U.S. Constitution

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

–Preamble to the United States Constitution

The Constitution acted like a colossal merger, uniting a group of states with different interests, laws, and cultures. Under America’s first national  government, the Articles of Confederation, the states acted together only for specific purposes. The Constitution united its citizens as members of a whole, vesting the power of the union in the people. Without it, the American Experiment might have ended as quickly as it had begun.

Police Powers Law and Legal Definition

Police powers are granted to states in the 10th Amendment to the U.S. Constitution, which reserves to the states the rights and powers "not delegated to the United States," which include protection of the welfare, safety, health and even morals of the public. Police powers denotes the basis for many regulatory subjects, such as licensing, inspection, zoning, safety regulations, and working conditions as well as law enforcement. Police powers may be used, for example to detain people or search things like vehicle.

It is a general term that expresses the fundamental power vested in every state to limit and regulate the exercise of private rights in the interest of public health, public morals, public safety, and the general welfare of the community. Governments have exercised police power to prohibit the sale of liquor and cigarettes and gambling. Cities and towns have prohibited the making of bricks in a town, the maintenance of livery stables, public laundries, billboards, public garages, coal yards and slaughterhouses.

Police power is the right to protect the country and its population from threats to the public health and safety. The term “police power” predates the development of organized police forces, which did not develop until the postcolonial period. In the colonial period, police power was used to control nuisances, such as tanneries that fouled the air and water in towns, to prevent the sale of bad food, and to quarantine persons who were infected with communicable diseases. Many of the colonies had active boards of health to administer the police power. This was one of the main governmental functions in the colonial period.

Under the Constitution, the states retained much of their police power but share the right to regulate health and safety issues with the federal government. Examples of the federal use of the police power are food and drug regulations, environmental preservation laws, and workplace safety laws. The states have companion laws in most of these areas, plus local public health enforcement such as restaurant inspections, communicable disease control, and drinking water sanitation. In most cases, the states share jurisdiction with the federal government and the courts will enforce whichever is the more strict law. State and local public health laws are exercises of the police power.

Jurisdiction

Jurisdiction is the authority granted by law to the courts to rule on legal matters and render judgments, according to the subject matter of the case, and the geographical region in which the issue took place. Areas of jurisdiction apply to local, state, and federal laws, which means that, for instance, a violation of federal law is tried in federal court. To explore this concept, consider the following jurisdiction definition.

Definition of Jurisdiction

Noun

1. The power and authority to administer justice by hearing and deciding legal cases

2. The territory over which such authority is exercised

3. The geographical area of a court’s legal authority, or of a law enforcement agent’s authority

Origin

1250-1300       Middle English <Latin jūris dictiōn

What is Jurisdiction

Jurisdiction is the term that refers to the limits of a legal authority. It can refer to both political territories and geographic regions, as well as the types of legal matters over which a legal body has authority. A formally authorized legal body is a court, political or governmental office, and in many situations, law enforcement agency. When a legal body holds jurisdiction, it has the authority to administer justice within that jurisdiction.

In the court system, there are three primary types of jurisdiction: subject matter, territorial, and in personam jurisdiction. If a court without proper jurisdiction hears a case, it does not have the authority to render a judgment, to provide the  with a remedy to his legal issue, or to hand down sentencing. For this reason, it is important for all parties involved to be sure the case has been filed in a court of proper jurisdiction. This is one of the first things that should be determined by the  as well, before allowing the case to proceed.

Typically, a court holds more than one jurisdiction type in any case. This might mean the court can hear cases that originate in its geographical jurisdiction, and it has  as well. As an example of jurisdiction, a  court has the authority to hear and decide matters related to , , , and other related issues, if the family lives in its geographical region.  does not, however, have jurisdiction to hear a criminal case, even if it somehow relates to a family issue.

For example:

Jack and Anna have separated and are going through the divorce process, including a child custody battle. Anna initially left Jack after he had beat her up badly, putting her in the hospital, and sending the children to stay with their grandparents. Jack was arrested that day, and charged with  spousal .

The family court is handling the issues of divorce and child custody, which are greatly affected by the behavior of the father for the past several years. It does not, however, have authority to try Jack on his criminal charges. That authority rests solely with the criminal court.

Courts of General Jurisdiction

Courts of  have authority to hear any type of case within its geographical and governmental jurisdiction, except where prohibited by law. These courts are often called “district courts,” or “superior courts,” depending on the state. In the state of New York, the state court of general jurisdiction is called the “Supreme Court,” which can be confusing, as it is not actually the state’s supreme court.

This means, for instance, that a state  court of general jurisdiction might have authority to hear cases regarding a variety of subjects, within its geographical and governmental jurisdiction. In most states, however, the superior or district courts are divided by subject matter, with a specified court assigned all cases dealing with that topic. For instance, separate courts, or judges, will hear family court matters, civil lawsuits, small claims lawsuits, traffic court, drug court, and criminal court. These are known as courts of “limited jurisdiction.”

