contract and show the class where the arbitration clause is located in the fine print, explaining the significance of it. 9. Have the class engage in a mediation role play by breaking the students in groups of three or five (depending on whether you want the parties to be represented by counsel). Give them some background facts on a legal dispute that could be settled through mediation. Have the mediators work with the parties for about 30-45 minutes, followed by a class discussion on whether and how settlements were reached. C. Video Recommendation(s) Two movies are recommended for this chapter, although there are many others that could be as well. The Rainmaker and A Civil Action, are excellent films on civil litigation and, while supremely entertaining, are also quite informative in the areas of discovery. The Rainmaker has a happy ending, while A Civil Action does not. Some of the fascinating components of A Civil Action are the focus on the costs of the litigation, the negotiations that take place, and a look at fair but tough defense tactics. The Rainmaker has many funny moments. D. Chapter Outline Pleadings A. Pleadings: Paperwork that initiates and responds to a lawsuit. Pleadings include: 1. Complaint. Filed by the plaintiff with the court and served with a summons on the defendant. It sets forth the basis of the lawsuit. 2. Answer. Filed by th e defendant with the court and served on the plaintiff. It usually denies most allegations of the complaint. 3. Cross-complaint. Filed and served by the defendant if he or she countersues the plaintiff. The defendant is the cross-complainant, and the plaintiff is the cross-defendant. The cross-defendant must file and serve a reply (answer). 4. Intervention. A person who has an interest in a lawsuit may intervene and become a party to the lawsuit. 5. Consolidation. Separate cases against the same defendant arising from the same incident may be consolidated by the court into one case if it would not cause prejudice to the parties. II. Discovery A. Discovery: The pre-trial litigation process for discovering facts of the case from the other party and witnesses. Discovery consists of: 1. Depositions. Oral testimony given by a deponent, either a party or witness. Depositions are transcribed. 2. Interrogatories. Written questions submitted by one party to the other party. They must be answered within a specified period of time. 3. Production of Documents. A party to a lawsuit may obtain copies of all relevant documents from the other party. 4. Physical and mental examinations. These examinations of a party are permitted upon order of the court where injuries are alleged that could be verified or disputed by such examination. III. Pretrial Motions A. Dismissals and Pretrial Judgments 1. Motion for judgment on the pleadings. Alleges that if all facts as pleaded are true, the moving party would win the lawsuit. No facts outside the pleadings may be considered. 2. Motion for summary judgment. Alleges that there are no factual disputes, so the judge may apply the law and decide the case without a jury. Evidence outside the pleadings may be considered (e.g., affidavits, documents, depositions). IV. Settlement Conference A. Settlement Conference: Conference prior to trial between the parties in front of the judge to facilitate the settlement of the case. Also called pretrial hearing. If a settlement is not reached, the case proceeds to trial. V. The Trial A. Phases of a Trial 1. Jury Selection. Done through a process called voir dire. Biased jurors are dismissed and replaced. 2. Opening statements. Made by the parties’ lawyers. Are not evidence. 3. The plaintiff’s case. The plaintiff bears the burden of proof. The plaintiff calls witnesses and introduces evidence to try to prove his or her case. 4. The defendant’s case. The defendant calls witnesses and introduces evidence to rebut the plaintiff’s case and to prove affirmative defenses and cross-complaints. 5. Rebuttal and rejoinder. The plaintiff and defendant may call additional witnesses and introduce additional evidence. 6. Closing arguments. Made by the parties’ lawyers. Are not evidence. 7. Jury Instructions. Judge reads instructions to the jury as to what law they are to apply to the case. 8. Jury Deliberation. Jury retires to the jury room and deliberates until it reaches a verdict. 