Deck 2: Courts and Alternative Dispute Resolution

Question 1

Spotlight on the National Football League-Arbitration.

Bruce Matthews played football for the Tennessee Titans. As part of his contract, he agreed to submit any dispute to arbitration. He also agreed that Tennessee law would determine all matters related to workers' compensation. After Matthews retired, he filed a workers' compensation claim in California. The arbitrator ruled that Matthews could pursue his claim in California but only under Tennessee law. Should this award be set aside? Explain. [National Football League Players Association v. National Football League Management Council, 2011 WL 1137334 (S.D.Cal. 2011)] (See page 42.)

Answer 1

Case brief:
As per the mentioned case it is stated that BM who used to play football on behalf of HO and TT in National Football League (NFL). after 5 years, he has asked for compensation claims from NFL after he left. During his playing times he has signed an agreement stating about the binding and final arbitration if any kind of dispute arises and all the salary and compensation will be taken care by as per the law. But the arbitrator ruled that M could pursue his claim in CAL city under Tennessee law.
Arbitration agreement is a general clause in a contract, employees are required to use arbitration agreements rather than going to courts to resolve their issues like unfair treatment in the workplace.
Arbitration is the process of mutually solving a dispute and concluding that is agreeable by both the parties. An arbitrator is selected to solve the case; an arbitrator is transparent and unbiased for both the parties involved in the issue.
As a part of contract, it is mentioned that M agreed to solve any dispute through arbitration and not legal proceedings will be undertaken. But after the retirement when M filed a case in CAL court claiming the workers' compensation, the arbitrator asked him that he can get his compensation but only under Tennessee law. But M has retired. Even though he was retired the contract was binding for both the parties. Thus, the arbitrator and his decision cannot be set aside.

Question 2

Minimum Contacts
Seal Polymer Industries sold two freight containers of latex gloves to Med-Express, Inc., a company based in North Carolina. When Med-Express failed to pay the $104,000 owed for the gloves, Seal Polymer sued in an Illinois court and obtained a judgment against Med-Express. Med-Express argued that it did not have minimum contacts with Illinois and therefore the Illinois judgment based on personal jurisdiction was invalid. Med-Express stated that it was incorporated under North Carolina law, had its principal place of business in North Carolina, and therefore had no minimum contacts with Illinois. Was this statement alone sufficient to prevent the Illinois judgment from being collected against Med-Express in North Carolina? Why or why not? [Seal Polymer Industries v. Med-Express, Inc., 725 S.E.2d 5 (N.C.App. 2012)] (See page 29.)

Answer 2

Med-Express Inc. failed to pay its owed money to Seal Polymers as a payment for the latex gloves sold to Med-Express. As a result Seal Polymers filed a case against Med-Express in court to solve the Case and get the result.
But Med-Express declined to participate in court proceedings stating that it do not have any contact or come under the geographic jurisdiction of court. And thus case must be filed in where Med-Express is located. Its principal base of business is and has minimal contact with.
Thus looking at the invalidity of personal jurisdiction, the statement made by Med-Express is sufficient enough to prevent judgement from being collected against Med-Express in.

Question 3

Arbitration.
Horton Automatics and the Industrial Division of the Communications Workers of America, the union that represented Horton's workers, negotiated a collective bargaining agreement. If an employee's discharge for a workplace-rule violation was submitted to arbitration, the agreement limited the arbitrator to determining whether the rule was reasonable and whether the employee violated it. When Horton discharged employee Ruben de la Garza, the union appealed to arbitration. The arbitrator found that de la Garza had violated a reasonable safety rule, but "was not totally convinced" that Horton should have treated the violation more seriously than other rule violations. The arbitrator ordered de la Garza reinstated. Can a court set aside this order? Explain. [Horton Automatics v. The Industrial Division of the Communications Workers of America, AFL-CIO, 2013 WL 59204 (5th Cir. 2013)] (See page 42.)

Answer 3

As the given case, there is a union association in Horton Automatics and the Industrial Division of the Communications Workers of America. There is a case in Horton where an employee is discharged of his duties stating that he has violated the rules of the company.
And this led to arbitration, and an arbitrator viewed that an employee de la Garza has violated safety rules but was not totally convinced fro the discharge of duties for him. He concluded that de la Garza should be reinstated and given his position once again and also advised Horton to be more alert towards serious violations than the safety violations of the company.
This case of discharge was clearly solved by an arbitrator and the court cannot set aside this conclusion because it has been solved by an arbitrator of a very good conduct.

