Lecture Notes for Business Law, 10th Edition

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1“Where there is no law, there is no freedom.”John LockeI.Teacher to Teacher DialogueOne of the most common dilemmas facing instructors of business law is the issue of topicchoice.By the very nature of the subjects we teach, the breadth of materials is so wide thatchoosing what to focus on in the limited classroom time we have with our students can be a mostdaunting task.This problem is especially exacerbated when the topics we are dealing with are allof deep interest and can stand alone as separate courses.In this chapter, for example, we are asked to introduce students to topics ranging from thedefinitions and purposes of law to how our system affects business decisions, to some of the mostimportant provisions found in the U.S. Constitution.Any one of these subparts can provide theraw materials for an entire course at the law school level.Our job must start with a self-evident,but sometimes forgotten, point:this isnotlaw school.We are here not to train future lawyers butrather students who need to know enough about these issues to recognize that theyareissues.Thetechnical legal problems they may be facing later will ultimately need to be resolved using lawand 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 teachingand research interests lie in the area of ethics and the schools of jurisprudential thought fromwhich they are derived, then by all means,runwith it!Rather than trying to be all things to allpeople, it is better to focus your efforts on your strengths.This does not mean that you canshortchange the other material.All key objectives of the chapter should be fully outlined andincorporated in both your lecture and materials outline.But if you have a particular interest andexpertise in, for example, the Law and Economics School of jurisprudential thought, then usethem as focal points of comparison in the evolutionary process that seeks to distinguish the olderschools of jurisprudence from newer approaches to these issues.In any event, remember thatphilosophical studies of what law is and what its role is in the larger scheme of things havealways 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 toopresumptuous for us to think that we can teach, in a few hours, what the great philosophers of theworld have tried to do over hundreds of years.Perhaps this is an early lesson in what wisdom isreally all about:the more we know of history, the more we know of our own limitations.If wecan get that point across, the course is off to a good start.LEGALHERITAGEAND THEDIGITALAGE1

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Chapter 12II.Learning Objectives and Chapter Contents•Definelaw.•List and describe the schools of judicial thought.•Learn the history and development of American Law.•List and describe the sources of law in the UnitedStates.•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 ofbehavior is most appropriate?Does law codify the standard?Do one or more of theschools 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 MaterialsThe first chapter’s objective is an introduction to the historical underpinnings of jurisprudentialthought. This would include not only the functions of law listed in the summary, but also an earlyopportunity to introduce the role of ethics based on the various schools of jurisprudencediscussed.What is Law?1.1 Define LawLaws 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 legalconsequences for lack of compliance.Functions of the Law–Laws are created to keep the peace, shape morals, promote socialpolicies, maintain the status quo, facilitate change or planning, promote compromise, and/or tomaximizeindividual freedoms.Fairness of the Law–The American legal system is, overall, a comprehensive and fair system.Yetitis 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 andtheDigitalAge3The modifications exhibit the flexibility and maturity of our system to be able to adapt to thechanging commercial, social, and ethical environments.Critical Legal Thinking–The law in the U.S.is permitted to grow and change over time as oursocial values change as a society. Having some vagueness to the law allowsthe lawto adaptmore easily.LandmarkU.S. Supreme CourtCase:Brown v. Board of EducationThis box discusses the application of law where the Supreme Court overturned the “separate butequal” 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 thatare in similar positions or situations, without favoring residents or any other group.Equalapplication is the important idea here.Ethics:Separate but equal cannot be applied when it comes to education, so the decision inPlessyv. Fergusonwas wrong.The Plessy decision was based on the idea of granting politicaland civil equality to African Americans, but left out social equality.The U.S.Constitution wasdrafted to reflect changing social, economic, technical, and intellectual ideas.This is what makesthe Constitution unique, as it slowly adapts to the changing world around us.Schools of Jurisprudential Thought1.2 List and describe the schools of judicial thought.There are several different philosophies about how the law developed, ranging from theclassical 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 moraltheory of law; the Historical School, with its recognition of the social traditions and customs thathave developed over time; the Analytical School,where law is shaped by logic; the SociologicalSchool,where law is applied to advance sociological goals; the Command School,whose lawsare established by the ruling party rather than the society as a whole; the Critical Legal StudiesSchool,who claim that laws are there only to maintain the status quo; and the Chicago School, orLaw and Economics School, which promotes market efficiency.International Law:Command Schoolof Jurisprudence of CubaCubais a one party communistdictatorship that has been ruled by one family since 1959.Cuba’slegal system is based on communist theory and the Command School of jurisprudence.History of American Law1.3 Learn the history and development of American law.English Common Law–English common law, the primary basis for U.S. law, was based onjudges issuing opinion when deciding a case.These opinions became the basis for precedent usedby later judges.The historical underpinning of U.S. law can be further reinforced with some discussion of the tie-ins betweenthecountry’spolitical history with that of the legal traditions of England and othercountries.This portion of the chapter materialcan be usedto introduce students to a broadoverview of the roles that the world’s major legal systems play in the world economy.Forexample, the role of the Law Merchant and its influence on international trade is critical to