9. Entry of judgment. The judge may: a. Enter the verdict reached by the jury as the court’s judgment. b. Grant a motion for judgment n.o.v. if the judge finds the jury was biased. This means that the jury’s verdict does not stand. c. Order remittitur (reduction) of any damages awarded if the judge finds the jury to have been biased or emotional. VI. The Appeal A. Appeal: Both parties in a civil suit and the defendant in a criminal trial may appeal the decision of the trial court. Notice of appeal must be filed within a specified period of time. The appeal must be made to the appropriate appellate court. VII. Alternative Dispute Resolution (ADR) A. Description: Non-judicial means of solving legal disputes. ADR usually saves time and money of costly litigation. B. Types of ADR 1. Arbitration. An impartial third party called the arbitrator hears and decides the dispute. The arbitrator makes an award. The award is appealable to a court if the parties have not given up this right. Arbitration is designated by the parties pursuant to: a. Arbitration clause. Agreement contained in a contract stipulating that any dispute arising out of the contract will be arbitrated. b. Submission agreement. Agreement to submit a dispute to arbitration after the dispute arises. 2. Mediation. A neutral third party called a mediator assists the parties in trying to reach a settlement of their dispute. The mediator does not make an award. 3. Conciliation. An interested third party called a conciliator assists the parties in trying to reach a settlement of their dispute. The conciliator does not make an award. 4. Minitrial. A short session in which the lawyers for each side present their case to representatives of each party who have the authority to settle the dispute. 5. Fact-Finding. The parties hire a neutral third person called a fact-finder, to investigate the dispute and report his or her findings to the adversaries. 6. Judicial referee. With the consent of the parties, the court appoints a judicial referee (usually a retired judge or lawyer) to conduct a private trial and render a judgment. The judgment stands as the judgment of the court and may be appealed to the appropriate appellate court. E. Critical Legal Thinking Questions 1. Describe the following types of pleadings: (1) complaint, (2) answer, (3) cross-complaint, and (4) reply. (1) The complaint is the initiating document that begins a lawsuit. It names the parties to the lawsuit and alleges the facts that establish the suit. (2) The answer is the initial document the defendant files in response to the complaint. In an answer, the defendant admits or denies the allegations contained in the complaint. (3) A cross-complaint is a complaint the defendant files upon suing the plaintiff after being sued by the plaintiff. (4) The reply, which can include affirmative defenses, must be filed by the original plaintiff in response to the cross-complaint. 2. What is intervention? What is consolidation? If other persons have an interest in the lawsuit, they may “intervene” and become parties to the lawsuit. If several plaintiffs have filed separate lawsuits stemming from the same fact situation against the same defendant, the court can “consolidate” the cases into one case if it would not cause undue prejudice to the parties. 3. What is a statute of limitations? What is the public policy for having statutes of limitation? A statute of limitations establishes the time period during which a plaintiff must bring a lawsuit against a defendant. If not filed within the time period, the right to sue is lost. Statutes of limitation range from one to four years. The policy behind them is to protect defendants from the stale claims of dilatory plaintiffs, as well as to stimulate plaintiffs to assert fresh claims against defendants in a diligent fashion. 4. Describe the following types of discovery: (1) deposition, (2) interrogatories, (3) production of documents, and (4) physical and mental examination. (1) A deposition is the oral testimony given by a party or witness prior to trial. Most depositions are taken at the office of one of the attorneys. The deponent is put under oath and then asked questions by one or both of the attorneys. (2) Interrogatories are written questions submitted by one party to a lawsuit to another party. An attorney usually helps with the preparation of the answers, and the answers are signed under oath. (3) Production of documents involves one party requesting that the other party produce such things as memoranda, correspondence, company records, or other documents. (4) In cases that concern the physical or mental condition of a party, a court can order the party to submit to certain physical or mental examinations to determine the extent of the alleged injuries. 5. Describe the following types of pretrial motions: (1) motion for judgment on the pleadings, and (2) motion for summary judgment. (1) A motion for judgment on the pleadings alleges that, if all of the facts presented in the pleadings are true, the party making the motion would win the lawsuit when the proper law is applied to these facts. In deciding this motion, the judge cannot consider any facts outside the pleadings. (2) A motion for summary judgment asserts that there are no factual disputes to be decided by the jury and that the judge should apply the relevant law to the undisputed facts to decide the case. The motions can be made by either party and are supported by evidence outside the pleadings, such as affidavits or depositions. 