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Lecture Notes for Business Law, 10th Edition

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    1 “Where there is no law, there is no freedom.” John Locke I. Teacher to Teacher Dialogue One of the most common dilemmas facing instructors of business law is the issue of topic choice. By the very nature of the subjects we teach, the breadth of materials is so wide that choosing what to focus on in the limited classroom time we have with our students can be a most daunting task. This problem is especially exacerbated when the topics we are dealing with are all of deep interest and can stand alone as separate courses. In this chapter, for example, we are asked to introduce students to topics ranging from the definitions and purposes of law to how our system affects business decisions, to some of the most important provisions found in the U.S. Constitution. Any one of these subparts can provide the raw materials for an entire course at the law school level. Our job must start with a self - evident, but sometimes forgotten, point: this is not law school. We are here not to train future lawyers but rather students who need to know enough about these issues to recognize that they are issues. The technical legal problems they may be facing later will ultimately need to be resolved using law and other practitioners. The plus side of this dilemma is that because we have such a diverse menu to select from, we are able to pick and choose our areas of emphasis. For example, if your particular teaching and research interests lie in the area of ethics and the schools of jurisprudential thought from which they are derived, then by all means, run with it ! Rather than trying to be all things to all people, it is better to focus your efforts on your strengths. This does not mean that you can shortchange the other material. All key objectives of the chapter should be fully outlined and incorporated in both your lecture and materials outline. But if you have a particular interest and expertise in, for example, the Law and Economics School of jurisprudential thought, then use them as focal points of comparison in the evolutionary process that seeks to distinguish the older schools of jurisprudence from newer approaches to these issues. In any event, remember that philosophical studies of what law is and what its role is in the larger scheme of things have always posed questions virtually impossible to answer. As mentioned in the student study guide, this chapter represents attempts by great thinkers to answer the unanswerable. It would be far too presumptuous for us to think that we can teach, in a few hours, what the great philosophers of the world have tried to do over hundreds of years. Perhaps this is an early lesson in what wisdom is really all about: the more we know of history, the more we know of our own limitations. If we can get that point across, the course is off to a good start. LEGAL HERITAGE AND THE DIGITAL AGE 1

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    Chapter 1 2 II. Learning Objectives and Chapter Contents • Define law . • List and describe the schools of judicial thought . • Le a rn the history and development of American Law . • List and describe the sources of law in the U nited S tates . • Learn what critical legal thinking is and how to apply it to analyzing legal cases. • Learn what skills you will gain through this text. III. Key Question Checklist • What is law? • Once you have identified the kind of societal expectation of behavior, what standard of behavior is most appropriate? Does law codify the standard? Do one or more of the schools of jurisprudence support the standard? • What are the sources of law in the United States? • What body of law and/or ethical standards apply? • How would you apply these standards to the facts? IV. Text Materials The first chapter’s objective is an introduction to the historical underpinnings of jurisprudential thought. This would include not only the functions of law listed in the summary, but also an early opportunity to introduce the role of ethics based on the various schools of jurisprudence discussed. What is Law? 1.1 Define Law Laws consist of rules that regulate the conduct of individuals, businesses, and organizations, forbidding undesirable activities . Definition of Law – Law is a group of rules promulgated by a controlling authority, with legal consequences for lack of compliance. Functions of the Law – Laws are created to keep the peace, shape morals, promote social policies, maintain the status quo, facilitate change or planning, promote compromise, and/or to maximize individual freedoms. Fairness of the Law – The American legal system is, overall, a comprehensive and fair system . Yet it is occasionally misused and abused. Flexibility of the Law – U.S. law has evolved and grown as a reflection of changes in society, technology, and commerce. The same general principles that we were established on still exist.