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Chapter 14understanding most international rules on import/export laws today.The origins of the LawMerchant, in turn, are traceable in large part to the Roman civil law.In the end,the U.S.legalsystem represents the “Cuisinart” effect. There areingredients from English common law, Romancivil law, and Judeo-Christian canon law all thoroughly processed into a bread of law.Theindividual ingredients are all present, but each is no longer independently identifiable.Law Courts–These were established following the Norman Conquest of England in1066 to administer laws in a uniform method.Law Courts emphasized form oversubstance.Chancery Courts–These courts were established to serve when Law Courts providedinadequate remedies; theyprovidedequitable solutions.These courts reviewed the meritsof the case, rather than the procedural aspects.Merchant Courts–Law Merchant courts were developed as a separate entity to solvecommercial disputes in the Middle Ages. Theywere not merged into the regular courtsystem in England until the early 1900s.LandmarkLaw:Adoption of English Common Law in AmericaAll the states of the United States of America except Louisiana base their legal systems primarilyon the English common law.Currently, the law of the United States is a combination of lawcreated by the judicial system and by congressional legislation.Global Law:The Civil Law Systemof France and GermanyThe Romano-Germanic civil law system dates back to 450 B.C., when Rome adopted a set oflaws based on civil codes that applied to all Romans.The sole source of civil law in a country isthe application of code or statutes.Court decisions do not have the force of law.Sources of Law in the United States1.4List and describe the sources of law in the United States.Constitutions–One of the goals of this chapter is tointroduce students to the role of the U.S.Constitution and its pivotal role in the ultimate distribution of powers between the federalgovernment and the states vis-à-vis the control of business conduct in the U.S.This section alsoexplains the three branches of the federal government: the legislative, executive, and judicialbranches.Treaties–The Constitution establishes that only the president, upon the advice and consent ofthe 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 areadopted by local governmental bodies.Contemporary Environment:How a Bill Becomes LawThe 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 smallpercentage of them become law. First, a bill must be sponsored by a member of the U.S. House ofRepresentative or the U.S. Senate. Then, it is referred to the appropriate committee for review andstudy.Bills that receive the vote of a committee are reported to the full chamber, where they are

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Legal Heritage andtheDigitalAge5debated and voted on. If the bill receives majority vote from the full chamber,and a subsequentsecond chamber, then it is forwarded to the president’s desk. The bill becomes law when it issigned 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. Thesegovernmental units are empowered to adopt ordinances. Ordinances are also codified.Executive Orders–The executive branch of the government is empowered to issue executiveorders.Regulations and Order of Administrative Agencies–Agencies are created to interpret andenforce statutes enacted by both federal and state Congresses.Judicial Decisions–Judges issue written decisions explaining their legal reasoning.Doctrine ofstare decisisestablishes past court decisions as a precedent for future decisions.Priority of Law in the United States–The U.S. Constitution and treaties take precedence overall other laws, followed by federal statutes and federal regulations.Federal law takes precedenceover conflicting state law, which has precedence over local laws.Similarly, state constitutionstake precedence over state statutes and regulations.Critical Legal Thinking–This concept gives the law consistency so that citizens are treatedfairly and similarly. Without stare decisis, our judges may have too much untampered authority.Law in theDigitalAgeThe electronic age arrived before new laws were written that were unique and specific for thisenvironment. Courts have applied existing laws to the new digital environment by requiringinterpretations and applications. In addition, new laws have been written that apply specifically tothis new environment. The U.S. Congress has led the way, enacting many new federal statutes toregulate the digital environment.Critical Legal Thinking1.5 Learn what critical legal thinking is and how to apply it toanalyzing legal cases.Critical Legal Thinkingis a method of thinking that consists of investigating, analyzing,evaluating, and interpreting information to solve a legal problem.Socratic method–Is a process of asking a series of questions and answers and give-and-takeinquiry and debate between a professor and students.IRAC method–Examines a law case by issue, rule, application and conclusion.Case 1.1Affirmative Action in University AdmissionsFisher v. University of Texas at Austin