6. What is a settlement conference? Federal court rules and most state court rules permit the court to direct the attorneys or parties to appear before the court for a settlement conference (or pretrial hearing) for the purposes of facilitating settlement. 7. Describe the following phases of a trial: (1) jury selection, (2) opening statements, (3) plaintiff’s case, (4) defendant’s case, (5) rebuttal and rejoinder, (6) closing arguments, (7) jury instruction, (8) jury deliberation, (9) entry of judgment. (1) This is the process of selecting the jurors and alternates from the jury pool, done through voir dire, which involves asking the prospective jurors questions about their preconceived biases about the case. (2) Once the trial begins, the lawyers are allowed to make an opening statement to the jury that summarizes the main factual and legal issues of the case, describing why they believe their client’s position is valid. This is not evidence. (3) Plaintiffs bear the burden of proof and put on their case by putting on physical and documentary evidence, and by calling witnesses to give testimony through direct examination, followed by the defense’s cross-examination of the witnesses. (4) The defendant’s case is put on after the plaintiff’s case and can involve rebutting the plaintiff’s evidence, proving affirmative defenses, and proving any allegations contained in the defendant’s cross-complaint. The defendant’s evidence is put on in much the same way as the plaintiff’s evidence is presented. (5) Rebuttal and rejoinder involve the plaintiff and defendant responding to each side’s evidence with additional witnesses and evidence. (6) The closing arguments are made by each side’s lawyers after the conclusion of the evidence. (7) The judge instructs the jury on what law to apply when deciding on the facts and what possible verdicts that can be rendered. (8) The jury then retires to the jury room to discuss and vote on the findings. This can take from minutes to weeks. (9) The entry of judgment is the official decision of the court, following the jury’s verdict, and most often in conjunction with that verdict. 8. Describe the process of appeal. Who are the parties to an appeal? In a civil case, either party can appeal the trial court’s decision, but in a criminal case, only the defendant can appeal. The appeal must be filed with the correct appellate court and must allege errors of law made at the trial court that need to be rectified by the appellate court. The party bringing the appeal is known as the appellant, and the responding party is known as the appellant. 9. What is alternative dispute resolution? What purposes are served by alternative dispute resolution? ADR is the title used to refer to different mechanisms employed more and more recently to resolve legal—and often commercial—disputes outside formal litigation, or at least before trial. ADR serves two primary purposes: economic efficiency and expediency. 10. Describe the following types of alternative dispute resolution: (1) arbitration, (2) mediation, (3) conciliation, (4) minitrial, (5) fact-finding, and (6) judicial referee. (1) Arbitration involves an impartial third party hearing and deciding the dispute. Evidence is presented in a less stringent manner in arbitration than at trial. Arbitration is primarily a creature of contract. The arbitrator’s award is appealable if the arbitration agreement allows for it. (2) In mediation, a neutral third party called a mediator assists the parties in trying to reach a settlement of their dispute. The mediator does not make an award. (3) In conciliation, an interested third party called a conciliator assists the parties in trying to reach a settlement of their dispute. The conciliator does not make an award. (4) A minitrial is a session, usually lasting a day or less, in which the lawyers for each side present their cases to representatives of each party who have authority to settle the dispute. Following the presentations, the parties meet to try to negotiate a settlement. (5) Fact-finding is a process whereby the parties hire a neutral person to investigate the dispute. That person reports his or her findings to the adversaries and may recommend a basis for settlement. (6) A judicial referee is often a retired judge or lawyer who conducts a private trial and renders a judgment that may be appealed to the appropriate appellate court. F. Cases for Discussion Nogart v. the Upjohn Company, 21 Cal.4th 383 (1999), concerns a woman who suffered from a bipolar disorder, and who was eventually prescribed Halcion after two suicide attempts. She then took her life