American Graduate School of Education Business Law Worksheet

The Legal Environmentof Business
Chapter 3: Courts and ADR
Professor Wambui Mungai, LL.B., LL.M
The Judiciary’s Role in American
Government
• The role of the courts in the American
government is to interpret and apply the
law.
• Through the process of judicial review—
determining the constitutionality of laws
—the judicial branch acts as a check on
the executive and legislative branches
of government.
2
Judicial Review: Marbury v.
Madison
• The power of judicial review was established
by Chief Justice John Marshall in Marbury v.
Madison, well after the Constitution had
established the other checks and balances
within the federal government.
• Acts of Congress that conflict with the
Constitution are not law/invalid, they are
subordinate to the Constitution. Supreme
Court established itself as the final arbiter of
when an Act of Congress is constitutional.
3
Basic Judicial Requirements
Before a lawsuit can be filed with
a court, certain requirements
must first be met. These include:
Jurisdiction
4
Venue
Standing
to Sue
Jurisdiction
• Before a court can hear a case, it
must have jurisdiction over the
person(s) against whom the suit is
brought or the property involved in
the suit, as well as jurisdiction over the
subject matter.
5
Jurisdiction
• Generally, a court’s power is limited to the territorial boundaries of
the state in which it is located, but in some cases, a state’s long
arm statute gives a court jurisdiction over a nonresident defendant.
• For the long arm statute to apply, the courts jurisdiction over the
defendant must adhere with Due Process under the constitution.
That means, it must be reasonably foreseeable that the defendant
would be sued in that court.
• A Defendant must have certain “minimum contacts” with that
state for the long arm statute to apply.
6
Subject Matter Jurisdiction
Limited
jurisdiction:
• Exists when a
court is limited to
a specific subject
matter, such as
probate or
divorce.
7
General
jurisdiction:
• Exists when a court
can hear any kind
of case.
Original vs. Appellate
Jurisdiction
Original
jurisdiction:
• Exists with courts
that have authority
to hear a case for
the first time (trial
courts).
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Appellate
jurisdiction:
• Exists with courts of
appeals, or
reviewing courts.
• Generally appellate
courts do not have
original jurisdiction.
Federal Jurisdiction
• A federal court can exercise jurisdiction:
– When a federal question is involved (when the
plaintiff’s action is based, at least in part, on
the U.S. Constitution, a treaty, or a federal
law).
– When a case involves diversity of citizenship
(citizens of different states, for example) and
the amount in controversy exceeds $75,000.
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Exclusive v. Concurrent
Jurisdiction
Concurrent
jurisdiction: Exists
when two different
courts have
authority to hear
the same case.
(Amendment 10 of the
Constitution)
10
Exclusive
jurisdiction: Exists
when only state
courts or only
federal courts have
authority to hear a
case. (Article III Section
2 Clause 1 of the
Constitution)
Exclusive v. Concurrent
Jurisdiction
11
Jurisdiction in Cyberspace & International
Issues
• The Sliding Scale
Standard
– Substantial business
• Jurisdiction exists
– Some interactivity
• May have jurisdiction.
– Passive advertising
• Jurisdiction does NOT
exist
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• A business has to
comply with the laws
in any jurisdiction in
which it targets
customers.
Basic Judicial Requirements
• Jurisdiction in Cyberspace.
– Sliding Scale Standard to determine whether a
court has jurisdiction.
Passive
Website
Some
Interaction
No
Yes
Substantial
Business
Interaction
13
Venue
Venue has to do with the most appropriate
location for a trial, which is usually the
geographical area in which the event
leading to the dispute took place or where
the parties reside.
14
Standing to Sue
• A requirement that a party must have a legally
protected and tangible interest at stake sufficient
to justify seeking relief through the court system.
• The controversy at issue must also be a
justifiable controversy, one that is real and
substantial, as opposed to hypothetical or
academic.
15
Following a State Court
Case
A sample civil court case in a state court would involve the
following:
The
Pleadings
Pretrial
Motions
Discovery
Post trial
Motions
Trial
Pretrial
Conference
The Appeal
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The Appeal
• Either party can appeal (file a writ of certiorari) the trial
court’s judgment to an appropriate court of appeals.
