Business Law - Chapter 4, Part 2: Courts and Alternative Dispute Resolution

State Court System Structure

Organized in three tiers: Trial courts (limited and general jurisdiction), Appellate courts (review questions of law), and the State's Highest Court (final authority on state law)[cite: 13].

Federal Court System Structure

Organized in three tiers: U.S. District Courts (trial courts), U.S. Courts of Appeals (13 regional circuit courts), and the U.S. Supreme Court (nine justices)[cite: 13].

Question of Law vs. Question of Fact

Trial courts focus on questions of fact (what happened); Appellate courts focus strictly on questions of law (how the law was applied)[cite: 12, 13].

State Supreme Court Authority

The highest court in a state has the final decision on questions of state law, unless a federal question or constitutional issue is involved[cite: 12, 13].

Writ of Certiorari

An order issued by the U.S. Supreme Court to a lower court requiring it to send up the record of the case for review[cite: 13].

Rule of Four

A rule stating that the U.S. Supreme Court will not issue a writ of certiorari unless at least four of the nine justices agree to hear the case[cite: 13].

Discretionary Jurisdiction of U.S. Supreme Court

The U.S. Supreme Court is not required to hear any appeal; it receives over 10,000 requests a year but only agrees to hear about 80 to 100 cases[cite: 12, 13].

Alternative Dispute Resolution (ADR)

Methods of resolving legal disputes outside of the formal court litigation process; generally faster, cheaper, more flexible, and private[cite: 13].

Negotiation

An informal ADR process where the parties attempt to settle their dispute directly without involving any third party[cite: 12, 13].

Mediation

An ADR method where a neutral third party helps the parties discuss differences and proposes solutions, but does NOT make a binding decision[cite: 12, 13].

Arbitration

An ADR method where a neutral third party (an arbitrator) hears arguments and evidence and issues a legally binding or non-binding decision (an award)[cite: 12, 13].

Arbitrator's Award

The official decision rendered by an arbitrator in an arbitration proceeding[cite: 13].

Sample Q1: The federal courts are superior to the state courts.

FALSE — The state and federal court systems operate as parallel, independent systems; federal courts are not "superior" to state courts[cite: 12, 13].

Sample Q2: A question of fact is generally the focus of an appellate court.

FALSE — Appellate courts focus on questions of law; trial courts focus on questions of fact[cite: 12, 13].

Sample Q3: Negotiation requires the use of a neutral third party to facilitate a settlement.

FALSE — Negotiation involves only the parties themselves (and their attorneys) without a third party[cite: 12, 13].

Sample Q4: To use arbitration as a method of dispute resolution, the parties must agree to arbitrate any dispute before it arises.

FALSE — Parties can agree to enter arbitration either before a dispute arises (via contract clause) OR after a dispute arises[cite: 12, 13].

Sample Q5: Arbitration differs from other forms of alternative dispute resolution in that a third party hearing a dispute makes a decision for the parties.

TRUE — Unlike a mediator, an arbitrator actually renders a formal decision (award) resolving the matter[cite: 12, 13].

Sample Q6: A decision on a question of state law is final when:

The State's highest court makes the decision[cite: 12, 13].

Sample Q7: Frank loses in federal district court, loses in the 9th Circuit appeal, and asks the U.S. Supreme Court to hear the case. The Court is:

Not required to hear the case — The Supreme Court's jurisdiction is discretionary under the Rule of Four[cite: 12, 13].

Sample Q8: Jill and Katie meet with attorneys and a neutral third party who proposes solutions but does not make a binding decision. This is:

Mediation[cite: 12, 13].

Sample Q9: Liz and Mary disagree over a contract amount. To avoid involving a third party in resolving their dispute, they should use:

Negotiation[cite: 12, 13].