Litigation 2024

Last Updated December 05, 2023


Law and Practice


Ajamie LLP is a commercial litigation boutique with offices in Houston and New York. It has a notable track record of more than USD1 billion in awards and settlements, setting it apart within the legal industry. The firm’s team of experienced trial lawyers has played key roles in significant legal outcomes. Notable accomplishments include a historic USD112 million RICO jury verdict (the largest in US history), a USD429 million arbitration award against PaineWebber (the largest securities arbitration award in US history), and a USD79 million settlement with Wells Fargo, marking the largest executive deferred compensation recovery in US history. Ajamie LLP’s expertise is evident in ground-breaking cases, including its early litigation against Wells Fargo, which prompted investigations into fraudulent customer accounts and other wrongdoings, resulting in substantial fines against the bank.

The federal legal system in the USA is based on the common law tradition. This means that legal principles and rules are developed and interpreted through court decisions. Precedent is important. Courts are generally bound to follow precedents set by higher courts within the same jurisdiction.

The US legal system follows an adversarial model, whereby disputes are resolved by opposing parties who advocate before a judge or jury. The parties present witnesses, evidence, and arguments to support their case, and the judge or jury decides the case based on this information. Proceedings may also involve written submissions and oral arguments. Written documents include pleadings, motions, and briefs. Oral arguments allow attorneys to advocate in person, respond to questions, and clarify or emphasise key points.

The court system in the USA contains both federal (national) and state courts. For the sake of simplicity, and because there is substantial overlap, this chapter focuses on the federal (national) courts, rather than on the separate courts of the 50 states. The following is an overview.

Federal Courts

  • US Supreme Court – the highest federal court in the land, responsible for interpreting the US Constitution and federal laws.
  • US Courts of Appeals – these are intermediate appellate courts, divided into 13 circuits, each covering specific geographic regions or subject matters. They handle appeals from federal district courts, federal administrative agencies, and certain specialised courts.
  • US District Courts – these are the federal trial courts. They have original jurisdiction over most federal cases, including civil, criminal, and bankruptcy matters.
  • Specialised federal courts – the federal system includes specialised courts, such as bankruptcy courts, tax courts, military courts, and federal administrative courts, which have jurisdiction over specific types of cases.

State Courts

  • State Supreme Courts – each state has its own supreme court, which interprets the state’s constitution and laws. State supreme courts hear appeals from lower state courts.
  • Intermediate appellate courts – many states have intermediate appellate courts, which hear appeals from state trial courts.
  • State trial courts – these are the primary trial courts in each state, sometimes divided into divisions based on subject matter. They handle civil, criminal, family, juvenile, probate, small claims, and other types of cases.

Subject Matter Jurisdiction

  • Civil and criminal courts – some states have separate civil and criminal courts. Civil courts handle disputes involving torts, contracts, property, and business disputes. Courts in other states handle both civil and criminal cases.
  • Family and probate courts – family courts handle divorce, custody, and related matters. Probate courts handle trust, wills, and estate matters.
  • Administrative courts – administrative courts handle disputes involving government agencies, licences, and permits.
  • Small claims courts – these are designed for quick, informal resolution of disputes involving low dollar amounts.

Court filings and proceedings are generally open to the public, as there is a strong presumption of public access to the legal system. This transparency helps promote accountability, fairness, and trust in the justice system.

In exceptional circumstances, a party may request to file documents under seal or exclude the public from the courtroom. This typically requires the showing of a compelling reason, such as:

  • protecting trade secrets, confidential business information, or personal data;
  • protecting the identity of vulnerable individuals like juveniles or criminal victims; or
  • for national security reasons.

Attorneys must be licensed to practice law in the jurisdiction where they are appearing. This typically involves passing a State Bar exam and meeting various educational and ethical requirements. Attorneys must also be in good standing with the Bar association(s) and the court(s) in which they are licensed and admitted. They are also expected to adhere to certain professional conduct and ethical rules.

Attorneys who meet the requirements can appear in federal court on behalf of their clients. They have the right of audience, which means they can advocate on behalf of their clients, present evidence, and make legal arguments.

Foreign lawyers can conduct cases in the federal legal system under specific circumstances, primarily when they are admitted pro hac vice ‒ a Latin phrase that means “for this occasion”. This allows out-of-state or foreign lawyers to appear in a particular court for a specific case.

Third-party litigation funding is allowed in the USA. Litigants, including individuals and businesses, may seek financial assistance from third-party funders to cover the costs of legal proceedings, such as attorney’s fees, court expenses, and other litigation-related costs. While litigation funding is generally permitted, it is subject to certain restrictions and considerations such as ethical considerations by each State Bar and also disclosure rules and obligations. It is important to note that litigation funding is a complex area of law that it still developing in the USA and may involve federal and state-level considerations.

Litigation funding is generally allowed in civil cases such as business disputes, contract breaches, IP, and antitrust matters. These types of cases often turn to litigation funding to cover the substantial costs associated with the matters. Litigation funding is also seen in personal injury cases, class action lawsuits, and employment and labour disputes, environmental litigation, and securities and investor claims.

Third-party funding is generally available for both plaintiffs and defendants in the USA, depending on the specific circumstances of the legal case.

Third-party funders in the USA do not typically have standardised minimum or maximum funding amounts that apply universally. Instead, the funding terms – including the minimum and maximum amounts – are determined on a case-by-case basis and can vary among different funding companies.

Third-party funders in the USA typically consider funding various costs associated with legal proceedings. The specific costs that a funder may consider funding can vary based on the nature of the case and the terms negotiated with the parties involved. However, common costs that third-party funders may consider covering include attorney’s fees, expert witness fees, discovery costs, court costs, and mediation and arbitration expenses.

Contingency fees are permitted in the USA, and they are a common fee arrangement in civil litigation, particularly in personal injury cases. Contingency fees are generally allowed in civil cases in the USA. This fee arrangement allows attorneys to represent clients without the client having to pay upfront legal fees. Instead, the attorney’s fee is contingent upon the successful outcome of the case. Some key features of contingency fee arrangements are as follows.

  • Percentage of recovery – in contingency fee arrangements, the attorney’s fee is typically calculated as a percentage of the monetary recovery obtained through settlement or judgment.
  • No win, no fee ‒ the defining feature of a contingency fee is that the attorney only gets paid if the case is successful. If the case is not successful, the attorney does not receive a fee, but the client may still be responsible for other case-related costs.
  • Costs and expenses ‒ in addition to the contingency fee, clients are generally responsible for reimbursing the attorney for case-related costs and expenses, such as filing fees, court costs, expert witness fees, and other out-of-pocket expenses.

Attorneys who use contingency fees must adhere to ethical obligations to ensure that the fee arrangement is reasonable and fair to the client. This includes providing clear and transparent fee agreements and keeping clients informed about the progress of the case.

There are typically no strict time limits by which a party to litigation must obtain third-party funding in the USA. It is advisable for parties to begin exploring their funding options early in the litigation process to allow sufficient time for negotiations and to ensure that their financial needs are adequately met.

Before filing a lawsuit, it is often prudent to engage in good faith negotiations and communication to try to resolve the dispute. This may involve sending a demand letter to the potential defendant explaining the dispute and suggesting a specific resolution. Some areas of law or contracts may require specific actions ‒ such as exhausting administrative remedies, sending a demand letter, or mediating a dispute – before filing suit. However, unless required by statute, rule, or contract, parties are generally not obligated to negotiate or mediate before filing a lawsuit.

Statutes of limitations are time limits that determine the deadline by which a plaintiff (the party bringing the claim) must file a civil lawsuit. These time limits can vary based on the type of claim, the discovery of certain information, and the applicable jurisdiction. The trigger for the statute of limitations can vary based on the specific claim and specific facts of the case. In some instances, the clock starts ticking when the plaintiff discovers or should have discovered the harm (the “discovery rule”).

Personal Injury Claims

Personal injury claims, such as those resulting from accidents, generally have a statute of limitations that ranges from one to three years. The statute is typically triggered on the date of the injury or the date when the injury should have been discovered, known as the “discovery rule”.

