LAW - Midterm Quiz

Laws

Rules that identify "right and wrong" behavior based on societal values and establish rights, duties, and responsibilities.

Legal System

The system of laws and regulations that govern a society and provide a framework for resolving disputes and maintaining order.

Case Law

Court decisions in criminal trials or non-criminal lawsuits that serve as precedents for future cases and help shape the interpretation and application of the law.

Commerce Clause

A provision in the United States Constitution that gives Congress the power to regulate commerce with foreign nations, among states, and with Indian tribes.

Due Process

The legal requirement that the government must respect all of a person's legal rights and treat them fairly before depriving them of life, liberty, or property.

Environmental Law

The body of law that regulates the protection and conservation of the natural environment, including air, water, land, and wildlife.

Administrative Agencies

Government bodies or organizations that have the authority to create and enforce regulations within a specific area of expertise, such as the Environmental Protection Agency (EPA).

What options do businesses have for resolving disputes?

• Negotiation: Parties discuss and reach a mutually acceptable agreement.

• Mediation: A neutral third party helps parties reach a voluntary settlement.

• Arbitration: A neutral third party makes a binding decision after hearing both sides.

• Litigation: Parties present their case in court, and a judge or jury makes a final decision.

• Alternative Dispute Resolution (ADR): Methods other than litigation used to resolve disputes.

How does a predictable legal system help businesses?

• Provides stability and certainty for business operations

• Encourages investment and economic growth

• Protects property rights and intellectual property

• Facilitates contract enforcement and dispute resolution

• Enhances trust and confidence in business transactions

• Promotes fair competition and market efficiency

What is the legal approach to problem solving - parts, process?

• What is the problem?

• Who is affected by this problem?

• What are the important facts in the problem?

• What rules apply to this problem?

• What is the conclusion?

Jurisprudence (schools of thought)

• Natural Law

• Legal Realism

• Legal Positivism

Legal Positivism

• Human-made body of law

• The law reflects society’s judgments on what is “right” and “wrong”

• Laws must always be followed

Legal Realism

• Believe in human-made laws

• “All law derives from prevailing social interests and public policy”

• The law reflects society

• Judges should take social concerns and public policy into consideration when making decisions

Natural Law

• Humans possess inherent natural rights that laws cannot limit or take away

• Laws NOT always right/ethical

• International example: UN Declaration on Human Rights

• US example: The Declaration of Independence

Unjust Laws

“One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws.” -MLK

Sources of Law

• Constitutions (Federal and State)

• Statutory Law (Federal, State, and Local)

• Administrative Law (State and Federal)

• Executive orders (Federal, State, Local)

• Case Law and Common Law

Constitutional Law

The body of law that interprets and applies the provisions of a constitution, including the allocation of government authority and the protection of individual rights.

Statutory Law

• Statutes (Federal and States): There is a hierarchy. Federal Statutes are passed by the US Congress; state statutes are passed by state legislatures but cannot conflict with federal statutes; lastly, local ordinances cannot conflict with either federal or state statutory law.

• Ordinances (Local): Local ordinances can represent a relatively rapid response to societal changes; lots of impact on business even if intention of legislation was to remedy social problem.

Business Statutes

• The Corporation and LLC are “creatures” of statutory law (state)

• Labor laws (fed and state)

• Trade secrets and competition laws (fed and state)

• Intellectual property (mainly fed)

• Environmental laws (fed and state)

Executive Orders

• Executive Orders are directives from the US President with the force of law.

• They implement policies and manage government operations.

• They can be challenged in court and overturned if unconstitutional.

