Litigation and enforcement in United States: overview
A Q&A guide to dispute resolution law in the United States.
The country-specific Q&A gives a structured overview of the key practical issues concerning dispute resolution in this jurisdiction, including court procedures; fees and funding; interim remedies (including attachment orders); disclosure; expert evidence; appeals; class actions; enforcement; cross-border issues; the use of ADR; and any reform proposals.
To compare answers across multiple jurisdictions visit the Litigation and enforcement Country Q&A tool.
This Q&A is part of the global guide to dispute resolution. For a full list of jurisdictional Q&As visit www.practicallaw.com/dispute-guide.
Main dispute resolution methods
Large commercial disputes are usually adjudicated in the adversarial US civil court system. The basic framework for litigation is consistent throughout the US, and typically commences when an aggrieved party (the plaintiff) files an action against another party allegedly responsible for the injury (the defendant). The litigation process consists of the following general stages:
Unlike the US criminal justice system, where the prosecution must prove guilt beyond a reasonable doubt, the civil justice system normally requires a claimant to meet the much lower "preponderance of the evidence" standard, which requires a claimant to demonstrate that each element of the claim is more likely than not to be true. Certain causes of action require an intermediate "clear and convincing evidence" standard when the interests at stake concern more than monetary damages.
Litigants to a civil action have a constitutional right to a trial by jury where money damages are sought, but parties can stipulate to a "bench trial" before the judge alone. There is no right to a jury trial for claims in equity, such as claims seeking injunctive relief. The vast majority of civil cases filed in the US are resolved pre-trial by dispositive motions (such as motions to dismiss and motions for summary judgment) or settlement.
Alternative dispute resolution (ADR)
As an alternative to the civil court system, parties can agree to resolve claims through ADR methods, the most common of which are arbitration and mediation (see Question 30). ADR has become increasingly prevalent mainly because of the high costs and prolonged timelines common in civil court adjudication. The US Government and most states have passed legislation either requiring courts to establish ADR methods or enforce ADR judgments (see for example the Federal Arbitration Act (FAA), 9 USC §§ 1 et seq and Article 75, New York Civil Practice Law and Rules (CPLR)).
Claimants must generally file claims in federal or state court within a statutorily prescribed period of time. These statutes of limitation generally begin to accrue on the occurrence of one of two events:
The date the injury occurred.
The date the plaintiff discovered or should have reasonably discovered the injury.
Statutes of limitation differ between jurisdictions and causes of action. For example, New York requires claimants to file breach of oral or written contract claims within six years of the date of the breach, whereas California requires filing within four years of the breach for a written contract, and two years for an oral contract. Federal statutes prescribe a limitations period for private rights of action arising under federal law.
Defendants often rely on statutes of limitation to bar causes of action. However, if a defendant does not raise such a defence by motion or in its responsive pleading, (Rule 12(b), Federal Rules of Civil Procedure (FRCP)) it may be deemed waived (Rule 8, FRCP).
Many jurisdictions also suspend or "toll" statutory time limits where equitable, such as when a defendant has misled the plaintiff or where the plaintiff was unable to file a claim due to extraordinary circumstances.
Federal and state courts share a general litigation framework, but there are important jurisdictional differences.
Federal courts are courts of limited jurisdiction, meaning the court can only hear a civil claim where there is:
A federal question: at least one of the causes of action is predicated on the US Constitution or a federal law or treaty (28 USC § 1331).
Diversity jurisdiction: the parties are citizens of different states or one party is a US citizen and the other a foreign citizen, and the amount in question exceeds US$75,000, excluding interest and costs (28 USC § 1332). For diversity purposes, a corporation that is a party is deemed to be a citizen of any state by which it has been incorporated and of any state where it has its principal place of business.
State civil court systems generally hear claims for monetary and equitable relief. Depending on the jurisdiction, a court may also specialise in certain causes of action. For example, New York's Commercial Division of the Supreme Court (the trial court) addresses disputes concerning breach of contract or fiduciary duty, fraud, misrepresentation, and business torts. Delaware, known for its well-established body of business law, maintains a Court of Chancery dedicated solely to adjudicating equitable claims and a Superior Court that hears civil monetary claims, including a Complex Commercial Litigation Division.
The answers to the following questions relate to procedures that apply in US federal and state courts.
Rights of audience
Rights of audience/requirements
If a large commercial dispute is filed in a state court, any lawyer licensed to practice in that state can provide legal representation. State licensing requirements generally include graduation from an accredited law school, a satisfactory score on the state-recognised bar examination and formal admission by the state licensing authority. If the dispute is filed in a federal district court, a lawyer must also be admitted to practice in that federal district. Federal court admissions generally require a state licence and an application and oath administration.
Lawyers licensed in a state other than where the state or federal action is pending or who are not admitted to the state or federal district court can seek admission "pro hac vice" to serve as counsel in that pending matter. Depending on the jurisdiction, in-state counsel or a lawyer admitted in that federal district may be required to sponsor the application.