Question 4

A Question of Ethics: Agreement to Arbitrate.

Nellie Lumpkin, who suffered from various illnesses, including dementia, was admitted to the Picayune Convalescent Center, a nursing home. Because of her mental condition, her daughter, Beverly McDaniel, filled out the admissions paperwork and signed the admissions agreement. It included a clause requiring parties to submit to arbitration any disputes that arose. After Lumpkin left the center two years later, she sued, through her husband, for negligent treatment and malpractice during her stay. The center moved to force the matter to arbitration. The trial court held that the arbitration agreement was not enforceable. The center appealed. [Covenant Health Rehabilitation of Picayune, LP v. Lumpkin, 23 So.3d 1092 (Miss.App. 2009)] (See page 42.)
?
(a) Should a dispute involving medical malpractice be forced into arbitration? This is a claim of negligent care, not a breach of a commercial contract. Is it ethical for medical facilities to impose such a requirement? Is there really any bargaining over such terms? Discuss fully.
(b) Should a person with limited mental capacity be held to the arbitration clause agreed to by the nextof- kin who signed on behalf of that person? Why or why not?

Question 5

Standing Jack and Maggie Turton bought a house in Jefferson County, Idaho, located directly across the street from a gravel pit. A few years later, the county converted the pit to a landfill. The landfill accepted many kinds of trash that cause harm to the environment, including major appliances, animal carcasses, containers with hazardous content warnings, leaking car batteries, and waste oil. The Turtons complained to the county, but the county did nothing. The Turtons then filed a lawsuit against the county alleging violations of federal environmental laws pertaining to groundwater contamination and other pollution. Do the Turtons have standing to sue? Why or why not?

Question 6

Access to Courts. Assume that a statute in your state requires that all civil lawsuits involving damages of less than $50,000 be arbitrated. Such a case can be tried in court only if a party is dissatisfied with the arbitrator's decision. The statute also provides that if a trial does not result in an improvement of more than 10 percent in the position of the party who demanded the trial, that party must pay the entire costs of the arbitration proceeding. (See page 42.)
?
(a) One group will argue that the state statute violates litigants' rights of access to the courts and to trial by jury.
(b) Another group will argue that the statute does not violate litigants' rights of access to the courts.
(c) A third group will evaluate how the determination on rights of access would be changed if the statute was part of a pilot program and affected only a few judicial districts in the state.

Question 7

What is "diversity of citizenship"?

Question 8

Budget Cuts for State Courts Can Affect Businesses
In the United States, businesses use the courts far more than anyone else. Most civil court cases involve a business suing another business for breach of contract or fraud, for instance. Additionally, when one company fails to pay another company for products or services, the unpaid company will often turn to the court system. If that firm does not have ready access to the courts, its financial stability can be put at risk.
Court Budgets Have Been Reduced
According to the National Center for State Courts, since 2008 forty-two state legislatures have reduced funding for their state courts. California's courts have experienced the steepest cuts-$844 million from their annual budget since 2011. Recently, the Alabama legislature cut its court funding by almost 9 percent. As a result, the state's chief justice ordered courthouses to close on Fridays. The number of weeks that jury trials are available to civil litigants in Alabama has been reduced by 50 percent.
Intellectual Property Cases Take Longer to Resolve
Today, the value of a company's intellectual property, such as its copyrights and patents, often exceeds the value of its physical property. Not surprisingly, disputes over intellectual property have grown in number and importance. As a result of the court budget cuts, these disputes also take longer to resolve. In California, for example, a typical patent lawsuit used to last twelve months. Today, that same lawsuit might take three to five years.
Investors are reluctant to invest in a company that is the object of a patent or copyright lawsuit because they fear that if the company loses, it may lose the rights to its most valuable product. Consequently, when litigation drags on for years, some companies may suffer because investors abandon them even though the companies are otherwise healthy.
Other Types of Litigation Take Longer, Too
Other types of lawsuits are also taking longer to conclude. Now attorneys must tell businesses to consider not only the cost of bringing a lawsuit, but also the length of time involved. The longer the litigation lasts, the larger the legal bills and the greater the drain on company employees' time. Roy Weinstein, managing director of Micronomics in California, argues that the economic impact of court delays on businesses is substantial. During the years that a lawsuit can take, some businesses find that they cannot expand or hire new employees, and they are reluctant to spend on additional marketing and advertising.
In fact, it is not unusual for a company to win its case but end up going out of business. As a result of putting its business on hold for years, the company becomes insolvent.
Some Meritorious Cases Are Never Filed
Facing long delays in litigation with potential negative effects on their companies, business managers are becoming reluctant to bring lawsuits, even when their cases clearly have merit. In Alabama, for instance, the number of civil cases filed has dropped by more than a third in the last few years. Judge J. Scott Vowell of Jefferson County attributes this decline to delays and higher court costs.
Managerial Implications
Before bringing a lawsuit, a manager must now take into account the possibility of long delays before the case is resolved. A cost-benefit analysis for undertaking litigation must include the delays in the calculations. Managers can no longer just stand on principle because they know that they are right and that they will win a lawsuit. They have to look at the bigger picture, which includes substantial court delays.
Business Questions
What are some of the costs of increased litigation delays caused by court budget cuts?

