Applying law to a set of facts

Attached is the discussion instructions as well as the required reading materials (Chapter 1,2 and 3). Please read the questions carefully and answer the questions substantively with a minimum of 250 words. Here is the reference to the chapter readings: Rogers, S. (2012). Essentials of Business Law [Electronic version].


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Read the Hypothetical Case Problem #1 at the end of Chapter 1 and respond to these questions:
If Javier sued Energy-Auto Inc., identify who would be the plaintiff and the defendant.
In which state or states can the suit be brought?
Assume that Javier incurred $100,000 in damages.
o Analyze whether the suit can be brought in federal court
o Explain the advantages and disadvantages of federal versus state court for this
type of suit.
Your initial post should be at least 250 words in length. Support your claims with examples from
the required reading material, and properly cite the reference.
Unit I
The Legal Environment
of Business
Sources of the Law and the Court System
Criminal Law
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he study of law as it affects business is essential for every businessperson. We live
in the most litigious society on earth. As a result, business owners, managers, and
employees need to have an awareness of legal issues that affect business as well as a
solid grasp of basic legal principles so that they can spot potential problem areas and seek
expert legal advice before problems grow into costly and time-consuming impediments.
The question most persons involved with business need to ask is not whether they are ever
likely to be involved in litigation, but rather when they are likely to encounter it. Consequently, awareness of basic legal principles is probably the best (and cheapest) risk management tool available to any businessperson. Indeed, an employee who fully understands
basic legal principles and can recognize potential legal problems before they arise can be a
company’s greatest asset.
In Unit I we begin our journey into practical legal training by examining the sources of
American law and our court system, as well as the basic principles of tort and criminal law.
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Sources of the Law
and the Court System
Learning Objectives
After studying this chapter, you will
be able to:
1. Distinguish between common law and
civil law.
2. Describe the structure and function of
both state and federal courts.
3. Define jurisdiction and its implication.
Chapter Overview
1.1 Sources of the Law
The Civil Law Tradition
The Common Law Tradition
Constitutional Law
Statutory Law
Administrative Law
1.2 The Courts
• State Court Systems
• The Federal Court System
• Jurisdiction: The Power to Decide a Case
1.3 Chapter Summary
• Focus on Ethics
• Case Study: Snyder v. Phelps
• Case Study: Citizens United v. Federal
Election Committee
• Critical Thinking Questions
• Hypothetical Case Problems
• Key Terms
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Section 1.1 Sources of the Law
aw, distilled to its essence, can be described as rules of conduct decreed and enforced
by government for the benefit of its citizens. Laws are by no means the only type
of rules that regulate conduct. A restaurant may require patrons to wear ties and
jackets when dining in its premises, a college professor may demand that students refrain
from talking in class, and a religious institution may command that its members abstain
from using certain types of contraceptives. In all three cases, a penalty may be imposed
for failure to observe the rules: the restaurant may deny entrance to anyone not wearing the proper attire, the professor may expel a student who talks during class, and the
church may ostracize any member who challenges the prohibition on contraceptive technology. Nevertheless, these rules do not rise to the level of laws simply because they are
not enacted and enforced by the state.
Note also that while law in a sense is derived from a society’s sense of morality, or what
people think is right and wrong, law is distinctly different from either morals or ethics.
Nonetheless, it is worthwhile to consider the ethical implications of the law.
In this chapter, we will trace the law to its various sources, as well as explore an overview
of the federal and state court systems in order to gain a better understanding of our system of justice.
1.1 Sources of the Law
t is a common misconception to think of the law as a set of rules written down in old,
dusty books that show little change over time. Such a vision of the law makes it seem
stagnant and inflexible. The reality, however, is quite different. Law in the United States
is vibrant, adaptable, and ever changing (albeit slowly). The U.S. Constitution is the starting point for our law. Statutes passed by legislative bodies such as the U.S. Congress and
the various states’ legislatures are an important part of the law, as are decisions handed
down by federal and state judges, and the regulations and administrative decisions of
state and federal agencies. All of these taken together make up what we commonly refer
to as the law. We will examine each of these important sources separately in order to gain
a better understanding of how they help to shape our law. We will begin with the two
basic legal systems in the world: civil law and common law. The civil law system emphasizes lawmakers setting down rules in written codes, whereas common law derives from
judges making decisions in actual lawsuits.
The Civil Law Tradition
Civil law is the dominant legal system, favored by most non-English-speaking countries
in Europe, Asia, Africa, and Latin America. The civil law system is based on a tradition
that dates back to the Code of Hammurabi (2100 bce), which reduces the law to statutes,
or written codes. For example, there is a section that provides for the liability of a builder
when a house collapses. A contractor in ancient times could thus reference the code and
know the risks of shoddy work in advance!
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Section 1.1 Sources of the Law
This tradition continued with Roman
law, which traces its recorded origin to
the Twelve Tables (450 bce)—bronze tablets setting down the law which were
attached to the orator’s platform in the
Roman Forum so that all citizens could
read and know the law. Finally, the tradition reached its zenith around 533 ce
when the Byzantine emperor Justinian I
undertook the task of recording and integrating 1000 years of existing law into a
single code—the Corpus Juris Civilis (literally the body of the civil law), more
commonly referred to as the Justinian
Code. That nearly 1500-year-old code
forms the most important pillar of the
civil law system.