with an overdose of Halcion and Darvocet. Six years after her death, her husband and her parents sued Upjohn, the maker of Halcion, for wrongful death. Upjohn won a summary judgment, based on the one-year statute of limitations, but it was overturned in the court of appeals, and Upjohn appealed to the California Supreme Court. The California Supreme Court held that the lawsuit was barred by the statute of limitations. Statutes of limitation are designed to protect defendants from stale claims, and are set by the legislature. Here, the plaintiffs missed the deadline by five years. QUESTIONS 1. What is the public policy behind having statutes of limitations? What is the public policy against having such statutes? Which policy should dominate, and why? The policy behind them is to prevent stale claims from being brought so that the evidence is available. The policy against them is that it does arbitrarily deny plaintiffs the right to bring cases that aren’t within the deadline. The policy that should dominate is the one that does—the policy of requiring plaintiffs to act and not “sit on their hands” too long. 2. Was it ethical for the Upjohn Co. to avoid facing the merits of the lawsuit by asserting the one-year statute of limitations? Ethics plays almost no role here. The merits of the suit aside, there is no reason why Upjohn should be forced to defend a suit that was late by five years. 3. What are the business implications for having statutes of limitations? The business implications are that companies can better plan for litigation costs (including insurance) by knowing they can rely on the statute of limitations to foreclose against litigation brought by plaintiffs at any time. Statutes of limitation also allow the litigation to be handled more efficiently, since timely cases should have more readily available evidence. Ferlito v. Johnson & Johnson Products, Inc., 771 F. Supp. 196 (1991), concerned a couple who sued J&J because the husband’s Halloween costume, made primarily from cotton batting produced by J&J, caught fire when he lit a cigarette with a butane lighter. Their suit alleged negligence by J&J for failing to warn buyers that cotton is flammable. The jury awarded them a total of over $600,000, and J&J moved for j.n.o.v. The trial court granted the J&J’s motion, finding that the jury’s decision was unreasonable in light of the evidence, which clearly showed that the plaintiff knew that cotton batting burns when exposed to flame, and that plaintiff showed no evidence that a warning would have dissuaded the wife from creating such a flammable costume. QUESTIONS 1. Should trial courts have the authority to enter j.n.o.v. or should jury verdicts always be allowed to stand? Explain your answer. This is purely an opinion/discussion question, but this case shows the advisability of granting judges the right to vacate a jury’s verdict. 2. Did the Ferlitos act ethically in suing J&J in this case? Were they responsible for their own injuries? They acted legally, since it was their right to sue. Whether they acted ethically is an opinion/discussion question. One could say they compounded their stupidity with greed by blaming the producer of cotton for their own injuries. They were absolutely responsible for their own injuries. 3. What would have been the business implications had J&J been found liable? The price of cotton batting would have dramatically increased or, perhaps, been pulled from the shelves. J&J’s insurance costs would have increased precipitously. 3.1 Conrad v. Delta Airlines, Inc., 494 F.2d 914 (7th Cir. 1974), concerned a former Delta pilot who sued Delta claiming he was forced to resign because of his pro-union activities, and not because of poor performance. A Delta report surfaced during discovery that stated Conrad was a confessed leftist activist and that his union activities made his resignation a way to avoid potential trouble. Delta moved for summary judgment. ISSUE: Should its summary judgment be granted? No, the court concluded that there was evidence concerning the issue of whether the discharge was the result of antiunion bias, which raised the question of Delta’s motivation in forcing Conrad’s resignation. That makes summary judgment inappropriate. 