Determining Whether a Court Has Jurisdiction

In order to determine which court has jurisdiction over a legal matter certain questions must be addressed. These are:

1. Which court has jurisdiction in that geographical area (a  for an accident that occurred in Florida cannot generally be heard in California)

2. Which court has jurisdiction over the  (or over the person being charged or sued)

3. Which court has jurisdiction over the subject matter (is it family law, traffic violation, or civil lawsuit)

If the court in which any legal matter is filed lacks jurisdiction in even one of these areas, it does not have the authority to render judgment.

Subject Matter Jurisdiction

Subject matter jurisdiction is the authority of a court to hear cases involving a certain subject matter. A few examples of subject matter include , divorce,  violations, and . The purpose of dividing a court system into such subject matter jurisdictions is to ensure that judges hearing certain types of cases are experienced in that area of law, as they work within it on a daily basis. It is just common sense that a judge specializing in bankruptcy cases not be allowed to hear a personal injury lawsuit.

Some types of jurisdiction, or lack thereof, can be waived by the parties, allowing the court to hear the case anyway. Subject matter jurisdiction, however, cannot be waived. If a court that does not have subject matter jurisdiction over a case makes a ruling on that case, the ruling can be invalidated.

For example:

As Alton was backing out of a parking space at the local mall, another car speeding down the aisle struck his car. While he had a stiff neck from the impact, Alton was more concerned about getting his car repairs taken care of, but the other driver’s insurance company is denying his claim.

A couple of weeks later, when Alton has to seek medical attention for the worsening pain in his neck and shoulder, he realizes he will have to file a civil lawsuit against the man who hit him, and against his insurance company. Alton knows where the courthouse is because he had hearings on his divorce there two years ago.

When Alton takes his civil lawsuit  to be filed with the court, he is told that the family law court cannot hear his personal injury lawsuit. Alton is redirected to the court that has subject matter jurisdiction over civil lawsuits and personal injury, to file his claim.

General Jurisdiction in State Courts vs. Federal Courts

While most states have courts of general jurisdiction, even if they have a system of courts with limited jurisdiction. On the other hand, the federal court system is limited by Article III of the U.S.  as to subject matter. A primary issue in whether a federal court has jurisdiction over a civil case is whether the plaintiff has claimed a violation of the U.S. Constitution or federal law has occurred. This is referred as “federal-question jurisdiction.”

Criminal cases may be brought in either a state or federal court, depending on whose laws were violated. A defendant charged with violating a state  law cannot be charged with that crime in a federal court. If he is accused of violating a federal law, such as trafficking in child , he can be charged and tried in federal court. In some cases, a person may be charged and tried in both state and federal courts related to different elements of the same crime, and it has been ruled that this does not amount to .

Territorial Jurisdiction

Territorial Jurisdiction refers to the authority a court has over cases within its specific geographical territory. If the court lacks territorial jurisdiction, it does not have the authority to make a ruling, or to hand down a sentence. Unlike subject matter jurisdiction, the defendant may be allowed to waive territorial jurisdiction in certain cases.

Territorial jurisdiction also applies to the geographical territory of a law enforcement agency, and therefore the prosecutor for that region. For instance, if Bob commits a crime in Bakersfield, California, the Bakersfield police have the authority to investigate, and the District Attorney for Bakersfield has the authority to bring criminal charges and prosecute the case. The criminal case would then be heard in the state court in Bakersfield.

There are certain exceptions. If someone is accused of committing crimes in more than one county or city within a single state, the crimes could be prosecuted in any of those jurisdictions, or each may choose to prosecute separately for the crime committed within its boundaries. If that person committed crimes in more than one state, or crossed state lines while committing the crime, the federal court has territorial jurisdiction.

In Personam Jurisdiction

The Latin term in personam jurisdiction, refers to a court’s jurisdiction over the person, though it also applies to an entity. Legal actions must be filed in a court that has some connection to the event, or to the parties involved. This only comes into play in certain situations. For instance, Jack drives across the boarder from his construction business in California, to do some construction repairs on a home in Nevada, then returns home. Later, the homeowner complains that Jack’s work was terrible, and that he was bilked out of his hard-earned money.

The homeowner files a civil lawsuit in Nevada, but Jack complains to the court that, because the homeowner hired the services of his business, which is based in California, it has no jurisdiction. The lawsuit should be filed in California. Generally, the Nevada court has no jurisdiction over Jack or his construction company, as they are based in another state. That court can, however, assert in personam jurisdiction, or personal jurisdiction, over Jack and his company, and hear the case where the work was done.

Police jurisdiction

Like the courts, law enforcement agencies are subject to issues of jurisdiction. Police jurisdiction refers primarily to the agency’s assigned geographic region. Within a single state, there may be several law enforcement agencies, which work together in a sort of choreographed maneuver:

· City police officers – have authority only within their city’s limits

· County sheriff’s deputies – have authority within their county, not including activities within the city limits

· State police or state troopers – have authority to act within their state, though they have authority only in limited circumstances within a county or city’s geographical regions

Each of these law enforcement agencies has their own territories, or police jurisdiction, but they work together to help ensure services are provided seamlessly between the regions. For instance, if city police chase a car across the city limits, they may be joined by county deputies to bring the chase to an end. State police often have broad authority, and are invited into the city or county jurisdictions to assist in certain cases.

Federal law enforcement officials have authority to arrest a person who has violated a federal law, regardless of which jurisdiction he is in. This is because they have authority to act when federal laws are violated, regardless of location within the U.S.

