Chapter 3 :Chapter 3 Trials and Resolving Disputes


Chapter Issues :Chapter Issues Basic Trial Procedures Procedures and Processes of Litigating a Dispute Remedies in Civil Litigation Appellate Stage Alternative Dispute Resolution (ADR) Arbitration Negotiation-Settlement Mediation Other forms of ADR


The Judicial System :The Judicial System The court system is adversarial in nature Parties have the responsibility for bringing a lawsuit, shaping issues and presenting evidence Lawyers represent the parties’ claims Judges don’t investigate Court applies legal rules to facts presented Trials are often costly and uncertain Complex facts, extensive evidence, mountains of business records involved Juries tend to be less sympathetic to businesses


Basic Trial Procedures :Basic Trial Procedures Pleading Stage Discovery Stage Pretrial Stage Trial Stage Appellate Stage Enforcement Stage See Exhibit 3.2


The Pleadings Stage :The Pleadings Stage Formal statements made to the court by the parties Jurisdiction needed over subject matter & parties Notice of lawsuit given by service of process by summons Complaint Alleges facts for jurisdiction & remedy/remedies Requests remedy(ies) See Exhibit 3.1 (Casino owner pokes a hole in a Picasso, and sues Lloyds of London for compensation for losses under his insurance policy with them.) Responses to Complaint Motion to Dismiss (Demurrer) By defendant Answer (may include affirmative defenses) Counterclaim Reply


Discovery Stage(Legal Tools to Obtain Evidence) :Rules of Civil Procedure set guidelines & limits to the process Purposes to 1) preserve evidence, 2) limit element of surprise, 3) encourage settlement Depositions of parties and witnesses (including experts) Interrogatories of the parties Use of Expert Witnesses Requests for Admissions Orders of Production of Documents Physical/Mental Examinations Impacts on business--expensive & time-consuming See Cooper Tire & Rubber v. Mendez Discovery Stage(Legal Tools to Obtain Evidence)


Cooper Tire and Rubber v. Mendez :Cooper Tire and Rubber v. Mendez Mendez was driving a minivan – 6 passengers Rear tire, made by Cooper Tire, lost its tread. Minivan rolled over. 4 passengers were killed. Mendez and 2 other survived. Examination showed nail had punctured the tire. Mendez and others sued Cooper for product defect. Jury awarded over $11 million damages. Appeals court affirmed. Cooper appealed that expert testimony of Richard Grogan, on behalf of Mendez, was inadmissible. HELD: Grogan’s presentation of a theory of wax contamination at manufacturing as a reason for the separation of the belts on the tire is unreliable and should not be admitted. Expert testimony is admissible if (1) the expert is qualified and (2) the testimony is relevant and based on a reliable foundation. Grogan is not a chemist, engineer or tire designer. Has a British national certificate equivalent to a high school diploma. No post-secondary degrees. Not accident reconstruction expert. (CONTINUED…)


Cooper Tire and Rubber v. Mendez, cont. :Cooper Tire and Rubber v. Mendez, cont. Grogan did work at Dunlop Tire Company in England, examining tires, including those that had failed. He teaches courses on tire failures and published a book entitled An Investigator’s Guide to Tire Failures, along with articles on tire failures. Grogan’s theory of wax contamination at manufacturing (creating separation of tire belt or tread) is supported only by his book and theory has not achieved general acceptance. Cooper’s chemical engineer Herzlich and other Cooper experts (one a chemist and former tire compounder; the other a chief chemist at the plant where the tire was manufactured) testified that wax migration is a normal, expected and understood phenomenon occurring during manufacture and the life of the tire. Cooper’s experts testified: Wax migration does not = a defect Grogan’s novel theory, that is not supported by science, does not meet the reliability standard for admission of expert testimony. Grogan’s testimony is not evidence of a defect and tire failure. REVERSED. Judgment rendered in favor of Cooper tire.


