Business LitigationBUSINESS LITIGATION INFORMATION CENTER Overview Depending on the needs of the business, a business owner has several options to look at when considering litigation. The business owner has the option of alternative dispute resolutions (ADR) instead of litigation. If the cause of action is a specific size, small-claims court can be a way to go. Litigation The litigation procedure consists of several steps and involves a huge volume of work even if it does not go to trial. A civil litigation is controlled by the Federal government or the State court rules. The steps that need to be taken in a litigation process are filing the initial pleading and response, motions for the judge, discovery, which includes interrogatories and depositions, pretrial conferences, the trial itself, the judgment and appeals if necessary. Alternative Dispute Resolution (ADR) Alternative dispute resolutions include arbitration and mediation. These methods are used to avoid a complicated and expensive trial in a courtroom. Arbitration has less formal procedural rules, is cheaper and less formal than a trial. However, it has limitations that a courtroom does not. Mediation is conducted by a neutral third party. It is a more informal process than arbitration. The mediator listens to both sides and tries to reach a resolution through compromise from both sides. ADR is used to avoid litigation and keep costs down to a minimum. Arbitration Arbitration tries to resolve issues without going to court. A neutral third party listens to both sides and makes a binding decision at the end. Many business contracts, such as employment or sales contracts have an arbitration provision, which states that any legal issues will be resolved by an arbitrator and not in a courtroom. An appeal can only be requested if the parties have agreed to an appeals process in the initial agreement. Binding arbitration is compared to a court judgment, while non-binding arbitration is just an advisory opinion. Action can still be pursued in court after non-binding arbitration.
Mediation Mediation is conducted by a neutral mediator. The session is usually lasts for a day. Mediation consists of opening statements, discussions, private caucuses and concludes with joint negotiations. The mediator will then offer his or her opinion. The opinion is not legally binding. There is a cost for the mediator’s services. Some cities have mediation centers that provide low-cost services. Class Action Lawsuits A class action lawsuit is one or two individuals or businesses pursuing litigation on behalf of a larger group. The reason for the lawsuit can result from a product defect to something very large like a violation of Federal regulations. A public notice in the newspaper or through a mailing naming the plaintiffs should take place. A class action starts with initial proceedings, motion hearings and pretrial conferences. Unlike other lawsuits, there is a motion for class certification that is filed with the initial complaint. A class action allows justice to be more efficient by combining similar smaller actions into one large class action lawsuit. It also saves litigation costs and the court’s time. However, a plaintiff can drop out of the class anytime to pursue the lawsuit on his or her own. Securities Class Action A securities class action is brought by an investor who has suffered a great deal of loss from his or her stock or security declining in value. If the individual’s stock value was fraudulently inflated, he or she is eligible to be a class plaintiff. Legal Costs Attorneys who work on class actions work on contingency. They will not be paid unless there is recovery at the conclusion of the trial. The attorney costs are usually high because there is a great deal of preparation, research and investigation associated with this type of lawsuit. Small Claims Court Small claims court is an informal court. It deals with minor lawsuits, which range from nuisance complaints to money disputes. A litigant usually chooses small claims court when there is a small amount of money involved. Courtroom Procedure Courtroom procedure can be complex. It is best to be acquainted with rules, regulations and Federal and State laws while preparing for your day in court. Every jurisdiction has different procedural issues. Your business lawyer can give you assistance with this. Pleadings A pleading is your formal written statement filed with the court in a civil action. Examples are a complaint, demurrer, or answer). A complaint or petition is the first pleading to initiate a lawsuit. It contains the allegations of fact and prayer for relief. The prayer for relief states the remedies that the plaintiff wants from the court. Remedies include punitive damages, compensatory damages, attorney fees, and an injunction to stop the defendant from a certain activity. The request for money is an ad damnum clause. The defendant files a demurrer. It challenges the legal need of the initial complaint. An answer is a pleading that denies or admits to the allegations set forth in the complaint; it constitutes a general appearance by the defendant. The defendant can seek to dismiss the action on one or more grounds. The defendant has the option to file a cross-complaint. Using the process of impleader, the defendant can bring other parties into the case. Pretrial Proceedings Pretrial proceedings look into matters before the actual trial. This helps to make the trial more efficient. During this time, the attorneys discover the strengths and weaknesses of both parties’ claims. In many cases, issues are resolved before the trial begins. Trial The trial consists of the judge, a jury or a panel of judges in some instances. It is at this time that the attorneys present their evidence, call and cross-examine witnesses, and make their opening and then closing arguments. Some business litigations can take months or years to get through. Motions A motion is for the judge’s determination. There are many reasons for a motion, which include a request to dismiss the action beforehand, exclude an issue, resolve an action or narrow the issues.
Judgment The court will render a judgment at the end of the trial. In business litigation cases, the judgment is usually for money. The money may be held as a lien against property or assets. However, the court can order the unsuccessful litigant to take a certain action. Appeal Either party can appeal the final judgment. The appeal is a request for the appellate court to review the decision made by the trial court, stating an error of procedure or application of the law. The appeal depends on the jurisdiction’s rules and laws. The appellate court can decide to uphold, reverse or modify the ruling of the trial court. The Appellate Court The number of appellate courts in a jurisdiction depends on the population and businesses in that jurisdiction. Many states have trial courts and appellate or supreme court. Other states have trial, appeal and supreme courts. Most states require that an appeal result from a final judgment. Only a few state courts allow an appeal for the trial has concluded. Federal Court There are specialized Federal courts, which include the United States Bankruptcy Court and the United States Tax Court. Most Federal trials begin in a district court. A district court considers issues of fact and law. The circuit court of appeal is the next court level. The circuit court listens to questions of law and reviews the final decisions of the district court. The United States Court of Appeal is broken into eleven regions throughout the country. The highest level of review is the United States Supreme Court. Using discretion, this court decides whether it will review the judgment of a lower court. Administrative Agencies Businesses do not always go to court to have their issues resolved. A business has the option to go to the Equal Employment Opportunity Commission (EEOC) or the Occupational Health and Safety Administration (OSHA). The final decisions are reviewed by a court. Conclusion Many businesses when confronted with issues that may involve litigation turn to alternatives to a courtroom to save on costs and time. Arbitration and mediation has helped many companies resolve their issues in a less stressful way than going to court. The appellate process has various rules and options that vary in each jurisdiction. If you are faced with litigation involving a business transaction, a skilled business attorney can provide you with the guidance you will need in this situation. Links to additional information For further information on mediation, go to the National Mediation Board website at www.nmb.gov If you have any questions on Federal rules and regulations, visit the U. S. Government’s official web page at www.usa.gov Small business information can be found on the Small Business Administration’s website located at www.sba.gov Legal questions can be answered on the Cornell University Legal Information Institute website located at www.law.cornell.edu Business Litigation Legal Center sponsored by
Earl Carter & Associates
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