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    Legal Heritage and the Digital Age 3 The modifications exhibit the flexibility and maturity of our system to be able to adapt to the changing commercial, social, and ethical environments. Critical Legal Thinking – The law in the U . S . is permitted to grow and change over time as our social values change as a society. Having some vagueness to the law allows the law to adapt more easily. Landmark U.S. Supreme Court Case: Brown v. Board of Education This box discusses the application of law where the Supreme Court overturned the “separate bu t equal” doctrine that condoned separate schools for black children and white children. Critical Legal Thinking: The states must treat all individuals in the same manner as others that are in similar positions or situations, without favoring residents or any other group. Equal application is the important idea here. Ethics: Separate but equal cannot be applied when it comes to education, so the decision in Plessy v. Ferguson was wrong. The Plessy decision was based on the idea of granting political and civil equality to African Americans, but left out social equality. The U . S . Constitution was drafted to reflect changing social, economic, technical, and intellectual ideas. This is what makes the Constitution unique, as it slowly adapts to the changing world around us. Schools of Jurisprudential Thought 1.2 List and describe the schools of judicial thought. There are several different philosophies about how the law developed, ranging from the classical natural theory to modern theories of law and economics and critical legal studies . The different schools jurisprudential thought include the Natural Law School, based on the moral theory of law; the Historical School, with its recognition of the social traditions and customs that have developed over time; the Analytical School , where law is shaped by logic; the Sociological School , where law is applied to advance sociological goals; the Command School , whose laws are established by the ruling party rather than the society as a whole; the Critical Legal Studies School , who claim that laws are there only to maintain the status quo; and the Chicago School, or Law and Economics School, which promotes market efficiency. International Law: Command School of Jurisprudence of Cuba Cuba is a one party communist dictatorship that has bee n ruled by one family since 1959 . Cuba ’s legal system is based on communist theory and the Comman d School of jurisprudence. History of American Law 1.3 Learn the history and development of American law. English Common Law – English common law, the primary basis for U.S. law, was based on judges issuing opinion when deciding a case. These opinions became the basis for precedent used by later judges. The historical underpinning of U.S. law can be further reinforced with some discussion of the tie - ins between the country’s political history with that of the legal traditions of England and other countries. T his portion of the chapter material can be used to introduce students to a broad overview of the roles that the world’s major legal systems play in the world economy. For example, the role of the Law Merchant and its influence on international trade is critical to

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    Chapter 1 4 understanding most international rules on import/export laws today. The origins of the Law Merchant, in turn, are traceable in large part to the Roman civil law. In the end, the U.S. legal system represents the “Cuisinart” effect . There are ingredients from English common law, Roman civil law, and Judeo - Christian canon law all thoroughly processed into a bread of law. The individual ingredients are all present, but each is no longer independently identifiable. Law Courts – These were established following the Norman Conquest of England in 1066 to administer laws in a uniform method. Law Courts emphasized form over substance. Chancery Courts – These courts were established to serve when Law Courts provided inadequate remedies ; they prov ided equitable solutions. These courts reviewed the merits of the case, rather than the procedural aspects. Merchant Courts – Law Merchant courts were developed as a separate entity to solve commercial disputes in the Middle Ages . They were not merged into the regular court system in England until the early 1900s. Landmark Law: Adoption of English Common Law in America All the states of the United States of America except Louisiana base their legal systems primarily on the English common law. Currently, the law of the United States is a combination of law created by the judicial system and by congressional legislation. Glob al Law: The Civil Law System of France and Germany The Romano - Germanic civil law system dates back to 450 B.C., when Rome adopted a set of laws based on civil codes that applied to all Romans. The sole source of civil law in a country is the application of code or statutes. Court decisions do not have the force of law. Sources of Law in the United States 1.4 List and describe the sources of law in the United States. Constitutions – One of the goals of this chapter is to introduce students to the role of the U.S. Constitution and its pivotal role in the ultimate distribution of powers between the federal government and the states vis - à - vis the control of business conduct in the U.S. This section also explains the three branches of the federal government: the legislative, executive, and judicial branches. Treaties – The Constitution establishes that only the president, upon the advice and consent of the Senate, can enter into treaties with foreign powers. Federal Statutes – Statutes are written laws that establish and enforce certain courses of conduct. Congress enacts federal statutes, whilst state legislatures enact state statutes. Ordinances are adopted by local governmental bodies. Contemporary Environment: How a Bill Becomes Law The U.S. Congress is composed of two chambers, the U.S. House of Representatives and the U.S. Senate. Thousands of bills are introduced in the U.S. Congress each year, but only a small percentage of them become law. First, a bill must be sponsored by a member of the U.S. House of Representative or the U.S. Senate. Then, it is referred to the appropriate committee for review and study. Bills that receive the vote of a committee are reported to the full chamber, where they are