Case Law (aka Common Law)

• System of Jurisprudence

• A court’s decision in a criminal trial or a non-criminal lawsuit

• Based on decisions made by appellate (higher) judges

• Judges in later cases use case law - precedent

• Stare decisis - “deciding new cases with reference to former decisions, or precedents”

Public v. Private Law

Public Law:

• Relationship between members of society and government

  • Ex: anti-trust law and criminal law, primarily statutory and administrative law

Private Law:

• Relationship between members of society

  • Ex: contract law, property law, landlord and tenant corporation law, primarily common law

Civil v. Criminal Law

Criminal Law

• Deals with wrongs against society for which society demands redress

  • Plaintiff is the government

  • Criminals are punished with fines and jail time

  • Is public law

Civil Law

• Deals with private or public wrongs or rights between people, as opposed to criminal law

  • Ex: contract, real estate, divorce

  • Most business law issues are civil law issues

  • Lawsuits and issues are usually between persons/orgs

  • Person filing the lawsuit is called a plaintiff and the person against whom a lawsuit is filed is called a defendant

Substantive v. Procedural Law

Substantive Law (“What”)

• Laws that define, regulate, and create legal rights and obligations

Procedural Law (“How”)

• How to enforce your rights

• Process by which law is enforced

• Establishes penalties or remedies

• Ex: paying a fine for a speeding ticket

International Law

• UN Declaration of Human Rights - series of agreements on what to do

• Aspirational

• Article 1 (free and equal), Article 8 (effective remedy), Article 10 (fair and public hearing)

Natural Law

A legal theory that establishes and limits individual rights based on principles of equality and justice.

Jurisdiction

“Authority to speak the law”

• A court needs jurisdiction over the subject matter of the dispute and

  • The parties or

  • Property involved in the case

Personal Jursdiction

• You can always sue someone where they’re located

• Can sue an out of state company that does business in Iowa

• Can sue where a contract is made

• Can sue where the wrong occurs

State v. Federal Jurisdictions

• State (Iowa Supreme Court)

  • Iowa Court of Appeals

  • District Court for XX County

• Federal (SCOTUS)

  • Court of Appeals for XXth Circuit

  • District Court for XX District

Subject-matter Jurisdiction

• All claims where no federal jurisdiction can be invoked (some torts, contracts, property disputes, etc.)

• Only at state level: marriage, adoption, probate

Long arm statutes/minimum contacts

State laws used by state courts to obtain jurisdiction over out-of-state defendants - “doing business in a state,” breach a contract with a state, etc.

• “Plucks” defendant and brings them back

How is “venue” different from “jurisdiction”?

• Venue means the “appropriate location” for a trial (Country doesn’t matter as much as the state; can move counties w/o reparations)

• Criminal trials frequently have venue changes

What does a Properly-Filed Case have?

• Subject-Matter Jurisdiction

• Personal Jurisdiction

• Venue

Trial v. Appellate Courts

• Cases start in trial courts

• Depending on the results, they may progress into appeals court

• State and Federal court systems are separate

• Some cases may start in one system and end in another

Appellate Cases

• Brought “on appeal” from trial court

• Do not have witnesses, new evidence, or testimony

• May or may not involve oral arguments

• Primarily decided upon the written briefs of the parties

Appellate Courts

• Can affirm, modify, reverse the decision of the lower court

• Look for legal errors made by the judge in the lower court case

• Harder to appeal

Appellate Opinions

• The court reaches its decision through a vote of the judges (ideally 9, always odd)

• Written ruling is called an opinion - can write a dissent if they disagree, but not law

• Important opinions are published and become precedent

Iowa District Courts

• Main trial courts

• One per country

• District Judges, DAJs, and Magistrate Judges hear cases

• Workload is mainly criminal and family law

Iowa Court of Appeals

• Intermediate appellate courts

• 9 members

• Sits in 3 judge panels

• Mostly criminal and family law cases

• Issues 1100-1300 opinions each year

Iowa Supreme Court

• Top level appellate court in Iowa

• 7 Justices, sitting together

• Handles 2,000+ yearly appeals from lower courts

• Issues 1-3 opinions per week in session

Federal Court System

• District Courts are trial courts

• Mid-level Courts of Appeals by numbered Circuit

• SCOTUS

• Specialty Courts

Federal Court Case Types

• Cases where the US is a party

• Civil rights cases under federal law

• Prisoner petitions

• Criminal cases

• Personal injury

• Special cases (IP, bankruptcy)

