Chapter 3: The Litigation/Trial Process

Chapter 3: The Litigation/Trial Process David Baumer Spring 2003

The Trial Process • Litigation is expensive and risky for various reasons • Damage awards can be highly variable • Juries can be overpowered by emotion and award sums far in excess of “actual” damages • In addition, things could leak out during litigation that could generate adverse publicity • Often caused by ex-employees • For these and other reasons, companies often take many measures to avoid court appearances

The Adversarial Process • If both parties have standing, it means • They have real current interests at stake • In general the plaintiff has the burden of proving by a • Preponderance of the evidence that his or her version of events are accurate and • Deserving of a verdict in his or her favor

Value of a Lawsuit: Plaintiff • The value of a lawsuit is based on • Expected values, which may have large variances, and • Reducing to present value, when any damage award is actually received • Adjustments should be made for • adverse publicity • cost of litigation • loss of future business relationship • risk aversion—probably should imagine the worst

Value of a Lawsuit: Defendant • Businesses are frequent targets for litigation • For business to business suits, there should be significant savings if the parties settle • These savings can be realized if the parties have similar expectations as to the outcome of the case • In many cases court litigation can be avoided altogether if the parties have agreed in a contract to arbitrate and have waived their right to sue in court • The decision as to how to deal with nuisance suits should take reputation into account

Stages of Litigation • In most cases when a person has a potential claim against another person, a settlement occurs, rather than litigation • Settlements can occur at any stage in litigation • Litigation begins with pleadings • Followed by motions • If motions to dismiss are denied then discovery begins • Following discovery there is a pretrial conference, a trial and then more motions and possible appeals

Litigation • Litigation may appear linear but it is actually iterative • Pleadings • The complaint is a short statement of facts which the plaintiff claims entitles him to a court remedy, if proved • Pleadings provides general notice to the defendant as to what the suit is about • Once the complaint is filed the defendant is served with a summons • Occasionally defendants evade lawsuits by evading service of summons

Pleadings and Motions • After the def. is served • He or she is required to file an answer within 20 or 30 days or else lose the case by default • Def.s may also file a motion to dismiss • May allege that the pl. failed to allege a cause of action--even if all the statements in the complaint are proved the def. is not liable to the pl. • If the motion is granted the case is over unless the pl. appeals and wins a reversal

Pleadings: Answer • In most cases the def. files an answer • It is common for def.s to issue of general denial of all the allegations contained in the complaint • In some answers, def.’s file affirmative defenses • In an affirmative defense the def. alleges additional facts that she claims exonerates her • Def.s have the burden of proof with respect to the facts alleged in support of the affirmative defenses

Counterclaim • When a def. files a counterclaim, she is claiming that the pl. is liable to her • Counterclaims have the same characteristics as the complaint, i.e., short statement of facts that provides notice to the other party • If the def. files a counterclaim, the pl. must file a reply, which has the same characteristics an answer • When there are multiple plaintiffs and defendants, there could be cross-claims between the pls.and defs.

Electronic Filing • Has the potential to be much more efficient than paper filing • In the past, firms had to hand carry motions to the courts • Searching documents was laborious • Copying records was expensive • Has the potential to eliminate much of the advantages associated with location of law offices relative to the courthouse

Discovery • Purpose of discovery is to allow parties to discover the facts necessary to prove or disprove allegations made in the pleadings • Enables one side to become aware of the other side’s evidence • Promotes settlements, especially when one side discovers its evidence is weaker than expected • During discovery the def. often files motions for a summary judgment (MSJ) • If the motion is granted, the case is over unless the pl. wins a reversal on appeal • MSJ should be granted if there is no genuine issue of fact

Discovery • Tools of discovery • Depositions--out of court questioning of witnesses, including parties • Written interrogatories--only allowed against other parties • Allows for more in-depth questioning requiring use of documents • Subpoena--one party requests that the other party produce documents

Discovery • Other tools of discovery • Requests for Admissions • Often used when the def. files a general denial • Used to narrow down exactly what the other party is saying is wrong • Physical and Mental Examinations • If the physical condition of either party is an issue, the other party can request a physical or mental examination • Refusal to cooperate during discovery is subject to sanction by the court, including dismissal of the case