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    Legal Heritage and the Digital Age 5 debated and voted on. If the bill receives majority vote from the full chamber , and a subsequent second chamber, then it is forwarded to the president’s desk. The bill becomes law when it is signed by the president. State Statutes – State legislatures enact state statutes. Such statutes are placed in code books. State statutes can be assessed in these hardcopy code books or online. Ordinances – State legislatures often delegate lawmaking authority to local government bodies, including cities and municipalities, counties, school districts, water districts, and such. These governmental units are empowered to adopt ordinances. Ordinances are also codified. Executive Orders – The executive branch of the government is empowered to issue executive orders. Regulations and Order of Administrative Agencies – Agencies are created to interpret and enforce statutes enacted by both federal and state Congresses. Judicial Decisions – Judges issue written decisions explaining their legal reasoning. D octrine of stare decisis establishes past court decisions as a precedent for future decisions. Priority of Law in the United States – The U.S. Constitution and treaties take precedence over all other laws, followed by federal statutes and federal regulations. Federal law takes precedence over conflicting state law, which has precedence over local laws. Similarly, state constitutions take precedence over state statutes and regulations. Critical Legal Thinking – This concept gives the law consistency so that citizens are treated fairly and similarly. Without stare decisis, our judges may have too much untampered authority. Law in the Digital Age The electronic age arrived before new laws were written that were unique and specific for this environment. Courts have applied existing laws to the new digital environment by requiring interpretations and applications. In addition, new laws have been written that apply specifically to this new environment. The U.S. Congress has led the way, enacting many new federal statutes to regulate the digital environment . Critical Legal Thinking 1.5 Learn what critical legal thinking is and how to apply it to analyzing legal cases. Critical Legal Thinking is a method of thinking that consists of investigating, analyzing, evaluating, and interpreting information to solve a legal problem. Socratic method – I s a process of asking a series of questions and answers and give - and - take inquiry and debate between a professor and students. IRAC method – E xamines a law case by issue, rule, application and conclusion. Case 1.1 Affirmative Action in University Admissions Fisher v. University of Texas at Austin

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    Chapter 1 6 136 S. Ct 2198 (2016) Facts: UT was admitting students giving weight to race as an admissions factor. A Caucasian student otherwise qualified was denied admission and sued. Issue: Is race - conscious admissions lawful under the Equal Protection Clause at UT? Decision: Race may be a positive factor in favor of admissions but only one factor to help diversify a public university. Ethics: Students will have differing opinions about the issue. Case 1.2 Voting Rights Act Shelby County, Texas v. Holder 133 S.Ct. 2612 (2013) Facts : The 15 th Amendment makes it unlawful for states to alter the rights of citizens as to voting. In 1965, a statute was passed to address this issue in a more fulsome manner. The 1965 VRA basically also put a lockdown on the ability of certain Southern states to change any districts. Issue: Is the coverage provision of the VRA legal? Decision : No, it is unconstitutional. This was a close decision of 5 - 4. Ethics : Students will have differing opinions on this issue. V . Key Terms and Concepts • Administrative agencies — Agencies (such as the Securities and Exchange Commission and the Federal Trade Commission) that the legislative and executive branches of federal and state governments are empowered to establish. • Administrative rules and regulations — Used by administrative agencies to enforce statutes . These rules and regulations have the force of law. • Analytical School — School of jurisprudence maintains that the law is shaped by logic. • Bill — Many bills are introduced each year at the U.S. Congress, out of which a few are passed as law. • Brown v. Board of Education — A landmark Supreme Court case in which a unanimous decision reversed prior precedent and held that the separate but equal doctrine violated the Equal Protection Clause of the Fourteenth Amendment to the Constitution. The decision le d to the banning of school segregation. • Chamber — The U.S. Congress is composed of two chambers, the U.S. House of Representatives and the U.S. Senate. • Civil Law — A code of laws applicable to Romans. Also known as the Romano - Germanic civil law system. • Code book — Federal statutes are organized by topic into code books . • Codified law — Federal statutes that have been organized into code books. • Comman d School — School of jurisprudence that believes that the law is a set of rules developed, communicated, and enforced by the ruling party rather than a reflection of the society’s morality, history, logic, or sociology. • Committee — Bills from either of the two chambers of the U.S. Congress are reviewed and studied by an appropriate committee. The committee may reject the bill, report it to the full cham ber for a vote, not act on it, or send it to a subcommittee for further study. • Conference committee — Committee made up of members of both the U.S. House of Representatives and the U.S. Senate. • Constitution of the United States of America — The supreme law of the United States. • Court of C hancery — Court that granted relief based on fairness. Also called equity court.