Pretrial Stage :Pretrial Stage Summary Judgment—either party may request Pretrial Conference—either party may request Usually attorneys and judge attend Simplify issues Plan course of the trial Judges get parties to drop certain parts of case Helps to focus on key issues Judges’ often encourage parties to reach out-of-court settlement


Jury Selection :Jury Selection 6th and 7th Amendments gives right to a jury in certain cases If no use of jury, judge becomes trier of fact Selection of jury involves voir dire Attorneys allowed limited number of challenges to reject prospective jurors without stating reason Usually 12 persons on jury panel Some states have fewer—such as 6 jurors


The Jury: 12 Angry Men :The Jury: 12 Angry Men


Trial Stage :Trial Stage Opening Statements by attorneys Presentation of Direct Testimony Closing arguments Instructions to Jury (also called charges) Burden of persuasion Verdict by jury. Judgment may be set aside for jury misconduct. Motions For A Verdict Motion For A Directed Verdict/Motion For Judgment As A Matter of Law Cases have been presented, but before going to jury, either party requests entering judgment in its favor Motion for Judgment As A Matter of Law/Motion For Judgment Notwithstanding the Verdict (N.O.V.)


The Truth :The Truth


Remedies in Civil Litigation(See Exhibit 3.4) :Monetary damages Compensatory Punitive or exemplary Nominal Equitable remedies Specific performance Injunction Permanent Temporary Remedies in Civil Litigation(See Exhibit 3.4)


Appellate Stage (Appeal Based on Error of Law) :Arguments before the court Written Briefs Oral Arguments Decisions by the court Majority opinion Concurring opinions Dissenting opinions Outcomes of decisions Affirmed Modified Reversed Remanded Appellate Stage (Appeal Based on Error of Law)


“German Trial Procedure” :“German Trial Procedure” In Germany judges play a more active role in trial process than U.S. judges. In U.S. judge’s role usually limited to applying law to facts of the case Civil procedure is governed by rules called the Zivilprozessordnung (ZPO): Judge decides the facts of the case, then applies law to facts Judge, not lawyers, decides which witnesses to call Judge, not lawyers, interrogates witnesses and records their testimony Judges may ask questions only about evidence that parties to the case present themselves What is presented is more limited than typical presentation at U.S. trials German courts more protective of confidential information than U.S. courts


Enforcement Stage :Enforcement Stage If no further appeal is available, judgment becomes final It is res judicata Enforcement of judgment is through writ of execution Court orders an official (i.e. sheriff) to satisfy judgment through an act (such as seizure of property, garnishment, etc.) A complexity that causes parties to look for alternative dispute resolution


ARBITRATION :ARBITRATION Arbitration: Most widely recognized form of ADR Usually results are faster in resolution of matters 3rd neutral party or panel (usually expert) is arbitrator or arbiter Parties agree upon this ADR in the contract or during a later dispute Arbitrator’s decision is binding Arbitration decision is final and matter usually cannot be litigated again or appealed Usual rule: No right to go to trial (parties to the dispute give up this right) Appeals are very specific and limited Thousands of international disputes go to arbitration each year Uniform Arbitration Act (UAA) upholds the integrity of this process


The Arbitration Process :Decided at time of making the contract or after dispute arises Begins when party files a submission Parties agree on arbitrator(s) The hearing procedure Closed door Less restrictive procedural and evidentiary rules than a trial court Arbitration associations have rules that guide participants/arbitrators Good faith cooperation Voluntary and prompt exchange of documents Uncooperative parties may be required to pay fees and compensation by arbitrator The Arbitration Process


The Arbitration Process . . . :The award (decision) Usually given in writing within 30 days of close of arbitration hearing Arbitrators have broad powers to decide remedies Appealing the award Attacks on arbitrators are rarely successful Errors of fact or law are not reviewable Grounds for overturning appeal: fraud, partiality, serious procedural misconduct, excessive use of power by arbitrator Arbitrators have wide latitude in awards Generally arbitration award is final The Arbitration Process . . .


Voluntary and Compulsory Arbitration :Labor Contracts Unions Insurance contracts Stockbrokers Pro-baseball, football Public Sector Employment Police officers Firefighters Public school teachers See “Global Acceptance of Arbitration” See also Cyberlaw: “International Arbitration and Mediation of Domain Name Disputes” Voluntary and Compulsory Arbitration


“Global Acceptance of Arbitration” :“Global Acceptance of Arbitration” Over 100 nations have signed the UN Convention on the Recognition & Enforcement of Foreign Arbitral Awards In some countries, however, it’s harder to receive enforcement China and India traditionally have had reputations for non-enforcement, although recent court decisions are moving toward enforcement


