Chapter 2: Traditional and Online Dispute Resolution 1
Chapter 2
Traditional and Online
Dispute Resolution
true/false questions
1.Federal courts are superior to state courts.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
2.State courts are superior to federal courts.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
3.The courts act as a check on the other branches of government.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
4.Generally, a state court can exercise jurisdiction over anyone within the boundaries of the state.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
5.A long arm statute is a state law that permits courts to obtain jurisdiction over out-of-state defendants.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
6.Generally, a state court cannot exercise jurisdiction over a nonresident if he or she had minimum contacts with the state.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
7.A state court can not exercise jurisdiction over all of the property located within the boundaries of the state.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
8.Any lawsuit involving a federal question can originate in a federal court.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
9.For purposes of diversity of citizenship, a corporation is a citizen only of the state in which it does business.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
10.Cyberspace is its own jurisdiction.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
11.The Internet has no effect on a court’s assertion of personal jurisdiction.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
12.Doing substantial business in a jurisdiction exclusively over the Internet is not enough to support jurisdiction over an out-of-state defendant.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
13.To have standing to sue, a party must have been harmed or have been threatened with harm by the action about which he or she complains.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
14.A justiciable controversy is a case in which the court’s decision—the “justice” that will be served—will be controversial.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
15.The jurisdiction of state courts of appeals is substantially limited to hearing appeals.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
16.The federal equivalent of a state trial court is a U.S. court of appeals.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
17.The United States Supreme Court has appellate authority over all cases decided in the state courts.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
18.An answer can admit to the allegations made in a complaint.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
19.An answer can deny the allegations made in a complaint.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
20.A motion for summary judgment may be supported with sworn statements and other materials.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
21.Discovery is a process for gathering evidence and information in a suit.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
22.In a federal case at law involving more than $20 in damages, a defendant has the right to a jury trial.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
23.A motion for a new trial will be granted only if the trial judge feels that it is appropriate to grant a judgment for the other side.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
24.After a decision has been rendered in a case, neither party may file an appeal.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
25.Most lawsuits are settled or dismissed before they go to trial.
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Objective: AACSB ReflectiveSkill Level: AICPA Risk Analysis
26.No court requires mediation before a case goes to trial.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
27.Mediation is adversarial in nature.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
28.An arbitrator can never render a legally binding decision.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
29.A party to an arbitration agreement may be compelled to arbitrate a dispute, if the agreement covers the subject matter of the dispute.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
30.An arbitrator’s mistake in a finding of fact or a conclusion of law is the only basis for setting aside an award.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
31.Most states do not enforce arbitration clauses.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
32.An arbitrator’s award is never the final word on a matter.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
33.A mini-trial is a private proceeding in which each party’s attorney argues the party’s case before the other party.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
34.Access to online dispute resolution services is possible 24/7.
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Objective: AACSB ReflectiveSkill Level: AICPA Leveraging
Technology
35.Unless otherwise agreed, the result of an online dispute resolution proceeding may not be appealed to a court.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
MULTIPLE-CHOICE questions
1.The Ohio state legislature passes a law to regulate local delivery services. The final authority regarding the constitutionality of this law
a.are the courts.
b.is the president of the United States.
c.is the governor of Ohio.
d.is the U.S. Congress.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
2.Gail is a resident of New Hampshire. In Vermont, Gail enters into a contract with Heather, a resident of Vermont. When Gail breaches the contract, Heather files a suit against Gail in Vermont. Regarding Gail, Vermont can
a.exercise diversity jurisdiction.
b.exercise in personam jurisdiction.
c.exercise in rem jurisdiction.
d.not exercise jurisdiction.
ANSWER:BPAGE:31TYPE:=
Objective: AACSB ReflectiveSkill Level: AICPA Legal
3.Leo, a resident of Missouri, owns a warehouse in Nebraska. A dispute arises over the ownership of the warehouse with Opal, a resident of Kansas. Opal files a suit against Leo in Nebraska. Regarding this suit, Nebraska has
a.diversity jurisdiction.
b.in personam jurisdiction.
c.in rem jurisdiction.
d.no jurisdiction.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
4. The case of Aaron v. Baker Co. is heard in a Minnesota district court, which has original jurisdiction. The case of NuCorp, Inc. v. Olson is heard in a Minnesota court of appeals, which has appellate jurisdiction. The difference between original and appellate jurisdiction lies in
a.the subject matter of the cases that a court can decide.
b.whether a case is brought by a citizen or by a business entity.
c.whether a case is being heard for the first time.
d.whether a court is exercising in personam or inrem jurisdiction.