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    Legal Heritage and the Digital Age 7 • C ritical Legal Studies School — School of Jurisprudence that proposes legal rules are unnecessary and are used as an obstacle by the powerful to maintain the status quo. • English common law — Law developed by judges who issued their opinions when deciding a case. The principles announced in these cases became precedent for later judges deciding similar cases. • Executive branch — A branch of the U.S. government that has the power to enforce the law. The president of the United States constitutes the executive branch of the government. • Executive order — An order issued by a member of the executive branch of the government. • Federal Statute — W ritten laws, enacted by the U.S. Congress, that regulate foreign and interstate commerce. • Fourth Amendment — Protects against searches and seizures without probable cause. • French Civil Code of 1804 — One of the models used by countries that adopted civil codes. Also known as the Napoleonic Code. • German Civil Code of 1896 — One of the models for countries used by countries that adopted civil code. Such codes act as the sole source of law in most civil law countries. • Historical School — School of jurisprudence that believes the law is an aggregate of social traditions and customs that have developed over the centuries. • Judicial branch — A branch of the U.S. government that has the power to interpret and determine the validity of the law. Also known as the courts. • Judicial decision — A decision about an individual lawsuit issued by federal and state courts. • Jurisprudence — The philosophy or science of law. • Law — That which must be obeyed and followed by citizens , subject to sanctions or legal consequences; a body of rules of action or conduct prescribed by controlling authority and having binding legal force. • Law court — A court that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror, legal procedure was emphasized over merits at this time. • Law and Economics School — School of jurisprudence that believes that promoting market efficiency should be the central goal of legal decision making. Also called Chicago School. • Law Merchant — Rules based on common trade practices and usage that were applied by merchants around England and Europe, in the Middle A ges, to solve commercial disputes. Also known as “law of merchants.” • Legislative branch — A branch of the U.S. government that has the power to enact the law. Also known as the U.S. Congress. • Merchant C ourt — The separate set of courts established to administer the “law of merchants.” • Moral theory of law — Theory that proposes that the law should be based on morality and ethics. • Natural Law School — School of jurisprudence that postulates that the law is based on what is “correct.” • Order — A decision of an administrative agency. • Ordinance — Laws enacted by local government bodies , such as cities and municipalities, counties, school districts, and water districts. • Precedent — A rule of law established in a court decision. Lower courts must follow the precedent established by higher courts. • Romano - Germanic civil law system — Legal system that dates back to 450 BCE when Rome adopted the Twelve Tables, a code of laws applicable to the Romans. Commonly known as civil law. • Sociological School — School of jurisprudence that asserts that the law is a means of achieving and advancing certain sociological goals.