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Chapter 16136 S. Ct 2198 (2016)Facts:UT was admitting students giving weight to race as an admissions factor. A Caucasianstudent 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 helpdiversify a public university.Ethics:Students will have differing opinions about the issue.Case 1.2 Voting Rights ActShelby County, Texas v. Holder133 S.Ct. 2612 (2013)Facts:The 15thAmendment makes it unlawful for states to alter the rights of citizens as tovoting. In 1965, a statute was passed to address this issue in a more fulsome manner. The 1965VRA basically also put a lockdown on the ability of certain Southern states to change anydistricts.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.KeyTermsand Concepts•Administrative agencies—Agencies (such as the Securities and Exchange Commission andthe Federal Trade Commission) that the legislative and executive branches of federal andstate 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—Schoolof jurisprudence maintains that the law is shaped by logic.•Bill—Many bills are introduced each year at the U.S. Congress, out of whichafew arepassed as law.•Brown v. Board of Education—A landmark Supreme Court case in which a unanimousdecision reversed prior precedent and held that the separate but equal doctrine violated theEqual Protection Clause of the Fourteenth Amendment to the Constitution.The decision ledto the banning of school segregation.•Chamber—The U.S. Congress is composed of two chambers, the U.S. House ofRepresentatives and the U.S. Senate.•Civil Law—Acode of laws applicable to Romans. Also known as the Romano-Germaniccivil law system.•Code book—Federal statutes are organized by topic intocode books.•Codified law—Federal statutes that have been organized into code books.•CommandSchool—Schoolof jurisprudence that believes that the law is a set of rulesdeveloped, communicated, and enforced by the ruling party rather than a reflection of thesociety’s morality, history, logic, or sociology.•Committee—Billsfromeither ofthe two chambers of the U.S. Congress are reviewed andstudied by an appropriate committee.The committeemay reject the bill,report it to the fullchamber 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 ofRepresentatives and the U.S. Senate.•Constitution of the United States of America—The supreme law of the United States.•CourtofChancery—Court that granted relief based on fairness.Also called equity court.

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Legal Heritage andtheDigitalAge7•CriticalLegal Studies School—School of Jurisprudence that proposes legal rules areunnecessary 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 decidingacase. The principles announced in these cases becameprecedentfor later judges decidingsimilar 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.•Executiveorder—An order issued by a member of the executive branch of the government.•Federal Statute—Written laws, enacted by the U.S. Congress, that regulate foreign andinterstate 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 adoptedcivil 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 socialtraditions and customs that have developed over the centuries.•Judicial branch—A branch of the U.S.government that has the power to interpret anddetermine the validity of the law. Also known as the courts.•Judicialdecision—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 legalconsequences; a body of rules of action or conduct prescribed by controlling authority andhaving binding legal force.•Lawcourt—A court that developed and administered a uniform set of laws decreed by thekings and queens after William the Conqueror, legal procedure was emphasized over meritsat this time.•Law and Economics School—School of jurisprudence that believes that promoting marketefficiency 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 bymerchants around England and Europe, in the MiddleAges, 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.•MerchantCourt—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 andethics.•Natural Law School—Schoolof 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 theprecedent established by higher courts.•Romano-Germanic civil law system—Legal system that dates back to 450 BCE when Romeadopted the Twelve Tables, a code of laws applicable to the Romans. Commonly known ascivil law.•Sociological School—Schoolof jurisprudence that asserts that the law is a means ofachieving and advancing certain sociological goals.