Litigants are also entitled to pro se legal representation.
Lawyers licensed to practice law in foreign countries who are not licensed in a US state cannot provide advice concerning the law of any US jurisdiction. Some states, including New York, permit foreign-licensed attorneys to obtain licences to provide legal consultation regarding the laws of the foreign jurisdiction in which they are licensed (NY Judiciary Law § 53; N.Y. Court of Appeals Rules, Part 521).
Fees and funding
Known as the "American Rule," US litigants are generally responsible for paying their own legal fees. However, a prevailing party may recover attorneys' fees in certain causes of action, such as civil rights or consumer protection actions (see Question 22).
The fee arrangement between a lawyer and a client may vary depending on the client and the cause of action, but a lawyer must not charge or collect an excessive fee. Each jurisdiction's rules of professional conduct provide guidance on appropriate fee arrangements, and should be consulted. Common fee structures in large commercial disputes include the following:
Contingency fees, where a lawyer receives as payment a percentage of the proceeds recovered.
Flat fees, where a lawyer accepts an agreed-on payment before serving as counsel.
Generally, the client pays the costs associated with litigating a cause of action. Alternative fee arrangements, such as contingency fees, may be used in actions where a client is unable or unwilling to pay litigation costs. A lawyer is ordinarily permitted to advance the costs and expenses of litigation where repayment is contingent on resolving the matter, but lawyers are prohibited from advancing non-litigation expenses to clients in nearly all states.
Third-party funding refers to financing for a party's legal representation provided by a non-party, such as an insurance company, bank, or hedge fund. If the funded party is a plaintiff, the third party may require a percentage of the proceeds recovered or a multiple of the funds invested. Alternatively, if the funded party is a defendant, an agreed-on periodic payment or payment on successful defence of the claims may be required. Third-party funding has become increasingly common in US litigation and arbitration, with some institutional investors even specialising in third-party funding. A funder's role in the litigation can vary depending on the ethical rules adopted in a given jurisdiction, especially concerning a funder's ability to control or otherwise influence a funded party's legal representation or lawyer.
Court proceedings in the US are generally public, including party filings, in-court hearings, trial, and judicial opinions. A party can petition a court to file an action under seal, but general policy favours public adjudication.
As an exception to this general policy, courts routinely enter protective orders to permit litigants to file personal or proprietary information under seal. Protective orders are often agreed to between the parties and entered by the court at or near the time discovery begins. A typical order sets out procedures for the type of information litigants can designate as confidential or highly confidential, who can access such materials, and how the parties can treat such information during litigation. Even without a protective order, both federal and state courts maintain procedures for filing documents containing sensitive or confidential information under seal or in redacted form.
Parties are not usually required to take any action before commencing litigation. One important exception to this general rule is that parties who reasonably anticipate litigation must take measures to identify and preserve documents and electronically stored information that are relevant to or may lead to the discovery of information relevant to the potential claims or defences. Failure to do so may result in severe sanctions, including adverse inference instructions, evidence preclusion, or even dismissal of the action. Important amendments to Rule 37(e) of the Federal Rules of Civil Procedure became effective on 1 December 2015, which establish new standards for preserving electronically stored information in all federal district court actions.
Another exception to the general rule may arise in actions against a municipal or state actor. Some jurisdictions, such as New York, require a party to serve a notice of claim on the state, municipality, and/or government agency before filing suit. Failure to do so may result in dismissal of the case.
A party commences an action in federal or state court by filing a complaint against an opposing party (Rule 3, Federal Rules of Civil Procedure). The complaint must set out a "short and plain statement" of factual allegations that, if accepted as true, would provide sufficient bases for proving the asserted causes of action, demand the relief sought, and generally include the bases for the court's jurisdiction (Rule 8, FRCP).
A party must meet a heightened standard when pleading certain causes of action, such as fraud or mistake. In those instances, federal rules require litigants to plead factual allegations with "particularity" (Rule 9(b), FRCP).
Notice to the defendant
Proper service of process is essential to filing a valid claim. Federal courts require a plaintiff to serve on the defendant a copy of the complaint and a summons within 90 days after the complaint is filed, unless a defendant waives service or the court extends the time limit. Rule 4 of the FRCP sets out the methods for proper service on a defendant located in the US, including:
Delivering a copy of the process directly to the defendant personally.
Leaving a copy at the defendant's home with another adult resident who lives with the defendant.
Delivering process to the individual or corporate defendant's appointed agent.
Any other method permitted under the law of the state where the district court is located or where service is made.
See Question 27 for methods of service on a defendant residing in the US for foreign proceedings.
The general stages of litigation include:
Responsive pleading. Within 21 days of being served with the complaint, a defendant must file a responsive pleading, known as an "answer," setting out the defences to each asserted claim and admitting or denying the factual allegations in the complaint (Rules 8 and 12(a), FRCP). The answer must also include any "affirmative defences" and counterclaims that arise from the same transaction or occurrence at issue in the complaint (Rules 8(c) and 13(a), FRCP). Subject to certain exceptions, a defendant that fails to raise such defences and counterclaims waives its right to do so.