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    Chapter 1 8 • Stare d ecisis — Latin for “to stand by the decision.” Adherence to precedent. • State Constitution — Constitutions that establish the legislative, executive, and judicial branches of state government and establish the powers of each branch. • State Statute — Statute enacted by state legislatures and placed in code books. • Statute — Written law enacted by the legislative branch of the federal and state governments that establishes certain courses of conduct that covered parties must adhere to . • Subcommittee — Studies bills sent by the committee. After review , the subcommittee may either let the bill die or report it back to the full committee. • Treaty — A compact made between two or more nations. • U.S. Congress — Branch of the government that creates federal law by enacting statutes. • U.S. House of Representatives — A chamber of the U.S. Congress. • U.S. Senate — A chamber of the U.S. Congress.

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    9 “I was never ruined but twice: once when I lost a lawsuit, and once when I won one.” Voltaire I. Teacher to Teacher Dialogue Twenty - first century technological advances have provided our students with all kinds of instant access to information. These devices have provided the students with a variety of preconceptions. Among these is the average undergraduate’s notion of how trials are conducted and the role of attorneys in that process. Invariably these perceptions center on popular television series such as “Law and Order” and “Court TV”. This is not all bad. Current media focus on numerous law - related issues has generated a whole new wave of public interest in the workings of our legal system. The downside is that the media has created many myths on the folklore of law and lawyers. In the world of pop culture, no one knows until the end who really did it until a surprise witness shows up to identify the bad guy. In more modern versions, the attorney first has a business relationship with the client and then proceeds to get him or her acquitted. Regardless of the outcome, the process is always full of glamour and intrigue. The problem is that a trial rarely resembles the goings on found in the entertainment media. Trials are long, tedious, emotionally , and financially draining processes for all parties concerned. In many ways, a trial represents a failure by the parties to reach some sort of satisfactory solution of the issue beforehand. Rarely do the parties actually want to go through a labyrinth of pleadings, motions, and the like, feeling all the while totally dependent on the sometimes questionable competence of their attorneys. Unlike the make - believe world of entertainment, the job of an attorney is to keep his or her client out of court. (This often needs some reinforcement with the student.) The attorney’s professional advice should anticipate and resolve potential legal problems before, rather than after, the fact if at all possible. It is against this backdrop that we should try to present a more realistic picture of how our system works. We can basically start by discussing how few controversies actually get to the trial stage and how even fewer of those are actually reported in the National Reporter System. Additionally, a fair amount of time should be spent reviewing the growing trend toward alternative dispute resolution (ADR) mechanisms. Personal experience examples might be helpful in illustrating the growing trends toward ADR. To complete the cycle , we can then proceed to itemize the key steps used in a court trial in this chapter and in th o se that follow. COURTS AND JURISDICTION 2

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    Chapter 2 10 II. Learning Objectives and Chapter Contents • Describe state court systems. • Describe the federal court system . • List and describe the types of decisions that are issued by the U.S. Supreme Court. • Explain the jurisdiction of federal courts and compare it with the jurisdiction of state courts . • Define standing to sue, jurisdiction, and venue . • Explain how jurisdiction is applied to digital commerce . III. Key Question Checklist • If the dispute or controversy needs to be resolved in a court of law, which court has jurisdiction? • Once jurisdiction is established, was the proper sequence of pretrial steps taken? • Was the trial sequence properly followed? • After the trial is completed, are any appeals from the decision applicable? IV. Text Materials One objective of this chapter is to familiarize students with the role of the major players in those events. The federal court system and the court systems of the 50 states and the District of Columbia are the two major court systems in the U.S. Litigation is the process of bringing, maintaining, and defending a lawsuit. In addition, there are a number of alternative dispute resolutions that can be used. State Court Systems 2.1 Describe state court systems. Limi ted - Jurisdiction Trial Court – Inferior trial - like traffic courts, juvenile courts, justice - of - the peace courts, probate courts, and family law courts hear specialized matter s . Another example of these is the small claim courts that hear limited dollar amount civil cases. General - Jurisdiction Trial Court – Courts of Record keep a record of the testimony and evidence presented at trial for future reference. These courts hear felony cases, civil cases over a certain dollar amount, and other items. Intermediate Appellate Court – Courts of Appeal hear appeals from trial courts, reviewing records of trials for errors without hearing any new evidence. Highest State Court – State supreme courts hear appeals from intermediate state courts and some trial courts, without hearing new evidence. Business Environment : Delaware Courts Specialize in Hearing Business Disputes