Cyberlaw: “International Arbitration and Mediation of Domain Name Disputes” :Cyberlaw: “International Arbitration and Mediation of Domain Name Disputes” World Intellectual Property Organization (WIPO) in Geneva establishes international rules for trademarks and other I.P. WIPO has domain name resolution service to protect domains (i.e. .mx for Mexico and .edu for education) WIPO has a Uniform Domain Name Dispute Resolution Policy (UDRP) dealing with such problems as “cybersquatting” Parties go to Arbitration and Mediation Center (http://arbiter.wipo.int) where experts handle disputes Fees are assessed If 1-5 names included in a complaint--$1500 If 3 panelists are requested -- $3000 Over 1000 disputes/year submitted to the Center


Negotiation :Negotiation Negotiation: Least formal form of ADR Parties decide to settle matter between themselves Often use lawyers or representatives, though not required Lawyers, etc. are agents of the parties of the dispute Negotiated settlement is usually a contract, which is enforceable, like other contracts, by the courts


Stages of Negotiation :Stages of Negotiation Stage 1: Study issues and information Stage 2: Exchange information Different styles: i.e.“tough guy” vs. “problem solver” Stage 3: Work your strategy Usually means compromise Stage 4: Agreement is reached; usually a contract is written Policy of the courts is to enforce negotiated settlements as most are contracts.


Mediation :Mediation Mediation: 3rd neutral person (mediator) assists the parties of the dispute Parties mutually decide on a resolution Mediator makes suggestions Mediator’s suggestions are NOT BINDING on the parties Parties may go to trial after this ADR Mediation often helps to maintain the relationship between the parties


The Mediator :The Mediator Some states have no requirements at law, but most states are moving toward some licensing Most people prefer a trained or experienced person If no requirements, the mediator may be the choice of the parties If mediator fails to act professionally, may be subject to liability to one of the parties


The Mediation Process :Mediator collects information, outlines key issues, listens, asks questions, observes the parties, discusses options, and encourages compromise Mediator often helps to draft the settlement agreement The settlement agreement is enforceable in court Mediator may assist in deciding the confidentiality of the case If confidentiality is agreed upon, nothing can be said in public Information revealed during negotiation or mediation not to be used as evidence if the dispute goes to a later trial The Mediation Process


Creative Business Use of MediationExample of Ford Motor Company :Ford is an example of efforts that try to avoid “bad press” through mediation First consumers discuss complaint with dealer & local district office If no resolution, complaint is next filed with Ford Consumer Appeals Boards Board’s decision: binding on Ford but not consumers, who can still seek legal remedies Process encourages dealer responsiveness to consumer problems Creative Business Use of MediationExample of Ford Motor Company


Innovative Forms of ADR :Innovative Forms of ADR Alternative Dispute Resolution Act of 1998 directs federal courts to implement a dispute resolution program, though Congress has not funded the mandate Judges usually press for parties to negotiate a settlement Many courts have formal mediation or other ADR Programs to resolve disputes Summary Jury Trial: The jury equivalent of a minitrial Advisory jurors are used; witnesses rarely used Judgment is not binding (though jurors don’t know this) Judge then meets with the parties to discuss decision and encourage settlement. Dissatisfied parties may still take the case to court. Nothing learned in this trial can be used as evidence in later full court proceedings. Courts have held that ADR proceedings are closed to the public and the press.


Expanding the Use of ADR(Congressional Encouragement) :Expanding the Use of ADR(Congressional Encouragement) Congress encouraged use of ADR originally in the Federal Arbitration Act Congress has enacted more recently statues to encourage ADR The Judicial Improvements Act The Administrative Dispute Resolution Act States have been changing their rules of civil procedure to encourage use of ADR techniques The purpose is to reduce costs and delays associated with court systems


The Constitution: Focus on Application to Business :The Constitution: Focus on Application to Business Chapter 4


The Constitution of the United States :The Constitution of the United States “We the people of the United States, in Order to form a more perfect a 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.” See Appendix C


Articles of the Constitution :Articles of the Constitution I. Composition and powers of Congress II. Selection and powers of the President III. Creation and powers of the federal judiciary IV. Role of the states in the federal system V. Methods of amending the Constitution VI. Declaring the Constitution to be supreme law of the land VII. Method for ratifying the Constitution


Constitutional Amendments :Constitutional Amendments The constitutional amendments began almost immediately after it was ratified. In 1791 the first 10 amendments were ratified by the States. These are called the Bill of Rights. A proposed amendment must be passed by 2/3 vote in the House and Senate Then ratified by 3/4 of state legislatures OR May be proposed by 2/3 of state legislatures by calling for a constitutional convention This in turn must be ratified by 3/4 of state legislatures


COMMERCE CLAUSEArt. I, Section 8 :COMMERCE CLAUSEArt. I, Section 8 Congress has power: “Regulate Commerce w/foreign Nations & among the several States, and w/the Indian Tribes” Deals with “interstate commerce” More power in State or Federal Government?