• Can only appeal questions of law!
• The appellate court holds a hearing and renders its
opinion. Please remember, getting an appeal hearing is not
an automatic right.
• Appeal courts affirm the trial decision, reverse the trial
decision or remand (send back) the case to the trial court
for further proceedings.
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Alternative Dispute Resolution:
Negotiation and Mediation
Negotiation: The
parties come together,
with or without
attorneys to represent
them, and try to reach
a settlement without
the involvement of a
third party.
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Mediation: The
parties themselves
reach an agreement
with the help of a third
party, called a
mediator, who
proposes solutions.
Alternative Dispute Resolution:
Arbitration
• A more formal method of ADR in which the parties submit
their dispute to a neutral third party, the arbitrator, who
renders a decision, which may or may not be legally
binding, depending on the circumstances.
• In most circumstances the decision of the arbitrator is
binding.
• What is the difference between mediation and arbitration?
– Third party arbitrator makes a binding decision
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ADR Comparison
20
The Legal Environment of
Business
Chapter 5: Tort Law
Professor Wambui Mungai, LL.B., LL.M
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1
Basis of Tort Law

A tort is a wrongful action—a civil, as opposed to criminal, wrong not
arising from a breach of contract. A tort is a breach of legal duty that
proximately causes harm or injury to another.
• Basis for all torts: wrongs & compensation
 Plaintiff (the injured party) sues the Defendant (the Tortfeasor) for
damages (monetary relief).
• Compensatory damages (general and special).
• Punitive damages.
• McDonald’s Hot Coffee Case
 Three Torts:
• Intentional;
• Unintentional (negligence-no fault);
• Strict Liability (absolute liability).
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2
Intentional Torts Against Persons
 Assault and Battery.
• Assault: the reasonable apprehension of immediate harmful
or offensive contact (contact need NOT result)
• Battery: Harmful or offensive contact to plaintiff’s person –
which includes anything attached to the plaintiff such as
purse, clothes, hat, etc…
• Defenses:
• Consent.
• Self-Defense and Defense of Others.
• Defense of Property.
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3
Intentional Torts Against Persons
 Defamation (Remember 1
st
Amendment implications)
• Involves wrongfully hurting a person’s
reputation.
• Slander: oral/spoken form
• Libel: written form
• Law imposes duty to refrain from making false
statements of fact about others.
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4
Intentional Torts Against Persons:
Defamation Continued
• Statement of opinions are usually not actionable.
• Publication of a false statement (oral or written) that
injures a person’s good reputation. (Publication means
communication)
• Publication: third party must hear or see statement.
• Statements made on the internet may be actionable.
• An individual who re-publishes the statement will also be
held liable.
• Statement must hold someone up to contempt, ridicule or
hatred in the community.
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5
Intentional Torts Against Persons:
Defamation Continued
• Defenses:
• Truth is normally an absolute defense.
• Statement was Privileged:
– Absolute: judicial and legislative proceedings.
– Qualified/Conditional: good faith, limited.
• If the defamation involves a matter of public concern (i.e.:
defamation of a public official, superstar) then the Constitution
(1st Amendment) requires the plaintiff also prove:
– Plaintiff must show statement made with “actual
malice”; and
– Plaintiff must show statement is false.
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6
Intentional Torts Against Persons:
Privacy
 Invasion of the Right to Privacy:
• Person has the right to solitude. Breach
of that duty is a tort.
• Four acts qualify as an invasion of
privacy:
– Appropriation of identity
– False Light
– Public Disclosure of Private Facts
– Intrusion into an Individuals Affairs or Seclusion
(remember, in most cases if the plaintiff is in a
public place he/she has NO privacy right)
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Intentional Torts Against Persons:
Fraudulent Misrepresentation
 Fraudulent Misrepresentation:
• Intentionally deceive another to believe in a
condition that is different from the condition
that already exists. Elements of this tort are:
• Knowing misrepresentation of fact (not opinion)
or reckless disregard to the truth.
• Intent to induce innocent party to rely.
• Justifiable reliance by innocent party.
• Causation and Damages.