Contract Claims

Breach of contract claims generally have a statute of limitations that ranges from three to ten years, depending on the jurisdiction and the terms of the contract. The statute is typically triggered on the date of the breach.

Property Damage Claims

Property damage claims, such as those related to damage to real property, generally have a statute of limitations that ranges from one to six years. The statute is typically triggered on the date when the damage occurred.

Fraud Claims

Fraud claims generally have a statute of limitations that ranges from one to six years. The statute is typically triggered on the date of the fraud.


Claims for various torts have distinct statute of limitations, which typically range from one to three years. The statute is typically triggered on the date of the tort.

Personal jurisdiction is the authority of a court to exercise legal power over an individual or entity. In the USA, personal jurisdiction is governed by constitutional principles of due process, as well as various federal and state statutes that incorporate these principles. There are two main types of personal jurisdiction, as follows.

Specific Personal Jurisdiction

Specific personal jurisdiction allows a court to hear a claim against a defendant when the defendant’s contacts with the forum state are directly related to the specific claims at issue in the lawsuit. To establish specific personal jurisdiction, the following requirements must be met.

  • Minimum contacts – the defendant must have sufficient minimum contacts with the forum state. These contacts may include conducting business, causing harm, or entering into contracts within that state.
  • Relatedness – the plaintiff’s claims must arise out of or relate to the defendant’s contact with the forum state.
  • Fairness and due process – the exercise of jurisdiction must be consistent with principles of fairness and due process, such that it is reasonable and fair to subject the defendant to litigation in that particular jurisdiction.

General Personal Jurisdiction:

General personal jurisdiction allows a court to hear any type of claim against a defendant, even if a claim is unrelated to the defendant’s activity in the forum state. To establish general personal jurisdiction, the requirements are more stringent.

  • Domicile or continuous presence – the defendant must either be a resident of the forum state or have such continuous and systematic contacts with the state that it is essentially their “home away from home”.
  • Substantial connections – the defendant’s connections with the forum state must be substantial and ongoing, beyond ordinary business transactions or occasional visits.
  • Fairness and due process – general jurisdiction requires an even greater showing of fairness and due process than specific jurisdiction, such that the defendant’s presence in the forum state is so continuous that it is fair to subject them to lawsuits there on unrelated matters.

The initial document filed to initiate a lawsuit in federal court is called a “complaint”. The complaint is the plaintiff’s formal statement of their claims against the defendant. It outlines the factual allegations, legal claims, and relief sought.

A party is typically permitted to amend the complaint after it has been filed. A party might do so in order to correct errors, add new parties or claims, or clarify its existing claims.

Federal Rule of Civil Procedure 15 governs the process of amending pleadings. Under Rule 15(a), a party can amend its pleading once as a matter of course within 21 days following either service of the complaint or service of a responsive pleading (such as an answer) or a motion under Rule 12. After this initial period, a party may amend a pleading only with the opposing party’s written consent or the court’s permission, which should be freely given when justice so requires. Amendment is generally prohibited when it would be futile, cause undue delay, or prejudice the opposing party.

Service of process formally notifies a defendant that they have been sued. It is a critical step in a lawsuit. The rules for service of process are found in Federal Rule of Civil Procedure 4 (FRCP 4).

Service of process must generally be carried out by an adult who is not a party to the case, a US marshal, or a deputy marshal. In some cases, the court may authorise alternative methods of service. The key documents to serve are the summons and a copy of the complaint. The summons informs the defendant of the lawsuit and includes a response deadline. The preferred method is personal service, where the defendant is handed the summons and complaint. This ensures direct notice.

If the defendant has appointed an agent to accept service of process for it, the documents can be delivered to the agent. If a corporation does business in a state, it must generally appoint an agent for service of process. Corporations, partnerships, and other entities may also be served by delivering a copy of the documents to an officer, managing or general agent, or any other agent authorised by appointment or law.

Service of process is the responsibility of the plaintiff, not the court. If the plaintiff does not ensure that the defendant is properly served, the case may be dismissed.

A party located outside the USA can be sued in the USA. In some cases, a plaintiff can serve process personally on a defendant outside the USA in a manner consistent with the laws of the foreign country where service occurs. With court approval, and if allowed by international agreements, a plaintiff may serve process by mail to a defendant outside the USA. If the country of the defendant is a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents, service can be made through the central authority designated by that country.

If a defendant fails to respond to a lawsuit by the deadline (typically 21 days after being served), the plaintiff may seek a default judgment. A default judgment is a court order that grants the relief requested in the complaint. By not responding, the defendant forfeits the opportunity to defend against the plaintiff’s claims. Once a default judgment is entered, the plaintiff can take steps to enforce it, such as filing liens on the defendant’s property, pursuing wage garnishment, or seeking the appointment of a receiver to enforce the judgment.

The federal courts allow for representative actions, class actions, and collective actions. These mechanisms join individuals who have similar claims or legal issues in a single lawsuit.

Class actions are allowed in federal court when many individuals have similar claims, and it would be impractical for each person to bring an individual lawsuit. Common scenarios include consumer protection cases, product liability claims, securities fraud cases, and civil rights matters. Class actions are typically either opt-in or opt-out. This means that individuals who fall within the class definition are either automatically excluded from the class unless they opt in by filing a claim by a certain deadline, or automatically included in the class unless they opt out by a certain deadline. Federal Rule of Civil Procedure 23 sets out criteria for certifying a class action. These criteria include commonality, typicality, adequacy of representation, and whether a class action is the superior method for handling the dispute.

Collective actions are commonly associated with wage-and-hour claims under the Fair Labor Standards Act (FLSA). They are allowed when a group of employees believes their statutory rights, such as their right to overtime pay or a minimum wage, have been violated. Collective actions are generally opt-in. Potential plaintiffs must affirmatively consent to join the lawsuit by filing an opt-in form by a certain deadline. The standard for certifying a collective action depends on where the case is pending but is generally lower than that for a class action. To join a collective action, workers must show that they are similar enough to each other and have the same dispute with their employer.

Representative actions are a broader category that includes both class and collective actions. They allow individuals or entities to represent others in pursuing legal claims. The specific circumstances and requirements vary depending on the type of claims involved.

Attorneys are generally not required to provide clients with a specific cost estimate of potential litigation at the beginning of a case. However, attorneys are obligated to provide clients with information about their fees and costs and may not charge or collect unreasonable fees or costs. The extent and specificity of these requirements vary depending on State Bar rules, attorney‒client agreements, and ethical considerations.

The Federal Rules of Civil Procedure contemplate several pre-trial motions that can be filed before a trial on the merits, including the following.

  • Motion to dismiss ‒ this allows the defendant to ask the court to dismiss the case based on the plaintiff’s complaint. It can be based on various grounds, such as lack of subject matter jurisdiction, failure to state a claim, or improper venue.
  • Motion for summary judgment – this is a request by either party for the court to decide the case without a trial, based on the evidence and legal arguments presented in the motion.
  • Preliminary injunction – a litigant can move for a preliminary injunction to restrain a party from taking certain actions pending the outcome of the trial. It is often used in cases involving disputes over IP, breach of contract where specific performance is required, or other matters where immediate action is needed. Preliminary injunctions are frequently preceded by a temporary restraining order, which is a request for more immediate relief and typically granted in emergencies (see 6.1 Circumstances of Injunctive Relief).

The most common early judgment application is a motion to dismiss under Rule 12(b). A motion to dismiss seeks to have some or all of the plaintiff’s claims dismissed. This motion is often based on legal arguments that the complaint fails to state a claim, lacks subject matter jurisdiction, or presents other procedural deficiencies. A defendant must file a motion to dismiss before answering the complaint. Courts decide motions to dismiss early in the case so it can streamline the claims, if necessary. If the court grants the motion to dismiss, either in whole or in part, it may also grant the plaintiff leave to re-file their complaint so that it can re-plead its claims properly.

The legal standards for motions to dismiss depend on the grounds for which the defendant is seeking dismissal. A Rule 12(b)(6) motion seeks to dismiss some or all of a complaint for failure to state a claim upon which relief may be granted. This motion to dismiss must be decided based on the pleadings alone. Other motions to dismiss, such as a motion to dismiss due to lack of subject matter or personal jurisdiction (Rule 12(b)(1) and (2)), can be decided upon based on material outside of the pleadings. By way of example, if a defendant is contesting personal jurisdiction, they may submit affidavits to the court to prove their lack of minimum contacts with the forum in which the court sits.