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    Court s and Jurisdiction 11 Delaware has created a special Chancery Court to decide business litigation, with a reputation for handling corporate matters. Delaware’s laws also tend to favor corporate management, so together with the Chancery Court, the state has created an environment that encourages incorporation in that state. Other states are beginning to follow suit and create their own variation of Delaware’s Chancery Court. Federal Court System 2.2 Describe the federal court system. Special Federal Courts – There are six courts of limited jurisdiction: the U.S. tax court, federal claims court, the Court of International Trade, bankruptcy court , and the courts of appeals for the armed services and for veteran ’ s claims . U.S. District Courts – These are the federal court system’s 9 4 trial courts of general jurisdiction. U.S. Courts of Appeal – These are the federal court system’s 13 intermediate appellate courts. Contemporary Environment Foreign Intelligence Surveillance Court Created in 1978, this court handles FBI, NSA, and warrants pertaining to national security issues called FISA warrants. Supreme Court of the United States 2.3 Describe the U.S. Supreme Court and the types of cases it decides. The Supreme Court is composed of nine justices who are nominated by the President and confirmed by the Senate. The President appoints one as the chief justice who is responsible for the administration of the Court, while the other eight are considered associate justices. Contemporary Environment The Process of Choosing a U.S. Supreme Court Justice The President appoints Supreme Court justices, with the advice and consent of the Senate (majority vote). This allows a form of balance of power between the executive and legislative branches of the government. Jurisdiction of the U.S. Supreme Court – The Supreme Court hears appeals from the federal district courts and from the highest state courts. Legal briefs are filed, oral arguments are made, lower court records are reviewed, but neither new evidence nor testimony is heard. The Supreme Court decision is final. Decisions by the U.S. Supreme Court – Congress has established the rules for the mandatory appellate review by the Supreme Court, which may also elect to hear cases at its discretion. Petitioners file a petition for certiorari asking for the Supreme Court to review their case. If the court decides to sit on the matter, it issues a writ of certiorari. The court hears about 100 cases per year. Unanimous Decisions – All the justices voting and agree as to both the outcome and the reasoning. These decisions become precedent.

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    Chapter 2 12 Majority Decision – Decisions by the Supreme Court are considered majority decisions if a majority of the justices agree on the outcome and reasoning. These decisions become precedent. Plurality Decision – A plurality decision is when the majority of the justices agree on the outcome, but not the reasoning. This settles the case, but does not serve as precedent. Tie Decision – In this case the winner in the lower court prevails. This does not serve as precedent. Concurring Opinion – When a justice agrees with the outcome of the majority, but not the reasoning, they will issue a concurring opinion explaining their stand. Dissenting Opinion – Any justice who does not agree with the decision may state their opinion. Contemporary Environment “ I’ll Take You to the U.S. Supreme Court!” This discusses the process necessary to win a review by the U.S. Supreme Court. Jurisdiction of Federal Courts 2.4 Explain the jurisdiction of federal courts and compare it with the jurisdiction of state courts. Federal Question – Federal courts have limited jurisdiction to hear cases involving federal questions with no dollar amount limit. Diversity of Citizenship – The federal courts have jurisdiction to hear cases involving diversity of citizenship. There must be diversity of state citizenship or the cases must be between a citizen and a subject of a foreign country. The amount in controversy must be over $75,000.00. Jurisdiction of State Courts – State courts hear cases that the federal courts do not have the jurisdiction to hear. Federal courts may have concurrent jurisdiction with state courts to hear cases involving diversity of citizenship. Full Faith and Credit Clause – Federal constitutional clause which requires that a judgment from one state court be recognized by every other state. Case 2.1 Full Faith and Credit Clause V.L. v. E.L, 136 S.Ct. 1017 (2016) Facts: Two women in a romantic relationship use technology to have three children together . The couple raised them jointly until they split up. Issue: Who has maternity rights to the children? Does a Georgia court final judgment of adoption make one the legal parent over the other woman as it applies to Alabama ? Decision: Full faith clause of the Constitution caused a remand of the case in Alabama for further proceedings. Ethics Question: Students will have differing opinions on this issue.

