Summer, 2001

Business Law (Bus. 120)

Prof. Robert H. Daniels

OW Holmes: "Law is a statement of the circumstances in which the power of society will be brought to bear on individuals through the courts."*

What is a "court"? What does a judge look like? How does a court bring the power of society to bear?

Specialized social institutions for law making and law enforcement. Legis-latures, judges, police, prisons, sheriffs, baliffs and marshalls. Lawyers of various sorts as intermediaries between citizens and legal institutions

Theories of "jurisprudence"

Theories of law depend on cultural context

Eg. Chinese distinction between li and fa

Natural law

Somewhat similar to Li. Law is revealed morality. Emphasis on the ethical/religious sources of rules of conduct. Strongly influenced by the judeo-christian tradition.

Distinction between "natural law" and "positive law". Example: is "Thou shalt not steal" the same type of law as "drive on the right, not on the left"?

Historical

Law seen as something that has evolved organically, in parallel with the historical development of society.

Emphasis on precedent, on applying past rules to current issues.

Analytic

Legal decisions the result of logical reasoning from given premises. Associated with European "civil law" tradition

Sociological

Text conflates it with the "realist" school. Law as a tool for shaping behavior. (Or law as a particular set of observed social institutions.)

Command

law as a mechanism for implementing political/economic decisions

A marxist element: characterized soviet-style command economies

Current capitalist counterpart might be the "law and economics" school of thought

Legal rules should facilitate, or be surrogate for, efficiency-maximizing market transactions. Important influence on contract law, and generally on relation of law to business activity.

Critical legal studies

Law viewed as an instrumentality of power, a tool of oppression and the maintainance of a ruling class

A "post-marxist" approach, influenced by M. Focault, and the "deconstructionist" approach to literature: "Knowledge is not for understanding. It is for cutting."

Historical influences on US law

A pluralistic society

The US as a "nation of immigrants" from many different countries and with many different religions. A "nation of strangers" with social and geographic mobility. Result was to increase the importance of law as a guide to conduct, in place of shared traditions, values or experiences.

The English tradition: making law by deciding cases

Start with England in the year 1188 (the beginning of "common" law (in the sense of "generally applied" to all of England, not in sense of "ordinary")

A desparately poor society by our standards: land and cattle the basis of wealth. A rural, hierarchic (feudal) society with three languages, and multiple sources of rules for conduct: traditional courts, church courts, merchant courts, petitions to the king for relief

In the traditional courts, judges decide cases. They announce /write down the facts and the decision. Common law evolves, characterized by:

• Reliance on precedent: the tradition that similar facts should produce similar decisions
• Case by case decisions, not involving a higher level statute or similar guidance.
• Avoidance of generalizations. A decision means only: on these facts, we reach this result. (This allow later judges "wiggle room" to reach different results in later cases if the facts differ.) An empirical approach to decisions: "crossing the river by feeling the rocks"

"Commentators" arise, who summarize and instruct in the law. They and the law professors, not the judges, discern the broad principles. But commentary is not precedent

The English Tradition: Multiple Sources of Law

Law is made both by legislative enactment of general rules, and by judges in the process of deciding specific cases.

Parliamentary Law

Law by general legislative enactments Examples: Royal decrees, statutes voted by British parliament or US Congress or US State legislatures, administrative regulations

Statutes/codes are statements of law, but case law interprets statutes and provides rules of decision even in the absence of statute.

Multiple Court systems

Chancery court. Originated in petitions to King when law courts lacked remedy (anything but money damages) or were narrowly bound by precedent and form. Delegated to Chancellor, and then to Chancellor's judges. Had power to force or restrain acts (injunction), and to consider fairness as well as legality.

Also church courts (inheritance of personalty, family law) and merchant courts

The Federal Constitution

Orig. negotiated in 1787-89 among 13 states with origins in English colonial governments. Owes a lot to 18th century political philosophy: Madison & Hamilton Federalist Papers

Fear of centralized power and belief in the primacy of the individual and Adam Smith's "invisible hand". Rational self-interest and free bargains favored over command and control. (Tho note that the post-WWII military state and the business world layer a fair amount of "command and control on top of the original model.)

Deliberate de-centralization, separate institutions sharing powers, making it difficult for anyone to get much control

About 28 Amendments -- it's deliberately difficult to amend.