The Federal Rules of Civil Procedure allow for several dispositive motions to be filed before trial, including the following.

  • Motion for judgment on the pleadings – this is similar to a motion to dismiss but is filed after the pleadings (complaint and answer) have been submitted. It seeks judgment in favour of the moving party based solely on the allegations contained in the pleadings, assuming that all factual allegations in the opposing party’s pleading are true.
  • Motion for summary judgment – this is a request that the court enter judgment in favour of the moving party before trial because there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. They are generally filed near the end or shortly after the close of discovery after the parties have had time to gather evidence to support their claims or defences. A summary judgment motion and a response to one must be supported by admissible evidence, such as affidavits, deposition transcripts, and documents collected during discovery.
  • Motion for directed verdict or judgment as a matter of law (JMOL) – in a jury trial, after the plaintiff has presented their case, the defendant may make a motion for a directed verdict (before the case is sent to the jury) or a motion for JMOL (after both parties have presented their cases). These motions argue that, based on the evidence presented, no reasonable jury could find in favour of the opposing party.

The Federal Rules of Civil Procedure allow interested parties who are not named as plaintiffs or defendants in a lawsuit to join a lawsuit under certain circumstances in a process called intervention. Interventions are either permissive or by right. An intervention of right requires the intervenor to have a significant interest in the litigation, a situation where disposition of the lawsuit could impair that intervenor’s rights and interests, and a representation that the existing parties inadequately represent their interests. Even if a party does not meet the criteria for intervention of right, the court may permit them to intervene if they have a claim or defence that shares a common question of law or fact with the main lawsuit. Interventions are accomplished through motions and court orders.

The US legal system generally does not follow the practice of requiring a plaintiff to post security for a defendant’s costs.

When parties file interim motions, they are typically required to pay filing fees to the court. The amount of the filing fee varies depending on the type of motion and the court’s fee schedule. In some cases, parties may be eligible for fee waivers or reductions if they meet certain financial criteria. In certain circumstances, the prevailing party may recover some of the costs associated with filing interim motions. Attorney’s fees, however, are generally not recoverable unless provided for by statute, contract, or court rule.

Courts often issue scheduling orders that outline the deadlines and procedures for various applications and motions in a case, including motions for summary judgment, motions to dismiss, and other pre-trial motions. In some cases, the court may schedule oral argument to address motions. The timing of oral argument can vary and it may depend on the court’s availability and the complexity of the motion. The timeframe for the court to issue a decision or order on the motion can vary significantly. In some cases, it may take several weeks to several months for the court to render a decision, depending on the case’s complexity and the court’s workload.

In certain situations, a party may request an expedited hearing for a motion by filing an emergency motion. These are typically reserved for extraordinary circumstances, such as requests for TROs or preliminary injunctions where immediate action is needed to prevent irreparable harm. The court will assess the urgency of the situation and may expedite the hearing accordingly. The availability of an expedited hearing is generally controlled by local rules and court procedures.

Discovery is a crucial part of the pre-trial phase in civil cases in federal courts in the USA, and litigants are entitled to extensive pre-trial discovery from their opponents and third parties to prepare for trial. Discovery mechanisms include the following.

  • Depositions – parties can take depositions of witnesses, including the opposing party, to obtain sworn testimony. They are usually conducted in person and are recorded by a court reporter.
  • Interrogatories – interrogatories are written questions that one party sends to another party. The receiving party must respond in writing and under oath. Parties are generally limited to 25 interrogatories each, in the absence of an agreement among the parties or a court order.
  • Requests for production of documents – parties can request the production of documents, electronically stored information (ESI), and tangible items. These requests seek the exchange of relevant records and materials.
  • Requests for admissions – a party can send requests for admissions to seek admissions or denials of specific facts from the other party. They are frequently used to authenticate important documents.

Per Rule 26(b), parties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defence and proportional to the needs of the case. When determining proportionality, courts and litigants consider the importance of the issues, the amount in controversy, and the parties’ resources. Information does not need to be admissible in evidence to be discoverable.

Discovery is administered by the litigants, and each party is responsible for complying with the rules and responding to discovery requests. Parties can stipulate various aspects of discovery, such as the timing and manner of production, but the court may become involved when disputes arise.

To contain the scope and cost of discovery, parties are required to confer over discovery issues at the start of the lawsuit and draft a discovery plan. Discovery plans address, among other things, the schedule for conducting discovery, subjects on which discovery is needed, potential privilege issues, and changes to limitations imposed by the federal or local court rules.

Under Rule 45, a litigant can have a subpoena issued to a third party to obtain discovery from them (including documents or ESI) for inspection of a third party’s premises or for deposition testimony. Subpoenas can be issued either by a court or by an attorney licensed to practise in that court. Documents or ESI must be produced as they are maintained in the ordinary course of business, and non-parties may assert objections and allowable privileges over documents, ESI, or testimony. The principles of relevance, proportionality, and fairness apply to third-party discovery, just as they do to discovery involving named parties in the case. When a third party responds to a subpoena, they generally have three options – compliance, objecting through motion practice before the court, or negotiating a response with the party seeking the discovery.

Rule 26 lays out the general provisions governing discovery in US federal courts. The rule contemplates broad discovery that allows litigants to obtain relevant documents and information from parties and non-parties to assist them in preparing for trial. Discovery should be relevant to the claims and defences in the case. Parties are entitled to discover any information that is not privileged and is relevant to any party’s claim or defence. The scope of discovery should be proportionate to the needs of the case. Discovery should be conducted in a manner that is fair, efficient, and not overly burdensome for the parties involved. While parties are generally entitled to broad discovery, courts may issue protective orders or limits on discovery in certain situations to prevent harassment, undue burden, or the disclosure of sensitive information.

Parties have a duty to disclose certain initial information without a discovery request, as required by Rule 26(a). This includes the following.

  • Initial disclosures – parties must provide the names of individuals who may have discoverable information, a description of the documents or categories of documents that support their claims or defenses, a computation of damages, and any insurance agreements that may be applicable to the claims at issue.
  • Expert witness disclosures – parties must disclose the identity of any expert witnesses they plan to call at trial.
  • Pre-trial disclosures – closer to trial, parties must provide more detailed information about their trial witnesses and exhibits.

Comprehensive discovery is a hallmark of the US litigation system, so this question is not applicable to US federal courts. However, certain types of civil proceedings, such as petitions for writs of habeas corpus or in rem proceedings over a particular piece of property, do not require initial disclosures and may not proceed on an ordinary discovery track like a more traditional lawsuit.

American federal courts recognise both the attorney–client privilege and the attorney work product doctrine. The attorney–client privilege protects confidential communications between an attorney and their client made for the purpose of obtaining legal advice or representation. To invoke the privilege, the communication must have been intended to be confidential, intended to seek legal advice, and not waived. In most cases, the client holds the privilege, and it can only be waived by the client. Communications with in-house counsel are generally protected by attorney–client privilege, as long as they meet the criteria for invoking the privilege. 

Work product protection applies to documents and materials prepared by an attorney or their agents in anticipation of litigation or in preparation for trial. This protection is designed to safeguard an attorney’s mental impressions, legal strategies, and trial preparation materials. Work product protection has two tiers. The “ordinary work product” (routine documents) is afforded qualified protection, whereas the “opinion work product” or “core work product” (materials reflecting an attorney’s mental impressions) is given greater protection. In-house counsel’s work product, like that of external counsel, is entitled to protection if created in anticipation of litigation.

There are other rules and legal doctrines that may allow a party to withhold or limit dissemination of information in a federal lawsuit. These include trade secrets, national security and state secrets, confidential settlement agreements, grand jury documents, and statutory protections concerning medical, financial, and educational records.

Injunctive relief may be awarded when a court determines that it is necessary to prevent irreparable harm, maintain the status quo, or enforce legal rights.