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Chapter 18•Staredecisis—Latinfor“to stand by the decision.” Adherence to precedent.•State Constitution—Constitutions that establish the legislative, executive, and judicialbranches 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 governmentsthat establishes certain courses of conduct that covered partiesmust adhere to.•Subcommittee—Studies bills sent by the committee. After review,the subcommittee mayeither 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.”VoltaireI.Teacher to Teacher DialogueTwenty-first century technological advances have provided our students with all kinds ofinstant access to information. These devices have provided the students with a variety ofpreconceptions.Among these is the average undergraduate’s notion of how trials are conducted and therole of attorneys in that process. Invariably these perceptions center on popular television seriessuch as “Law and Order” and “Court TV”. This is not all bad. Current media focus on numerouslaw-related issues has generated a whole new wave of public interest in the workings of our legalsystem. The downside is that the media has created many myths on the folklore of law andlawyers. In the world of pop culture, no one knows until the end who really did it until a surprisewitness shows up to identify the bad guy. In more modern versions, the attorney first has abusiness relationship with the client and then proceeds to get him or her acquitted. Regardless ofthe outcome, the process is always full of glamour and intrigue.The problem is that a trial rarely resembles the goings on found in the entertainmentmedia. Trials are long, tedious, emotionally,and financially draining processes for all partiesconcerned. In many ways, a trial represents a failure by the parties to reach some sort ofsatisfactory solution of the issue beforehand. Rarely do the parties actually want to go through alabyrinth of pleadings, motions, and the like, feeling all the while totally dependent on thesometimes questionable competence of their attorneys. Unlike the make-believe world ofentertainment, the job of an attorney is to keep his or her client out of court. (This often needssome reinforcement with the student.) The attorney’s professional advice should anticipate andresolve 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 oursystem works. We can basically start by discussing how few controversies actually get to the trialstage 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 towardalternative dispute resolution (ADR) mechanisms. Personal experience examples might be helpfulin illustrating the growing trends toward ADR. To complete the cycle,we can then proceed toitemize the key steps used in a court trial in this chapter and in those that follow.COURTSAND JURISDICTION2

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Chapter 210II.Learning Objectives and Chapter Contents•Describestate court systems.•Describethe federal courtsystem.•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 statecourts.•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 hasjurisdiction?•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 MaterialsOne objective of this chapter is to familiarize students with the role of the major players in thoseevents.The federal court system and the court systems of the 50 states and the District of Columbia arethe two major court systems in the U.S.Litigation is the process of bringing, maintaining, anddefending a lawsuit.In addition, there are a number of alternative dispute resolutions that can beused.State Court Systems2.1 Describe state court systems.Limited-Jurisdiction Trial Court–Inferior trial-like traffic courts, juvenile courts, justice-of-the peace courts, probate courts,andfamily law courts hear specialized matters.Another exampleof 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 andevidence presented at trial for future reference.These courts hear felony cases, civil cases over acertain dollar amount, and other items.Intermediate Appellate Court–Courts of Appeal hear appeals from trial courts, reviewingrecords of trials for errors without hearing any new evidence.Highest State Court–State supreme courts hear appeals from intermediate state courts andsome trial courts, without hearing new evidence.BusinessEnvironment:Delaware Courts Specialize in Hearing Business Disputes

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Courtsand Jurisdiction11Delaware has created a special Chancery Court to decide business litigation, with a reputation forhandling corporate matters.Delaware’s laws also tend to favor corporate management, sotogether with the Chancery Court, the state has created an environment that encouragesincorporation in that state.Other states are beginning to follow suit and create their own variationof Delaware’s Chancery Court.Federal Court System2.2 Describe the federal court system.Special Federal Courts–There aresixcourts of limited jurisdiction: the U.S. tax court,federalclaims court, the Court of International Trade, bankruptcy court, and the courts of appeals for thearmed services and for veteran’s claims.U.S. District Courts–These are the federal court system’s 94trial courts of general jurisdiction.U.S. Courts of Appeal–These are the federal court system’s 13 intermediate appellate courts.Contemporary EnvironmentForeign Intelligence Surveillance CourtCreated in 1978, this court handles FBI, NSA, and warrants pertaining to national security issuescalled FISA warrants.Supreme Courtof the United States2.3 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 andconfirmed by the Senate.The President appoints one as the chief justice who is responsible forthe administration of the Court, while the other eight are considered associate justices.Contemporary EnvironmentThe Process of Choosinga U.S.Supreme Court JusticeThe President appoints Supreme Court justices, with the advice and consent of the Senate(majority vote).This allows a form of balance of power between theexecutive and legislativebranches of the government.Jurisdiction of the U.S. Supreme Court–The Supreme Court hears appeals from the federaldistrict courts and from the highest state courts.Legal briefs are filed, oral arguments are made,lower court recordsarereviewed, but neither new evidence nor testimony is heard.The SupremeCourt decision is final.Decisions by the U.S. Supreme Court–Congress has established the rules for the mandatoryappellate 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 thecourt decides to sit on the matter, it issues a writ of certiorari.The court hears about 100 cases peryear.Unanimous Decisions–All the justices votingandagree as to both the outcome and thereasoning.These decisions become precedent.