• Mere “puffery” is insufficient.
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8
Intentional Torts Against Property
 Trespass to Land (real property)
 Trespass to Personal Property
 Conversion
• Act that deprives an owner of personal
property or use of that property without
that owner’s permission and without just
cause.
 Disparagement of Property
• Slander of Quality
• Slander of Title
 Defenses:
• Trespass is warranted, or so-called owner
did not have rights to the property
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9
Unintentional Torts
Negligence
 Negligence is an unintentional tort.
 Occurs when someone suffers injury
because of the defendant’s failure to
comply with a legal duty.
 Defendant (tortfeasor) created
foreseeable risk of injury.
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Unintentional Torts
Negligence–Analysis
 For negligence to be established, the
answer to each question must be YES.
• Did the Defendant owe the Plaintiff a legal
duty of care?
• Did the Defendant breach that duty?
• Did the Plaintiff suffer a legal injury?
• Did the Defendant’s breach of duty cause
the Plaintiff’s injury (causation
requirement)?
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11
Unintentional Torts
Negligence- Duty
 Duty of Care and Breach:
• Duty is based on the reasonable person standard.
• How would a reasonable person have acted under the
circumstances?
• This is an objective standard.
• Ie: Duty of Landowners to invitees and tenants:
• Landowners that invite persons onto their premises usually
have a duty to exercise reasonable care to protect their
invitees against foreseeable risks that the owner knew or
should have known about to keep area safe (duty to warn)
• No duty to warn of obvious risks.
• Ie: Duty of Professionals to clients (attorneys, CPA’s,
doctors):
• An individual with knowledge, skill, or intelligence superior to
that of an ordinary person has a higher standard of care—his
or her duty is that which is reasonable in light of those
capabilities.
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Unintentional Torts
Negligence-Causation
 Injury Requirement and Damages:
• Plaintiff must suffer a legally recognizable injury.
 Causation:
• The breach of the duty of care must have caused the
harm for which recovery is sought.
• Causation in Fact (“but for” test).
• Proximate Cause (a foreseeably strong connection).
• Landmark Case: Palsgraf v. Long Island Railroad Co.
(1928) . Were the plaintiff’s injuries foreseeable?
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13
Unintentional Torts
Negligence-Defenses
 Assumption of the Risk.
 Superseding Cause.
•Event must be unforeseeable.
•A superseding intervening force breaks the connection (breaks
the chain of causation) between a wrongful act and an injury.
 Contributory Negligence (few jurisdictions).
•Plaintiff recovers nothing if (s)he is partly at fault.
 Comparative Negligence (more common).
•As long as Plaintiff is less than 50% at fault (s)he can recover a
pro-rata share of the verdict.
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14
Unintentional Torts
Special Negligence Doctrines

Res Ipsa Loquitur “The facts speak for themselves”
• Negligence may be inferred.
• It must be caused by something within the exclusive control of
the defendant, and it must not have been due to any act on the
part of the injured party.
 Negligence Per Se: Occurs when an individual violates a statute
providing for a criminal penalty and that violation causes another
to be injured. Violation of law is legal breach of duty. Plaintiff
must show:
• Defendant violated a statute.
• Plaintiff is in special class to be protected by the statute; and
• Statute designed to prevent injury to Plaintiff.
 “Danger Invites Rescue” doctrine.
 Dram Shop Acts & Good Samaritan statutes.
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15
Strict Liability
 Strict liability
• Does not require the plaintiff to prove
that the defendant was at fault.
• Abnormally Dangerous Activities
– Explosives
• Other Applications of Strict Liability
– Wild animals
– Product liability
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16
Cyber Torts
 Can a person be liable for a tort committed in
cyberspace?
• Cyber Bullying?
 Defamation Online.
• Should an ISP be liable for the actions of its
subscriber?
 Who should be liable for “spam” and computer
viruses that cause injury?
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license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
17
The Legal Environment
of Business
Chapter 6: Criminal Law
Professor Wambui Mungai, LL.B., LL.M
Civil and Criminal Law
• Civil law is the whole body of law that
includes, among others, contracts
and torts.