Necessary and Proper Clause(Clause 18, Article I, Section 8) :Necessary and Proper Clause(Clause 18, Article I, Section 8) Constitution enumerates list of Congressional powers - AND power “to make all Laws which shall be necessary and proper for carrying into Execution the forgoing Powers…” This power with the Commerce Clause provides BROAD Congressional control of commerce. Almost everything is necessary and proper!!


Federal Supremacy: The Supremacy ClauseArticle VI, Paragraph 2 :Federal Supremacy: The Supremacy ClauseArticle VI, Paragraph 2 “The Constitution, and the Laws of the United States . . . Shall be the supreme Law of the Land; and the judges in every State shall be bound thereby. . . . “ McCulloch v. Maryland states that when the federal government has power to act under the Constitution, its actions are “supreme” In such a case, federal government actions take precedence over actions of other governments.


McCulloch v. Maryland (1819) :McCulloch v. Maryland (1819) Can Congress establish a National Bank? Yes, it is constitutional under the Necessary and Proper clause, which EXPANDS, not restricts, Congress’s powers Federal actions take precedence over actions of other governments under Federal Supremacy clause Maryland wanted to regulate National Bank NO! Because of the Supremacy clause


Wickard v. Filburn (1942) :Wickard v. Filburn (1942) Federal controls on production of wheat Small farm in Ohio produces 239 bushels more than the farmer, Filburn, was allowed He is fined $117 and ordered not to plant more Filburn argues that production used to feed his animals and family--all for consumption on farm HELD: Although this appears “intrastate” & “trivial” STILL, all small farmers together would impact “interstate” commerce and “market conditions” Congress may regulate production Note: Almost all commerce is defined as “interstate”


Katzenbach v. McClung (Use of Commerce Clause in Non- discrimination) 1964 Case :Katzenbach v. McClung (Use of Commerce Clause in Non- discrimination) 1964 Case Ollie’s Bar-B-Q Family-owned restaurant in Birmingham, AL 220 seats for white customers only Title II of 1964 Civil Rights Act prohibits racial segregation in public accommodations if serving interstate travelers or if food moved in interstate commerce Does Title II apply? HELD: Yes, activity may “exert a substantial economic effect on interstate commerce.”


When State law impedes Interstate Commerce Some Supreme Court Cases: :Southern Railway Co v. Arizona--Ct. struck down Arizona law which required trains to be shortened for safety reasons Chemical Waste Management v. Hunt-- Violates Commerce clause to charge more for out of state generated hazardous waste than for in state waste Morales v. Transworld Airlines--State can’t sue under consumer protection statutes because Feds have exclusive authority to regulate airlines Wyoming v. Oklahoma--OK law requiring coal-burning power plants to burn at least 10% OK-mined coal was discriminatory & interfered w/interstate commerce When State law impedes Interstate Commerce Some Supreme Court Cases:


Hughes v. Oklahoma :Hughes v. Oklahoma Oklahoma prohibits shipping or selling minnows out of state to protect OK minnows. Hughes bought minnows in OK and took them to Texas. Convicted of violating state law. OK Supreme Court upheld statute as constitutional to protect OK natural resources. Hughes appealed. U.S. Supreme Court: Reversed for Hughes. Test for constitutionality of such regulations: 1) Does statute regulate evenhandedly with only “incidental” effects on interstate commerce? 2) Does statute serve a legitimate local purpose, and if so 3) Could it be done by alternative means to promote this purpose as well without discriminating against interstate commerce? Fine for state to protect wildlife, but could be done in less discriminatory way.


Imitation Not Allowed :Imitation Not Allowed States may not copy federal regulations if imitation inhibits interstate commerce. South-Central Timber Development v. Wunnicke Commerce clause long recognized as limiting power of states to pass laws “imposing substantial burdens on such [interstate and foreign] commerce.” This power is granted to Congress.