Question 9

Stan Garner resides in Illinois and promotes boxing matches for SuperSports, Inc., an Illinois corporation. Garner created the concept of "Ages" promotion-a three-fight series of boxing matches pitting an older fighter (George Foreman) against a younger fighter. The concept had titles for each of the three fights, including "Battle of the Ages." Garner contacted Foreman and his manager, who both reside in Texas, to sell the idea, and they arranged a meeting in Las Vegas, Nevada. During negotiations, Foreman's manager signed a nondisclosure agreement prohibiting him from disclosing Garner's promotional concepts unless the parties signed a contract. Nevertheless, after negotiations fell through, Foreman used Garner's "Battle of the Ages" concept to promote a subsequent fight. Garner filed a suit against Foreman and his manager in a federal district court located in Illinois, alleging breach of contract. Using the information presented in the chapter, answer the following questions.
1. On what basis might the federal district court in Illinois exercise jurisdiction in this case?
2. Does the federal district court have original or appellate jurisdiction?
3. Suppose that Garner had filed his action in an Illinois state court. Could an Illinois state court exercise personal jurisdiction over Foreman or his manager? Why or why not?
4. Assume that Garner had filed his action in a Nevada state court. Would that court have had personal jurisdiction over Foreman or his manager? Explain.

Question 10

Jurisdiction Marya Callais, a citizen of Florida, was walking along a busy street in Tallahassee, Florida, when a large crate flew off a passing truck and hit her, causing numerous injuries. She experienced a great deal of pain and suffering, incurred significant medical expenses, and could not work for six months. She wants to sue the trucking firm for $300,000 in damages. The firm's headquarters are in Georgia, although the company does business in Florida. In what court might Callais bring suit-a Florida state court, a Georgia state court, or a federal court? What factors might influence her decision?

Question 11

How does the presence-or lack-of diversity of citizenship affect a lawsuit?