In general, a law enforcement officer does not have the authority to arrest someone outside his jurisdiction. Similarly, an off duty police officer, who is on vacation in another state, has no authority to detain or arrest someone in his official capacity as a police officer. This lack of police jurisdiction does not prevent the officer from making a citizen’s arrest while waiting for officers to arrive.

An Example of Jurisdiction

One of the first considerations for any court in the land is whether it has jurisdiction over any case brought before it. Laypeople bringing their own suit are often unaware of limitations to jurisdiction, which is understandable. This leaves the court responsible for making that determination before the case can move forward.

Foreign Company Sued over Faulty Part

In the 1980s, a young couple were riding a motorcycle which crashed because of a faulty valve that had been produced in Japan. The driver was seriously injured, and his wife, riding as passenger, was killed in the accident. The victim filed a civil lawsuit in the California court, where the victims lived, and the accident happened, against the Taiwanese distributor of the value, Cheng Shin Rubber Industrial Co. Cheng Shin Rubber had purchased the valves to use in their assembly of thousands of motorcycle wheels.

Cheng Shin filed a complaint with the court, asserting that the faulty valves had been manufactured by Asahi Metal Industry Co, in Japan, and that Cheng Shin had no knowledge that they were faulty. The complaint asked to be relieved of  in the lawsuit, and that Asahi instead be held responsible. Asahi argued that the court in California had no jurisdiction over the company. The California court, however, ruled that it had personal jurisdiction based on the company’s awareness of the scope to which its products would be distributed internationally.

A series of appeals ensued, until the matter was brought before the U.S. Supreme Court in 1986. In  the Court addressed the issue of whether the state court properly took personal jurisdiction over the Japanese company, simply by the fact that it should have known that its products, which were sold to a Taiwanese company, and shipped directly to that company, would make it into the California market.

The Court applied the following test to determine whether the state court could assert personal jurisdiction over a foreign defendant:

· What is the burden on the defendant to bring his case in a foreign land?

· What are the interests of the state in which the lawsuit was filed in the ?

· What is the interest of the plaintiff in litigating the matter in that state?

· Does the allowance of personal jurisdiction serve interstate efficiency?

· Does the allowance of personal jurisdiction serve interstate policy interests?

The U.S. Supreme Court ruled that California could not claim personal jurisdiction over the Japanese company, which has no presence in the U.S., does no business in the country, and owns no property in the country. The Court held that, should the California court be allowed to exercise jurisdiction over Asahi, the act would be “unreasonable and unfair.”

Related Legal Terms and Issues

· Appellate Court – A court having jurisdiction to review decisions of a trial-level or other lower court.

· Authority – The right or power to make decisions, to give orders, or to control something or someone.

· Defendant – A party against whom a lawsuit has been filed in civil court, or who has been accused of, or charged with, a crime or offense.

· Judgment – A formal decision made by a court in a lawsuit.

· Plaintiff – A person who brings a legal action against another person or entity, such as in a civil lawsuit, or criminal proceedings.

Jurisdiction in Cyberspace

This article was edited and reviewed by  | Last updated March 26, 2008

American Bar Association Section of Business LawCyberspace Law Committee

Coping with Personal Jurisdiction in CyberspaceABA Subcommittee on Internet Law Liability Report #3

Until the Internet's advent, a business operating within one state was subject to suit only in that state. Only a business developing a national or international focus had to assess the risk of becoming subject to suit in other states or countries. Performing that risk assessment was usually simple. Traditionally, whether a particular court can exercise control over a particular defendant depends on their physical locus, described in such terms as residence, domicile or place of business. For example, a corporation can generally be sued in any state where it maintains a place of business. The Internet introduces a new dimension towards the question of where a party is subject to suit. If a company has a Web site, it has a presence everywhere that Web site can be accessed. In short, across the entire world. Over the Internet, an individual can have the same impact on entities in other states and countries as can a multi-national corporation. Now, even smaller businesses must assess the risk, arising from use of the Internet, of becoming subject to suit in other states or countries. The location of a company's cyberassets, its maintaining a Web site, or its use of the Internet can all effect where it is subject to suit.

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Already, numerous courts have examined the question of when a defendant's operation of a Web site creates personal jurisdiction. The decisions of these courts are not always consistent, but they are starting to reflect some common themes. This paper's purpose is not to review the body of decisional law, but to examine the emerging themes and discuss their application to actual business planning.

Personal Jurisdiction Basics

The judicial decisions to date in the United States, regardless of their result, are based upon well-developed and long established personal jurisdiction doctrines. Understanding these doctrines is essential to analyzing the emerging decisional law related to Internet use. Personal jurisdiction is based on the interaction between an affirmative statutory or common-law source law dictating the scope of the court's jurisdiction, and limitations imposed by constitutional due process rights. State courts can always assert jurisdiction over an entity or things physically present in the state. State courts also assert personal jurisdiction over entities located outside of the state using "long-arm statutes." Long-arm statutes differ from state to state, but tend to be similar. The Uniform Interstate and International Procedure Act is typical.

1.02 [Personal Jurisdiction Based upon Enduring Relationship]

A court may exercise personal jurisdiction over a person domiciled in, organized under the laws of, or maintaining his or its principal place of business in, this state as to any [cause of action].

