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True / False

1. The role of the courts is to interpret and apply the laws.

  a. True
  b. Fals
e
ANSWER:  True

2. State courts are superior to federal courts.

  a. True
  b. Fals
e
ANSWER:  Fals
e

3. Minimum contacts with a jurisdiction are never enough to support jurisdiction over a nonresident defendant.
  a. True
  b. Fals
e
ANSWER:  Fals
e

4. A court can exercise jurisdiction over property located that is located within its boundaries.
  a. True
  b. Fals
e
ANSWER:  True

5. A business firm may have to comply with the laws of any jurisdiction in which it actively targets customers.
  a. True
  b. Fals
e
ANSWER:  True

6. For jurisdictional purposes, corporations are considered legal persons.

  a. True
  b. Fals
e
ANSWER:  True

7. The minimum-contacts requirement is usually met if a corporation advertises or sells its products within a state.
  a. True
  b. Fals
e
ANSWER:  True

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8. The amount in controversy in a diversity of citizenship case must be more than $1 million before a federal court can
take jurisdiction.
  a. True
  b. Fals
e
ANSWER:  Fals
e

9. States do not have exclusive jurisdiction on any matter.

  a. True
  b. Fals
e
ANSWER:  Fals
e

10. Concurrent jurisdiction exists when only state courts have the power to hear a particular case.
  a. True
  b. Fals
e
ANSWER:  Fals
e

11. Small claims courts are inferior trial courts.

  a. True
  b. Fals
e
ANSWER:  True

12. In most states, in suits brought in small claims courts, lawyers are allowed.
  a. True
  b. Fals
e
ANSWER:  True

13. In many cases, a court can exercise jurisdiction over an out-of-state defendant who has done business in the state only
over the Internet.
  a. True
  b. Fals
e
ANSWER:  True

14. To have standing to sue, a party must be “standing” in the geographical jurisdiction of the court in which a suit is
filed.
  a. True
  b. Fals
e
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ANSWER:  Fals
e

15. The term venue refers to the location of a trial.

  a. True
  b. Fals
e
ANSWER:  True

16. A justiciable controversy is a case in which the court’s decision—the “justice” that will be served—will be
controversial.
  a. True
  b. Fals
e
ANSWER:  Fals
e

17. Cases arising between citizens of different states involve diversity of citizenship.

  a. True
  b. Fals
e
ANSWER:  True

18. A state case typically originates in a federal court.

  a. True
  b. Fals
e
ANSWER:  Fals
e

19. Trials courts conduct trials.

  a. True
  b. Fals
e
ANSWER:  True

20. The United States Supreme Court does not have original jurisdiction in any case.
  a. True
  b. Fals
e
ANSWER:  Fals
e

21. Some cases decided by federal courts of appeals are not subject to review by the United States Supreme Court.
  a. True

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  b. Fals
e
ANSWER:  Fals
e

22. Litigation is the process of resolving a dispute through the court system.

  a. True
  b. Fals
e
ANSWER:  True

23. The term alternative dispute resolution refers to methods for resolving disputes outside the traditional judicial process.
  a. True
  b. Fals
e
ANSWER:  True

24. Negotiation can involve the parties to a dispute and their attorneys.

  a. True
  b. Fals
e
ANSWER:  True

25. Negotiation is the most complex form of alternative dispute resolution.

  a. True
  b. Fals
e
ANSWER:  Fals
e

26. No court offers mediation as an option before a case goes to trial.

  a. True
  b. Fals
e
ANSWER:  Fals
e

27. In mediation, the mediator proposes a solution and makes a decision resolving the dispute.
  a. True
  b. Fals
e
ANSWER:  Fals
e

28. Arbitration that is mandated by a court is often binding on the parties.

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  a. True
  b. Fals
e
ANSWER:  Fals
e

29. A court’s review of an arbitrator’s award may be restricted.

  a. True
  b. Fals
e
ANSWER:  True

30. Early neutral case evaluation refers to the resolution of a case before the dispute becomes contentious, when the
parties’ positions are said to be “neutral.”
  a. True
  b. Fals
e
ANSWER:  Fals
e

