Introduction to Legal Processin the United States

(1) Sources of law(2) Court system(3) Judicial process

Alan R. Palmiter 23 Jan 12

(1) Sources of law

• Legislative

• Executive / Administrative

• Judicial

Federalism: federal (supreme) vs. state

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)

(2) Court systems

Federal

USSupreme

Court

US Court ofAppeals

NC Business

Court

NC Superior

Court

NCDistrictCourt

NC Court ofAppeals

NCSupreme

Court

Special Court

USDistrict Court

State (North Carolina)

Judicial infoFederal• 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

Federal courts

(3) Judicial process

Pleading

Filters at each stage

Discovery

Pre-trial

Trial

Post-trial(appeals)

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

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?

The end