1.03 [Personal Jurisdiction Based on Conduct]

(a) A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a [cause of action] arising from the person's:

(1) transacting any business in this state;

(2) contracting to supply services or things in this state;

(3) causing tortious injury by an act or omission in this state; [or]

(4) causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this state…

(b) When jurisdiction over a person is based solely upon this section, only a [cause of action] arising from acts enumerated in this section may be asserted against him.

In determining whether the court has jurisdiction, the first step is to examine the applicable long-arm statute, or common-law equivalent, to determine whether the statute grants the court jurisdiction over the out-of-state defendant. The second step is to evaluate whether the exercise of jurisdiction in the particular case violates due process rights granted under the United States Constitution.Constitutional due process is satisfied if the defendant has "minimum contacts" with the forum state so that subjecting the defendant to suit in that state satisfies considerations of "fair play and substantial justice."In determining whether "minimum contacts" exist, the court should consider "the relationship among the defendant, the forum, and the litigation." In determining whether exercising jurisdiction will satisfy "traditional notions of fair play and substantial justice" the court should focus on the contacts in light of other factors such as:

1. the burden on the defendant;

2. the forum state's interest in adjudicating the dispute;

3. the plaintiff's interest in obtaining the most efficient resolution of the controversy;

4. the interstate judicial system's interest in most efficient resolution of controversies; and

5. the shared interest of the several states in furthering fundamental substantive social policies.

Establishing jurisdiction requires "some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws."Activities within a state that can result in a party subjecting itself to suit in that state include purposefully selling goods in the state, maintaining a physical office or store in the state, entering into a contract with someone in the state, or committing a tortious act within the state. In general, the more passive the defendant was with respect to a transaction, and the fewer events related to the transaction occurred within the forum state, the less likely the court will exercise jurisdiction over the defendant. The difficulty arises in determining when maintaining a Web site, accessible to people in a state, is an activity directed at a state sufficient to allow the state to exercise personal jurisdiction over the Web site owner.

Personal Jurisdiction, Multimedia and Broadcasting

In evaluating the ability to obtain personal jurisdiction over a defendant due to operation of a Web site, a parallel can be drawn to print publications. Print publications, like Web sites, come into contact with several jurisdictions, based on conduct that occurs primarily in one location. Print publications are created by conduct concentrated at the location of the author and publisher. The activity creating a Web site occurs in the state in which the Web site is developed, and the locus of the Web server. However, like a broadly distributed magazine or broadcast, a Web site is accessible everywhere.

The United States Supreme Court has held that a state can exercise personal jurisdiction over a publisher accused of publishing libelous material about a resident of that state when the publisher targets its economic activity at that state. In Keeton v. Hustler Magazine, Inc.[11], the United States District Court for the District of New Hampshire was able to exercise personal jurisdiction over an Ohio corporation because the defendant's magazine circulation in the state of New Hampshire created minimum contacts with that state. Jurisdiction was appropriate because of the state's interest in discouraging libel by the defendant against its citizens.

In a companion case, Calder v. Jones [12], the Supreme Court held that a California court could exercise personal jurisdiction against an author and editor, both resident in Florida, who had libeled a California resident in an article published in the National Enquirer newspaper. The court determined that the defendants had purposefully targeted their libelous activity at California by publishing their article containing libelous material about a California resident in a magazine which they knew was sold and circulated in California and "must reasonably anticipate being haled into court" in California.

In these cases, the tortious act is the knowing publication in the state attempting to exercise personal jurisdiction over the defendant. The results differ if the tortious act is unrelated to the act of publication. If, instead of publishing an article in a magazine or newspaper circulated in the forum state, the defendant submits advertising to a nationally circulated magazine or newspaper, the fact of that advertising is generally not sufficient to create jurisdiction, unless the claim arises from the advertising. For example, in  the defendant advertised in nationally circulated newspapers and magazines and on national television, and maintained an Internet Web site. The District Court for the Northern District of Illinois held that such advertising did not involve systematic and continuous contact with the forum state, Illinois, and concluded that it did not have personal jurisdiction over the defendant. In Gaingolo v. Walt Disney World Co.[15] a district court judge noted that allowing national advertising to make a defendant subject to suit wherever the advertisement appeared would "substantially undermine the law of personal jurisdiction."

Personal Jurisdiction Based on Internet Contacts

Based on the rules expressed in cases like IDS Life Insurance and Gaingolo, operating a Web site or advertising on the Internet should not, by itself, subject a party to global jurisdiction. But, based on the Keeton and Calder decisions, a person committing a tortious act using the Internet should expect to be subject to jurisdiction in the state at which the tortious act is directed. Several courts have addressed the issue of whether maintaining a Web site accessible from a state subjects the owner of the Web site to personal jurisdiction in that state.