31. The verdict in a summary jury trial is binding.

  a. True
  b. Fals
e
ANSWER:  Fals
e

32. International treaties often stipulate arbitration for resolving disputes.

  a. True
  b. Fals
e
ANSWER:  True

33. Generally, a foreign court’s decision can be enforced in the United States.

  a. True
  b. Fals
e
ANSWER:  True

34. Most online dispute resolution services apply international principles promulgated by the United Nations to resolve
disputes.
  a. True
  b. Fals
e
ANSWER:  Fals

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35. A choice-of-law clause is a provision in a contract that excuses a party from liability for nonperformance due to “acts
of God.”
  a. True
  b. Fals
e
ANSWER:  Fals
e

Multiple Choice

36. The Maine state legislature passes a law to regulate local delivery services. The final authority regarding the
constitutionality of this law is
  a. the judicial system.
  b. the president of the United
States.
  c. the governor of Maine.
  d. the U.S. Congress.
ANSWER:  a

37. As a judge in a federal court, Elena can decide, among other things, whether the laws or actions of the executive and
legislative branches are constitutional. The process for making this determination is known as
  a. judicial review.
  b. jurisdiction.
  c. jurisprudence.
  d. justifiability.
ANSWER:  a

38. Hope wants to file a suit against Gerry. For a court to hear the case,
  a. Gerry must agree.
  b. the court must have jurisdiction.
  c. the parties must have no minimum contacts with each other.
  d. the parties must own property.
ANSWER:  b

39. Hua, a resident of Illinois, owns a warehouse in Indiana. A dispute arises over the ownership of the warehouse with
Jac, a resident of Kentucky. Jac files a suit against Hua in Indiana. Regarding this suit, Indiana has
  a. federal jurisdiction.
  b. in personam jurisdiction.
  c. in rem jurisdiction.
  d. no jurisdiction.
ANSWER:  c

40. An Oklahoma state court can exercise jurisdiction over Petro Resources Inc., an out-of-state company, if the firm has
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  a. minimum contacts with the state.

  b. maximum contacts with the state.
  c. median contacts with the state.
  d. no contacts with the state.
ANSWER:  a

41. Milo files a suit against Nick in an Ohio state court, noting that Nick operates a Web site through which Ohio
residents have done substantial business with him. The court is most likely to have jurisdiction over Nick if Milo’s claim
arises from
  a. anything an Ohio resident has done.
  b. Nick’s Web site activities.
  c. nothing an Ohio resident has done.
  d. something other than Nick’s Web site.
ANSWER:  b

42. David, an Alabama resident, files a suit in an Alabama court against QuickAds, an Internet company based in Georgia
that provides advertising services. QuickAds only contact with persons in Alabama has been through QuickAds’s passive
advertising. The Alabama court is
  a. likely to have jurisdiction over the case.
  b. not likely to have jurisdiction over the case.
  c. likely to refer the case to a higher district
court.
  d. likely to refer the case to an appellate court.
ANSWER:  b

43. McHenry, a New York resident, files a suit in a New York state court against OneWorld Inc., a company based in
California. OneWorld’s only contact with McHenry is the company’s app, which McHenry downloaded while traveling
across the United States. According to the sliding-scale analysis, the factor most likely to confer jurisdiction on the New
York court is
  a. the geographical distance between McHenry and OneWorld.
  b. the degree of interactivity via the app between McHenry and OneWorld.
  c. OneWorld’s location when the app was created.
  d. McHenry’s location when the app was downloaded.
ANSWER:  b

44. All Bikes, Inc., a firm in Wisconsin, advertises on the Web. A court in Ohio would be most likely to exercise
jurisdiction over All Bikes if the firm
  a. did substantial business with Ohio residents over the Internet.
  b. interacted with any Ohio resident through its Web site.
  c. only engaged in passive advertising on the Web.
  d. suddenly removed its ad from the Internet.
ANSWER:  a

45. Mediocrité, Inc., makes and sells goods that are substandard. Naomi, who has never bought or used a Mediocrité item,
files a suit against the firm, alleging that its products are defective. The company’s best ground for dismissal of the suit is
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that Naomi does not have
  a. certiorari.
  b. jurisdiction.
  c. standing.
  d. sufficient minimum contacts.
ANSWER:  c