Taxing Power: Art. I, Section 8, Clause 1 :Taxing Power: Art. I, Section 8, Clause 1 “lay & collect taxes” Taxes used to raise revenue and /or deter/punish/encourage certain behavior Supreme Court: Upheld taxes on illegal gambling, narcotics & marijuana (illegal business activities) If reported: evidence of illegal activity If don’t, violate tax laws States may not use taxes to impede interstate or international commerce


Business and Free SpeechFirst Amendment Freedom of Speech :Business and Free SpeechFirst Amendment Freedom of Speech Commercial Speech (advertisements) Political statements by corporations (public issues) Usually allowed UNLESS “compelling state interest” to prohibit or restrict (For example: public safety) See Consolidated Edison case (business & political speech) See also Central Hudson case (business and commercial speech)


Consolidated Edison Co. v. Public Service Commission of NY :Consolidated Edison Co. v. Public Service Commission of NY Con Ed mailed controversial statement supporting nuclear power in monthly billing Public Service Comm. of NY said: Can’t do it as customers are captive audience and should not be subjected to Con Ed’s views Supreme Court test: Was the state’s prohibition 1) reasonable time, place & manner of speech? 2) a permissible subject matter? 3) serving a “compelling state interest”? HELD: Supreme Court reversed in favor of Con Ed This is not a captive audience forced to read message. Customers may choose not to be exposed to material by not reading it or tossing it in the wastebasket.


Central Hudson Gas & Electric v. Public Service Comm. of New York :The NY Public Service Commission ordered the end of all advertising that promoted the use of electricity because it was contrary to public interest at that time US Supreme Court HELD: Although commercial speech does accord lesser protection than other guaranteed expressions -- The court held that the commission’s ban was more extensive than necessary to achieve the state’s objective and thus was unconstitutional. Reversed in favor of Central Hudson Central Hudson Gas & Electric v. Public Service Comm. of New York


“Freedom of Commercial and Political Speech Abroad” (Most nations more restrictive than U.S.) :French court ordered Yahoo! to block French Internet users from accessing auctions selling Nazi artifacts. Yahoo! removed items. This is equivalent of the U.S. government prohibiting sale of Osama bin Laden artifacts in U.S. Germany upheld prison sentence for Australian citizen who posted information on Australia-based web site that denied the Holocaust occurred. Denying the Holocaust is banned in Germany as hate speech. This is equivalent of US S. Ct. upholding a conviction of an Iranian citizen who posted material on an Iranian web site claiming that the World Trade Center terrorist attacks never occurred. “Freedom of Commercial and Political Speech Abroad” (Most nations more restrictive than U.S.)


Freedom To Criticize Freedom of speech vs. disparagement :Freedom To Criticize Freedom of speech vs. disparagement Bose Corp. v. Consumers Union Consumer’s Report gave bad review of Bose speakers. Product disparagement or truthful reporting? To show defamation must show actual malice in publishing a knowing and reckless falsehood. Supreme Court HELD: Okay since no MALICE


4th Amendment--Unreasonable Search & Seizure :4th Amendment--Unreasonable Search & Seizure Does government (i.e. OSHA) need warrant? Usually yes Exception: closely regulated businesses However, business usually agrees Generally, closed places such as homes and businesses are not subject to random police searches See also: No Right of Privacy in Chat Rooms” Messages sent to chat rooms lose their privacy and can be used as evidence in child pornography case “The right of the people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue but upon probable cause….”


New York v. Burger :New York v. Burger Junkyard is searched without warrant under NY statutory scheme; stolen cars and parts are found Owner tries to keep evidence out of trial as unconstitutional search To be OK for warrantless search: must have substantial government interest searches must be necessary to further regulatory scheme must have adequate substitute for a warrant (must advise owner and define scope) HELD: Search is constitutional as furthering NY statutory concerns regarding theft


5th Amendment-Right Against Self-Incrimination :5th Amendment-Right Against Self-Incrimination Why was this added to Constitution? Does self-reporting violate 5th Amendment? Applies to PEOPLE, not Corporations Braswell v. U.S.: President & sole stockholder must report, even if it incriminates him “No person shall be. . . compelled in any criminal case to be a witness against himself.”


5th Amendment- Just Compensation or Takings Clause :5th Amendment- Just Compensation or Takings Clause Can government take property for public purposes-- oil pipelines, military bases, highways, sidewalks? Yes. Eminent domain – the right of governments to condemn private property for public uses What is “just” compensation? Destruction of property value through takings must be almost complete to receive compensation i.e. 60% devaluation due to change in zoning laws does not require governmental compensation to affected owners. Controversial economic development tactics: City uses power to piece together land desired by a private developer – legal in some states; illegal in others See Kelo v. City of New London, Connecticut “nor shall private property be taken for public use, without just compensation.”