  • Temporary restraining order (TRO) – a TRO is an emergency measure issued when immediate action is necessary to prevent irreparable harm. TROs are granted at the beginning of a case (often before the defendant is even served) and typically last for a short duration (often no more than 14 days).
  • Preliminary injunction – a preliminary injunction is a temporary measure issued before a case goes to trial. It is often sought to maintain the status quo during the lawsuit and prevent immediate harm.
  • Permanent injunction – a permanent injunction is issued after a trial on the merits. It is intended to provide a permanent remedy to the prevailing party and to prevent future harm.

TROs and preliminary injunctions are often issued to prevent a party from disposing of or transferring assets during the course of litigation. They are often used when there is a concern that a party might attempt to dissipate assets to avoid a judgment.

Injunctions may also be used to prevent parallel proceedings from moving forward in other jurisdictions. By way of example, an anti-suit injunction prevents a party from filing or continuing to prosecute a parallel lawsuit outside the USA. If an anti-suit injunction has already been issued against a party by a court outside the USA, that party may seek an anti anti-suit injunction – a rare sub-species of anti-suit injunction – in the USA. Although an US court has no jurisdiction over the other court, it does have jurisdiction over the parties before it, and can order a party to not continue proceedings in another court.

Parties seeking injunctive relief may need to post a bond to cover any damages that may result from the injunction.

Injunctive relief can be obtained quickly, especially when circumstances are urgent. The process for obtaining injunctive relief, including TROs and preliminary injunctions, is designed to address emergency situations promptly.

When a party believes that they need urgent injunctive relief, they can file a motion with the court explaining the circumstances and the need for immediate action. This motion typically includes evidence and legal arguments. The court reviews the motion and supporting documents to determine whether there is an immediate need for injunctive relief. If there is, the court will issue an injunction, often without prior notice to the opposing party.

A TRO is a short-term emergency injunction often issued without a full hearing. TROs are often issued on an ex parte basis, meaning that they are granted without notifying the opposing party. The TRO typically lasts for a short period, often no more than 14 days.

After issuing a TRO, the court typically schedules a hearing on a preliminary injunction. At this hearing, both parties have the opportunity to present their arguments and evidence, and the court decides whether to convert the TRO into a preliminary injunction. A preliminary injunction typically lasts until a trial on the merits concludes.

Many federal courts handle emergency or out-of-hours requests for injunctive relief. Certain judges are often designated to handle emergency matters, even outside of regular court hours.

TROs and preliminary injunctions are not permanent solutions but temporary measures to address immediate needs. To obtain a permanent injunction, parties must proceed to a trial on the merits.

Injunctive relief, including TROs, can be obtained on an ex parte basis. An ex parte TRO is issued without providing notice to the respondent (the opposing party) and without the respondent being present. This procedure is typically used in emergency situations where immediate action is necessary to prevent irreparable harm.

If the respondent successfully challenges and discharges an injunction, the applicant can be held liable for any damages suffered by the respondent owing to the injunction. These damages can include financial losses, legal fees, and other harm directly caused by the injunction. In some cases, the court may require the applicant to post a bond or provide security to cover potential damages that the respondent may suffer if the injunction is later dissolved. This bond is often known as a “bond for damages”.

Injunctive relief generally applies to actions or assets within the jurisdiction of the court. It does not typically extend to worldwide assets of a party. Injunctive relief issued by a US court is generally enforceable within the USA and its territories but does not have extraterritorial effect.

Parties seeking to enforce injunctive relief against assets or conduct occurring outside the USA often face complex and international legal considerations. To achieve enforcement beyond the USA, additional steps may be necessary, such as seeking recognition and enforcement of an injunction in a foreign jurisdiction through international treaties, conventions, or reciprocal agreements. The principles of comity and international law govern the recognition and enforcement of foreign judgments and injunctions, and the process can be intricate and subject to the legal procedures of the foreign jurisdiction.

Third-party injunctive relief is a legal remedy used to compel or restrain the actions of individuals or entities that are not directly involved in the underlying dispute between the primary parties (plaintiff and defendant). Injunctive relief can be obtained against third parties under the following circumstances.

  • Aid and abetment or conspiracy – third parties may be subject to injunctive relief if they are found to have aided, abetted, or conspired with a defendant in wrongdoing.
  • Successor liability – third parties can be subject to an injunction if they have acquired the assets or liabilities of a defendant who has been ordered to comply with an injunction.
  • Vicarious liability – third parties may be subject to an injunction if they have vicarious liability due to their relationship or control over the defendant.
  • Common enterprise – third parties who are part of a common enterprise or venture may be subject to an injunction if the enterprise’s actions have violated the law and the relief is necessary to remedy the situation.

If a party fails to comply with the terms of an injunction, there can be significant legal consequences, including the potential for being held in contempt of court. Contempt of court is a legal finding that the non-complying party has wilfully and knowingly violated a court order. Civil contempt is intended to compel compliance with the court’s order. The court may issue sanctions, fines, or other coercive measures to ensure the party complies with the injunction. For severe or wilful violations, the court may issue criminal contempt charges. This can result in penalties such as fines, probation, or even incarceration. The court may issue further injunctions or remedies to enforce compliance with the original injunction. This can include orders for specific performance, additional injunctions, or orders to cease and desist from particular actions. In extreme cases, the court may authorise the seizure of assets to satisfy any financial penalties or damages awarded as a result of the non-compliance.

Trials in the USA typically involve a combination of oral argument, witness and expert testimony, and written submissions.

A trial typically begins with an opening statement by an attorney for each side. Witnesses for the plaintiff then testify, followed by witnesses for the defendant. Witness testimony is a fundamental component of a trial. Witnesses testify under oath and each side has the opportunity to cross-examine witnesses. During witness testimony, documents and other exhibits may be admitted into evidence. Each side usually calls a combination of fact and expert witnesses.

Cases typically involve pre-trial and post-trial hearings, which involve many topics, including:

  • case management issues;
  • the admissibility of certain exhibits, topics or witness testimony;
  • jury instructions; and
  • the entry of a final judgment.

At some point after trial, the judge issues a final judgment that states what (if any) relief – such as money damages, a declaration of rights, or an injunction ordering a party to do or refrain from doing something – is granted.

Case management hearings are conducted at the judge’s discretion to ensure that the case proceeds efficiently and that the parties are prepared for trial.

  • Discovery – case management hearings can address discovery issues, such as disputes over the production of documents, scheduling depositions, or protective orders.
  • Scheduling and timetables – the court may set deadlines for filing motions, conducting discovery, and other case-related activities.
  • Settlement discussions – case management hearings can provide opportunities for parties to discuss settlement and ADR options.

Jury trials are available in most civil cases. The Seventh Amendment to the US Constitution guarantees the right to a jury trial in civil cases where the value in controversy exceeds USD20. Parties are entitled to a jury trial in a wide range of civil cases, including those involving contracts, personal injury, and employment discrimination. Not all civil claims, however, are eligible for a jury trial. Equitable claims, which seek non-monetary remedies such as injunctions or specific performance, generally must be decided by a judge. Parties may waive their right to a jury trial by mutual consent or by failing to request one. In some cases, parties may prefer to have a judge decide the case, especially if it involves complex legal issues or if a jury trial would be less practical.

The admission of evidence at trial in the federal legal system is governed by the Federal Rules of Evidence. These rules play a crucial role in ensuring that evidence presented at trial is relevant, reliable, and consistent with principles of fairness and justice.

Please see 7.4 Rules That Govern Admission of Evidence. The Federal Rules of Evidence aim to ensure that evidence presented at trial is relevant and reliable.

Court proceedings, including hearings and trials, are generally open to the public to ensure transparency and accountability in the judicial process. The principle of open courts is a fundamental aspect of the US legal system.

While the default is openness, there are circumstances where court proceedings may be closed or sealed. Common exceptions include cases involving sensitive or classified information, minors, trade secrets, or confidential informants. Courts may also close certain proceedings to protect the privacy or safety of witnesses or victims.

Some federal courts, particularly appellate courts, provide live broadcasting or streaming of oral arguments and hearings on their websites. Federal trial courts generally do not video broadcast their proceedings but sometimes provide a telephone dial-in number to allow interested persons to listen in or participate in a hearing or trial.