46. Tyler, a citizen of Utah, files a suit in a Utah state court against Virtual Sales Corporation, a Washington state
company that does business in Utah. The court has original jurisdiction, which means that
  a. the case is being heard for the first time.
  b. the court has a unique method of deciding whether to hear a case.
  c. the court has unusual procedural rules.
  d. the subject matter of the suit is interesting and new.
ANSWER:  a

47. Stephan wins his suit against Tidewater Boats, Inc. Tidewater’s best ground for appeal is the trial court’s interpretation
of
  a. the demeanor of the witnesses during the trial.
  b. what happened to give rise to the dispute.
  c. the dealings between the parties before the
suit.
  d. the law that applied to the issues in the case.
ANSWER:  d

48. Delia files a suit against Eduardo in a Florida state court over the ownership of a boat docked in a Florida harbor. Both
Delia and Eduardo are residents of Georgia. Eduardo could ask for a change of venue on the ground that Georgia
  a. has a sufficient stake in the matter.
  b. has jurisdiction.
  c. has sufficient minimum contacts with the parties.
  d. is a more convenient location to hold the trial.
ANSWER:  d

49. Marty files a suit against Norah in a state court over an employment contract. The case proceeds to trial, after which
the court renders a verdict. The case is appealed to an appellate court. After the highest state court’s review of Marty v.
Norah, a party can appeal the decision to the United States Supreme Court if
  a. if a federal question is involved.
  b. if a question of state law remains
unresolved.
  c. if Marty questions the result.
  d. under no circumstances.
ANSWER:  a

50. Kari and Lillian, who are citizens of Mississippi, are involved in a case related to the adoption of their child. Over this
case, Mississippi state courts have

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  a. concurrent jurisdiction with federal courts.

  b. concurrent jurisdiction with other state courts.
  c. exclusive jurisdiction.
  d. no jurisdiction.
ANSWER:  c

51. Olivia, a citizen of Nebraska, wants to file a suit against Micah, a citizen of Kansas. Their diversity of citizenship may
be a basis for
  a. no court to exercise jurisdiction.
  b. a federal court to exercise original jurisdiction.
  c. a state court to exercise appellate jurisdiction.
  d. the United States Supreme Court to refuse jurisdiction.
ANSWER:  b

52. D’Antoni files a suit in a federal district court against Enya. D’Antoni loses the suit, appeals to the U.S. Court of
Appeals for the Ninth Circuit, and loses again. D’Antoni asks the United States Supreme Court to hear the case. The Court
is
  a. not required to hear the case.
  b. required to hear the case because D’Antoni lost in a federal court.
  c. required to hear the case because D’Antoni lost in a lower court.
  d. required to hear the case because it is an appeal.
ANSWER:  a

53. The case of Max v. National Credit Co. is heard in a trial court. The case of O! Boy! Ice Cream Co. v. Pecan Corp. is
heard in an appellate court. The difference between a trial and an appellate court is whether
  a. a trial is being held.
  b. the court is appealing.
  c. the parties question how the law applies to their dispute.
  d. the subject matter of the case involves complex facts.
ANSWER:  a

54. Carol files a suit against Andy in a state trial court and loses. Carol can
  a. not take her case any higher in the court system.
  b. insist that the United States Supreme Court hear her case.
  c. plead her case before an appellate court.
  d. plead her case before a small claims court.
ANSWER:  c

55. Laredo loses his suit against McLain in a North Dakota state trial court. Laredo appeals to a state intermediate court of
appeals and loses again. Laredo would appeal next to
  a. the American Arbitration Association.
  b. the North Dakota Supreme Court.
  c. the United States Supreme Court.
  d. the U.S. Court of Appeals for the Eighth Circuit.
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ANSWER:  b

56. The Montana Supreme Court rules against Natural Grocery Mart in a case against One Stop 2 Shop Stores, Inc.
Natural Grocery files an appeal with the United States Supreme Court. The Court does not hear the case. This
  a. is a decision on the merits that has value as a precedent.
  b. indicates agreement with the Montana court’s decision.
  c. means nothing.
  d. means that the Montana court’s decision is the law in
Montana.
ANSWER:  d