If a defendant files a motion to dismiss, the answer is not due until 14 days after the motion is resolved (Rule 12(a)(4), FRCP).
Discovery. Discovery typically begins after initial pleadings have been filed and any motions to dismiss have been decided. The primary mechanisms for pre-trial discovery are as follows:
Interrogatories: up to 25 written questions can be served on any other party, which must be answered or objected to within 30 days after service (Rule 33, FRCP).
Document requests: requests for relevant, non-privileged documents can be served on an opposing party or by subpoena on a third party. The receiving party must respond within 30 days (Rules 34 and, 45, FRCP).
Requests for admission: requests for written statements served on any other party relating to facts, the application of law to facts or the genuineness of any document(s) to which a receiving party must respond within 30 days after service or the matter is deemed admitted (Rule 36, FRCP).
Parties are also permitted to depose experts regarding any opinions they intend to offer at trial (see Question 19).
Trial. Following the close of fact and expert discovery, parties generally submit pre-trial motions to exclude evidence, arguments, or testimony from trial. Trial typically commences soon after pre-trial motions are decided, and generally consists of four primary stages:
Opening statement: each party presents an overview of its case in a non-argumentative fashion.
Plaintiff's case in chief: the plaintiff presents evidence and testimony supporting its claims, subject to objection or cross-examination by the defendant.
Defendant's case in chief: the defendant submits evidence and testimony supporting its defences, subject to the plaintiff's challenges.
Closing statements: each party summarises the evidence and arguments submitted to the court and/or the jury.
After closing statements, the judge or jury determine whether the applicable standard of proof has been met and render a verdict.
A defendant can seek to dismiss any or all claims asserted in an initial pleading using the following motions:
Motion to dismiss. A party against whom claims have been asserted can file a motion to dismiss before submitting a responsive pleading. Grounds for dismissal may include the court's lack of jurisdiction over the claims or a party, or the plaintiff's failure to assert a claim for which the court may grant relief (Rule 12(b), Federal Rules of Civil Procedure (FRCP)). In deciding motions to dismiss, courts are typically limited to reviewing the facts and allegations in the initial pleading, including any exhibits thereto and must accept them as true.
Motion for judgment on the pleadings. If a responsive pleading has been entered, any party can move the court for a judgment on the pleadings (Rule 12(c), FRCP). On such a motion, the court can issue a decision based on the pleadings and any public information of which the court takes judicial notice.
Motion for summary judgment. A motion for summary judgment can be filed at any time prior to 30 days before trial, but is typically filed after the close of discovery (Rule 56, FRCP). Courts can consider facts outside the pleadings, such as documents produced in the course of litigation, affidavits, and deposition testimony. Either party can move for summary judgment against any or all of the claims and defences at issue. Many courts require the parties to submit statements of uncontested facts to the court in determining whether there is a genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.
Plaintiffs are not generally required to provide a security for the defendant's costs. One important exception is when a party moves for provisional relief (see Questions 12 and 13). If the provisional relief is granted, the moving party may be required to provide an undertaking that would adequately compensate the defendant for damages suffered as a result of the injunction in the event the non-moving party is wrongfully restrained or enjoined.
Availability and grounds
Provisional remedies, such as temporary restraining orders (TROs) and preliminary injunctions, are available if a moving party can show the following:
A likelihood of success on the merits of the underlying claim.
The balance of equities weighs in favour of the moving party.
Courts can also consider whether the injunction would serve the public interest. TROs and preliminary injunctions are generally available to maintain the status quo while the court adjudicates the underlying issues, and are often filed at or near the time litigation is commenced. Notably, TROs in federal court are limited to 14 days without a court order or stipulation (Rule 65(b)(2), Federal Rules of Civil Procedure), whereas state courts may extend the time period until the motion for a preliminary injunction is heard.
Parties can seek a TRO without prior notice to the defendant in both federal and state courts. A moving party must generally submit an affidavit explaining the reasons for submitting an application without notice to the defendant, and may be required to show that significant prejudice would result if prior notice were required to be given to the defendant.
However, preliminary injunctions generally require notice to all parties. The rationale underlying this differing treatment is that a TRO is generally used to maintain the status quo until the court can decide the motion for a preliminary injunction. A defendant is typically given advance notice to prepare and submit filings in opposition to the motion for a preliminary injunction.
Preliminary injunctions are most commonly prohibitory (that is, intended to maintain the status quo). Mandatory preliminary injunctions (requiring a party to act) may also be available, but often require the moving party to make a higher showing of need. For example, the Second Circuit Court of Appeals requires a party to make a "clear showing" that the moving party is entitled to a mandatory injunction, or show that "extreme or very serious damage will result from a denial of preliminary relief" (Fishman v. Paolucci, 628 F. App’x 797, 800 (2d Cir. 2015)).
