American Law and Business Ethics

Four primary sources of American law

U.S. Constitution/state constitutions, statutes passed by legislatures, regulations created by administrative agencies, and case law

Primary source of law

A document where the law itself is contained, such as a constitution, statute, or case law

Secondary source of law

Books and articles that discuss primary sources of law, such as legal encyclopedias and law review articles

Constitutional law

Law that lays out the powers and organization of government; each state and the federal government has a constitution

Statutory law

Laws enacted by legislatures; local, state, and federal governments each have statutory codes

Administrative law

Written rules established by local, state, or federal administrative agencies

Case law / common law doctrines

Rules of law as interpreted by courts, which also interpret other sources of American law

Common law

The body of law that developed from court decisions, based on principles from the English legal system

Precedent (stare decisis)

A court decision that becomes a rule for deciding later, similar cases

Two main principles of stare decisis

Lower courts must follow decisions of higher courts, and courts should not overturn their own decisions without strong justification

Why is stare decisis important?

It helps make the legal system more stable and predictable

Remedy

Relief given to a party to compensate them for a loss

Remedies in equity (equitable remedies)

Compensation given outside normal legal guidelines, giving the court discretion (e.g., an injunction instead of monetary damages)

Substantive law

The written rules that define which conduct is and is not prohibited

Procedural law

The methods that must be followed in enforcing substantive laws

Civil law

Law concerned with the enforcement of disputes among private individuals

Criminal law

Law concerned with wrongs committed against society

Trial court

Where cases are litigated (questions of fact are decided)

Appellate court

A court that rules on/reviews the decisions of trial courts (questions of law)

Plaintiff/Petitioner

The party initiating a lawsuit

Defendant/Respondent

The person the lawsuit is brought against

Majority opinion

The views of the majority of the justices deciding a case

Concurring opinion

Written by a justice who agrees with the majority's decision but wants to make an additional point not made in the majority opinion

Dissenting opinion

The views of justices who disagree with the majority's decision

Business ethics

The application of moral and ethical principles to decisions in the marketplace and workplace

Ethics

The study of right and wrong behavior; whether an action is fair, right, or just

Triple bottom line

A company's profits, treatment of people, and treatment of the planet

Four things to consider in ethical business decisions

Legal implications, public relations impact, safety risks to employees/public, and financial implications

Short-run profit maximization risk

Choosing actions (like selling a defective product) that boost immediate profits but cause long-run harm from lawsuits and bad publicity

Moral minimum

Complying with the law as the minimum degree of ethics required of a business

Duty-based ethical standards

Ethical standards holding that businesses have a duty of care to others

Outcome-based ethical standards

Ethical standards holding that the strongest duty is to a company's stakeholders

Utilitarianism

The ethical view that the best course of action is the one that produces the greatest good for the greatest number of people

Cost-benefit analysis

Weighing the pros and cons of an action to decide the best course

Corporate Social Responsibility (CSR)

The idea that corporations should be held responsible for their duty to society; not required by law

How can CSR increase profits?

By increasing publicity and goodwill through social impact, such as donations and environmental efforts

Sarbanes-Oxley Act

Requires companies to have confidential systems so employees can report potential unethical behavior

Judicial review

The process for determining whether decisions of the executive and legislative branches are constitutional

Case that established judicial review

Marbury v. Madison (1803)

Jurisdiction

A court's authority to hear and decide a case

In personam jurisdiction

A court's control over a specific person or corporation within its geographic area

In rem jurisdiction

A court's control over a specific piece of property (an object)

Long arm statute

Allows a court to exercise jurisdiction over out-of-state defendants who have sufficient minimum contacts with the state

Courts of general jurisdiction

Courts unlimited as to the types of disputes they can hear

Courts of limited jurisdiction

Courts specific to a certain area, such as bankruptcy or probate court

Original jurisdiction

Jurisdiction of the trial court where a dispute takes place

Appellate jurisdiction

Jurisdiction to review a trial court's decision for legal errors

When do federal courts have jurisdiction?

