FIN 331

1. FIN 331 Text * Chapter 1

2. Learning Objectives • Types and sources of law • Important legal doctrines • Classification of law • Jurisprudence and legal reasoning • Statutory interpretation • Limitations on judicial power 1 - 2

3. Types or Sources of Law • Federal, state, and tribal level: • Constitution: establishes governmental structure, specific rights and duties • Example: U.S. Constitution • Statute: enacted by legislative body to regulate conduct • Example: Clean Air Act, 42 U.S.C. §§ 7401 et seq. (1970) • Counties and municipalities enact “ordinances” (e.g., zoning ordinance) 1 - 3

4. Types or Sources of Law • Federal, state, and tribal level: • Common Law: case law (judge-made) • Example: Gribben v. Wal-Mart Stores, Inc. • Administrative Law: agency rules to implement enforcement of statutes • Example: U.S. Environmental Protection Agency’s Identification and Listing of Hazardous Waste Rule, 40CFR261 1 - 4

5. Types or Sources of Law • Issued at the chief executive level: • Executive Order: under limited powers • Examples: http://www.whitehouse.gov/news/orders/ • Treaty: with other nations, by the U.S. president on behalf of the nation, ratified by the U.S. Senate • Example: The Moscow Treaty, No. 107-8 (2002) 1 - 5

6. Important Doctrines • Stare Decisis (let the decision stand) • Doctrine of precedent applied in common law • Example: in Gribben v. Wal-Mart Stores, the Indiana Supreme Court cited Cahoon v. Cummings for a well-established rule about intentional first-party spoliation of evidence • Equity • Applied by the judiciary to achieve justice when legal rules would produce unfair results • Examples: injunction or specific performance 1 - 6

7. Important Doctrines • Federal supremacy: a rule of priority for conflicts between laws that holds the U.S. Constitution is the supreme law of the land • Supremacy Clause, Article VI, Section 2, of the U.S. Constitution • Practical meaning: • Federal law defeats state law • A state constitution defeats state legislation • A statute defeats an administrative regulation • A statute or regulation defeats common law 1 - 7

8. Classification of Law • Criminal law establishes duties to society • Government charges and prosecutes defendant, who is found guilty or innocent • A convicted defendant will be imprisoned or fined 1 - 8

9. Classification of Law • Civil law establishes duties between private parties • Plaintiff sues defendant for monetary damages or equitable relief • A defendant will be held liable or not liable 1 - 9

10. Classification of Law • Substantive law establishes rights and duties of people in society • Example: The act of murder is a crime • Procedural law establishes how to enforce those rights and duties • Example: A defendant charged with murder has the right to a jury trial 1 - 10

11. Classification of Law • Public law refers to the relationship between governments and private parties • Examples: constitutional, statutory, and administrative law • Private law refers to the regulation of conduct between private parties • Examples: contract, tort, and property laws 1 - 11

12. Jurisprudence • Jurisprudence refers to the philosophy of law as well as the collection of laws • Legal positivism: law is the command of a recognized political authority • Just or unjust, law must be obeyed • Natural law: universal moral rules bind all people whether written or unwritten • Unjust positive laws are invalid 1 - 12

13. U.S. v. Lynch • Facts & Procedural History: • Trial court issued injunction to prohibit defendants from further violations of a statute • Defendants moved to amend order based on natural law argument that the statute was invalid • Trial court denied amendment, defendants appealed • Issue: Did the district court fully address and deny defendants’ natural law defense? • Holding: Natural law is not a valid defense. Trial court decision affirmed. 1 - 13

14. Jurisprudence • Legal realism defines law as the behavior of the judiciary as they rule on matters within the legal system • Thus law in action dominates positive law • Sociological jurisprudence unites theories that examine law within its social context 1 - 14

15. Legal Reasoning • Basically deductive, with the legal rule as the major premise and facts as the minor premise • Result is product of the two • Court may stand on precedent or distinguish prior case from current case • If precedent inapplicable, new rule developed 1 - 15

16. Hagan v. Coca-Cola Bottling Co. • Facts & Procedural History: • Florida plaintiffs drank from bottle of Coke, found foreign object, suffered emotional distress, and brought suit for negligence • Jury returned verdict for plaintiffs, judge reduced jury award, and both parties appealed • Certified question sent to Florida Supreme Court • Question: Should the impact rule (physical injury required to state a claim) be abolished or amended in Florida? 1 - 16

17. Hagan v. Coca-Cola Bottling Co. • Court’s Reasoning: • Reviewed facts and arguments of parties • Reviewed application of impact rule within Florida, including modifications to the rule • Discussed public policy recognized by the Florida Supreme Court in Doyle v. Pillsbury Co. • Noted court decisions in other states • Holding: Impact rule does not apply where emotional damages are caused by conduct that is a freestanding tort (e.g., contaminated food) 1 - 17

18. Statutory Interpretation • Plain meaning rule: court applies statute according to usual meaning of the words • Example: Hyatt v. Anoka Police Department • A court examines legislative historyand purpose when plain meaning rule is inadequate • Example: What is meant by a prohibition against discrimination “because of an individual’s age?” 1 - 18

19. General Dynamics Land Systems, Inc. v. Cline • Facts: • Collective bargaining agreement discriminated against workers under 50 years of age; plaintiffs over 40 and under 50 filed a claim under the Age Discrimination in Employment Act (ADEA) • Issue: Does the ADEA forbid “favoring the old over the young?” • Reasoning: Plain meaning of “age” within the statute not clear, but legislative history makes clear that an employer may favor an older employee over a younger one • Holding: judgment reversed in favor of employer 1 - 19

20. Statutory Interpretation • Courts may interpret a statute in light of a general public purpose or public policy • Courts follow prior interpretation of a statute (precedent) to promote consistency • Maxims may be used to assist in statutory interpretation • Example: ejusdem generis (things of the same type); when general words follow specific words, the general words are limited to the same things as specific words • “Automobiles and other vehicles” does not include airplanes 1 - 20

21. Limitations on Judicial Power • Courts limited to deciding existing cases or controversies • In other words, the dispute must be current and not yet resolved • However, a declaratory judgment allows parties to determine rights and duties prior to harm occurring 1 - 21

22. Limitations on Judicial Power • Parties must have standing (direct interest in the outcome) to sue • Whales, for example, do not have standing • The Cetacean Community v. Bush, 386 F.3d 1169 (9th Cir. 2004) 1 - 22

23. Global Business Environment • Courts may faced with treaty interpretation • The U.S. Supreme Court interpreted The Warsaw Convention in Olympic Airways v. Husain • How would you have interpreted the treaty language? “The carrier shall be liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of the operations of embarking or disembarking.” Warsaw Convention, Art. 17 1 - 23