Right to vary or discharge order and appeals
The right to appeal against provisional relief generally depends on the type of relief sought and the jurisdiction. For example, a party in federal court ordinarily cannot immediately appeal the determination of a TRO, regardless of whether the TRO was issued without notice to the non-moving party. A non-movant can, however, immediately appeal decisions on a motion for a preliminary injunction (28 USC § 1292(a)(1)). Some state courts recognise an immediate right to appeal decisions on both motions for a TRO and a preliminary injunction.
Availability and grounds
Interim attachment orders are generally available to prevent a party from transferring, removing, or otherwise disposing of a debt or property to ensure satisfaction of a final judgment. In deciding these orders, federal courts apply the law of the state where the case is filed, unless a governing federal statute exists (Rule 64, Federal Rules of Civil Procedure). State requirements vary between jurisdictions, but often include a likelihood of success on the moving party's underlying claims.
Attachment orders can be granted without notice and sometimes on the same day if a moving party can demonstrate a strong showing of need.
Attachment orders are generally limited to debt or property within the jurisdiction of the court. An exception may exist where the debtor or property owner has personally submitted to the jurisdiction of the court (Hotel 71 Mezz Lender LLC v. Falor, 926 N.E.2d 1202, 1207 (N.Y. 2010)).
Preferential right or lien
Attachment orders create a lien in favour of the claimant over the debt or property that is the subject of the attachment.
Damages as a result
A claimant can be held liable for damages suffered by the non-moving party if the court determines that the debt or property was wrongfully attached.
A moving party is generally required to provide an undertaking that would compensate the non-moving party for costs and damages sustained if the court determines that the debt or property was wrongfully attached.
Depending on the jurisdiction, other remedies may be available as interim relief, including (Rule 64(b), Federal Rules of Civil Procedure):
Garnishment: an order requiring a third party to pay money to a claimant that otherwise would have been paid to the non-claimant.
Replevin: an order requiring a non-claimant to return personal property that was wrongfully held or taken.
Receivership: the appointment of a third-party receiver to take temporary possession of a party's property.
Notice of pendency: an order establishing a lien over real property that is the subject of the action to ensure the satisfaction of a judgment at trial.
Depending on the cause of action, the following remedies may be available to a claimant following trial:
Declaratory judgment: setting out the individual rights of the parties.
Damages: monetary compensation, restitution to put a party in the position it would have held absent the violation, or disgorgement of funds that were wrongfully obtained.
Coercive remedies: injunctive relief (both prohibitory and mandatory), including specific performance of a contract.
Punitive damages may also be available in cases where a party's conduct is deemed worthy of punishment.
If damages or loss is an element of a pleaded claim, the claimant generally must show by a preponderance of the evidence that it actually suffered the loss. However, monetary damages awarded by a judge or jury will stand unless the award is unsupported by the evidence presented.
US courts favour broad discovery. Litigants in federal courts must disclose certain information even before receiving a request for disclosure from the opposing party, including a copy or description by category and location of all documents, electronically stored information, or other tangible evidence that the disclosing party has in its possession and may use to support its claims or defences (Rule 26(a), Federal Rules of Civil Procedure (FRCP)).
Document disclosure also occurs in response to requests for documents and electronically stored information served by an opposing party. In response, parties must produce relevant, non-privileged evidence. Litigants can also seek documents from non-parties to an action by serving on them a subpoena "duces tecum" for production of evidence (Rule 45, FRCP).
Relevance and privilege
Discoverable evidence is construed broadly to include any evidence relevant to a party's claims or defences, and need not be admissible at trial if it appears reasonably likely to lead to the discovery of admissible evidence. Amendments to Rule 26(b)(1) of the FRCP, which became effective on 1 December 2015, further require discoverable evidence to be "proportional to the needs of the case," based on factors such as the importance of the issues at stake in the action, the amount in controversy and the parties' resources, among others.
A party can withhold from production documents protected under a recognised privilege. However, a withholding party must provide the requesting party a "privilege log" containing a general description of each document withheld and identifying the applicable privilege (Rule 26(b)(5), FRCP). See Question 17.
Timeline and procedure
The timeline for responding to document requests can be agreed on between the parties, established by a court order, or governed by rules or local procedure. Federal rules require a party to respond to a document request in writing within 30 days of service (Rule 34, FRCP). Failing to comply with a discovery request or a court order can result in sanctions, including monetary fines or even dismissal in severe cases.
In large commercial disputes, courts may be more inclined to establish discovery protocols governing the categories of documents that must be produced and the format for production. These issues are particularly important where large-scale electronic discovery is at issue, as evidenced by the court's increasing role in establishing preservation measures related to electronic discovery early in litigation (see 2015 amendments to Rule 16(b)(3)(B) and Rule 26(f)(3)(C) of the FRCP).
Courts in all US jurisdictions recognise a litigant's claim of privilege over documents that are:
Attorney-client communications. The attorney-client privilege extends to oral and written communications between an attorney and the client made in confidence and for the purpose of obtaining legal advice. This privilege belongs to the client, and a lawyer is therefore not permitted to waive it. A corollary to the attorney-client privilege is the joint defence privilege, which permits litigants with a common interest, such as a joint defence or strategy, to share otherwise privileged communications without waiving the attorney-client privilege.