Pretrial Conference • At the end of discovery, before the trial, the judge will call for a conference between the parties • At the pretrial conference, the judge will try to get the parties to settle • If the judge is unsuccessful in achieving a settlement, the judge will try to get the parties to stipulate to uncontested facts so that the focus of the trial can be on the contested facts

Trial • Jury trials cost more money, so parties often waive their right to have the case tried before a jury • During voir dire jurors are questioned for possible bias • Attorneys also have a certain number of preemptory challenges, which are challenges without stating a reason • In civil cases, there can be less than 12 jurors and verdicts that are not unanimous

Trials • Beginning with the pl., each side makes an opening statement • In the opening statement, a party states the facts it intends to prove to the jury • Proof often takes place through testimony, though there are other forms of presenting evidence • Motion for Directed Verdict • Often filed by the def. when the pl.’s case is weak • In the motion the def. claims that there is no credible proof of one or more of the elements of the cause of action • If the motion is granted the case is over unless the pl. wins a reversal on appeal

Trial • Closing arguments • Each side summarizes the evidence in a way that is favorable to their contentions • Jury instructions • Each side will propose its own version of jury instructions that is slightly slanted in their direction. If too one-sided, the judge will use the other side’s proposed instructions as a template • Jury instructions are a frequent basis for appeal

Verdict • Most juries do reach a verdict, especially in civil cases where unanimity is not required if both sides agree • It is a mistrial if there is a hung jury which takes place when the • There is disagreement among jurors and unanimity is required, or • The required majority is not achieved

Post Trial Motions • When it is apparent that the trial court judge made a mistake, he or she may grant a motion for new trial • Rather than having the decision of the trial court reversed on appeal • Misconduct by attorneys could be grounds for declaring a mistrial • Also a judge may disagree with the jury verdict and grant a motion for a new trial

Post Trial Motions • Motion for J. n.o.v. • If the motion is granted the judge is saying the case should not have gone to the jury, even though the judge allowed the jury to render a verdict • By allowing a case to go to a jury and then granting a J.n.o.v., there is a jury verdict if the decision to grant the J.n.o.v. is reversed • Allowing a case to go to a jury, but granting a J.n.o.v. conserves judicial resources

Remedies • As indicated previously, settlements can occur at any time, even after the jury verdict • The pl. may settle for something less than the jury award, but the def. agrees not to appeal • In most cases successful pls. are awarded compensatory damages • There are limits on recoveries for damages that are deemed too speculative • Contract pls. are awarded what they would have received had the contract not been breached • Tort pls. are awarded economic and non-econ. damages

Damage Awards • Punitive damages • Are generally not awarded in contract cases even if the breach of contract is deliberate • For intentional torts, the pl. may be able receive punitive damages, which are designed to punish the def. and deter other similarly situated defs. • Punitive damages can be awarded if the def. show a reckless disregard for the safety of others • Punitive damages should bear some reasonable relationship to compensatory damages

Equitable Remedies • A pl. may be able to get an temporary injunction, even before the trial takes place • Must be able to show that • Irreparable damage will take place if the def. is not stopped and • The pl. is likely to win if the case goes to trial • If the pl. wins at trial, the injunction may be made permanent • Contract pls. may request specific performance if monetary damages are inadequate and the consideration is unique, or has special value to the pl.

Appeals to Higher Courts • Appeals are generally based on errors of law by the trial court judge • Legal errors could take place based on • Motions, the granting or non-granting of motions • Jury instructions • Admission or non-admission of evidence • Appellate courts can • affirm the verdict of the trial court • reverse the trial court • reverse the trial court and remand the case for a new trial

Judgments • When a case has been decided, the doctrine of res judicata applies to prevent retrials of the same case in another state • State courts accord decisions made by the courts in other states comity • In most cases when the def. loses, he or she writes out a check to the pl • Sometimes the pl. has to obtain a writ of execution to enforce the judgment • Wages can be garnished or bank accounts seized • Liens can be placed on real property

Chapter 3: The Litigation/Trial Process