The developing theme in the cases is to base jurisdiction on the extent to which the activity performed by maintenance of the Web site is directed toward the forum state. Important factors include the level of interactivity in the Web site, whether the Web site content is directed toward an audience including residents of the forum state, whether the Web site has been accessed by residents of the forum state, or whether a particular activity of the Web site giving rise to the cause of action was directed at the forum state. Some decisions have expressed this analysis as sorting Web sites into three categories. Where the defendant actively does business over the Internet directed at the forum state, the forum state can exercise jurisdiction over the defendant. Where the Web site provides a lower level of interactivity by allowing the defendant to exchange information with customers over the Internet, the court must assess the level of interactivity and commercial nature of the Web site to determine if sufficient contacts exist to warrant the exercise of jurisdiction. Where the defendant passively provides information or an advertisement on a Web site, without other contacts existing with the forum state, the forum state can not exercise personal jurisdiction over the defendant.

Most Internet jurisdiction cases, like that resulting in the Panavision International, L.P. v. Toeppen decision, involve trademark disputes involving use of the Web site domain name and hold that the forum state can exercise jurisdiction over the owner of the Web site because the infringing conduct targets the forum state and thus creates a basis for specific jurisdiction. As in the publishing arena, the Web site must knowingly target potential viewers in the forum state. An alleged injury related to the operation of the Web site is insufficient to create jurisdiction where the Web site operation is not directed at the forum state and no other contacts with the forum state are found. Further, when Web site operation is unrelated to the conduct, courts have generally not allowed exercise of general jurisdiction based on the presence of a passive advertising Web site.

One early decision is Inset Systems, Inc. v. Instruction Set, Inc.[20] A Massachusetts corporation allegedly used a Connecticut corporation's trademark as its domain name. The defendant advertised its goods for sale using a Web site available through the contested domain name. The Connecticut "long-arm" statute[21] allows personal jurisdiction over a non-resident on any cause of action arising from business solicited within Connecticut, if the solicitation was repeated. The court concluded that advertising using a Web site, by itself, is a sufficiently repetitive contact sufficient to allow Connecticut to exercise personal jurisdiction under its "long-arm" statute. The court then, in addressing the constitutional issues, stated that:

In the present case, Instruction has directed its advertising activities via the Internet and its toll-free number toward not only the state of Connecticut, but to all states…advertisement on the Internet can reach as many as 10,000 Internet users within Connecticut alone. Further, once posted on the Internet, unlike television and radio advertising, the advertisement is available continuously to any Internet user. ISI has therefore, purposefully availed itself of the privilege of doing business within Connecticut.

The United States District Court for the Eastern District of Missouri reached a similar result in Maritz, Inc. v. Cybergold, Inc. In that case, which also involved a trademark dispute over use of a domain name, a California company advertised on the Internet and received at least 131 hits from Missouri residents. The District Court held that this was sufficient for a Missouri court to obtain personal jurisdiction over the California defendant.

The United States Court of Appeals for the Ninth Circuit reached a different result in another trademark case, Cybersell, Inc. v. Cybersell, Inc.,[23] because it determined that the Web site was not directed at the forum state. The plaintiff was an Arizona corporation that advertises for commercial services over the Internet. The defendant was a Florida corporation that offered Web site construction services over the Internet under the name "Cybersell." The court found that no part of the defendant's business was sought or achieved in Arizona. The only contact with Arizona was the fact that the defendant's Web site was accessible over the Internet by Arizona residents. The court held that this contact, constituting mere passive advertising, was insufficient to provide a basis for jurisdiction.

Both the Inset and Cybergold cases involved a trademark dispute over a domain name being used by the defendant in interstate commerce. Thus, the cause of action was related to the defendant's contact with the forum state. In the IDS Life Insurance Company v. SunAmerica, Inc. case, the United States District Court for the Northern District of Illinois addressed the question of obtaining personal jurisdiction over an out-of-state defendant in a tort case where the cause of action was unrelated to the Internet advertising. The Illinois "long-arm" statute allows an Illinois court to exercise personal jurisdiction over an out-of-state defendant if the defendant is doing business in Illinois by carrying on "continuous and systematic" business in the state. The court compared the defendant's advertising on its Web site with the defendant's advertisements in nationally circulated newspapers and magazines and on national television. The court concluded that maintaining advertising on a Web site, although accessible in Illinois, does not constitute an advertisement directed at Illinois and therefore Illinois could not exercise personal jurisdiction over the defendant.

International Personal Jurisdiction

Cases examining whether a Web site maintained outside of the United States can allow a United States court to exercise personal jurisdiction over the Web site owner follow the same analysis as the purely domestic cases. The first case to discuss the issue of specific jurisdiction in an international context was Granite Gate Resorts, Inc., a Nevada Corporation, advertised on the Internet a Web site known as WagerNet. WagerNet was maintained on a web server located in Belize by a Belize registered corporation. The Minnesota Attorney General took the position that his state can exercise personal jurisdiction over any party which uses the Internet to conduct any activity illegal in Minnesota. He filed a complaint against Granite Gate Resorts, Inc. alleging deceptive trade practices, false advertising and consumer fraud for advertising in Minnesota. The Minnesota Court of Appeals held that because the Web site was accessible by Minnesota residents, and because the defendant had directed its advertisements at customers in the United States, including residents of Minnesota, it could exercise personal jurisdiction over the defendant.