When a case involves a federal law, treaty, or the U.S. Constitution, or when there is diversity of citizenship

Diversity of citizenship

Plaintiff and defendant are residents of different states and the amount in controversy exceeds $75,000

Where are corporations considered residents for diversity jurisdiction?

The state where they were incorporated and the state of their principal place of business

Minimum contacts test

Used with long arm statutes to determine if a court has jurisdiction over a nonresident defendant who purposefully availed itself of business in the state, breached a contract there, or committed a tort/caused harm there

Concurrent jurisdiction

When both state and federal courts have jurisdiction to hear a case

Exclusive jurisdiction

When only a state court or only a federal court (not both) can hear a case

U.S. Courts of Appeal role

Review decisions of trial courts and administrative agencies/commissions, and issue orders to lower courts and litigants

U.S. Supreme Court composition

One chief justice and eight associate justices, appointed by the President

Writ of certiorari

A request (abbreviated "cert.") asking the U.S. Supreme Court to hear a case; the Court has discretion to grant or deny it

Rule of four

At least four Supreme Court justices must approve for a writ of certiorari to be issued

Sliding scale (cyberspace jurisdiction)

Standard used to determine if courts have jurisdiction over defendants based on their Internet activity; substantial business online supports jurisdiction, passive advertising does not

Venue

The physical location of a trial, usually the jurisdiction where the incident occurred

Standing to sue

Requirement that the party bringing suit suffered a harm and has a justiciable (actual, not hypothetical) controversy

Ohio's trial court

Common Pleas Court; there is one in each of Ohio's 88 counties

How are Ohio state court judges selected?

They are elected

Ohio's court of appeals for Hamilton County

The 1st District Court of Appeals hears appeals from Hamilton County Common Pleas Courts

State appellate court structure

Usually a panel of three elected judges that reviews trial court rulings for harmful errors of law or procedure

Ohio Supreme Court vs. U.S. Supreme Court

Both have discretion to choose cases, but Ohio Supreme Court justices are elected while U.S. Supreme Court justices are appointed

Federal court system structure

U.S. District Courts (trial courts), U.S. Courts of Appeal (intermediate appeals), and the U.S. Supreme Court (highest court)

Pleadings

Statements detailing the facts, charges, and defenses in a case

Plaintiff's complaint

Contains facts establishing jurisdiction, the allegations, and the remedy sought

Defendant's answer

Admits or denies the allegations and establishes defenses; may include a counterclaim

Reply

The plaintiff's response to a defendant's counterclaim

Motion to dismiss

When a defendant asks the court to dismiss the suit for legal reasons

Motion for Judgment on the Pleadings

A request to decide a case solely on the pleadings without a trial; granted only if no facts are in dispute

Motion for Summary Judgment

A request for judgment without a trial based on evidence outside the pleadings; granted only if no facts are in dispute

Discovery

The process by which parties obtain information from the opposing party before trial

Deposition

Sworn testimony recorded and transcribed by a court reporter

Interrogatories

Written questions and answers given under oath

Pretrial conference

An informal meeting between the parties and judge to discuss settlement and trial plans

Voir dire

The process of jury selection, in which parties question potential jurors

Peremptory challenge

Limited challenge allowing a party to eliminate a potential juror without giving a reason

Challenge for cause

Unlimited challenge allowing a party to ask the judge to remove a potential juror due to potential bias

Motion for directed verdict

Requested by the defense after the plaintiff rests if they feel the elements of the case were not met

Motion for Judgment N.O.V.

Granted if the jury's verdict was unreasonable and erroneous

Motion for New Trial

Granted if, after reviewing the evidence, the judge finds the jury was in error

Affirm vs. reverse

An appeals court affirms (agrees with) or reverses (disagrees with) a lower court's decision

Alternative Dispute Resolution (ADR)

Methods businesses use to resolve disputes outside of the traditional court process, allowing more flexibility

Negotiation Parties

attempt to settle a dispute informally, with or without attorneys

Mediation

A neutral third party (mediator) works with both sides to reach an agreed resolution; may propose a solution but both parties must agree

Arbitration

A neutral arbitrator hears a dispute and imposes a resolution; can be binding or non-binding and is usually not appealable