Question 12

Budget Cuts for State Courts Can Affect Businesses
In the United States, businesses use the courts far more than anyone else. Most civil court cases involve a business suing another business for breach of contract or fraud, for instance. Additionally, when one company fails to pay another company for products or services, the unpaid company will often turn to the court system. If that firm does not have ready access to the courts, its financial stability can be put at risk.
Court Budgets Have Been Reduced
According to the National Center for State Courts, since 2008 forty-two state legislatures have reduced funding for their state courts. California's courts have experienced the steepest cuts-$844 million from their annual budget since 2011. Recently, the Alabama legislature cut its court funding by almost 9 percent. As a result, the state's chief justice ordered courthouses to close on Fridays. The number of weeks that jury trials are available to civil litigants in Alabama has been reduced by 50 percent.
Intellectual Property Cases Take Longer to Resolve
Today, the value of a company's intellectual property, such as its copyrights and patents, often exceeds the value of its physical property. Not surprisingly, disputes over intellectual property have grown in number and importance. As a result of the court budget cuts, these disputes also take longer to resolve. In California, for example, a typical patent lawsuit used to last twelve months. Today, that same lawsuit might take three to five years.
Investors are reluctant to invest in a company that is the object of a patent or copyright lawsuit because they fear that if the company loses, it may lose the rights to its most valuable product. Consequently, when litigation drags on for years, some companies may suffer because investors abandon them even though the companies are otherwise healthy.
Other Types of Litigation Take Longer, Too
Other types of lawsuits are also taking longer to conclude. Now attorneys must tell businesses to consider not only the cost of bringing a lawsuit, but also the length of time involved. The longer the litigation lasts, the larger the legal bills and the greater the drain on company employees' time. Roy Weinstein, managing director of Micronomics in California, argues that the economic impact of court delays on businesses is substantial. During the years that a lawsuit can take, some businesses find that they cannot expand or hire new employees, and they are reluctant to spend on additional marketing and advertising.
In fact, it is not unusual for a company to win its case but end up going out of business. As a result of putting its business on hold for years, the company becomes insolvent.
Some Meritorious Cases Are Never Filed
Facing long delays in litigation with potential negative effects on their companies, business managers are becoming reluctant to bring lawsuits, even when their cases clearly have merit. In Alabama, for instance, the number of civil cases filed has dropped by more than a third in the last few years. Judge J. Scott Vowell of Jefferson County attributes this decline to delays and higher court costs.
Managerial Implications
Before bringing a lawsuit, a manager must now take into account the possibility of long delays before the case is resolved. A cost-benefit analysis for undertaking litigation must include the delays in the calculations. Managers can no longer just stand on principle because they know that they are right and that they will win a lawsuit. They have to look at the bigger picture, which includes substantial court delays.
Business Questions
In response to budget cuts, many states have increased their filing fees. Is this fair? Why or why not?

Question 13

CASE PROBLEM WITH SAMPLE ANSWER: Arbitration Clause. Kathleen Lowden sued cellular phone company T-Mobile USA, Inc., contending that its service agreements were not enforceable under Washington state law. Lowden requested that the court allow a class-action suit, in which her claims would extend to similarly affected customers. She contended that T-Mobile had improperly charged her fees beyond the advertised price of service and charged her for roaming calls that should not have been classified as roaming. T-Mobile moved to force arbitration in accordance with the provisions that were clearly set forth in the service agreement. The agreement also specified that no class-action suit could be brought, so T-Mobile also asked the court to dismiss the request for a class-action suit. Was T-Mobile correct that Lowden's only course of action was to file arbitration personally? Why or why not? [ Lowden v. T-Mobile USA, Inc., 512 F.3d 1213 (9th Cir. 2008)]

Question 14

What did the court conclude with respect to the parties' "diversity of citizenship" in this case?

Question 15

Venue.
Brandy Austin used powdered infant formula to feed her infant daughter shortly after her birth. Austin claimed that a can of Nestlé Good Start Supreme Powder Infant Formula was contaminated with Enterobacter sakazakii bacteria. The bacteria can cause infections of the bloodstream and central nervous system, in particular, meningitis (inflammation of the tissue surrounding the brain or spinal cord). Austin filed an action against Nestlé in Hennepin County District Court in Minnesota. Nestlé argued for a change of venue because the alleged tortious action on the part of Nestlé occurred in South Carolina. Austin is a South Carolina resident and gave birth to her daughter in that state. Should the case be transferred to a South Carolina venue? Why or why not? [Austin v. Nestlé USA, Inc., 677 F.Supp.2d 1134 (D.Minn. 2009)] (See page 36.)

Question 16

How did the court's conclusion affect the outcome?

Question 17

Arbitration.
PRM Energy Systems owned patents licensed to Primenergy to use in the United States. Their contract stated that "all disputes" would be settled by arbitration. Kobe Steel of Japan was interested in using the technology represented by PRM's patents. Primenergy agreed to let Kobe use the technology in Japan without telling PRM. When PRM learned about the secret deal, the firm filed a suit against Primenergy for fraud and theft. Does this dispute go to arbitration or to trial? Why? [PRM Energy Systems v. Primenergy, 592 F.3d 830 (8th Cir. 2010)] (See page 42.)