In  the United States District Court for the District of New Jersey addressed whether a United States court could exercise general personal jurisdiction over a foreign defendant based solely on maintenance of a passive Web site. The defendant was a hotel, located in Italy, which maintained a Web site as an advertisement. The plaintiff, a New Jersey resident, sustained injuries while visiting the hotel in Italy. On returning to the United States, the plaintiff sued the defendant in New Jersey state court, and claimed the New Jersey court could assert personal jurisdiction over the defendant based on its Web site. The Court determined that maintaining a Web site as an advertisement is comparable to advertising in a national magazine and is insufficient to allow the forum court to establish personal jurisdiction over the defendant. Because the defendant's sole contact with New Jersey was its Web site, and because the injury was not related to the Web site, the court declined to exercise jurisdiction over the Italian defendant.

Owners of Web sites maintained in the United States should address whether operating the Web site will subject them to the jurisdiction of courts in other countries. Foreign courts will determine whether they can exercise jurisdiction over a defendant resident in the United States based upon the foreign country's own rules, which may differ from those used by United States courts. Further, because widespread use of the Internet is occurring later in many foreign countries than in the United States, little or no guidance may be available to predict how a particular country's courts might address the issue.

Nevertheless, the risk of being sued overseas does exist. For example, in the case, a German court found it could exercise jurisdiction over a defendant based in Kansas City based on the fact that the Web site operated at the defendant's domain name was accessible at the plaintiff's location in Germany. In another case, the Supreme Court of Hong Kong attempted to exercise jurisdiction over a California Internet service provider by issuing a Writ of Summons against the defendant. That case settled before the issue of jurisdiction was determined.

Conclusion

A company putting a Web site on the Internet should remain aware that its Web site may expand the geographic scope of its business. Depending on the nature of the business and the Web site content, the company might now be directing its activities toward customers in other states and countries. This makes it subject to foreign laws and regulations governing business activities and possibly subject to jurisdiction in foreign courts. Thinking in advance about the nature of its business and the content of its Web site will help the company assess the risk of its being hailed into a foreign court, even if definitive answers are not available.

Some protective measures may be available. The company might use click-through agreements or disclaimers to clarify a geographic focus. Trademark searches will help assess the risk of a trademark infringement suit resulting from use of the Web site and help pinpoint the location of potential plaintiffs. Where a trademark infringement suit is anticipated, a preemptive lawsuit can be filed in the company's home state or where the domain name registrar is located. A company can perform a global review of the laws governing its industry to identify particular jurisdictions where it might become subject to suit. Once it identifies specific problem states or countries, it can obtain an opinion regarding that jurisdiction's laws and case law regarding Web site based jurisdiction. Where a potential problem exists, the company can bring its business methods into compliance with the problem jurisdiction's laws. No company will be able to completely predict or prevent being sued in foreign courts. However, being aware of the problem is the first step in minimizing the risk it creates.

Alternative Dispute Resolution (ADR): Overview

Created by  of legal writers and editors | Last updated August 03, 2018

A wide variety of processes, practices, and techniques fall within the definition of "alternative dispute resolution." Arbitration and mediation are the best known and most frequently used types of ADR, but not the only ones. Minitrials, early neutral evaluations, and summary jury trials are less well-known forms of ADR. Many of these ADR techniques have little in common except that negotiation plays a prominent role in each. Parties to ADR procedures generally agree that a negotiated settlement is worth pursuing before investing time and money in full blown civil litigation.

Arbitration

Arbitration is the process of referring a dispute to an impartial intermediary chosen by the parties who agree in advance to abide by the arbitrator's award that is issued after a hearing at which all parties have the opportunity to be heard. Arbitration resembles traditional civil litigation in that a neutral intermediary hears the disputants' arguments and imposes a final and binding decision that is enforceable by the courts. One difference is that in arbitration the disputants elect to settle any future disputes by arbitration before a dispute actually arises, whereas with civil litigation the judicial system is generally chosen by a disgruntled party after a dispute has materialized. Another difference is that the disputants to an arbitration select the intermediary who will serve as arbitrator, whereas parties to civil litigation have little to no control over who will preside as the judge in judicial proceedings.

Arbitration also resembles litigation in that many parties use arbitration as a springboard to negotiation. Parties who know that their dispute will wind up in arbitration often fail to commence serious negotiations until shortly before or shortly after the arbitration proceedings have begun. Frequently, negotiations will continue simultaneously with the arbitration proceedings, meaning the parties' representatives will discuss settlement outside the hearing room while the hearing itself is underway inside. Arbitration can even expedite negotiations, since the parties know that once the arbitrator has issued a decision, the decision is typically final and rarely appeal-able.

There are two different forms of arbitration: private and judicial arbitration. Private arbitration is the most common form of ADR. Sometimes referred to as contractual arbitration, private arbitration is the product of an agreement to arbitrate drafted by the parties who enter a relationship anticipating that disputes will arise, but who mutually desire to keep any such disputes out of the courts. Private arbitration agreements typically identify the person who will serve as arbitrator. The arbitrator need not be a judge or government official. Instead, the arbitrator can be a private person whom the parties feel will have sufficient knowledge, experience, and equanimity to resolve a dispute in a reasonable manner. In some states, legislation prescribes the qualifications one must satisfy to be eligible for appointment as an arbitrator.