Chapter 2: Cases, Courts and Lawsuits

How to read a case

The five elements:

Facts

Procedural History

Issue

Holding / Ruling

Analysis (and possibly a critique)

The central significance of the facts

The common law tradition of creating law one case/one pattern of facts at a time. A decision really means: given a certain pattern of facts, here's the result -- that's the "Holding". It is a precedent only to the extent the pattern of facts in later cases are similar enough.

The explanation is "dicta" ("stuff said"), but the essence of the precedent is the holding.

The Federal and State "judicial pyramids"

1 National and 50 State Governments

50 state governments and a national government. System w/ not many parallels elsewhere: Canada, Australia, Switz. Results in two sets of issues:

What matters are federal, what are state, what allow overlap?

How coordinate multiple states?

Much of US constitutional law is concerned with answers to these Q's

The judicial pyramid: Fed and States similar

At the base: trial courts, which decide lawsuits based on the argument and evidence presented. Frequently no written opinions for those at state level.

There may be specialized trial courts, such as those for small claims, or traffic cases at state level and those for patent or tax matters at federal level. The general trial courts are the "Superior Courts" (county-by county) in California, and the Federal District Courts.

A dissatisfied litigant may appeal to a reviewing court (CA Court of Appeals; Federal Circuit Courts). Here there are multiple judge panels. Appeals are decided on the printed record (they don't hear the parties; evidence is at one remove.) Facts found in trial court stand unless "clearly erroneous". Opinions are written (sometimes "not citeable").

At top of each system a "Supreme Court". Discretionary review.

The concept of "jurisdiction"

"The power to speak the law".

Subject matter jurisdiction: the power to decide this kind of case. Can be q. of state or federal law

Jurisdiction over the parties: the power to enforce a result as to a party -- eg. defendant in another state or country. Depends on valifity of service of process and on Def.'s contacts w/ the state. "Service of process" means to somehow "tag" the defendant, directly or indirectly, with the legal paper

Jurisdiction "in rem" - "as to the thing" example: cases involving ownership of real estate

The life history of a civil lawsuit

Note heavy procedural element: definitions mostly from the FRCP. A number of devices for screening out claims. Consider whether they are justified by "efficiency", or some other goal.

"Pleadings"

Lawsuit is commenced by filing a "complaint" with the court

"A short and plain statement of the facts showing entitlement to relief"

Parties described as "Plaintiff" and "Defendant"

Consider in advance issues of jurisdiction and proper "venue": place of hearing

Defendant may try to dismiss. A "motion" made to judge.

No jurisdiction over subject matter, or over me, or "the facts alleged, even if true, do not state a claim on which relief may be granted"

Def. then answers

Admits or denies various statements in complaint. Idea is to sort out points of agreement and dispute. Can raise affirmative defenses, counter claims or 3rd party cross claims.

Pleadings need not be consistent: the "Bart Simpson" defense. "I didn't do it, and besides, it was already broken."

Pleadings then closed. Depending on location, court may take active or passive role in moving case along to trial

Discovery: getting the facts

Interrogatories: written questions. Now limited in number

Requests for admissions

Production of documents (esp. important in business litigation)

Depositions: formal recorded interview under oath

Pretrial Motions and negotiations

Motions: summary judgment, or orders from court to move the case along. Formal settlement negotiations. Possibly mediation or arbitration

Trial

(Maybe 2% of all lawsuits get this far)

Will there be a jury? Constitution, 7th Amend: criminal cases and a $20 civil threshhold -- but depends whether it was traditionally a law-type case. This is a legacy of the old English law vs equity/chancery distinction

Presentation of argument and witnesses. Cross-examination

Jury determines the facts, as instructed by judge in the law

Appeal

Preparation of the record and appellate briefs

The written case law is generally by appellate judges who did not try the case and have only a printed transcript record

The written decisions are for the close cases -- they couldn't be negotiated away, and are they close enough to justify an appeal by the loser

Courts tend to write as tho result is clear. It's often closer than it seems

Finding the law: citations

A very structured format. Usu. "plaintiff v. defendant", vol. number, name of court or name of printed series reporting decisions, page number, court name if not implied by name of printed series, date.

Format under pressure now from move to electronic citations.

*AMERICAN BANANA COMPANY v. UNITED FRUIT COMPANY, 213 U.S. 347, 356 (1909) (originally: "Law is a statement of the circumstances in which the public force will be brought to bear upon men through the courts. ")