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Chapter 212Majority Decision–Decisions by the Supreme Court are considered majority decisionsif a majority of the justices agree on the outcome and reasoning.These decisions becomeprecedent.Plurality Decision–A plurality decision is when the majority of the justices agree on theoutcome, 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 asprecedent.Concurring Opinion–When a justice agrees with the outcome of the majority, but notthe reasoning, they will issue a concurring opinion explaining their stand.Dissenting Opinion–Any justice who does not agree with the decision may state theiropinion.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 Courts2.4Explain the jurisdiction of federal courts and compare it with the jurisdiction ofstate courts.Federal Question–Federal courts have limited jurisdiction to hear cases involving federalquestionswith no dollar amount limit.Diversity of Citizenship–The federal courts have jurisdiction to hear cases involvingdiversityof citizenship.There must be diversity of state citizenshiporthecasesmust bebetween a citizenand 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 thejurisdiction to hear.Federal courtsmay have concurrent jurisdiction with state courts to hear cases involving diversityof citizenship.Full Faith and Credit Clause–Federal constitutional clause which requires that a judgment fromone state court be recognized by every other state.Case 2.1Full Faith and Credit ClauseV.L. v. E.L, 136 S.Ct. 1017 (2016)Facts:Twowomen in a romantic relationship use technology tohavethree childrentogether.The couple raised them jointly until they split up.Issue:Who has maternity rights to the children? Does a Georgia court final judgment ofadoption make one the legal parent over the other womanas it applies to Alabama?Decision:Full faith clause of the Constitution caused a remand of the case in Alabama forfurther proceedings.Ethics Question:Students will have differing opinions on this issue.

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Courtsand Jurisdiction13Standing to Sue, Jurisdiction and Venue2.5 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 plaintifffiling a lawsuit with a court and by serving a summons on the defendant.If personal service isunavailable, 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 theircase, and cannot be served while making this appearance.Long-Arm Statute–A court can obtain jurisdiction over persons and businesses located inanother state through use of a long-arm statute, provided the defendant has had some minimumcontact with the state.Critical Legal ThinkingInternational Shoe Company v. State of WashingtonInternational 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. WashingtonStatedetermined that they had failed to pay unemploymenttaxeson International’s employees, andserve notice to the organization on one of their Washington sales representatives as well as bymailing the notice to theheadquarters in St. Louis.International made a special appearance toargue that it had insufficient contacts within the state to warrant payment of the tax.Theunemployment office and appeals board, as well as various courts within the state ruled againstInternational, which appealed to the U.S. Supreme Court.The Supreme Court ruled thatInternational had neither casual nor irregular contacts within the state, and was, therefore, subjectto in personam jurisdiction and service upon one of their agents, based on their “minimumcontacts” within the state.The Supreme Court clearly stated that the Due Process Clause permitsjurisdiction over a defendant in any state in which the defendant has “certain minimum contactssuch that the maintenance of the suit does not offend traditional notions of fair play andsubstantial justice.”Critical Legal Thinking Questions–There are firmly established standards developed throughcase law which allow a court to determine when minimum contact has been made with a state.Case 2.2 Long Arm StatuteMacDermid, Inc. v. Deiter702 F.3d 725 (2012) 2ndCircuitFacts:Prior to her employment termination, the defendant took proprietary property from heremployer who in turn sued her to get it back.Issue:Does the district court have personal jurisdiction over the defendant?Decision:YesEthics Questions:The defendant took property that did not belong to her which seems to be amore pressing substantive issue than personal jurisdiction.In RemJurisdiction–Courts may have jurisdiction over property found within the state, basedonin rem(over the thing) jurisdiction.Quasi In RemJurisdiction–Attachment jurisdiction occurs when a plaintiff who has obtained ajudgment attempts to satisfy the judgment by attaching property located in another state.

