Introduction to Legal Process in the United States

1. Introduction to Legal Processin the United States Sources of law Court system Judicial process Alan R. Palmiter 23 Jan 12

2. (1) Sources of law • Legislative • Executive / Administrative • Judicial Federalism: federal (supreme) vs. state

3. Legislative (Congress) • Constitution • Statutes • Legislative history Administrative (Securities & Exchange Commission) • Regulation (rules) • Agency decisions • Opinions • No-action letters Judicial (federal courts) • Constitutional review • Statutory interpretation • Common law (precedent)

4. (2) Court systems State (North Carolina) Federal US Supreme Court NC Supreme Court US Court of Appeals NC Court of Appeals US District Court Special Court NC District Court NC Superior Court NC Business Court

5. Federal US Supreme Court Discretionary review (from federal courts of appeal and state supreme courts) Original jurisdiction (state vs. state) Appointed for life by President (Senate confirms) US Courts of Appeals Appeal of right from US trial courts Review of errors (primarily legal) 11 regional circuits / DC Circuit / Federal Circuit US trial courts US District Courts Limited jurisdiction (federal questions / diversity cases) Exclusive / concurrent jurisdiction Juries for $ damages / judges for injunctions Special courts US Claims Court US Bankruptcy Court US International Court of Trade US Tax Court State (North Carolina) NC Supreme Court Discretionary review (questions of law) Elected (7 justices) NC Court of Appeals Appeal of right from superior courts Review of errors (factual / legal) 15 elected judges (appeals heard by 3-judge panels) NC trial courts Superior court: felonies / civil > 10K / jury trial District courts: minor criminal / civil <10K / family law Magistrate court: traffic court / small civil <4K Small claims court: small civil <4K, pro se (no attorney) Special business court: by reference Sits in Greensboro, Raleigh, Charlotte Three appointed judges All filings in electronic form Judicial info

6. Federal courts

8. (3) Judicial process Pleading • Complaint (individual or class action) • Answer (counterclaim / cross-claim) • Filters • Default judgment • Motion to dismiss • Rule11 sanctions Discovery • Depositions • Interrogatories • Document requests • Examinations (physical and mental) • Admissions • Filters • Discovery sanctions Pre-trial • Settlement conference • Alternative dispute methods: mediation / arbitration • Pre-trial conference • Filters • Summary judgment • Voluntary dismissal (settlement) Trial • Jury / bench trial • Live, continuous: witness / exhibits • Rules of evidence • Lawyer arguments • Filters • Directed verdict (judgment as matter of law) Post-trial (appeals) • Reopen case before appeal • Enforcement of judgment • Appeal (on record) • Filters • Judgment notwithstanding verdict (NOV) • Appeal: affirm, reversal, remand Pleading Discovery Pre-trial Trial Post-trial(appeals) Filters at each stage

9. Basic Inc. v. Levinson (US 1988) 1.  What are the facts in the case? • What allegations did the plaintiffs make? • What kind of suit is this?  What do the plaintiffs seek? • Who are the defendants? 2.  What is the issue that the Court addresses? • What are the arguments of the defendants? • What are the responses by the plaintiffs? 3.  What is the definition of materiality adopted by the Court? • What alternatives did the Court have in choosing a definition? • What is an "agreement in principle" definition?  a "price and structure" definition? • What is a "probability-magnitude" test?  Is this how financial markets judge information's materiality? 4.  Why does the Court adopt a case-by-case definition of materiality? • Why does the Court reject the bright-line tests urged by the defendants? • What are the advantages and disadvantages of the Court's approach? • After this case, when should corporate executives disclose merger negotiations? 5. After this case, when can corporate executives strategically misinform securities markets about merger plans?

10. The end