Attorney work product. The doctrine of attorney work product affords privilege to any materials prepared by an attorney or at the direction of an attorney in anticipation of litigation or trial. This applies to materials drafted by in-house counsel, provided such materials relate to anticipated or actual litigation. The rationale underlying the privilege of attorney work product is to protect from discovery information critical to the legal strategy and preparation of a case. It is important to note that attorney work product is a qualified privilege that another party may overcome by showing a substantial need and that the information is otherwise unavailable.
Subject to certain exceptions, courts also recognise that settlement negotiations and offers of settlement are not admissible to support to either parties’ claims or defences (Rule 408, Federal Rules of Evidence).
Other non-disclosure situations
An attorney is typically barred from disclosing documents that contain confidential information, such as personal identifying information or proprietary information. The designation and treatment of confidential information is often governed by a protective order entered by the court. Where disclosure of certain information would result in serious economic injury to a party, such as a trade secret, a court may determine that the information does not need to be disclosed in the litigation. See Question 7.
Examination of witnesses
Fact witnesses are generally permitted to submit evidence either orally or in writing. During pre-trial proceedings, for example, a fact witness may submit an affidavit in support of a motion or testify at deposition (Rule 30, Federal Rules of Civil Procedure (FRCP)). Although live testimony at trial is preferred, an unavailable witness's deposition testimony can be used for any purpose at trial (Rule 32, FRCP; Rule 804(b)(1), Federal Rules of Evidence).
Right to cross-examine
Fact witnesses testifying during deposition or at trial are subject to cross-examination. A judge during trial may examine a party witness, but the judge may not assume the role of an advocate (Rule 614, Federal Rules of Evidence). Although a fact witness can provide direct testimony by written statement in some instances, the witness would still be subject to live cross-examination during trial. Cross-examination is generally limited to the scope of the direct examination or issues related to the witness's credibility.
Third party experts
The parties to an action generally retain their own experts. Courts usually require a party who intends to offer expert testimony at trial to disclose the identity of the expert prior to trial. At the time of disclosure, the expert must provide a written report containing the following (Rule 26(a)(2), Federal Rules of Civil Procedure):
All the opinions the expert intends to offer at trial.
The facts or data considered by the expert in forming the opinion.
Any summary exhibits supporting the expert's opinion.
The expert's qualifications, including a list of all publications offered in the preceding ten years.
A list of all cases in which the expert has testified in the preceding four years.
A statement detailing the compensation the expert is receiving in exchange for the testimony.
Role of experts
The role of an expert varies depending on the cause of action and the circumstances of each case. Experts can be retained to give their opinion on industry practices, a plaintiff's damages, or to analyse specific evidence, such as handwriting or metadata. However, experts in large commercial disputes generally offer opinions in support of the legal theories advanced by the party that has retained them.
Right of reply
Experts are generally subject to cross-examination during deposition and trial. At deposition, the opinions expressed in the expert's written report are usually the focus of inquiry. The written report may not be admissible at trial, requiring an expert to express his/her opinions during live testimony.
Parties generally pay for their own expert fees. Expert fees, like lawyer fees, are not treated as normal costs of litigation. However, a party can recover the costs associated with expert retention under an agreement or to the extent permitted by statute or other rule. California's Fair Employment and Housing Act, for example, permits a prevailing plaintiff to recover expert fees at the court's discretion.
A party is generally entitled to appeal a final judgment of the trial court to an appellate court of competent jurisdiction. In federal courts, district court judgments are appealed to the regional circuit court of appeals. In state courts, appeals of first instance judgments are generally made to an intermediate appellate court.
Grounds for appeal
The recognised grounds for appeal are broad and can concern a trial court's mistaken or inadequate application of law, finding of fact, admission of evidence, or procedural determination. A party can appeal certain evidentiary and procedural issues raised during trial, provided the issues are adequately preserved by objecting on the record and securing a ruling.
A party may not have to seek relief in an appellate court, as certain procedural rules permit the trial court to grant a party relief in the first instance. For example, a court can grant a motion for judgment as a matter of law before the case is submitted to the jury where no reasonable jury would have a legally sufficient evidentiary basis to find for the party on that issue (Rule 50, FRCP). A trial court can also grant a new trial on all or some of the issues determined by either the judge or jury during trial (Rule 59, Federal Rules of Civil Procedure (FRCP)). A motion for a new trial must be made within 28 days after entering judgment.
The time limit in which a party can appeal a final judgment to an appellate court varies depending on the jurisdiction. The Federal Rules of Appellate Procedure (FRAP) require a party to file a notice of appeal within 30 days after the entry of a judgment (Rule 4, FRAP). State courts vary as to when a litigant must file a notice of appeal.