Kelo v. City of New London, CT :Kelo v. City of New London, CT City of New London worked on plan to piece together property along riverfront for upscale housing, a new shopping center, and a facility for the Pfizer Company. Some home owners refused to sell, including Suzette Kelo, who wanted to keep her water front home, and Wilhemina Dery who was born in her home in 1918 and lived there all of her life. City used power of eminent domain to buy property and sell to developers. Homeowners claimed this was a 5th Amendment violation of “public use.” Connecticut courts held the taking was proper and home owners appealed


Kelo v. City of New London, CT :ISSUE Does the City’s development plan serve a “public purpose”? This court favored giving legislatures broad latitude in determining the public needs through takings. Court will defer to the city’s determination for the need for “economic rejuvenation.” Look at benefits to the community, such as new jobs, increased tax revenue. HELD: The takings that are challenged satisfy the Fifth Amendment requirements of takings for a public purpose. City wins. Kelo v. City of New London, CT


6th, 7th & 8th Amendments :6th, 7th & 8th Amendments


14th Amendment--Due Process Clause and Equal Protection Clause :14th Amendment--Due Process Clause and Equal Protection Clause “No state . . . shall deprive any person of life, liberty or property without due process of law; “ nor deny to any person within its jurisdiction the equal protection of the laws.” Due process: is violated when state infringes on fundamental liberty interests without narrowly tailoring to meet the compelling state interest is offended when state action shocks the conscience or offends judicial notions of fairness and human dignity Equal protection: governments must treat people equally


Philip Morris USA v. Williams :Philip Morris USA v. Williams Williams died from smoking-related lung cancer. His wife sued Philip Morris, maker of his favorite cigarette. Claimed that company knowing and falsely led him to believe smoking was safe. Jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages. Oregon high court upheld the award. Philip Morris appealed to the U.S. Supreme Court. Judge’s instructions to the jury: “Punitive damages are awarded against a defendant to PUNISH misconduct and to DETER misconduct,” and “are not intended to compensate the plaintiff or anyone else for damages caused by the defendant’s conduct.” (emphasis added) (Continued on next slide)


Philip Morris USA v. Williams :Philip Morris USA v. Williams HELD: Due Process Clause requires that States assure that juries do NOT ask the wrong question – that is, not simply to determine reprehensibility but also punish for harm caused to strangers of the court. Punitive damages may be used to punish unlawful conduct and deter further unlawful conduct to others. HOWEVER, must avoid an arbitrary determination on the amount of the award. Proper standards must be used to control the jury’s discretionary authority. Guard against “arbitrary punishments”. If a defendant is punished to deter for possible misconduct on other or future parties, this leaves the jury open to speculation. Risks: arbitrariness, uncertainty, lack of notice and other due process concerns HELD: The Court’s standard used in determining punitive damages was improper. Case remanded.


Club Italia Soccer & Sports Organization , Inc. v. Charter Township of Shelby, Michigan :Club Italia Soccer & Sports Organization , Inc. v. Charter Township of Shelby, Michigan Soccer City contacted Township of Shelby re: development of soccer facilities. Submitted a formal proposal to the town. Club Italia, a non-profit organization, got a copy of Soccer City’s proposal and complained about bidding process. Wanted to submit a proposal. Town board voted to accept other proposals, and gave interested parties 3 weeks to submit bids. Club Italia failed to bid in the time allowed. Contract went to Soccer City, the only bidder. Club Italia sued Town, claiming the bidding procedure violated Due Process and Equal Protection clauses. District Court granted summary judgment to the Town. Club Italia appealed. (Continued on next slide)


Club Italia Soccer & Sports Organization , Inc. v. Charter Township of Shelby, Michigan, cont. :Club Italia Soccer & Sports Organization , Inc. v. Charter Township of Shelby, Michigan, cont. Club Italia claims that as a prospective bidder, it had a property or liberty interest in the bidding process. Claim: the bidding regulations deprived Club Italia of procedural due process under the 14th Amendment. For the amendment to apply, plaintiff must show (1) deprivation of a protected liberty or property interest, and (2) deprivation occurred without due process. HELD: Due Process claim was properly dismissed. There is no 14th Amendment violation. The City’s decision to deny Club Italia a single contract only is a restraint on business dealings. City’s decision did not “besmirch” plaintiff’s name or preclude future contracts. There is no deprivation of a liberty interest. No abuse of power by the City in awarding the contract “Invitation to compete” made by the City to Club Italia is not = to a property or liberty interest.