The level of intervention by a judge during a hearing or trial can vary depending on the nature of the proceedings and the specific circumstances. The judge rules on legal issues – such as objections to the admissibility of evidence – at hearings and at trial. In jury cases, the judge provides jury instructions, which explain the law that the jury must follow when reaching a verdict. The judge maintains order in the courtroom, ensuring that proceedings are orderly and respectful.

In some hearings and non-jury trials, the judge renders a decision at the end of the proceeding. This may happen when the judge believes there is sufficient information to make a decision.

In other cases, the judge reserves judgment to a later date. This may happen for various reasons, including when the judge requires additional time to review evidence or legal issues. Judgment may be reserved for days, weeks, or even months, depending on the complexity of the case and the judge’s workload. The judge may request additional briefing after a hearing or trial, including on proposed findings of fact and conclusions of law.

In jury trials, the judge does not render a decision; instead, the jury renders a verdict. The judge’s role is to manage the proceedings and instruct the jury on the law; however, the ultimate decision is made by the jury.

The timeframes for proceedings from the commencement of a lawsuit to trial, as well as the typical duration of trials, can vary significantly. Commercial disputes can be influenced by the complexity of the case, court caseload, and the parties involved. Cases typically go to trial between one and three years after the case is filed. Trials can last from a few days to several months, depending on the complexity of the case and the number of witnesses and exhibits involved.       

In the USA, court approval is generally not required to settle a lawsuit. Parties involved in a lawsuit have the right to voluntarily settle their case at any time before or during trial without seeking court approval.

However, there are specific circumstances in which court approval may be required to settle a lawsuit, such as:

  • class actions;
  • cases involving minors or incapacitated parties;
  • cases with structured settlements; and
  • probate matters.

In the USA, the settlement of a lawsuit can remain confidential if the parties involved agree to include confidentiality provisions in their settlement agreement. These provisions are commonly referred to as confidentiality or non-disclosure clauses. They are contractual terms that the parties negotiate and agree upon as part of the settlement process.

It is important to note that, even though confidential settlements are common, there is debate about their social and legal implications. Some argue that they can shield misconduct or dangerous products from public awareness, whereas others believe they protect the privacy and interests of the parties involved. The enforceability of these provisions can depend on state law and the specifics of the agreement.

Settlement agreements in the USA are typically enforced as contracts. Once the parties involved in a lawsuit reach a settlement and both parties sign the agreement, it becomes a legally binding contract.

The enforcement of settlement agreements generally follows the following principles.

  • Contractual obligation – a settlement agreement is a contract between the parties and, as such, it is legally binding. Each party is obligated to fulfil the terms and conditions specified in the agreement.
  • Filing a lawsuit for breach – to enforce a settlement agreement, the aggrieved party typically files a lawsuit for breach of contract in the appropriate court. The aggrieved party must demonstrate that the other party failed to meet their contractual obligations as outlined in the settlement agreement.
  • State laws and jurisdiction – the enforcement of settlement agreements is subject to state contract law, as contract law is primarily governed at the state level. Courts in the state where the lawsuit was originally filed usually have jurisdiction over the enforcement of the settlement agreement.

Settlement agreements in the USA can be set aside or invalidated under certain circumstances. The process for setting aside a settlement agreement involves legal proceedings and is subject to specific criteria. Some common grounds on which settlement agreements may be set aside include fraud or misrepresentation, duress or undue influence, lack of capacity, mutual mistake, material breach of the settlement agreement, or a public policy violation.

Setting aside a settlement agreement is not common and requires a legal process in court. The party seeking to set aside the agreement must provide evidence supporting their claim.

The following are among the most common forms of awards and remedies available to successful litigants.

  • Monetary damages – successful litigants may be awarded monetary damages, which are intended to compensate them for losses incurred owing to the defendant’s actions. The types of monetary damages include:
    1. compensatory damages – these are designed to compensate the plaintiff for actual economic losses, such as medical expenses, lost wages, property damage, or other quantifiable losses; and
    2. punitive damages – in cases of willful misconduct or egregious behaviour, punitive damages may be awarded to punish the defendant and deter similar conduct in the future.
  • Equitable remedies – in some cases, a successful litigant may seek equitable remedies, which aim to provide fair and just relief rather than monetary compensation. These remedies include:
    1. injunctions – an injunction is a court order that requires a party to take certain actions or refrain from certain actions and can be used to prevent future harm, compel specific performance, or protect legal rights; and
    2. specific performance – specific performance is an equitable remedy that requires a party to fulfil a specific contractual obligation as outlined in the original agreement and is commonly used in cases involving real estate and unique items.
  • Rescission – rescission allows the parties to a contract to cancel or void the contract, returning both parties to their pre-contractual positions.
  • Declaratory judgment – a declaratory judgment is a court’s formal declaration of the rights, duties, or obligations of the parties involved in a legal dispute. It clarifies the legal relationship between the parties without awarding monetary damages.
  • Restitution – restitution is a remedy aimed at restoring any benefits or property wrongfully obtained by the defendant to the rightful owner. It is often used in cases involving unjust enrichment.
  • Attorney’s fees and costs – in some cases, a successful litigant may be entitled to recover attorney’s fees and litigation costs from the losing party. This is typically provided for in statutes, contracts, or through common-law principles.

Punitive damages, also known as exemplary damages, are intended to punish the defendant for wilful misconduct, gross negligence, or malicious behaviour. The primary purpose is to deter the defendant and others from engaging in similar behaviour. The availability of punitive damages varies by state and by the nature of the case. Some states have imposed limits on punitive damages, whereas others allow them without specific caps. The US Supreme Court has also ruled that punitive damages must be reasonable and proportional to the harm caused.

In some cases, statutes provide for specific amounts of damages for particular violations. By way of example, copyright infringement cases may involve statutory damages as provided by federal copyright law. Many types of cases, such as patent cases and anti-trust matters, have their own statutory damages that should be reviewed by counsel prior to filing such matters.

In the USA, parties may be entitled to collect both pre-judgment and post-judgment interest. However, the rules and parameters for each type of interest can vary based on federal or state law.

Pre-judgment Interest

Pre-judgment interest is interest that accrues on the amount of damages from the time the cause of action arose until the date of the judgment. The availability and calculation of pre-judgment interest are typically governed by state law, and the rules can vary from one state to another.

Post-judgment Interest

Post-judgment interest is interest that accrues on the amount of the judgment from the date the judgment is entered until the judgment is paid. Post-judgment interest is generally governed by federal law ‒ specifically, 28 USC § 1961, which sets the interest rate for federal judgments. The rate is based on the weekly average one-year constant maturity Treasury yield and is updated periodically by the US Department of the Treasury. Some exclusions do apply, such as IRS tax cases.

State laws may also apply to post-judgment interest in cases filed in state courts, but in federal court cases, the federal rate typically prevails. Federal law sets the post-judgment interest rate for federal court judgments, and this rate is typically used in federal cases. However, the rate may be updated by the US Department of the Treasury.

Enforcing a domestic judgment in the USA involves various mechanisms, primarily at the state level ‒ given that the enforcement of judgments is primarily governed by state law. Some common mechanisms for enforcing a domestic judgment include a writ of execution, garnishment of bank accounts or wages, or liens on property.

Enforcing a judgment from a foreign country in the USA involves a different process than enforcing domestic judgments. The primary mechanism for enforcing foreign judgments in the USA is based on the principles of comity and recognition of foreign judgments. The following is a general overview of the procedure.

  • File a lawsuit to enforce the foreign judgment – the first step is to file a lawsuit in a US court seeking to enforce the foreign judgment.
  • Provide the US court with required documentation – the next step is to provide the US court with the necessary documents, which typically include a certified copy of the foreign judgment, along with a translation if the judgment is not in English. The court may require an affidavit or other supporting documents as well. If the US court determines that the foreign judgment is eligible for enforcement, it will issue an order recognising and enforcing the foreign judgment in the USA.
  • Enforcement mechanisms – once the foreign judgment is recognised in the USA, the judgment creditor can proceed with enforcement actions, such as obtaining writs of execution, garnishments, or other remedies available under US law to collect the judgment amount.