Federal and state courts permit litigants to file claims on behalf of a class of individuals. In federal court, a judge must certify a class to ensure that the rights of each class member are adequately represented and adjudicated. Certification requires a class plaintiff to show the following (Rule 23(a), Federal Rules of Civil Procedure (FRCP)):
Numerosity: the class is so numerous that joinder of claims would be impossible.
Commonality: questions of law or fact are common among the class members.
Typicality: class representatives assert claims and defences that are typical of the class.
Adequacy: class representatives will fairly and adequately protect the interests of the class.
If the class seeks money damages, federal courts also require that common questions of law or fact predominate over any questions concerning individual members, and that the class action is superior to other available methods for fairly and efficiently adjudicating the matter (Rule 23(b)(3), FRCP). Most states have adopted rules governing class action lawsuits consistent with the federal rules.
Class members are generally required to request exclusion from the suit (or "opt out") to preserve the right to independently adjudicate their claims against a defendant. Many class action lawsuits also require class members to submit a claim to a monetary settlement or award.
Class action litigation is often funded by the lawyers providing legal representation to the class plaintiffs, but class members may self-finance the litigation in some cases. Third parties can also fund the litigation (see Question 6).
Although parties to litigation are generally required to pay their own attorneys' fees, courts are encouraged to award the costs of litigation to a prevailing party unless otherwise barred by statute. In federal actions, costs generally include fees of the clerk, witness fees, and general administrative costs (28 USC § 1920). Witness fees are limited to US$40 per day (28 USC § 1821).
Fee-shifting statutes may also permit a prevailing plaintiff to recover the costs of litigation as well as attorneys' fees. These include statutes governing violations of civil rights, anti-trust laws, and consumer protection laws. A prevailing defendant is typically only entitled to attorneys' fees where a plaintiff is found to have filed a frivolous claim.
Courts can control costs by virtue of their ability to control litigation proceedings. For example, witness fees are directly related to the time a judge permits each witness to be questioned and the number of witnesses a judge permits to testify.
A prevailing party is usually entitled to an award of post-judgment interest on a money judgment (28 USC § 1961). However, awards of pre-judgment interest differ between jurisdictions and may be limited to specific causes of action. The interest rate applied also varies between jurisdictions, but is typically designated by statute.
Pre-judgment interest is usually calculated based on the interest accrued from the time the claim arose until the date the money judgment is entered. Post-judgment interest accrues from the date the money judgment was entered until the appeal is affirmed. Where an appellate court modifies or reverses a money judgment, the court normally provides instructions on whether interest is allowed (Rule 37, Federal Rules of Appellate Procedure).
Enforcement of a local judgment
The procedures to enforce a local judgment may differ depending on the type of judgment awarded and whether a statute expressly prescribes the available enforcement procedures.
Unless the court directs otherwise, federal and state monetary judgments are enforced by issuing a writ of execution consistent with the procedures adopted in the state where the court is located. Generally, writs of execution require local law enforcement to seize qualifying real and personal property, which is subsequently sold and the proceeds delivered to the prevailing party in satisfaction of the judgment. Federal statutes govern federal monetary awards to the extent applicable (Rule 69, Federal rules of Civil Procedure (FRCP)).
A litigant can also enforce mandatory injunctive relief by moving the court to appoint a third party to perform the mandated action at the non-compliant party's expense, or even by holding the non-compliant party in contempt of court (Rule 70, FRCP).
State and federal courts routinely apply the parties' choice of law in a contract, even where the law is that of a foreign jurisdiction. Exceptions to this general rule may apply where the chosen law has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the choice, or the chosen law conflicts with fundamental public policy (Restatement (Second) of Conflict of Laws § 187(2)). Public policy areas that can override a choice of law provision include consumer contracts and securities regulation.
Courts generally uphold parties' choice of jurisdiction in a contract, subject to certain exceptions (see Question 25).
A defendant located in the US can be served with process in connection with a foreign proceeding in several ways:
Requesting service through the US Office of International Judicial Assistance pursuant to the 1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (see website, www.hcch.net).
Requesting service through a federal district court located in the district where the defendant resides (28 USC § 1696(a)).
Evidence in the possession of a party residing in the US can be obtained for use in a foreign proceeding through several mechanisms:
The US Office of International Judicial Assistance is tasked with executing requests for evidence in foreign proceedings under the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (see website, www.hcch.net).
A federal district court located in the district where the defendant resides can order the defendant to produce evidence on a letter rogatory issued or a request made by an interested party or a foreign tribunal (28 USC § 1782(a)).
Where such evidence can be voluntarily obtained from the defendant (28 USC § 1782(b)).
The evidence sought need not be discoverable in the foreign jurisdiction, nor must a foreign proceeding even be pending or imminent (Intel Corp v Advanced Micro Devices, Inc., 542 US 241, 258-62 (2004)).
Enforcement of a foreign judgment
Although the US is not a party to a convention or treaty providing for the enforcement of a foreign judgment, federal and state courts routinely enforce such judgments. Federal and state courts generally apply the procedures adopted in the state where enforcement is sought, which, depending on the state, is set out in one of the following:
The 1962 Uniform Foreign Money-Judgments Recognition Act.