57. The Kentucky Supreme Court rules against Luther in a case against Motor Cars, Inc. Luther wants to appeal the case
to the United States Supreme Court. Luther must ask the Court to issue a writ of
  a. appeal.
  b. certiorari.
  c. jurisdiction.
  d. summons.
ANSWER:  b

58. Salina files a suit against Tanner. Before going to trial, the parties, with their attorneys, meet to try to resolve their
dispute. A third party suggests or proposes a resolution, which the parties may or may not adopt. This is
  a. arbitration.
  b. mediation.
  c. negotiation.
  d. not a legitimate form of dispute resolution.
ANSWER:  b

59. First Community Credit Union and General Hydraulics. Inc., have their dispute resolved in arbitration. Before
determining the award, the arbitrator meets with First Community’s representative to discuss the dispute without General
Hydraulics’ representative being present. If this meeting substantially prejudices General Hydraulics’ rights, a court will
most likely
  a. compel arbitration.
  b. review the merits of the dispute.
  c. review the sufficiency of the
evidence.
  d. set aside any award.
ANSWER:  d

60. Sforza files a suit against Thieu. If this suit is like most cases, it will be
  a. dismissed during a trial.
  b. settled before a trial.
  c. resolved only after a trial.
  d. appealed to a higher court.
ANSWER:  b
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61. Liz and Moss disagree over the amount due under their contract. To avoid involving any third party in the resolution
of their dispute, Liz and Moss might prefer to use the alternative dispute resolution method of
  a. arbitration.
  b. litigation.
  c. mediation.
  d. negotiation.
ANSWER:  d

62. Farmers Pantry Products Inc. and Market Grocers LLC dispute a term in their contract. If Farmers Pantry and Market
Grocers have a long-standing business relationship that they would like to continue, they may prefer to settle their dispute
through mediation because
  a. the case will be heard by a jury.
  b. the dispute will eventually go to trial.
  c. the process is not adversarial.
  d. the resolution of the dispute will be decided an
expert.
ANSWER:  c

63. If Cornel and Deanna resolve their dispute by having a neutral third party render a binding decision, they will have
used the method of
  a. arbitration.
  b. conciliation.
  c. intervention.
  d. mediation.
ANSWER:  a

64. SPF Sunscreen Corporation and Taylor agree to resolve their dispute through arbitration. The arbitrator’s decision is
called
  a. a conclusion of law.
  b. a finding of fact.
  c. an award.
  d. a verdict.
ANSWER:  c

65. Sour Dough Inc. and The Bread Company, agree to a contract that includes an arbitration clause. If a dispute arises, a
court having jurisdiction may
  a. monitor any arbitration until it concludes.
  b. order an arbitrator to rule in a particular way.
  c. order a party to bring the dispute to court.
  d. order a party to submit to arbitration.
ANSWER:  d

66. Cullen files a suit against Demi. Cullen and Demi meet, and each party’s attorney argues the party’s case before a
judge and jury. The jury presents an advisory verdict, after which the judge meets with the parties to encourage them to
settle their dispute. This is
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  a. court-ordered arbitration.
  b. early neutral case evaluation.
  c. a mini-trial.
  d. a summary jury trial.
ANSWER:  d

67. Service Employees International Union and Timberline Products, Inc., have their dis-pute resolved in arbitration. The
arbitrator arbitrates issues that the parties did not agree to submit to arbitration.  This is a ground for a court to
  a. none of the choices.
  b. review the merits of the dispute.
  c. review the sufficiency of the
evidence.
  d. set aside the award.
ANSWER:  d

68. Millie and Noble dispute the quality of a suite of furniture sold over the Internet. They agree to resolve their dispute in
OpenTerms.com, an online forum. Like most online forums, OpenTerms.com applies
  a. general, universal legal principles.
  b. the provisions of the Federal Magistrates Act.
  c. international principles provided by the United
Nations.
  d. the law of the Internet.
ANSWER:  a