The federal court system in the USA provides several levels of appeal or review mechanisms for parties dissatisfied with trial court decisions. These levels of appeal typically include the following.

  • US Courts of Appeals – the first level of appeal in the federal system is the US Courts of Appeals. There are 13 federal circuits, each covering specific geographic regions. The Court of Appeals reviews cases decided in federal district courts within its circuit.
  • Petition for a writ of certiorari to the US Supreme Court – if a party is not satisfied with the decision of the Court of Appeals, they can seek further review by filing a petition for a writ of certiorari with the US Supreme Court. However, the Supreme Court has discretion in choosing which cases to hear, and it grants certiorari to a relatively small percentage of cases. The US Supreme Court typically reviews cases that present significant legal questions, conflict between different circuits, or matters of national importance.

These levels of appeal are the general rule in most civil cases in the US Federal System. Other types of appellate review can be available such as interlocutory appeals of certain issues. This type of review is usually provide for by federal statutes. Most cases do not proceed to the US Supreme Court and the vast majority are resolved at the Court of Appeals level.

Appeals of judgments in federal court in the USA are governed by a set of rules and procedures designed to ensure that parties have the opportunity to challenge lower court decisions. In most cases, parties have a right to appeal a final judgment or order issued by a federal district court to the appropriate US Court of Appeals.

To appeal, a party must have legal standing, which means they must be an aggrieved party directly affected by the judgment. In other words, they must have a personal stake in the outcome of the case.

The first step in the appeal process is filing a Notice of Appeal with the clerk of the district court that issued the judgment. This notice must be filed within a specified timeframe.

  • Time limit for filing a notice of appeal – in most cases, a party has 30 days (60 days if the USA is a party) from the entry of the judgment or order they wish to appeal. The clock begins ticking on the day the judgment is entered. If the judgment is entered electronically, the 30-day period typically starts running on the date of electronic entry. 28 USC §2107(a) FRAP 4.
  • Appealing non-final orders – if a party wishes to appeal a non-final order, such as an interlocutory order, the time limit for filing a Notice of Appeal may be different. Parties should consult the Federal Rules of Appellate Procedure or local rules for the specific deadlines in such cases.
  • Designating the record – after filing the Notice of Appeal, the appellant (the party appealing) must designate the parts of the trial court record they wish to include in the appellate record. This includes transcripts of relevant proceedings and any necessary exhibits.
  • Appellate briefs – the appellant and the appellee (the party responding to the appeal) file appellate briefs presenting their legal arguments and responses. These briefs outline the issues on appeal and the legal basis for challenging or defending the lower court’s decision.
  • Oral argument (if scheduled) – in some cases, the Court of Appeals may schedule oral arguments, during which the parties’ attorneys present their arguments to a panel of judges. Oral arguments provide an opportunity for parties to further explain their positions and for the judges to question the attorneys.
  • Appellate decision – the Court of Appeals reviews the case and issues a written decision, either affirming, reversing, or remanding the lower court’s decision. The decision may contain legal analysis and reasoning.

Triggering Events for Filing an Appeal

  • Entry of final judgment – in most cases, the trigger for filing an appeal is the entry of a final judgment or order by the district court. This marks the completion of the trial court proceedings.
  • Interlocutory appeals – in some cases, parties may seek interlocutory appeals for non-final orders, which can include decisions on preliminary injunctions, qualified immunity, or other matters.

Federal appellate courts in the USA consider a range of issues during an appeal. The scope of review is generally limited to matters that were raised and preserved in the trial court.

Federal appellate courts may consider legal issues and questions of law, including:

  • interpretation and application of federal statutes and regulations;
  • constitutional issues;
  • questions of jurisdiction and venue; and
  • legal errors made during trial proceedings, such as improper evidentiary rulings, jury instructions or application of legal standards.

Appellate review is generally limited to the record created in the trial court, which includes transcripts of trial proceedings and any relevant exhibits. New evidence is typically not considered on appeal.

Federal appellate courts in the USA generally do not impose conditions on granting an appeal as a matter of routine practice. Instead, the decision to grant or deny an appeal is primarily based on the merits of the case and whether it meets the criteria for appellate review.

It is important to note that the appeals process is primarily focused on reviewing the trial court’s decision on its merits, rather than imposing conditions for the mere act of granting an appeal. Appellate courts make their decisions based on the rules of appellate procedure and legal standards governing appellate review. If a party is granted an appeal, it is typically to address specific legal issues or errors that were raised during the trial court proceedings.

After hearing an appeal, appellate courts in the USA have several powers and options, depending on the specific circumstances and the nature of the case. These powers are designed to address legal errors, ensure fairness, and provide remedies when necessary. An appellate court can affirm, reverse, or modify a final judgment either in whole or in part.

An appellate court can also remand a matter back to the trial court for further proceedings, such as additional fact finding or correction of legal errors.

In general in the USA, each party bears their own attorney’s fees and costs. It is not a “loser pays” system unless provided for by statute or contract.

In some cases, specific statutes or contracts may provide for the recovery of attorney’s fees and costs by the prevailing party. If a prevailing party seeks to recover attorney’s fees and costs, the opposing party can challenge the amount and reasonableness of those fees and costs. Sometimes, if the prevailing party seeks to recover costs such as court fees and expenses, a process known as “taxation of costs” occurs. The court assesses whether the costs claimed by the prevailing party are recoverable under applicable rules.

The court considers the following factors when awarding costs.

  • Statutory provisions – the court examines relevant federal statutes that may authorise the award of costs in specific types of cases, such as civil rights cases, antitrust cases, or certain consumer protection cases.
  • Rule 54(d) – Federal Rule of Civil Procedure 54(d) provides a general framework for awarding costs to the prevailing party. It states that costs should be allowed to the prevailing party unless a federal statute, rule, or court order provides otherwise. The court will consider Rule 54(d) as the default rule for awarding costs.
  • Reasonableness – the court assesses the reasonableness of the costs sought by the prevailing party. This includes determining whether the costs are necessary for the litigation and whether the amounts are reasonable in light of prevailing market rates.
  • Non-taxable costs – some costs may be non-taxable, meaning they are not recoverable under Rule 54(d). By way of example, the costs of experts, certain transcripts, and deposition transcripts may not be recoverable as a matter of right and require a specific showing of necessity.
  • Objections – the court considers any objections raised by the opposing party to the award of costs. The opposing party may challenge the necessity or reasonableness of the costs claimed.
  • Equity and discretion – courts have some discretion in awarding costs and may consider the equities of the case. This can involve weighing the relative success of the parties, the complexity of the case, and the overall fairness of awarding costs.
  • Settlement agreements – if the parties reach a settlement agreement that includes provisions for cost allocation, the court will consider the terms of the settlement agreement when determining costs and likely give any settlement agreement between parties substantial deference.

In federal courts in the USA, interest is generally not awarded on costs. Costs are typically considered as fixed amounts associated with litigation expenses and they do not accrue interest. Instead, interest is primarily awarded on judgments, which represent the final amount of money a party is required to pay as a result of the court’s decision.

Alternative dispute resolution is viewed favourably in the federal legal system of the USA as a means of resolving disputes efficiently, cost-effectively, and with more flexibility than traditional litigation. ADR methods are encouraged and often required by federal courts as a way to reduce the caseload and promote the early and amicable resolution of disputes. Some of the most popular ADR methods in the federal legal system include mediation, arbitration, and settlement conferences.

  • Mediation – mediation is widely used in the federal legal system and is highly regarded. It is a voluntary process in which a neutral third party, the mediator, assists the parties in reaching a mutually agreeable resolution. It is non-binding, meaning that the parties are not required to accept the mediator’s recommendations and they retain the ability to pursue litigation if no agreement is reached.
  • Arbitration – arbitration is another popular ADR method, particularly in cases involving arbitration agreements, such as those found in employment contracts, consumer agreements, and commercial contracts. In arbitration, a neutral arbitrator or panel of arbitrators makes a binding decision to resolve the dispute. The Federal Arbitration Act (FAA) governs arbitration agreements and awards in federal court. The FAA emphasises the enforceability of arbitration agreements, subject to certain statutory exceptions and contract defences.
  • Settlement conferences – federal courts frequently schedule settlement conferences to encourage parties to resolve their disputes before proceeding to trial. These conferences are presided over by a magistrate judge or another neutral, and they provide a forum for parties to discuss their cases and explore potential settlements.