The 2005 Uniform Foreign Country Money-Judgments Recognition Act.
The Restatement (Third) of Foreign Relations Law's provisions on foreign judgment recognition.
Generally, enforcement requires:
Filing an action against the judgment debtor in a US court.
Establishing jurisdiction over the debtor or its property.
Presenting evidence of a final foreign judgment rendered against the judgment debtor (see Rule 44, Federal Rules of Civil Procedure).
However, there is a well-established mechanism for enforcing foreign arbitral awards, as the US is a signatory to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, which has been enacted into Chapter Two of the Federal Arbitration Act.
Alternative dispute resolution
Arbitration and mediation are the two most common forms of ADR employed in resolving large commercial disputes.
Arbitration is a trial-like proceeding during which the parties present evidence and testimony to one or more arbitrators, who issue a binding decision called an "award." The award is enforceable in federal and state courts. Depending on the dispute, federal or state laws may govern the arbitration proceedings. However, the Federal Arbitration Act pre-empts conflicting state law. Arbitration has become increasingly common in large commercial disputes due to contract clauses designating arbitration as the sole means of adjudicating a dispute; however, the vast majority of civil litigation is commenced in the state or federal court system. In certain circumstances, federal courts can also refer cases to arbitration, with the consent of the parties (28 USC § 654).
Mediation is a voluntary and confidential process by which a neutral third party, often a former judge or highly experienced attorney, brokers discussions between parties to a dispute. The parties ordinarily submit papers to the mediator detailing the causes of action, procedural history, and facts supporting their claims. The mediator does not issue a binding decision, but seeks to assist the parties in reaching an agreeable resolution. Parties can seek mediation before filing an action in a civil court or at any point while an action is pending.
Other ADR processes, although less common, include:
Early neutral evaluation, which usually requires disputing parties to submit their case to a neutral evaluator, who considers each side's position and renders a non-binding evaluation of the case.
A minitrial, in which disputing parties present a summarised case to a panel of officials, some of which are advocates for the parties and one of which is a neutral party. The neutral panel member then issues a non-binding opinion on the facts and law.
All federal courts offer some form of ADR pursuant to the Alternative Dispute Resolution Act (28 USC §§ 651 et seq). However, courts do not generally compel parties to a large commercial dispute to use ADR. Even where parties consent to arbitration while a case is pending, a federal court can only permit arbitration under certain conditions, such as where constitutional violations are not at issue and the amount in controversy is less than US$150,000 (28 USC § 654). Some state courts mandate ADR, such as the Delaware Superior Court (Del Sup Ct CR 16), and other courts are experimenting with compulsory ADR programmes.
There are no mandatory rules concerning the presentation of evidence in ADR, and procedures are generally set out in the relevant agreement between the parties. However, ADR is generally confidential.
While parties to an arbitration present documents and testimony to an arbitrator, such proceedings normally do not involve pre-hearing depositions or unduly burdensome discovery requirements. Mediation, on the contrary, typically involves only a presentation of summaries of arguments and evidence to the mediator.
The Federal Arbitration Act does not address the confidentiality of arbitral proceedings, and questions of privacy and confidentiality are generally left to the parties' agreement and the arbitration rules the parties select.
Due to the nature of non-binding ADR, parties generally pay their own costs. Where a binding decision is issued, such as in arbitration, parties can expressly agree in contract or invoke institutional rules that arbitrators can award fees at the end of the proceedings. Arbitral awards that impose fee shifting are routinely upheld by US courts, despite the usual hostility to fee shifting in ordinary civil litigation.
The following arbitration organisations are commonly used to administer large commercial arbitrations in New York:
The American Arbitration Association (AAA) (www.adr.org).
The Institute for Conflict Prevention and Resolution (CPR) (www.cpaadr.org), which maintains its headquarters in New York.
JAMS (www.jamsadr.com) which, although headquartered in California, has a New York office and a roster of potential arbitrators and mediators in the New York area.
The Financial Industry Regulatory Authority (FINRA) (www.finra.org/ArbitrationAndMediation). FINRA operates the largest dispute resolution forum in the securities industry to assist in the resolution of monetary and business disputes between and among investors, brokerage firms and individual brokers. It is used primarily in domestic cases.
Proposals for reform
Courts are increasingly willing to refer or mandate cases for ADR. For example, while the New York State Supreme Court ended its pilot programme mandating mediation for certain civil litigants in February 2016, judges there continue to consider seriously each case for mediation under the traditional, mandatory mediation referral programme. Furthermore, the US Congress has periodically considered various amendments to the Federal Arbitration Act (FAA), but so far no such efforts have succeeded, and no substantial changes to the FAA are reasonably expected in the near future.
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Hague Conference on Private International Law (HCCH)
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Tai-Heng Cheng, Partner
Quinn Emanuel Urquhart & Sullivan LLP
Professional qualifications. JSD, Yale Law School (2004); LLM, Yale Law School (2000); admitted in New York; US Courts of the Southern District of New York, Eastern District of New York, Western District of New York;US Court of Appeals for the Second Circuit.