69. To resolve a dispute in nonbinding arbitration, Alyson in Baltimore and Chuck in Denver utilize E-Resolve, an online
dispute resolution (ODR) service. This limits these parties’ recourse to the courts
  a. not at all.
  b. until the ODR service has issued a decision.
  c. with respect to any dispute arising between them.
  d. with respect to this dispute only.
ANSWER:  a

70. Quest Inc., a U.S. firm, and Real Treks, Ltd., a Canadian firm, enter into a contract that does not have a forum-
selection or choice-of-law clause. Litigation between Quest and Real Treks involving this contract may occur in
  a. an online forum only.
  b. Canada or the United States, but not both.
  c. Canada, the United States, or both.
  d. an international, United Nations tribunal only.
ANSWER:  c

Essay

71. Norwest Trucking Corporation files a suit in a state court against Bob’s Service Company (BSC), and wins. BSC
appeals the court’s decision, asserting that the evidence presented at trial to support Norwest’s claim was so scanty that no

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reasonable jury could have found for the plaintiff. Therefore, argues BSC, the appellate court should reverse the trial
court’s decision. Is the appellate court likely to reverse the trial court’s findings with respect to the facts? If not, why not?
What are an appellate court’s options after reviewing a case?
ANSWER An appellate court will reverse a lower court’s decision on the basis of the facts if the
:   evidence does not support the findings or if it contradicts them. Appellate courts
normally defer to a judge’s decision with regard to the facts of a case, however, for a
number of reasons. First, trial judges routinely sit as fact finders. As a result, they
develop a particular expertise in determining what kind of evidence and testimony is
reliable and what kind is not. Second, trial judges and juries have the opportunity to
observe witnesses and tangible evidence first hand. The appellate court sees only a cold
record of the trial court proceedings and therefore cannot make the kind of judgments
about the credibility of witnesses and the persuasiveness of evidence that can be
gleaned only from first hand experience. (There are also constitutional reasons for an
appellate court to defer to a jury verdict. If, based on the evidence presented to a jury, a
reasonable person could have come to the same decision that the jury came to, an
appellate court cannot reverse the jury’s decision with regard to the facts because this
would, in essence, take away a person’s right to a jury trial.) 
An appellate court’s options after reviewing a case are to affirm the trial court’s
judgment, to reverse it in whole, to reverse it in part, to modify the decision, or to
remand the case for further proceedings.

72. Tech Performance, Inc., completes programming and other tech services for Uno IT Products Corporation. When
Uno’s computer system crashes, it loses $500,000 worth of business and pays $100,000 to have the system
reprogrammed. Uno IT announces to the media that the crash was due to Tech Performance’s incompetence and files a
complaint in a federal court against the firm. What are Tech Performance’s options in response?
ANSWER In response to the complaint, Tech Performance (the defendant) may file an answer in
:   which the firm admits the statements or allegations set out in Uno IT’s complaint or
denies them and sets out any defenses that Tech Performance may have. (If Tech
Performance admits to the allegations, a judgment will be entered in favor of Uno IT. If
Tech Performance denies the allegations, the matter will proceed.) In the answer, Tech
Performance may assert an affirmative defense—that is, admit the truth of the
complaint but raise new facts to show that the firm should not be held liable for the
damage sustained by Uno IT. (The sorts of facts these might be and the legal effect
they might have are details explained in later chapters in this text.) Tech Performance
could also deny Uno IT’s allegations and assert a counterclaim alleging that the crash
occurred as a result of something Uno IT did and that Uno IT owes Tech Performance
damages for the harm done to its reputation. Uno IT would have to submit an answer to
the counterclaim.
Instead of filing an answer, Tech Performance might file a motion to dismiss. This
motion might contend that Uno IT failed to state a claim for which relief can be granted
—in other words, even if the facts presented in the complaint are true, their legal
consequences are such that there is no reason to go ahead with the suit. Other grounds
for this motion include improper service of process and the court’s lack of jurisdiction
or venue. (If the motion is denied, Tech Performance will be given time to file an
answer. If the motion is granted, Uno IT will be given time to file an amended
complaint.)

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