Overall, ADR is a valued and integral component of the federal legal system in the USA. It allows parties to tailor dispute resolution processes to their specific needs and preferences while promoting efficiency and reducing the burden on the court system. Additionally, it can lead to more creative and mutually satisfactory solutions than traditional litigation.

In the federal legal system of the USA, the promotion of ADR is a well-established practice, and ADR mechanisms are actively encouraged. Here is an overview of the extent to which the legal system promotes ADR. In general, ADR is voluntary ‒ although many courts require it as part of the standard scheduling order issued with cases. In addition, arbitration clauses in contracts are strongly favoured and are typically enforced by federal courts.

In the USA, institutions offering and promoting ADR are well-organised and play a significant role in the legal landscape. These institutions are responsible for providing resources, training, and services related to various ADR methods, ensuring their effectiveness and accessibility. Organisations such as the American Arbitration Associate (AAA) and JAMS are widely used by parties and have well-established sets of rules and procedures and lists of potential arbitrators and mediators. There are also many private ADR practitioners that can be used in state or federal matters.

The FAA is the primary federal law on arbitration. It embodies public policy favouring arbitration. This policy seeks to promote finality and efficiency in arbitration while allowing for limited judicial review. Under the FAA, if an arbitration agreement is valid under basic contract principles, a court has limited authority to set aside an arbitral award.

The USA is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”). Under the New York Convention, US courts are required to recognise and enforce foreign arbitral awards, subject to limited exceptions. The USA is also a signatory to the Inter-American Convention on International Commercial Arbitration (the “Panama Convention”). This convention governs the recognition and enforcement of arbitral awards within the Americas.

Arbitral awards can be confirmed and enforced in either federal or state court. Even though the FAA and international conventions favour recognising and enforcing arbitral awards, there are limited grounds upon which an award may be challenged. These grounds include fraud, corruption, procedural irregularities, the arbitrator exceeding their authority, or if enforcing an arbitral award violates public policy.

There are certain subject matters that may not be referred to arbitration, or for which arbitration may be subject to limitations or restrictions, as follows.

  • Certain employment claims – although many employment disputes are arbitrable, some employment claims may be subject to restrictions, including claims related to wage-and-hour violations, workplace discrimination, sexual assault or harassment, or wrongful termination.
  • Certain regulatory matters – arbitration may not be available for certain regulatory disputes, including those related to environmental regulations, zoning and land use, or public safety issues.
  • Patent validity and trade mark registration – patent validity and trade mark disputes are generally not arbitrable because they involve questions of federal law and require specialised patent courts.
  • Family law and child custody – family law matters (such as divorce, child custody, and child support) are typically not arbitrable. The public policy interest in ensuring the welfare of children and resolving family disputes by the court system leads to limitations on arbitration in these areas.

There are limited grounds on which to challenge an arbitral award. These grounds are outlined in the FAA and apply to both domestic and international arbitration.

  • Fraud, corruption, or misconduct – a party may challenge an arbitral award if there is evidence of fraud, corruption, or other misconduct by an arbitrator or the opposing party. Such misconduct must have had a material impact on the award.
  • Exceeding arbitrator’s authority – if an arbitrator exceeds their authority (eg, issues an award that goes beyond the scope of the arbitration agreement), a party can challenge the award.
  • Arbitrator bias or partiality – if the arbitrator exhibited bias or partiality that materially affected the award, the award may be challenged. This bias can be evident from the arbitrator’s behaviour, actions, or financial interests that show a lack of neutrality.
  • Lack of arbitration agreement or due process violation – if there was no valid arbitration agreement or due process was not followed, a party can challenge the award.
  • Public policy violation – an arbitral award that violates established public policy may be challenged. This ground is narrowly construed.

Enforcing domestic and foreign arbitration awards involves the following specific procedures.

  • Request for confirmation – the prevailing party must first confirm the award court. This involves filing a petition to confirm the award, along with a copy of the arbitration agreement and the award itself.
  • Court confirmation – if the court is satisfied that the arbitration award meets the legal requirements and is not subject to challenge, it will confirm the award and issue a judgment in favour of the prevailing party. This judgment can then be enforced like any other court judgment.
  • Enforcement – once the court judgment confirming the arbitration award is obtained, the prevailing party can take legal action to enforce the judgment, such as seeking to collect monetary damages or obtain specific performance.

There are no specific proposals for comprehensive dispute resolution reform in the USA.

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Trends and Developments


Kasowitz Benson Torres LLP is headquartered in New York City and is one of the pre-eminent law firms in the United States, with approximately 250 lawyers across ten offices. Its core focus is commercial litigation, complemented by exceptionally strong bankruptcy/restructuring, employment litigation and real estate transactional practices. The firm is known for its creative, aggressive litigators and willingness to take on tough cases, and has extensive trial experience in representing both plaintiffs and defendants in every area of litigation. Clients include Fortune 500 companies, private equity and other investment firms across a wide range of industries, including financial services, technology and real estate. The firm has successfully secured billions of dollars in awards and settlements for clients.

Litigation in the USA: an Introduction

In 2023, law firms have been navigating significant developments in technology and addressing important rulings relating to their own diversity hiring. There were also a number of important substantive law developments, notably relating to mass tort liability restructuring.

The rise of generative artificial intelligence (GenAI)

Many are predicting that GenAI will have dramatic effects across the legal industry. Early adopting practitioners are using software with GenAI to perform many tasks to increase efficiency and conserve resources, delivering additional value to their clients. In litigation, perhaps the most useful GenAI-based tools currently available can analyse vast numbers of documents by, for example, culling relevant documents from a large data set and identifying potential key documents in a litigation. Other useful AI tools include those that help to perform legal research and generate draft legal documents. GenAI-based tools can also quickly summarise complex cases and regulations, at least preliminarily helping lawyers quickly get up to speed on key issues.

Risks of relying on GenAI

GenAI must be exploited appropriately, as a tool that can perform tasks rather than as a replacement for an experienced practitioner. It should not be relied upon to provide legal advice, but to increase the efficiency of the provision of legal services. Importantly, the information that GenAI tools generate must be carefully reviewed, and a few cautionary tales have already emerged.

This past year, industry publications and mainstream media reported on Mata v Avianca, a case in federal court in New York, in which the plaintiff’s attorneys, relying on research generated by GenAI, cited cases with rulings favourable to the plaintiff. It later emerged that the cited cases did not exist: the GenAI tool had invented the cases. Worse, when the defence and court questioned the legitimacy of the cited cases, the attorneys doubled down by providing, according to the court, “shifting and contradictory explanations” for their inclusion. The court sanctioned the attorneys for not meeting their obligations of “ensuring the accuracy of their filings” and for not being forthcoming initially as to the source of the citations.

Instances where GenAI creates information, such as the non-existent cases cited in Mata v Avianca, are not unusual and are referred to as “hallucinations”. Hallucinations can be a feature of GenAI, not a flaw, and occur because certain GenAI tools are designed to generate language by attempting to mimic how people write – or perform other creative tasks – rather than to provide accurate data that is supported by data from a trustworthy legal source. GenAI tools may also draw data from the internet and from other GenAI users, without verifying the accuracy of that information. It is imperative, therefore, that attorneys verify the accuracy and truthfulness of any information obtained from these tools, as well as the sources for the data.

Other risks exist. For example, practitioners must be cautious not to input privileged or confidential information into publicly available GenAI-based tools because, given that GenAI tools learn from user inputs, there is a strong risk that GenAI tools retain and replicate data outputs that may include confidential, privileged and other types of proprietary information.

The advent of GenAI is a monumental shift for the legal community. Countless hours of work reviewing evidence, conducting research and drafting papers may be reduced to mere seconds in some instances. However, while this may save a lawyer time in some areas, it will require careful oversight and consideration to ensure that the final work product is accurate. As the court in Mata v Avianca stated: there is nothing “inherently improper” in practising attorneys using GenAI to “assist” in their work – so long as they can ensure its accuracy.