A private arbitrator's power is derived completely from the arbitration agreement, which may also limit the issues the arbitrator has authority to resolve. Private arbitration agreements are supported in many states by statutes that provide for judicial enforcement of agreements to arbitrate and arbitrator-rendered awards. However, statutes governing private arbitration often set forth criteria that must be followed before an arbitration agreement will be binding on both parties and enforced by a court. If those criteria are satisfied, a court will normally deem the arbitrator's decision final and enforceable. The losing party may only appeal the decision upon a showing of fraud, misrepresentation, arbitrariness, or capriciousness by the arbitrator.

Private arbitration is the primary method of settling labor disputes between unions and employers. For example, unions and employers almost always include an arbitration clause in their formal negotiations, known as collective bargaining agreements. By doing so, they agree to arbitrate future employee grievances over wages, hours, working conditions, and job security. Many real estate and insurance contracts also make arbitration the exclusive method of negotiating and resolving certain disputes that can arise between the parties entering those types of relationships.

Judicial arbitration, sometimes called court-annexed arbitration, is a non-binding form of arbitration, which means that any party dissatisfied with the arbitrator's decision may choose to go to trial rather than accept the decision. However, most jurisdictions prescribe a specific time period within which the parties to a judicial arbitration may elect to reject the arbitrator's decision and go to trial. If this time period expires before either party has rejected the arbitrator's decision, the decision becomes final, binding, and just as enforceable as a private arbitrator's decision.

Judicial arbitration is usually mandated by statute, court rule, or regulation. Many of these statutes were enacted to govern disputes for amounts that exceed the jurisdiction of small claims court but fall short of the amount required for trial in civil court. For example, in New York State claims for over $3,000 and for less than $10,000 must be submitted to non-binding judicial arbitration. NY CPLR Rule section 3405. Ten federal district courts also have mandatory programs for non-binding judicial arbitration that are funded by Congress. For example, rule 30 of the Local Rules of Court for the U.S. District Court for the Western District of Missouri provides that cases designated for compulsory, non-binding arbitration are those in which the damage award could not reasonably be expected to exceed $100,000.

Because judicial arbitration is mandatory but non-binding, it often serves as a means of facilitating negotiation between the parties to a dispute. Civil court calendars are frequently backlogged with hundreds of lawsuits. States hope that by mandating nonbinding arbitration for certain disputes the parties will see the value of a negotiated settlement where both parties compromise their positions, since their positions would likely be compromised were their dispute to be resolved in civil court. Seldom do litigants receive everything they ask for in their petitions, complaints, and answers.

Private and judicial arbitration are generally less costly and more time efficient than formal civil litigation. It has been estimated that the average arbitration takes 4 to 5 months while litigation may take several years. The cost of arbitration is minimal compared to civil trials as well, since the American Arbitration Association (AAA) charges only a nominal filing fee and the arbitrator may even work without a fee to broaden his or her professional experience.

Mediation

Mediation is a rapidly growing ADR technique. It consists of assisted negotiations in which the disputants agree to enlist the help of a neutral intermediary, whose job it is to facilitate a voluntary, mutually acceptable settlement. A mediator's primary function is to identify issues, explore possible bases for agreement, discuss the consequences of reaching impasse, and encourage each party to accommodate the interests of other parties through negotiation. However, unlike arbitrators, mediators lack the power to impose a decision on the parties if they fail to reach an agreement on their own.

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Mediation is sometimes referred to as conciliation, or conciliated negotiation. However, the terms are not necessarily interchangeable. Conciliation focuses more on the early stages of negotiation, such as opening the channels of communication, bringing the disputants together, and identifying points of mutual agreement. Mediation focuses more on the later stages of negotiation, exploring weaknesses in each party's position, investigating areas where the parties disagree but might be inclined to compromise, and suggesting possible mutually agreeable outcomes. Conciliation and mediation typically work well when the disputants are involved in a long-term relationship, such as married partners, wholesaler and retailer, and manufacturer and distributor, to name a few. Mediation and conciliation also work well for "polycentric" problems that are not easily solved by all-or-nothing solutions, as with certain antitrust suits involving a myriad of complex issues.

Although some jurisdictions have enacted statutes that govern mediation, most mediation proceedings are voluntary for both parties. Accordingly, a mediator's influence is limited by the autonomy of the parties and their willingness to negotiate in good faith. Thus, a mediator can go no further than the parties themselves are willing to go. Since agreements reached by mediation bear the parties' own imprint, however, many observers feel that they are more likely to be adhered to than decisions imposed by an arbitrator or court. Disputants who participate in mediation without representation of legal counsel are also more likely to adhere to settlements when the alternative is to pursue civil litigation, where attorneys fees consume a significant portion of any monetary award granted to the parties.

Minitrials

A minitrial is a process by which the attorneys for the parties present a brief version of the case to a panel, often comprised of the clients themselves and a neutral intermediary who chairs the process. Expert witnesses (and less frequently, lay witnesses) may be used in presenting the case. After the presentation, the clients, normally top management representatives who by now are more aware of the strengths and weaknesses of their positions, attempt to negotiate a settlement of the dispute. If a negotiated settlement is not reached, the parties may allow the intermediary to mediate the dispute or render a non-binding advisory opinion regarding the likely outcome of the case were it to be tried in civil court.