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    Court s and Jurisdiction 13 Standing to Sue, Jurisdiction and Venue 2.5 Define standing to sue, jurisdiction, and venue. Standing to Sue – The plaintiff must have a stake in the outcome of the lawsuit. In Personam Jurisdiction – In personam jurisdiction over the person is achieved by the plaintiff filing a lawsuit with a court and by serving a summons on the defendant. If personal service is unavailable, notice of the case by mail or publication in newspapers is allowed. Defendants disputing the jurisdiction of a court may make a special appearance to argue their case, and cannot be served while making this appearance. Long - Arm Statute – A court can obtain jurisdiction over persons and businesses located in another state through use of a long - arm statute, provided the defendant has had some minimum contact with the state. Critical Legal Thinking International Shoe Company v. State of Washington International Shoe had salespeople that sold shoes door - to - door within the state of Washington, and were paid on a commission basis. They had no office in the state. Washington State determined that they had failed to pay unemployment taxes on International’s employees, and serve notice to the organization on one of their Washington sales representatives as well as by mailing the notice to the headquarters in St. Louis . International made a special appearance to argue that it had insufficient contacts within the state to warrant payment of the tax. The unemployment office and appeals board, as well as various courts within the state ruled against International, which appealed to the U.S. Supreme Court. The Supreme Court ruled that International had neither casual nor irregular contacts within the state, and was, ther e for e , subject to in personam jurisdiction and service upon one of their agents, based on their “minimum contacts” within the state. The Supreme Court clearly stated that the Due Process Clause permits jurisdiction over a defendant in any state in which the defendant has “certain minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Critical Legal Thinking Questions – There are firmly established standards developed through case law which allow a court to determine when minimum contact has been made with a state. Case 2.2 Long Arm Statute MacDermid, Inc. v. Deiter 702 F.3d 725 (2012) 2 nd Circuit Facts: Prior to her employment termination, the defendant took proprietary property from her employer who in turn sued her to get it back. Issue: Does the district court have personal jurisdiction over the defendant ? Decision : Yes Ethics Questions: The defendant took property that did not belong to her which seems to be a more pressing substantive issue than personal jurisdiction. In Rem Jurisdiction – Courts may have jurisdiction over property found within the state, based on in rem (over the thing) jurisdiction. Quasi In Rem Jurisdiction – Attachment jurisdiction occurs when a plaintiff who has obtained a judgment attempts to satisfy the judgment by attaching property located in another state.

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    Chapter 2 14 Venue – The court with the jurisdiction that is located closest to where the incident occurred or where the parties live should hear the lawsuit. Pretrial publicity may prejudice jurors and may lead to a request for a change of venue in order to get a more impartial jury. Forum shopping is the process of looking for a more favorable court without a valid reason, and it is frowned upon by most courts . Forum - Selection and Choice - of - Law Clauses – Because many business agreements are formed between people from different states and different countries, many contracts have clauses that specifically address the state’s or country’s laws that will be applied in the case of a dispute, in what are known as choice - of - law clauses. Additionally, they will often agree as to which court will have jurisdiction over any dispute in forum - selection clauses. 2.2 Forum - Selection Clause Carter’s of New Bedford, Inc. v. Nike, Inc. 790 F.3d 289 (2015) Facts: Nike attempts to enforce a forum - selection clause against Carter’s, a retailer of its shoes in Massachusetts. Issue: Is the forum - selection clause enforceable ? Decision: Yes Critical Legal Thinking Questions: Students will have differing ideas on these questions. Jurisdiction in Digital Commerce 2.6 Explain how jurisdiction is applied to digital commerce. Today, with the advent of the Internet and the ability of persons and businesses to reach millions of people in other states electronically, particularly through websites, modern issues arise as to whether courts have jurisdiction in cyberspace. Zippo Manufacturing Company v. Zippo Dot Com, Inc . is an important case that established a test for determining when a court has jurisdiction over the owner or operator of an interactive, semi - interactive, or passive website. Information Technology Jurisdiction Over an Internet eBay Seller Internet forums like eBay expand the seller’s market across the world and sellers know that and avail themselves of the benefits. This opens up personal jurisdiction much more broadly. International Law: Judicial System of Japan There is very little litigation in Japan when compared to the United States. A primary reason for the difference is cultural because Japan nurtures the attitude that confrontation should be avoided. Other reasons include the high cost that must be borne by plaintiff s who want to file a lawsuit. Even if the plaintiff wins, the damages awarded are low . In the past, a relatively low number of lawyers graduated every year from the few law schools in Japan. But now, due to increasing business and personal disputes, the government is building new law schools and plans to double the number of lawyers by the year 2020. V . Terms and Concepts • Article III of the U.S. Constitution — It provides that the federal government’s judicial power is vested in one “Supreme Court.” This court is the U.S. Supreme Court.