Areas of practice. Construction litigation; domestic US arbitration; energy sector disputes; government contracts litigation; international arbitration; litigation representing plaintiffs; real estate litigation; transnational litigation; white collar and corporate investigations.
Non-professional qualifications. BA in Law, First Class Honours, Oxford University (1999); MA, Oxford University (2004).
Represented an NYSE-listed international company in simultaneous regulatory investigations, a class action lawsuit in California, and a lawsuit against short sellers in New York.
Represented a leading Indian real estate company and a New York real estate company in a petition to confirm an arbitration award and related 28 USC § 1782 petition for discovery in aid of foreign proceedings, respectively; successfully opposed attachment and injunctive relief and discovery.
Represented Progas and former Iraqi Oil Minister Ali Allawi in a US$600 million UNCITRAL arbitration against Pakistan concerning a gas investment.
Represented Spentex against Uzbekistan in a US$500 million ICSID bilateral investment treaty arbitration concerning the expropriation of cotton mills.
Represented a London and Portugal hedgefund against Société Générale in a JAMS arbitration, winning full damages and 90% of fees and costs.
Represented an Asian real estate company against Whitehall (Goldman Sachs) and Hines in a US$1.4 billion arbitration dispute in the US, achieving a favourable settlement.
Represented a Korean insurance company in a US$60 million LCIA arbitration against Goldman Sachs, achieving a favourable settlement before the hearing.
Represented a sovereign wealth fund in a petition and appeal to compel a US$1 billion arbitration, winning at both stages.
Represented a power company in the worldwide enforcement of a US$600 million judgment concerning a hydroelectric project in Albania, involving legal actions in multiple countries.
Represented a sovereign wealth fund in a US$5 billion dispute involving commercial mortgage backed securities, achieving a swift and favourable business solution.
Represented a CFO in an eight-week federal white collar trial and appeal concerning a US$50 million fraud, obtaining a sentence of one day time-served and no restitution.
Represented a Taiwanese banker facing white collar crime charges in US federal courts relating to a US$1.7 billion accounting fraud in Japan.
Represented multiple sovereign wealth funds against the US Department of Justice (DOJ) concerning the 2008 financial crisis, achieving no action by the DOJ and no publicity.
Represented the Republic of Poland against a gun seller supported by the National Rifle Association in a lawsuit in the Eastern District of Virginia concerning a rare World War I rifle, resulting in the repatriation of the rifle to Poland.
Languages. English, Mandarin
College of Commercial Arbitrators Fellow: 2014-present.
American Society of International Law Executive Council: 2010-2013; Chair Awards Committee: 2011; Co-chair Annual Meeting: 2011; Chair Awards Committee: 2011.
American Law Institute Elected Member: 2009-present, Members Consultative Committee on Restatement on International Commercial Arbitration, 2009-present; Members Consultative Committee on Principles of World Trade Organization Law, 2009-present.
American Bar Association Steering Committee, Arbitration, 2012-present. International Law Section, 2009-present.
American Bar Foundation Fellow: 2011-present.
Foreign Policy Association Honorary Fellow: 2007-present.
Standing Committee on International Dispute Resolution, 2006-2009, 2013-present.
Publications. Over 60 books and articles, including:
International Arbitration in the US (Kluwer Law International, forthcoming, 2014) (co-editor).
When International Law Works (Oxford University Press, 2012).
State Succession and Commercial Obligations (BRILL, 2006) (cited as authoritative by US courts).
State Incapacity and Sovereign Immunity in International Arbitration, Singapore Academy of Law Journal, Special Issue on Arbitration (2014).
Finality & Justice in ICSID Annulments, 31 Berkeley J. Int'l L. 263 (2013).
Why New States Accept Old Obligations, 2011 U. Ill. L. Rev. 1 (2011).
Renegotiating the Odious Debt Doctrine, 70 L. & Contemp. Probs. 7 (2007) (cited as authoritative by US courts).
Precedent and Control in Investment Treaty Arbitration, in Investment Treaty Law: Current Issues III (BIICL, 2009), revising 30 Ford. J Int'l L. 1014 (2007), 5:3 Transnat'l Dispute Mgmt. (May, 2008).
Christopher Cook, Associate
Quinn Emanuel Urquhart & Sullivan LLP
T +1 212 849 7000
F +1 212 849 7100
Professional qualifications. JD, Fordham University School of Law (2012); admitted to practice, the State Bar of in New York and the State Bar of New Jersey; US District Courts of the Southern District of New York; Eastern District of New York; District of New Jersey.
Areas of practice. Commercial and financial litigation; securities; class actions; civil rights; environmental litigation and contract disputes. Focus on complex commercial and business litigation.
Recent Cases. Represented clients in high-profile securities litigations stemming from the 2008 financial crisis that resulted in numerous billion-dollar settlements and a trial victory.