3.2 Haviland & Co. v. Montgomery Ward & Co., 31 F.R.D. 578 (S.D.N.Y. 1962), concerned Haviland suing Montgomery Ward in federal court for trademark infringement, because Ward sold merchandise with “Haviland” on it. Ward wanted to depose William Haviland, but Haviland’s attorneys said that, at age 80 and living in France, he was too ill to travel to America for the deposition, accompanied by a doctor’s affidavit. ISSUE: Must Haviland give his deposition? Yes. The court said that the plaintiff selected the forum to enforce its rights and must expect that its officers and managing agents will be subjected to process. Mr. Haviland’s deposition must be taken, but it could occur in France, provided the plaintiff pays the defendant’s costs for going there to take it. 3.3 Simblest v. Maynard, 427 F.2d 1 (2d Cir. 1970), concerned a lawsuit by Simblest against Maynard, claiming that Maynard’s negligent driving of a fire truck caused the truck to hit Simblest as he crossed an intersection on a night when there was a blackout. Simblest’s testimony about the accident and conditions was directly contradicted by many witnesses, but the jury gave a verdict for Simblest. The defense moved for judgment n.o.v. ISSUE: Who wins? Maynard. The court found that the judge’s decision to grant judgment n.o.v. was correct because the evidence showed that the plaintiff was contributorily negligent as a matter of law that was, at the time, a complete defense in a negligence action. 3.4 Burnham v. Superior Court of California, 495 U.S. 604 (U.S. 1990), concerned a husband and wife who lived in New Jersey and decided to separate. The wife, who was to have custody of the children, was moving to California. The husband agreed to file a divorce in New Jersey on the grounds of irreconcilable differences, but then threatened to file a divorce on the grounds of desertion. The wife then responded by filing for a divorce in California. When the husband was in California on a business trip, the wife served him with the divorce petition. He moved to quash the service of process, and the case went all the way to the U.S. Supreme Court. ISSUE: Did Mr. Burnham act ethically in trying to quash the service of process? Did Mrs. Burnham act ethically in having Mr. Burnham served on his visit to California? Is the service of process good? Whether the husband or wife acted ethically are questions of opinion and good for class discussion, but they are almost irrelevant to the case. Each spouse has a right to dissolve the marriage in a forum that suits each spouse’s interests best. As to whether the service of process on the husband was valid, the Court (by Scalia) held that it was valid and did comport with due process—even though he was in the jurisdiction for a reason unrelated to the lawsuit—particularly in light of the fact the was “personally served” in the jurisdiction, which is a historically significant method of obtaining jurisdiction over the defendant. Jurisdiction based on physical presence alone is one of the continuing traditions of the legal system. G. Case for Briefing 1. Case Name Gnazzo v. G.D. Searle & Co., 973 F.2d. 136 (2d Cir. 1992) 2. Key Facts A. Gnazzo had an IUD produced and sold by Searle inserted in her uterus in 1974. B. In 1975 she was told by her doctor that she had pelvic inflammatory disease (PID) due to a venereal disease or the IUD. The IUD was eventually removed in 1977. C. In 1989 she learned that she was infertile because of PID, resulting from the use of the IUD. D. Gnazzo then answered a questionnaire in 1989, created by her then-attorneys, which stated she first suspected in 1981 that her IUD had caused her harm, upon not being able to get pregnant and after reading about the damaging effects of IUDs. E. She sued Searle in 1990. F. Searle moved for summary judgment, arguing that Gnazzo’s claim was barred by Connecticut’s three-year statute of limitations for product liability actions, since Gnazzo stated 1981 as the date in which she learned of her IUD-related problems. G. The trial court granted Searle’s motion for summary judgment. 3. Issue Does the statute of limitations on product liability claims begin to run when the plaintiff believes he or she may have been injured by the product, such as an IUD, as opposed to when the plaintiff knows for sure that he or she were injured by the product? 4. Holding Yes. The Court of Appeals held the statute of limitations begins to run when the plaintiff discovers some form of actionable harm, not the fullest manifestation of it. 5. Court’s Reasoning A. The product liability statute of limitations begins to run within three years of the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered. B. Actionable harm occurs when the plaintiff discovers, or should discover, that he or she has been injured and that the defendant’s conduct caused injury. C. The evidence in support of the summary judgment motion showed that it was in 1981 that Gnazzo suspected that her IUD had caused her health problems, which was the link between her injury and the defendant’s causal connection to it. D. Gnazzo acknowledged that she didn’t pursue the medical issue in 1981 because of her marriage difficulties. E. Therefore, viewing the evidence in the light most favorable to Gnazzo, the nonmoving party, the court concluded that by 1981, she had some form of actionable harm. Thus, her 1990 suit was barred by the statute of limitations.