Minitrials are increasingly used by businesses to resolve large-scale disputes involving product liability questions, antitrust issues, billion dollar construction contracts, and mass tort or disaster litigation. The federal government also makes use of minitrials for disputes involving telecommunications. The Code of Federal regulations establishes procedures whereby individuals and entities under investigation by the FCC can request a minitrial prior to commencement of more formal administrative proceedings. 47 CFR section 1.730.

Minitrials are often effective because they usually result in bringing top management officials together to negotiate the legal issues underlying a dispute. Early in the negotiation process, upper management is sometimes pre-occupied by the business side of a dispute. Minitrials tend to shift management's focus to the outstanding legal issues. Minitrials also allow businesses to share information with each other and with their attorneys, providing a forum for initial face-to-face negotiations. Management also generally prefers the time-saving, abbreviated nature of minitrials over the more time-consuming and costly civil-litigation alternative. Minitrials expedite negotiations as well, by making them more realistic. Once the parties have seen their case play out in court, even in truncated fashion, the parties are less likely to posture over less relevant or meaningless issues.

Summary Jury Trials

Summary jury trials are an ADR technique used primarily in federal courts, where they provide parties with the opportunity to "try" their cases before an advisory panel of jurors, without having to face the final and possibly adverse decision of a regular jury in civil court. The purpose of the summary jury trial is to facilitate pretrial termination of cases in which a significant impediment to negotiation is disagreement between the attorneys or parties regarding a civil jury's likely findings on liability or damages in the case. Like minitrials, summary jury trials give the parties a chance to reach a preliminary assessment of the strengths and weaknesses of their positions and proceed with negotiations from a common starting point, namely the advisory jury's findings. Both summary jury trials and minitrials can ordinarily be scheduled and completed before formal civil cases would normally reach a court's docket.

Summary jury trials are presided over by a judge or magistrate in federal district court. A ten-member jury venire is presented to counsel for consideration. Counsel are provided with a short character profile of each juror and then given two challenges to arrive at a final six-member jury for the proceeding. Each attorney is given one hour to describe his or her client's case to the jury. After counsel's presentations, the presiding judge or magistrate delivers to the jury a brief statement of the applicable law, and the jury retires to deliberate. Juries are encouraged to return a consensus verdict, but they may return a special report that anonymously lists the view of each juror as to liability and damages. After the verdict or special report has been returned, counsel meet with the presiding judge or magistrate to discuss the verdict and to establish a timetable for settlement negotiations. Evidentiary and procedural rules are few and flexible.

Early Neutral Evaluation

Early neutral evaluation is an informal process by which a neutral intermediary is appointed to hear the facts and arguments of counsel and the parties. After the hearing, the intermediary provides an evaluation of the strengths and weaknesses of the parties' positions and the parties' potential exposure to liability for money damages. The parties, counsel, and intermediary then engage in discussions designed to assist the parties in identifying the agreed upon facts, isolating the issues in dispute, locating areas in which further investigation would be useful, and devising a plan to streamline the investigative process. Settlement negotiations and mediation may follow, but only if the parties desire. In some jurisdictions, early neutral evaluation is a court-ordered ADR technique. However, even in these jurisdictions the parties are given the option of hiring their own neutral intermediary or having the court appoint one.

The objective of early neutral evaluation is to obtain an early assessment of the parties' dispute by a credible outsider who has no interest in the outcome of the dispute but who has sufficient knowledge and experience to sift through the facts and issues and find the ground shared by the parties and the ground separating them. Much like in the other forms of ADR, the success of early neutral evaluation depends largely on the disputants' faith in the neutral intermediary. It also depends in large part on the disputants' willingness to compromise and settle the dispute. Successful early neutral evaluations can lead directly to meaningful negotiations.

Conclusion: Negotiation, ADR, and Civil Litigation

The procedures and techniques discussed above are the most commonly employed methods of ADR. Negotiation plays an important role in each method, either primarily or secondarily. However, there are countless other ADR methods, many of which modify or combine the above methods. For example, it is not uncommon for disputants to begin negotiations with early neutral evaluation and then move to nonbinding mediation. If mediation fails, the parties may proceed with binding arbitration. The goal with each type of ADR is for the parties to find the most effective way of resolving their dispute without resorting to litigation. The process has been criticized as a waste of time by some legal observers who believe that the same time could be spent pursuing the claims in civil court, where negotiation also plays a prominent role and litigants are protected by a panoply of formal rights, procedures, and rules. But many participants in unsuccessful ADR proceedings believe it is useful to determine that their disputes are not amenable to a negotiated settlement before commencing a lawsuit.

Despite its success over the past three decades, ADR is not the appropriate choice for all disputants or all legal disputes. Many individuals and entities still resist ADR because it lacks the substantive, procedural, and evidentiary protections available in formal civil litigation. For example, parties to ADR typically waive their rights to object to evidence that might be deemed inadmissible under the rules of court. Hearsay evidence is a common example of evidence that is considered by the parties and intermediaries in ADR forums but that is generally excluded from civil trials. If a disputant believes that he or she would be sacrificing too many rights and protections by waiving the formalities of civil litigation, ADR will not be the appropriate method of dispute resolution.