ANSWER:CPAGE:33TYPE:N
Objective: AACSB AnalyticSkill Level: AICPA Critical
Thinking
5.Sam, a citizen of New Mexico, wants to file a suit against Tanya, a citizen of Texas. Their diversity of citizenship may be a basis for
a.any court to exercise in rem jurisdiction.
b.a federal district court to exercise original jurisdiction.
c.a U.S. court of appeals to exercise appellate jurisdiction.
d.the United States Supreme Court to issue a writ of certiorari.
answer:BPAGE:33TYPE:N
Objective: AACSB ReflectiveSkill Level: AICPA Legal
6.Don files a suit against Eagle Sales, Inc., in a Florida state court based on a Web site through which Florida residents can do business with Eagle. The court will likely exercise jurisdiction over Eagle if the interactivity of the site is seen as
a.a “neutral” connection with the state.
b.an “Internet” connection with the state.
c.a “passive” connection with the state.
d.a “substantial enough” connection with the state.
ANSWER:DPAGE:34TYPE:N
Objective: AACSB AnalyticSkill Level: AICPA Critical
Thinking
7.Doug files a suit in Ohio against Beth over the ownership of a boat docked in Ohio. Doug and Beth are residents of New York. Beth could ask for a change of venue on the ground that New York
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.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
8.Consumer Goods Corporation sells products that are poorly made. Dina, who has never bought a Consumer Goods product, files a suit against the firm, alleging that its products are defective. The firm could ask for dismissal of the suit on the basis that Dina does not have
a.jurisdiction.
b.standing.
c.sufficient minimum contacts.
d.venue.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
9.Mary wins her suit against National Manufacturing Company. National’s best ground for appeal is the trial court’s interpretation of
a.the conduct of the witnesses during the trial.
b.the credibility of the evidence that Mary presented.
c.the dealings between the parties before the suit.
d.the law that applied to the issues in the case.
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Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
10.Ben files a suit in a federal district court against Cathy. Cathy loses the suit, appeals to the U.S. Court of Appeals for the Second Circuit, and loses again. Cathy 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 Cathy lost in a federal court.
c.required to hear the case because Cathy lost in a lower court.
d.required to hear the case because it is an appeal.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
11.Linda files a suit against Kate. Kate denies Linda’s charges and sets forth her own claim that Linda breached their contract and owes Kate money for the breach. This is
a.an affirmative defense.
b.a counterclaim.
c.a crossclaim.
d.an irrelevant response.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
12.Sam files a suit against Laura. The document that informs Laura that she is required to respond is
a.the answer.
b.the complaint.
c.the service of process.
d.the summons.
answer:DPAGE:39TYPE:N
Objective: AACSB AnalyticSkill Level: AICPA Legal
Fact Pattern 2-1 (Questions 13–17 apply)
Mack and Nancy engage in a business transaction from which a dispute arises. Mack initiates a lawsuit against Nancy by filing a complaint.
13.Refer to Fact Pattern 2-1. The sheriff serves Nancy with a summons. If Nancy chooses to ignore it
a.Mack must file an amended complaint.
b.Mack will have a judgment entered in his favor.
c.Nancy must be served with a second summons.
d.Nancy will have a judgment entered in her favor.
ANSWER:BPAGE:39TYPE:+
Objective: AACSB ReflectiveSkill Level: AICPA Critical
Thinking
14.Refer to Fact Pattern 2-1. If Nancy responds to Mack’s complaint by filing a counterclaim
a.Mack will be given time to file a response.
b.Mack will have a judgment entered in his favor.
c.Nancy will be given time to file an amended answer.
d.Nancy will have a judgment entered in her favor.
ANSWER:APAGE:39TYPE:+
Objective: AACSB ReflectiveSkill Level: AICPA Legal
15.Refer to Fact Pattern 2-1. If Nancy files a motion to dismiss, she is asserting that
a.Mack did not state a claim for which relief can be granted.
b.Mack’s statement of the facts is not true.
c.Mack’s statement of the law is not true.
d.Nancy suffered greater harm than Mack.
ANSWER:APAGE:40TYPE:+
Objective: AACSB AnalyticSkill Level: AICPA Legal
16.Refer to Fact Pattern 2-1. If Nancy files a motion to dismiss, and the court denies it
a.Mack will be given more time to file an amended complaint.
b.Mack will have a judgment entered in his favor.
c.Nancy will be given more time to file another response.
d.Nancy will have a judgment entered in her favor.
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Objective: AACSB ReflectiveSkill Level: AICPA Legal
17.Refer to Fact Pattern 2-1. If Nancy files a motion to dismiss, and the court grants it
a.Mack will be given more time to file an amended complaint.
b.Mack will have a judgment entered in his favor.
c.Nancy will be given more time to file another response.
d.Nancy will have a judgment entered in her favor.
ANSWER:APAGE:40TYPE:+
Objective: AACSB ReflectiveSkill Level: AICPA Legal
18.Adam files a suit against Beta Products, Inc. Beta responds that even if Adam’s statement of the facts is true, according to the law Beta is not liable. This is
a.a counterclaim.
b.a motion for judgment on the pleadings.
c.a motion for summary judgment.
d.a motion to dismiss.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
19.Carol files a suit against Delta Corporation. Delta responds that it appears from the pleadings the parties do not dispute the facts and the only question is how the law applies to those facts. Delta supports this response with witnesses’ sworn statements. This is
a.a counterclaim.
b.a motion for judgment on the pleadings.
c.a motion for summary judgment.
d.a motion to dismiss.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
20.Home Appliances, Inc., files a suit against Retail Sales Corporation over a contract between them. Before the trial begins, Retail can obtain from Home
a.access to related documents in Home’s possession.
b.accurate information about Home’s trade secrets.
c.an admission of the truth of matters not related to the trial.
d.all of the above.