Modern law has roots in ancient Rome.
Top Photo Group/Thinkstock
The tradition of putting the law into a code that the general public can read and understand continues today in most countries using a civil law system. Civil law requires that
law be written and made accessible to the people so that they may know their rights and
obligations as citizens. There is relatively little leeway given to judges in interpreting civil
law, and little room for debate as to the meaning and application of the law in any given
circumstance. Civil law jurisdictions generally make it simpler for citizens to know the
law and to predict its outcome. As a result, there tends to be less litigation and less need
for attorneys in civil law societies, and many routine tasks are handled by paralegals.
Societal opinions, changing values, or the cumulative wisdom of judicial interpretation
of the law gleaned from legal precedent have a lesser role in civil law systems than they
do under a common law system. Therefore, the law tends to be relatively inflexible and
changes only when and if legislative bodies see fit to change it.
The Common Law Tradition
The common law system emphasizes the making of rules through court decisions, and
traces its roots to England. After the Norman Conquest of 1066, King William I began
the attempts to consolidate what were at times conflicting laws throughout the country
into a unified common law that would apply throughout the realm. By the 13th century,
magistrates traveled throughout the countryside, hearing cases as they went from town
to town in regular circuits. Since the magistrates had no great body of written law to rely
upon, they in essence created the law as they decided cases, by applying basic principles
of fairness drawn from the customs, traditions, and ethics of the time. Ultimately, these
decisions were written down and used as precedents or guidelines, to be referred to and
followed when similar cases arose in the future. Before the United States of America came
into existence, this land consisted largely of English colonies, which adopted the common
law tradition. The exception is Louisiana, which still adheres to much of the civil law system developed as a French colony.
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Section 1.1 Sources of the Law
Under the doctrine of stare decisis (“let the decision stand”), courts today still follow precedent closely and decide cases in a way that is consistent with the way that similar cases
were decided in the past. The role of lawyers in a common law system largely involves
arguing how existing precedent should be applied to a particular set of facts.
Example 1.1. In an 1834 case titled Joel v. Morison, the court found that
an employer could be liable under some circumstances where his servant,
driving the master’s horse and cart, had collided with a pedestrian. The
key issue was whether the servant was on the master’s business or on a
small detour, in which case the master was liable, as opposed to the servant’s going off on a frolic of his own, whereupon the master would not be
liable. The same rules the court used in Joel are still being used today. If a
United Parcel Service truck hits someone, the attorney for UPS will argue
the driver was on a frolic, and the lawyer for the injured person will claim
he was still on UPS business.
The characteristic distinguishing common law from civil law is that common law is primarily derived from judges deciding actual cases. That is not to say that only judges make
law. Today, there are large bodies of statutes in common law (not unlike those of civil
law jurisdictions) that seek to codify important areas of the law. Unlike civil law jurisdictions, however, statutes do not form the foundation of the law in most areas, but largely
serve to alter or clarify the common law. For example, the basic rules governing contracts
(enforceable agreements) have evolved from the common law, but today many contracts
are subject to a statutory body of law, the Uniform Commercial Code (UCC). The UCC
is a summary of traditional common law rules governing commercial transactions, which
has been all or partially enacted into statutory law by the state legislatures. UCC rules are
in many places identical to those from the common law.
Even in areas where the law has been largely modified by statute, the courts still retain the
power of interpreting, modifying, and generally fine-tuning the law through legal decisions. In order to know what a given statute means, one must always look to see how it
has been interpreted and applied by the courts.
Example 1.2. A number of federal statutes apply only in situations involving “interstate commerce.” A commonsense definition of interstate commerce might be “commercial transactions that cross state lines.” But the
courts interpret the phrase far more broadly, so that a business exclusively
within one state can still be regulated by federal statutes because of its
potential effects on interstate commerce. Thus a barbeque restaurant in
Alabama that refuses to promote African Americans to management positions can be sued for racial discrimination (a federal law), even if the plaintiff (the person suing) is also from Alabama (thus not crossing state boundaries). The discrimination can potentially affect the interstate job market,
since African Americans from other states might be less likely to seek jobs
in Alabama.
Also unlike civil law, it can be difficult for the average layperson to know with any certainty what the common law is with regard to any specific situation. In many instances,
even experienced attorneys can only venture an educated guess on how a court is likely
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Section 1.1 Sources of the Law
to apply the law to a given set of facts. And even the best judicial minds often disagree,
based at least in part on their judicial philosophy and political ideology. Many decisions
of the U.S. Supreme Court are not unanimous and are sometimes decided by narrow fiveto-four margins, with judges interpreting the law very differently based in great part on
their judicial philosophy.