SCOTUS

• 9 justices appointed for life by the President with the advice and consent of the Senate

• One justice is appointed as the Chief Justice

• Reviews cases from: US District Courts, US Courts of Appeals, Highest Courts of the States

• Review is through Writ of Certiorari

Class Action Lawsuits

Useful where there is a large number of plaintiffs suffering similar injury, esp. if individually small amounts

Pretrial Stage

• Motion for Summary Judgment - where no facts are in dispute

• Settlement discussion may be ongoing

• Use of pretrial conference to simplify issues and plan course of the trial

Trial Process

• Opening statements - plaintiff first

• Direct and Cross examination

• Defendant presents evidence and witness

• Plaintiff sometimes offers rebuttal evidence

• Closing arguments

Discovery Process

• Use: get key documents and facts for trial, preserve evidence for trial, narrow down issues that actually need to be litigated

• Misuse: increase time, cost and burden, “paper to death” the other side, intimidation due to cost of production

Depositions

• Use: Oral questioning, under oath, to preserve testimonial for trial and get more facts

• Misuse: Harassment, delay, making something uncomfortable for the other side

• Lawyer asks questions to witness directly

Jury and Verdict

• Finds in favor of plaintiff or defendant or both, sets amount of damages

• Federal cases - unanimous, some states do not require unanimous civil jury verdicts

• If unable to reach verdict may get mistrial, “hung-jury”

Alternative Dispute Resolution (ADR)

Any procedure or method for resolving disputes outside the traditional judicial process

Forms of Alternate Dispute Resolution

• Negotiation

• Mediation

• Arbitration

• Hybrid

Negotiation

• The first method, formally or informally

• Parties make settlement offers and counter-offers

• May be face-to-face or working through lawyers

• Really GOOD way to settle disputes

Mediation

• A form of assisted negotiation

• Neutral third party (mediator) attempts to get parties to reach a settlement

  • Mediator need not be a lawyer

  • One person or a panel

What are the benefits of mediation?

• Can help in discovering underlying issues and promoting integrative settlements

• Produces high settlement rate (60-80%+)

• Can serve a face-saving function

• Disputants often see process as “fair”

• Reduced antagonism

When is mediation appropriate?

• Parties want to continue and preserve the relationship

• Going to court would adversely impact morale and productivity

• Confidentiality is important

• There are concerns about future litigation and repetitive claims

• The cost of litigation is likely to exceed the value of the dispute

• Neither party’s case is a clear winner

When is mediation inappropriate?

• A person who is important to the case is not present

• There is a threat of criminal action

• Discovery is needed

• Public policy requires transparency

Arbitration

• A process where the parties make their case to a neutral, third-party, private decision maker

• The arbitrator makes a decision, called an "award”

• The arbitrator may be one person or a panel of expert with subject matter expertise on the topic of the dispute

• The arbitrator’s decision is normally legally binding

What is the arbitration process?

• Begins with a submission

• Hearing - “rules of the game” are set out

• The award - decision the arbitrator makes

How do you get to arbitration?

• May be mutually agreed upon or mandatory if chosen in advance

• Many contracts have arbitration clauses

• A voluntary agreement to arbitrate normally will be enforced by the courts

What are the benefits of arbitration?

• Generally binding

• Often cheaper than litigation

• Efficient

• Private

• Can choose a high-qualified person

What are the drawbacks of arbitration?