ANSWER:APAGE:41TYPE:+
Objective: AACSB AnalyticSkill Level: AICPA Legal
21.Carl files a suit against Dina, over a contract between them. Before the trial begins, Carl can obtain from Dina
a.access to related documents in Dina’s possession.
b.accurate information about Dina’s privileged material.
c.an admission of the truth of matters not related to the trial.
d.all of the above.
answer:APAGE:41TYPE:+
Objective: AACSB AnalyticSkill Level: AICPA Legal
22.Don files a suit against Eve. At the trial, each party’s attorney presents the party’s case before Fred, a judge, who hears the dispute and renders a legally binding decision. This is
a.arbitration.
b.litigation.
c.mediation.
d.negotiation.
ANSWER:BPAGE:42TYPE:=
Objective: AACSB AnalyticSkill Level: AICPA Legal
23.In Nation Corporation’s suit against Omega, Inc., the jury renders a verdict against Nation. Nation files a motion stating that even if the evidence is viewed in the light most favorable to Omega, a reasonable jury should not have found in its favor. This is a motion for
a.a directed verdict.
b.a judgment in accordance with the verdict.
c.a judgment n.o.v.
d.a new trial.
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Objective: AACSB AnalyticSkill Level: AICPA Legal
24.In Greg’s suit against Holly, Greg seeks to recover the cost to provide copies of documents in hyperlinked CD format. According to the court in Case 2.2, Phansalkar v. Andersen, Weinroth & Co., this cost could be awarded if
a.all of the parties used the electronic copies.
b.Greg advanced the expense, hoping to recover it later.
c.Holly consented to the expense in advance.
d.the court encouraged the submission of electronic copies.
ANSWER:CPAGE:44TYPE:N
Objective: AACSB CommunicationSkill Level: AICPA Risk Analysis
25.Sam files a suit against Tina. If this suit is like most cases, it will be
a.dismissed before the parties enter a courtroom.
b.settled before the parties enter a courtroom.
c.dismissed or settled before the parties enter a courtroom.
d.resolved only after a trial.
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Objective: AACSB AnalyticSkill Level: AICPA Risk Analysis
26.Sally files a suit against Tom. Before going to trial, the parties meet, with their attorneys to represent them, to try to resolve their dispute. A third party assists them in reaching an agreement. This is
a.arbitration.
b.litigation.
c.mediation.
d.negotiation.
ANSWER:CPAGE:46TYPE:=
Objective: AACSB AnalyticSkill Level: AICPA Critical
Thinking
27.Beta, Inc., and Beta’s employee Chuck have their dispute resolved in arbitration. The arbitrator makes an erroneous finding of fact. This is a ground for a court to
a.review the merits of the dispute.
b.review the sufficiency of the evidence.
c.set aside the award.
d.none of the above.
ANSWER:DPAGE:46TYPE:+
Objective: AACSB ReflectiveSkill Level: AICPA Legal
28.Betty files a suit against Carl. Before going to trial, the parties meet, with their attorneys to represent them, to try to resolve their dispute without involving a third party. This is
a.arbitration.
b.litigation.
c.mediation.
d.negotiation.
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Objective: AACSB AnalyticSkill Level: AICPA Critical
Thinking
29.Mike files a suit against Kay. Before going to trial, the parties meet, with their attorneys to represent them, to formally present their dispute to a third party (other than a court) who renders a legally binding decision. This is
a.arbitration.
b.litigation.
c.mediation.
d.negotiation.
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Objective: AACSB AnalyticSkill Level: AICPA Critical
Thinking
30.Macro, Inc., and Micro Corporation ask Nora, an arbitrator, to resolve their dispute, which involves a matter of significant public concern. This is a ground for a court to
a.review the merits of the dispute.
b.review the sufficiency of the evidence.
c.set aside the award.
d.none of the above.
ANSWER:DPAGE:46TYPE:N
Objective: AACSB ReflectiveSkill Level: AICPA Legal
31.National Consumer Goods Corporation and Paula Purchaser agree to resolve their dispute in arbitration. The arbitrator’s decision is called
a.a conclusion of law.
b.a finding of fact.
c.an award.
d.a verdict.
ANSWER:CPAGE:46TYPE:N
Objective: AACSB AnalyticSkill Level: AICPA Legal
32.Jan and Kyle sign a contract that provides if a dispute arises, they will submit to arbitration. A dispute arises, but before it goes to arbitration, Jan files a suit against Kyle. The court will likely
a.hear the suit and then order the parties to arbitrate.
b.hear the suit without ordering the parties to arbitrate.