Example 1.3. A majority of the Supreme Court has found that commercial
speech (such as advertising) merits First Amendment protection, but not to
the same degree as other types of speech. Nowhere in the First Amendment
is this distinction drawn. Thus when Puerto Rico passed a law allowing
casino gambling but forbidding advertising of gambling establishments,
the Court said the First Amendment was not necessarily violated. Four
judges dissented, partly because they thought it made no sense to allow
the activity (gambling) but not speech about the activity. Supreme Court
justices still disagree about whether commercial speech should be
treated differently. Justice Clarence Thomas stated in a 1996 case,
Liquormart, Inc. v. Rhode Island, “I do not see a philosophical or historical
basis for asserting that ‘commercial’ speech is of ‘lower value’ than
‘noncommercial speech.’”
This uncertainty and susceptibility of the common law to varying interpretations, which
may depend on judges’ personal philosophies and opinions, is perhaps its major drawback.
On the positive side, common law is not as inflexible as civil law; judges have a considerable amount of power to change, adapt, and mold the law to fit particular cases in order
to insure that justice is done and that the law reflects society’s changing social values. For
example, consider the changing views of racial discrimination that caused the Supreme
Court over time to switch from endorsing “separate but equal” segregation in the 1896
case Plessy v. Ferguson, which allowed states to mandate separate schools for African
American children, to finding such policies unconstitutional in the 1954 case Brown v. the
Board of Education.
Constitutional Law
A constitution establishes a state or nation’s form of government and sets out its most
fundamental legal principles. The United States has a federal Constitution as well as constitutions for each of the 50 states. In addition, local municipalities may have their own
versions, known as charters. Article VI, Section 2 of the U.S. Constitution (see Appendix
A) specifically states that the U.S. Constitution “shall be the supreme Law of the Land.”
If a conflict arises between the U.S. Constitution and any other law, including a state constitution or city charter, the federal Constitution rules and the conflicting law is deemed
unconstitutional, which means it has no force or effect.
Constitutions are of necessity rather broad documents stating the basic principles a government must follow. The interpretation of the constitution is left to the courts and the
final say on the meaning of the U.S. Constitution is reserved to the U.S. Supreme Court.
Once the highest court in the land has interpreted the Constitution, all other courts are
bound by its interpretation.
Example 1.4. The state of Texas enacts a statute that makes it a crime to
destroy an American flag. Jennifer attends a protest against United States
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Section 1.1 Sources of the Law
involvement in Afghanistan,
where she burns an American flag, while shouting, “War
sucks!” Jennifer is arrested,
charged, and convicted under
the Texas law. She appeals, stating that this law violates her First
Amendment right to free speech.
Jennifer would win her case, and her conviction would not stand. The Supreme
Court found in a 1989 case, Texas v. Johnson, that flag burning is symbolic speech
and protected by the First Amendment.
Thus the Texas law is unconstitutional.
The First Amendment protects flag burning as a form of
Suppose the Supreme Court finds a
political speech. In 1967, demonstrators gathered in Sheep
federal law unconstitutional. What can
Meadow of Central Park and burned an American flag in
Congress do if it disagrees with the U.S.
opposition to the war in Vietnam.
Supreme Court’s interpretation of the
1967/Daily News, L.P. (New York) / New York Daily News via Getty Images
Constitution? Only one thing: amend the
Constitution. Under Article V, Congress
has the right to amend the Constitution
by a two-thirds vote by the House of Representatives and the Senate. If three-quarters
of the states’ legislatures then approve the amendment, or if a constitutional convention
in three-quarters of the states approves it, the amendment becomes law and the Constitution is changed to include the new amendment. However, the right of each state to equal
representation in the Senate may not be amended. It should be noted that it is relatively
rare that the amendment procedure is successful; in the past 200 or so years, there have
only been 27 amendments.
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Section 1.1 Sources of the Law
In the Media: Eminem’s Lyrics—Free Speech or Defamation?
Marshall Mathers, better known as the rapper Eminem, is one of the bestselling hip hop artists of all time. He has sold over 85 million albums, all
with the parental advisory warning stamped on the front. Drawing inspiration from his own, evidently difficult upbringing, Eminem has rapped
about his mother, his ex-wife, a former schoolmate, and even his fans, in
his notoriously abrasive style. As a result, he has been involved in numerous lawsuits for defamation.
Classmate DeAngelo Bailey sued Eminem in 2002, alleging that he was the
subject for the song “Brain Damage” from Eminem’s 1999 debut album,
The Slim Shady LP. “Brain Damage” is about a childhood bully who is physically violent with little Marshall, and it includes the following lines: “I was
harassed daily by this fat kid named DeAngelo Bailey. [. . .] [E]very day he’d
shove me in the lockers. One day he came in the bathroom [. . .] and beat
me into submission.” Although Bailey was working in sanitation when he
filed the million-dollar suit, Bailey claimed that Eminem’s lyrical disparagement cost him a career in music. In 2003, the lawsuit was dismissed in a
14-page ruling, but not without Michigan trial judge Deborah A. Servitto
finding her own lyrical voice. In footnote 11 of the order of dismissal, Judge
Servitto wrote the following gem: “To convey the Court’s opinion to the
fans of rap, the Court’s research staff has helped the Court put the decision

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