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    Court s and Jurisdiction 15 • Associate Justices of the U.S. Supreme Court — The eight other justices apart from the Chief Justice of the U.S. Supreme Court. • Change of Venue — In certain circumstances, when pretrial publicity may prejudice jurors, a change of venue may be requested so that a more impartial jury can be found. • Chief Justice of the U.S. Supreme Court — Appointed by the president and responsible for administration of the U.S. Supreme Court. • Choice - of - law clause — A contract provision that designates a certain state’s law or country’s law that will be applied in any dispute concerning nonperformance of the contract. • Circuit — The geographical area served by each U.S. court of appeals. • Concurrent jurisdiction — Jurisdiction shared by two or more courts. • Concurring opinion — An opinion that can be issued by a justice of the Supreme Court who agrees with the outcome of a case but not the reason proffered by the other justices. • Court of Appeals for the Federal Circuit — A court of appeals in Washington, D.C., that has special appellate jurisdiction to review the decisions of the Claims Court, the Patent and Trademark Office, and the Court of International Trade. • Delaware Court of Chancery — A special court which decides cases involving corporate governance, fiduciary duties of corporate officers and directors, mergers and acquisitions, and other business issues. • Dissenting opinion — An opinion which sets forth the reason why a justice of the Supreme Court does not agree with a decision. • District — The geographical area served by a U.S. district court. • District of Columbia Circuit — The 12 th circuit court, located in Washington, DC. • Diversity of citizenship — A case between (1) citizens of different states and (2) a citizen of a state and a citizen or subject of a foreign country. • En banc review — A review that can be requested by a petitioner in the U.S. court of appeals after a decision is rendered by a three - judge panel. • Exclusive jurisdiction — Jurisdiction held by only one court. • Federal question case — A case arising under the U.S. Constitution, treaties, and federal statutes and regulations. • FISA warrant — A warrant issued by a FISA Court for the government to conduct surveillance against persons who are suspected of being threats to national security. • Forum shopping — Looking for a favorable court without a valid reason. • Forum - selection clause — Contract provision that designates a certain court to hear any dispute concerning nonperformance of the contract. • Full Faith and Credit Clause — A clause of the U.S. Constitution under which a judgment of a court of one state must be given “full faith and credit” by the courts of another state. • General - jurisdiction trial court — A court that hears cases of a general nature that are not within the jurisdiction of limited - jurisdiction trial courts. Testimony and evidence at trial are recorded and stored for future reference. • Highest state court — The highest court in a state court system; it hears appeals from intermediate appellate state courts and certain trial courts. • In personam jurisdiction — Jurisdiction over the parties to a lawsuit. • In rem jurisdiction — Jurisdiction to hear a case because of jurisdiction over the property of the lawsuit. • Intermediate appellate court — An intermediate court that hears appeals from trial courts. • International Shoe Company v. State of Washington — A landmark U.S. Supreme Court case that established the minimum contacts standard.

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