Bankruptcy litigation: non-consensual third-party releases

In August 2023, the U.S. Supreme Court accepted a review of the decision by the U.S. Court of Appeals for the Second Circuit in In re Purdue Pharma, L.P., reversing the decision of the U.S. District Court for the Southern District of New York and reinstating the decision of the U.S. Bankruptcy Court for the Southern District of New York, which held that the non-consensual third-party releases constituting the backbone of Purdue Pharma’s plan of reorganisation did not violate the provisions of the Bankruptcy Code. Oral argument is set for December 2023.

Section 1141(d) of the Bankruptcy Code generally allows prepetition liabilities of a reorganised, non-liquidating Chapter 11 debtor to be discharged. However, there is no analogous provision in the Bankruptcy Code expressly extending non-consensual releases to third parties. Nonetheless, non-consensual third-party releases and related injunctions are recognised in a majority of circuit courts and are often approved as part of a plan of reorganisation in Chapter 11 cases. The issue on appeal to the Supreme Court is relatively straightforward: does the Bankruptcy Code authorise courts to release non-debtors from liability as part of a plan of reorganisation? However, the answer to this question and its practical implications are far more complex.

As is widely known, Purdue Pharma developed, manufactured and marketed OxyContin, an opioid which the company promoted as non-addictive. On 15 September 2009, Purdue filed for Chapter 11 bankruptcy in an effort to resolve thousands of lawsuits related to the drug against the company and its equity owners – the Sackler family and related entities. In September 2021, as part of the Bankruptcy Court’s decision to confirm the debtors’ reorganisation plan, Judge Drain issued a decision extending non-consensual third-party releases and injunctions to the Sackler family and related entities. In support of the holding that the third-party release was authorised, the Bankruptcy Court found that the Sackler family had agreed to:

  • pay USD4.325 billion over nine years;
  • certain restrictions on naming rights;
  • not engage in business with the reorganised debtors;
  • exit foreign companies within a prescribed time;
  • release a public document depository, including privilege waivers, that future governments and the public could evaluate and benefit from; and
  • certain “snap back” protections to enhance collectability upon default in settlement payments.

Eight objecting states and the U.S. Trustee, among others, appealed. Judge McMahon reversed the Bankruptcy Court’s decision. The court reviewed the releases de novo, holding that the Bankruptcy Court did not have the constitutional authority to enter a final order in the case. In her analysis, Judge McMahon found that nothing in the Bankruptcy Code authorises non-consensual third-party releases for non-derivative claims (those claims for which a creditor may be liable independently of the debtor) and non-asbestos claims (which Section 524(g) of the Bankruptcy Code expressly allows). Judge McMahon expressly rejected the argument that any “equitable authority” or “residual” authority in other provisions of the Bankruptcy Code permits third-party releases, while acknowledging the well-developed body of case law across the circuit courts and within the Second Circuit that has permitted such releases, observing that although “[o]ne would think that this had been settled long ago ... [i]t has not been”.

Subsequently, the debtors and other parties who supported the reorganisation plan appealed. The Second Circuit reversed the District Court’s decision and reinstated the Bankruptcy Court’s order confirming the plan. The Second Circuit based its rationale on the lack of a specific authority in the Bankruptcy Code precluding third-party releases. In doing so, the Court relied on Section 105(a), which grants bankruptcy courts broad equitable power to effectuate provisions of the Bankruptcy Code. The Court also relied on Section 1123(b)(6), which provides that a reorganisation plan can “include any other appropriate provision not inconsistent with the applicable provisions of this title”. These sections, acting in tandem, grant bankruptcy courts “a residual authority consistent with the traditional understanding that bankruptcy courts, as courts of equity, have broad authority to modify creditor-debtor relationships”. As part of its decision, the Second Circuit laid out a seven-factor test to guide bankruptcy courts in determining whether to approve non-consensual third-party releases.

The stakes at risk before the Supreme Court are high. More than a simple legal determination of whether the Bankruptcy Code can affect creditor claims against non-debtors is at issue: it is a question of whether the Bankruptcy Code’s provisions allow courts to adapt to current economic realities by authorising broad solutions to problems that extend beyond the debtor. A holding that third-party releases are unconstitutional would fundamentally alter an important strategic consideration for the debtor in determining whether to commence a Chapter 11 case and the prospect of creditor recoveries therein.

In Purdue Pharma, if third-party releases are not authorised, the Sackler family does not get released. At the same time, the bankruptcy estates would not benefit from over USD4 billion of value contributed by the Sackler family in exchange, leaving creditors to return to state courts to litigate liability and damages in thousands of separate cases against non-debtor, non-released parties. When the Supreme Court issues its decision, likely prior to the end of the current term on 30 June 2024, all affected parties must be prepared to adapt and strategically leverage the decision to enhance their respective interests in ongoing and future bankruptcy cases.

Law firm diversity after Students for Fair Admissions

On 29 June 2023, in Students for Fair Admissions v Harvard, the Supreme Court rejected admissions programmes used by Harvard College and the University of North Carolina that considered applicants’ races. Although the Court did not directly overturn its precedent that achieving diversity could be a compelling basis for the positive consideration of race, the decisions rejected the justifications and procedures used by Harvard and UNC.

Specifically, the Court held that the Harvard and UNC programmes violated the Equal Protection Clause because they used race as a negative (eg, against Asian applicants) and stereotyped candidates (eg, into certain viewpoints). The Court further held that the justifications provided by the universities (eg, achieving new knowledge through diverse opinions) were too indefinite to be evaluated under the strict scrutiny standard required for race-conscious decisions, and the criteria used were both overinclusive and underinclusive to meaningfully address the stated goals. Accordingly, the Court found that such programmes lacked meaningful oversight and an identifiable end point.

Risks to certain law firm fellowship programmes

Many law firms in the US have recognised a benefit to increasing the diversity in their workforce, citing reduced operational costs, increased profits and an enhanced firm reputation. Some law firms have employed Diversity, Equity and Inclusion (DEI) initiatives that include race-conscious fellowship and scholarship programmes. Students for Fair Admissions portends an increase in litigation around such programmes. Indeed, less than one month following the Court’s decisions, the American Alliance for Equal Rights filed federal actions in Texas and Florida against two law firms (Perkins Coie and Morrison Foerster), taking aim at their diversity fellowships. Subsequently, five state attorneys general sent a letter to the top 100 law firms, claiming that DEI programmes, initiatives and fellowships are discriminatory practices “unambiguously in tension with employer legal duties under state and federal law”. Accordingly, many law firms are considering changes to their scholarship and fellowship programmes in order to remain compliant with federal and state law.

Law firms are adjusting approaches to DEI

While Students for Fair Admissions should give firms caution in how they advance efforts to increase diversity, the decision ultimately impacts only a small portion of the efforts law firms have historically used to achieve diversity. Law firms may still provide scholarships and fellowships, and the Supreme Court has recognised that, at least in the educational context, applicants may be encouraged to discuss how race has affected their lives, when tied to a quality of character or unique ability that the particular applicant can contribute to the firm.

Therefore, Perkins Coie announced that its diversity fellowship will be open to all students and that it will evaluate applicants based on their efforts to advance DEI in their community and the legal profession. Similarly, Morrison Foerster removed the requirement that its fellowship applicants be members of historically underrepresented groups, instead requiring that applicants “bring a diverse perspective to the firm” via adaptability, cultural fluency, resilience and life experiences.

Other tools are available to firms to promote diversity that are not proscribed by Students for Fair Admissions, including:

  • establishing DEI committees and teams to support a diverse firm culture through networking, mentoring and career development;
  • promoting mentorship programmes that allow the firms to connect with and assist students in underprivileged communities;
  • achieving a broad applicant pool by recruiting at a diverse range of law schools;
  • highlighting the achievements of partners and associates of diverse backgrounds in firm marketing; and
  • training employees on unconscious biases, in accordance with local laws, that may limit opportunities for diverse employees and applicants.

Students for Fair Admissions does not signal an end to DEI programmes at law firms; rather, law firms can continue to comply with the law while promoting diversity and strengthening their business and work culture.

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