• Criminal law deals with offenses
against society as a whole, punished
by jail and/or fines.
2
Civil Law and Criminal Law
• Major Differences Between Civil and
Criminal Law.
– Burden of Proof. Civil is preponderance of the
evidence. Criminal is proof beyond a
reasonable doubt.
– Criminal Sanctions. Harsher than those
applied in civil cases.
3
Civil vs. Criminal Law
4
Criminal Liability
• To be convicted of a crime, the State must
show beyond a reasonable doubt that the
Defendant:
– Performed an illegal act (actus reus) AND
– While performing the act, had the required
intent or specific state of mind (mens rea).
– Without the required intent there can be no
conviction.
5
Criminal Liability
• State of Mind:
– Required mens rea (or mental state) is
indicated in the applicable statute or law.
• Intent
• Recklessness (wanton disregard)
• Criminal Negligence (unjustified,
substantial and foreseeable risk that
results in harm).
6
7
Corporate Criminal Liability
• A corporation is a legal “person.”
• Respondeat superior: A corporation is normally liable
for the crimes committed by the agents and employees
within the course and scope of employment.
• A corporation can be fined or denied legal privileges
(license) for criminal activity.
• Responsible Corporate Officer: officers and directors
can be criminally liable for the crimes they commit.
8
Types of Crimes
• Violent Crimes:
– Crimes against persons (murder, rape).
– Robbery is a violent crime (theft with force/fear).
• Property Crimes: Most common, involves
money or property.
– Burglary
• Burglary is, the unlawful breaking and entering into a building
with the intent to commit a felony.
– Larceny
• Larceny is the wrongful taking and carrying away of another
person’s personal property with the intent to permanently deprive
the owner of the property.
9
Types of Crimes
• Property Crimes continued:
– Obtaining Goods by False Pretenses
•
Is representing as true some fact or circumstance that is not true,
with the intent of deceiving and with the result of defrauding an
individual into relinquishing property. (ie: buying groceries with
bad check)
– Receiving Stolen Goods
•
The intent requirement for this crime is knowing the goods are
stolen.
– Arson
•
The intentional burning of a building owned by another.
– Forgery
•
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The fraudulent making or altering of any writing in a way that
changes the legal rights and liabilities of another.
White Collar Crimes
•
White Collar Crimes: Non-violent crimes involving a
business transaction.
– Embezzlement
• Embezzlement is the fraudulent appropriation of funds or
other property by a person to whom the funds or property
has been entrusted. Intending to ultimately return
embezzled property is not a defense.
– Mail and Wire Fraud
• Use of the mails to defraud is a federal crime that requires
(1) devising a scheme to defraud and (2) using the mails
to carry it out.
• It is also a crime to use a wire, for example, the
telephone, radio, or television transmission to defraud.
11
White Collar Crimes
(continued)
• Bribery
– Offering something of value to a person in an attempt
to influence that person (ie: bribery of a public official)
• Bankruptcy Fraud
– A debtor who fraudulently transfers assets to favored
parties before or after petitioning for bankruptcy, or
who fraudulently conceals property commits a crime.
12
White Collar Crimes (continued) &
Public Order Crimes
•
Theft of Trade Secrets
–
•
Trade secrets constitute a form of intellectual property. Theft
trade secrets is a crime. If is also a crime to buy or possess
trade secrets of another, knowing that they were acquired
without the owner’s authorization
Insider Trading
–
The purchase or sale of corporate securities on the basis of
inside information (information that has not been made available
to the public).
Public Order Crimes: Crimes contrary to public values and
morals. Ie: public drunkenness, prostitution, gambling, illegal
drug use.
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Organized Crimes
•
•
Organized crime operates illegitimately to supply illegal
goods and services.
Money Laundering
–
–
•
14
Falsely reporting income that has been obtained through criminal
activity as income obtained through a legitimate business
enterprise.
Under federal law, financial institutions must report currency
transactions of over $10,000. To avoid detection under this law,
those who engage in illegal activities may attempt to launder the
money through legitimate businesses. For example, criminal
profits might be reported as a restaurant’s income.
RICO Act Criminal Provisions
Classification of Crimes
A criminal act can also have civil liability. (Remember the
O.J. Simpson trials?)