• Still a fee associate

• Can in some cases be appealed

• Written opinion not always given

• Arbitrators do not have to follow precedent, so results can be unpredictable

• Discovery not available, so have to question a lot of witnesses

• Can be misused

Hybrid ADR or others

• “Binding mediation” - the parties try to negotiate a resolution themselves, but if not, mediator can decide

• “Med-Arb” - an agreement to try mediation, and if no resolution is reached, to submit to arbitration

Pros and Cons of mediation and arbitration

Mediation

• Mediator helps the parties in a dispute talk through the issues and try to reach an agreement

• The mediator can’t order the parties to reach an agreement

• A confidential process that the parties control whether or not they reach an agreement

Arbitration

• The arbitrator listens to each side’s arguments, reviews their information and who makes a decision that the parties have agreed to follow

• A confidential process

• Parties pick the arbitrator and create the process for the arbitrator to follow

Legal challenges to arbitration awards

• An arbitrator’s award is normally the final word

• Can’t complain later

• Hard to overturn

Why is ethical leadership important?

• Leaders have to model ethical behavior

• Talk the talk, but also walk the walk

• Employees take their cue from management

4 Traditions/Framework to talk about ethics

• Standard of conduct (means) - the actor

• Character - the agent

• Consequences (ends) - the outcome

• Relationships/Care - the relationships

Standards of Conduct (1st Tradition)

• Certain standards of conduct apply to everyone, and these rule out treating people in certain ways

• Strengths: clear, bright-line, easy to understand, effective if followed

• Weaknesses: detached and legalistic approach, doesn’t take human factor into consideration, doesn’t consider outcomes

• Example: lying is against the rules, so telling a lie is wrong

Character (2nd Tradition)

• Focuses on the agent or actor

• A person of good character has important virtues, a person of bad character has significant failings or vices

• You have to “walk the talk” in an organization if this is your focus

• Weaknesses: inward focused, character is hard to gain yet easily lost in moments of weakness

Consequences (3rd Tradition)

• The ends justify the means - “consequentialism”

• Similar: Utilitarianism

• Leads you to focus on stakeholders in a situation and how a decision will affect them

• Weaknesses: can constrain view to the short term, lead to unsustainable decision-making for the long-term, may lead us to downplay standards of conduct

Relationships/Care (4th Tradition)

• What do we owe each other in relational context?

• In healthy organizations, people feel like they are part of something larger than themselves

• People are interdependent, vulnerable stakeholders deserve extra consideration

• Weaknesses: Putting relationships first can devalue other considerations

What is the legalistic approach to business ethics?

• Multiple laws resulted from Enron scandal and others

• Help prevent future scandals, but don’t prevent or reduce everything

The bandwagon

• “Everyone is doing it” - contagion effect

• What is the logical conclusion of following this?

The consummate professional

• “I had to do it.” “I was just doing my job”

• What is the logical conclusion of following this?

• Following corrupt orders makes you corrupt

The relativist

• “If I think it’s ok, it’s ok” - it’s NOT

• What is the logical conclusion of following this?

• Also: “If I think it’s not ok, it’s not ok” “They did this and that’s worse” - recent politics

Overcoming Self-Delusion

A desire to fit in (to an unethical group) can lead to normalizing bad behavior and self delusion.

How can leaders “teach” and enforce ethics?

• Company ethical rules must be established - importance of codes of conduct

• Top-level management must “model” ethical behavior to their employees

• We must manage for, and reward for, ethical behavior

• Training to educate employees on company values

• Designated contact people for questions and an open discussion

Ethical Decisionmaking

Using a framework helps you make better ethical decisions!

Causes of unethical behavior

• Greed, taking shortcuts to get ahead

• Lack of ethical role models

• Contagion from seeing others engage in unethical behavior

• A desire to right a perceived wrong or injustice

Shareholder v. Stakeholder model

• Stakeholders are those affected by the company’s actions

• Employees, customers, suppliers, creditors

• People in the community, those affect by environmental issues

• Approach: Balanced

Shareholder Model

• Own stock in the company

• Have an obvious financial interest in the company’s decisions

• Approach: maximize profits, within the law

Corporate social responsibility

• Stakeholder view

• Takes additional parties into account

• Paying a living wage, fair trade, an environmental responsibility, keeping jobs in a community

• Ex: Patagonia ownership is donated to a nonprofit rather than held by individual shareholders

Corporate codes of ethics

• Code of ethics: A set of guidelines that outlines the ethical standards and principles that a company expects its employees to follow.