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Chapter 214Venue–The court with the jurisdiction that is located closest to where the incident occurred orwhere 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 toget a more impartial jury.Forum shopping is the process of looking for a more favorable courtwithout a valid reason, anditis frowned uponby most courts.Forum-Selection and Choice-of-Law Clauses–Because many business agreements are formedbetween people from different states and different countries, many contracts have clauses thatspecifically address the state’s or country’s laws that will be applied in the case of a dispute, inwhat are known as choice-of-law clauses.Additionally, they will often agree as to which courtwill have jurisdiction over any dispute in forum-selection clauses.2.2 Forum-Selection ClauseCarter’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 shoesin Massachusetts.Issue:Is the forum-selection clause enforceable?Decision:YesCritical Legal Thinking Questions:Students will have differing ideas on these questions.Jurisdiction inDigital Commerce2.6 Explain how jurisdiction is applied to digital commerce.Today, with the advent of the Internet and the ability of persons and businesses to reach millionsof people in other states electronically, particularly through websites, modern issues arise as towhether courts have jurisdiction in cyberspace.Zippo Manufacturing Company v. Zippo DotCom, Inc.is an important case that established a test for determining when a court has jurisdictionover the owner or operator of an interactive, semi-interactive, or passive website.Information TechnologyJurisdiction Over an Internet eBay SellerInternet forums like eBay expand the seller’s market across the world and sellers know that andavail themselves of the benefits. This opens up personal jurisdiction much more broadly.International Law:Judicial System of JapanThere is very little litigation in Japan when compared to the United States. A primary reason forthe difference is cultural because Japan nurtures the attitude that confrontation should be avoided.Other reasons include the high cost that must be borne by plaintiffswho want to file a lawsuit.Even if the plaintiff wins, the damages awarded are low. In the past,a relatively low number oflawyers graduated every year from the few law schools in Japan. But now, due to increasingbusiness and personal disputes, the government is building new law schools and plans to doublethe number of lawyers by the year 2020.V. Termsand Concepts•Article III of the U.S. Constitution—Itprovides that the federal government’s judicialpower is vested in one “Supreme Court.” This court is the U.S. Supreme Court.

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Courtsand Jurisdiction15•Associate Justices of the U.S. Supreme Court—The eight other justices apart from theChief Justice of the U.S. Supreme Court.•Change of Venue—In certain circumstances, when pretrial publicity may prejudicejurors, 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 foradministration of the U.S. Supreme Court.•Choice-of-law clause—A contract provision that designates a certain state’s law orcountry’s law that will be applied in any dispute concerning nonperformance of thecontract.•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 Courtwho 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., thathas special appellate jurisdiction to review the decisions of the Claims Court, the Patentand Trademark Office, and the Court of International Trade.•Delaware Court of Chancery—A special court which decides cases involving corporategovernance, 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 SupremeCourt does not agree with a decision.•District—The geographical area served by a U.S. district court.•District of Columbia Circuit—The 12thcircuit court, located in Washington, DC.•Diversity of citizenship—A case between (1) citizens of different states and (2) a citizenof a state and a citizen or subject of a foreign country.•En bancreview—A review that can be requested by a petitioner in the U.S. court ofappeals 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 federalstatutes and regulations.•FISA warrant—A warrant issued by a FISA Court for the government to conductsurveillance 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 anydispute concerning nonperformance of the contract.•Full Faith and Credit Clause—A clause of the U.S. Constitution under whicha judgmentof 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 notwithin the jurisdiction of limited-jurisdiction trial courts. Testimony and evidence at trialare recorded and stored for future reference.•Highest state court—The highest court in a state court system; it hears appeals fromintermediate appellate state courts and certain trial courts.•In personamjurisdiction—Jurisdiction over the parties to a lawsuit.•In remjurisdiction—Jurisdiction to hear a case because of jurisdiction over the propertyof 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 Courtcase that established the minimum contacts standard.

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