Felonies
Serious crimes,
punishable by Death or
prison for more than one
(1) year.
15
Misdemeanors
Non-serious (petty) crimes
punishable by jail for less
than one(1) year and/or by
fines.
Defenses to Criminal Liability
Continued
• Justifiable Use of Force/Self Defense
– The legally recognized privilege to protect oneself or one’s
property against injury by another. Must use reasonable force in
the circumstances.
– Can use deadly force if reasonably believe that imminent death
or imminent serious bodily injury will result.
– Cannot use deadly force to protect property alone.
• Necessity
– A criminal act was necessary to prevent an even greater harm.
• Insanity
– As a result of mental disease or defect the defendant lacked the
substantial capacity to appreciate the wrongfulness of his
conduct.
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Defenses to Criminal Liability
Continued
• Mistake
– Mistake of fact negates the required mental state. (ie: Carl
mistakenly walks off with Julies briefcase because he thinks it is his.
There is no theft because Carl thought the briefcase with his).
• Duress
– Duress exists when a wrongful threat induces a person to do
something that he or she would not otherwise do.
• Entrapment
– Where a defendant claims that he or she was induced by a public
official (usually an undercover police officer) to commit a crime that
he/she would otherwise not have committed.
– The important issue is whether a person who committed a crime was
predisposed to do so.
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Defenses to Criminal Liability
Continued
• Statute of Limitations (SOL)
– Most crimes, except murder, must be prosecuted within a certain
time. If a criminal proceeding is brought after the SOL has
expired, then that is a defense.
• Immunity/Self-Incrimination
– To obtain information, the state can grant immunity from
prosecution. A person may then be compelled to answer
questions (under the Fifth Amendment a person can refuse to
answer questions only on the ground of self-incrimination).
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Constitutional Safeguards
4th Amendment
• Fourth Amendment Protections:
– Search Warrants and Probable Cause
• Officer must have “Probable Cause”
– Reasonable grounds for believing that a person
committed a crime and should be arrested or searched.
• The search warrant must be precise: no ‘general’
warrants (fishing expedition).
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Constitutional Safeguards
4t , 5th 6th, and 8th Amendment
•
•
•
•
4th Amendment Protections:
– Search and Seizure in Businesses
• Generally, government cannot enter business without a warrant.
• No warrant required for contaminated food or highly regulated liquor or gun
businesses.
• What about airports?
5th Amendment Protections:
• No person shall be deprived of “life, liberty, or property without due process of law.
• Right against self incrimination
6th Amendment Protections:
• Right to a speedy Trial, Trial by jury, public trial, confront witnesses, right to a lawyer.
8th Amendment Protections:
• Prohibitions against excessive bail and fines & against cruel and unusual punishment.
20
Exclusionary Rule
• Evidence obtained in violation of
constitutional procedures must be
excluded from trial.
• Evidence derived from illegal evidence
is “fruit of the poisonous tree” and
must be excluded from trial.
• Deters police from misconduct.
21
Constitutional Safeguards
5th Amendment
• Due Process of Law
– Procedural and Substantive. Procedural due process
requirements underlie criminal process.
• Self-Incrimination: (5th Amendment)
– Right to remain silent, or right not to testify against yourself.
– This does NOT apply to partnerships or corporations.
22
Miranda Rule
• Miranda v Arizona (1966).
– Inform suspect of his rights when he is
arrested, including right to counsel and right
to remain silent.
• Exceptions:
– Public safety
– Accused person must unequivocally assert
his/her rights to counsel to stop police
questioning. Example: “I want to speak to my
lawyer”
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Criminal
Process
Arrest
Booking
Initial Appearance
Grand Jury
Preliminary Hearing
Indictment
Information
Arraignment
Plea Bargain
Guilty Plea
Trial
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Cyber Crime
• Computer Crime: a wrongful act directed
at computers
• Cyber Crime: A crime that occurs online
(on the internet) rather than in the physical
world.
25
Cyber Crime
• Cyber Theft
– Identity Theft
– Phishing
– Vishing
• Hacking
– Malware
– Cyber Terrorism.
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