• Purpose: To promote ethical behavior, integrity, and transparency within the organization.

Foreign Corrupt Practices Act (FCPA)

• Amended in 1998 by the International Bribery Act

• The anti-bribery provisions prohibit:

  • Making use of interstate commerce corruptly as in an offer or payment of anything of value to a foreign official, etc. for the purpose of influencing any act of that official in violation of the duty of that official

Who is subject to the Foreign Corrupt Practices Act?

• Issuers: any US or foreign corporation that has securities registered

• Domestic concerns

• Anti-bribery provisions of the FCPA have applied to all US persons and certain foreign issuers of securities

History of the Constitution

• Adopted in 1787 and was ratified by 9 of the original 13 states in 1789

• Consists of a preamble and seven articles

• Article I: establishes Congress’ constitutional authority, while Articles II and III do the same for executive and judicial branches of the government

• Article IV: includes the Privileges and Immunities clauses

• Article V discusses the amendment process, Article VI includes the Supremacy Clause, and Article VII indicated that the original Constitution could be ratified by the vote of 9 of the original 13 states

Article I of the Constitution

• The necessary and proper clause

• Congress shall have power to lay and collect taxes

• Regulate Commerce

• Establish uniform laws on the subjects of bankruptcies

• Establish post offices

• Promote the Progress of Science and useful Arts

• Constitute Tribunals inferior to the supreme court

Article II of the Constitution

• Executive powers, the President

• Qualifications to be elected

• Electoral system

• Emoluments clause

Article III of the Constitution

• US Supreme Court

• Case or controversy must be justiciable

• A person or entity must have “standing” to sue

Judicial Review

“The process by which courts decide on the constitutionality of legislative enactments and actions of the executive branch.”

Separation of Powers

• Executive branch carries out the law

• Legislature makes laws (representative gov)

• Judicial system interprets laws

• Checks and balances

Article IV of the Constitution

• Full faith and credit

• A civil court judgment from one state can be enforced in another state

• Citizens of each state are entitled to all privileges and immunities of citizens in several states

• Extradition clause

Article V of the Constitution

• How to amend the Constitution

  • Propose and amendment (vote of house + vote of senators)

  • Ratify an amendment (vote of the states’ legislatures)

Article VI of the Constitution

• Supremacy Clause

• Constitution is the “supreme law” of the land

• Conflicts between federal statutes and the Constitution are resolved in favor of the constitution

• State court judges must follow the US Constitution and federal laws when there is a conflict with state law

Article VII of the Constitution

• Ratification

• After adoption at the Constitutional Convention, proponents had to convince at least 9 of 13 states to ratify it

Commerce clause

An important source of federal lawmaking

• Congress can regulate any activity that has a substantial economic effect of interstate commerce

• Anything not reserved by Federal Gov is delegated to the states

• Many cases that test this - commerce clause jurisprudence

Gibbons v. Ogden, 1842

Steamboat case - It it substantially affected commerce involving more than one state

Wickard v. Filburn, 1942

Federal law involving wheat production, challenged by farmer

Katzenbach v. McClung, 1964

• Hotel and restaurant desegregation (Ollie’s BBQ)

• Federal Civil Rights legislation noted burden to interstate commerce when travelers couldn’t get a mean or a room

Commerce Clause in Criminal Law

• There must be a Constitutional basis for something to be subject to Fed Jurisdiction, including crimes

• Fed Govt gets criminal jurisdiction through the Commerce Clause

US v. Lopez, 1995

• Commerce Clause Jurisprudence reined in

• Portrayed guns as impediment to learning, disruptive to commerce