Final case deliverable Baron Art Mart-2 PDF

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Business case prep document for Business Gateway. Professor Wayne Smith....

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Cover Letter To: Mr. Donald West From: Los Toros Consulting Date: March 26, 2019 Subject: Baron Art Mart, Inc.

Hello Mr. West, You will be pleased to find within this report a detailed evaluation of law and a statistical analysis incorporating principles of accounting and macroeconomics explaining where you stand in the case, your options, and our teams recommendations. Our talented team of skilled professionals have carefully and thoroughly analyzed all facts and issues related to the case and addressed all of the questions and concerns that you may have. On behalf of all of us here at Los Toros Consulting, thank you for giving us the opportunity to work with you-- we appreciate it tremendously. If you have any questions, please feel free to contact us.

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Executive Summary………………………………………………………… 1 Statistical Analysis………………………………………………………….. 2 Legal Analysis Concerning False Imprisonment………………………….... 6 Legal Analysis Concerning Negligence……………………………………. 11 Strategic Consideration…………………………………………………….. 14 Ethical Consideration………………………………………………………. 16 Recommendation…………………………………………………………… 18 Works Cited ………………………………………………………………… 19

Executive Summary The case study of Baron Art Mart arises from the issue that Susan Kim had to go through when she visited the store to purchase a calligraphy set for her daughter’s art project at school. The security had suspected Susan Kim of stealing a product from the store and pulled her to stop her from shoplifting. As she was standing up from the fall, many people in the store looked at her, which she felt extremely embarrassed. Also, she was forced to go to the Loss Prevention Room for a long time for the manager to arrive. After about an hour, Susan was found not guilty of shoplifting and was set free to go. Then she was sent to the Cedar Sinai Hospital emergency room due to an increasing back pain she was having. As she visited the hospital for few surgeries, she was notified that she was diagnosed with an abnormal degeneration of her spine, which is not curable and permanent. This meant that she can no longer work, so she quit her job. Susan Kim sent a mail to the company stating that she demands a compensation for not only past and future medical bills, but also for the future income that she would have earned if she worked. The statistical analysis of Susan Kim’s future income would be close to equivalent to how much she has earned in the past 15 years. She has earned about $378,604.61 in average during the past 15 years. Calculating the future, there is about 4% inflation in her income each year, which would increase the loss of future income.

Statistical Analysis Question 1: Determining Mrs. Kim’s real income According to online Statistics Education: A Multimedia Course of Study, project by David Lane, Mean is the average number find after adding all data and then divide it by the number data point. In order to determine Mrs. Kim real income for the past fifteen years, we used the data from Exhibit 3. First, by converting the price index by 100 to find the adjusted price index. Ex. 1991- Price index- 137.20/100= 1.3720 which is the adjusted price index. After defining the adjusted price index, we took the gross income divided to the adjusted price index to determine the real income, ex. 1991- Gross Income: $48,549.00/ 1.3720=$35,385.57. Once finding the real income for the fifteen years, we add them together and found the average or mean of $37,608.61 which means that Mrs. Kim average income for the past fifteen years was $37,608.61, this is helpful to know since it can be used to define her real income for the upcoming years. The data from exhibit 3, can be used as a tool to define other statistical data to approximately get an understanding of how to help Mrs. Kim compensation. Median is the middle number find after sorting the data from the smallest to the largest number. In this case, it was easy to define the median since it was an odd numbers data, however, if there were two middle numbers, the median would have been determined based on the mean of two numbers. Based on the data from Exhibit 3, the median is $37,525.98. After finding the median, we define the variance of the real income which used to define the spread between the data set and its mean value. The larger the variance, the larger the distance between the number sets and the mean, smaller variance number means the data sets are closer to the mean. In this data sets variance is $3,047,883.24 meaning that the variance is large and the distance spread is large between number sets and the mean value.

Can you use the mean income to forecast future earnings? Statistically, by using linear regression we can determine future earnings. Linear regression gives an idea of the economic change for each year and predictions of future earnings. Step one is to find the intercept. In order to find the Y-intercept which is also the price index. We need to identify the independent and dependent variable based on the data to understand the price change from the data given. Based on Exhibit 3, the year is the independent variable while the adjusted price index is the dependent variable. After finding the Y-intercept and slope, we can use the information for regression findings, (refer to excel), Price index equal intercept plus coefficient times year. Y=-79.02+ 0.040x, in other words we can predict that the inflation rate increases by 4% each year. Non statistical considerations include: unemployment, economy, change of career, promotion and bonuses. These factors can always change after seeing how to determine Mrs. Kim future earnings. Question 2: The coefficient of determination, also known as R-square determine the percentage spread between the independent and dependent variable, the perfect score for R-Square is 1 which also means that the independent and dependent variables are close to each other. Linear Regression Equation: Y= b0+b1*X1, or, Y= intercept + slope x independent variable. The Rsquare is 0.97, the adjusted price index and the year grow 97% closer to each other. In order to understand the decision making of the growing rate the price index, and make the assumptions about what could happen in the future. We use the hypothesis test, which includes the Null hypothesis or Alternative hypothesis. Null hypothesis makes an assumption that the observation is based on a chance factor meanwhile alternative hypothesis is the opposite to the null hypothesis and show that the observations are results of real effect. In this case, the Null

hypothesis is equal to 0 or no relationship and Alternative hypothesis is not equal to 0 or some relationship with the assumption of alpha being (ꭤ) 0.05. These three statistical methods are used to understand the outcome of P-value which would help conclude the final decision of either supporting the claim or not. P-value is a method used for calculation of the probability of findings. The P-value is -.000000000027 < 0.05, therefore, we reject the Null Hypothesis, meaning that there is no relationship between the data sets. Can you use the regression equation to predict the price indices? By looking at the base year price index from 1991, it shows that the general price level also known as price of all goods purchase during a period of time. In 1991, the price index was $137.20 which means the price have risen with 37.2 % since 1982-1984. Consumer price index filled with consumer goods including transportation, medical care, housing, food, entertainment. These factors of price index give an idea of price change and the cost of living, based on the information from the base year and the information from the regression results it is safe to determine that there were an inflation during 1991-2005 which caused the price to rise. Question 3: Accounting Analysis After examining the statistical analysis of Mrs.Kim we can begin to see the data that will determine the present value of her future income. Assuming the tax rate is 35% and we can determine what her gross rate would be if we multiply it by 65%. We begin with the mean which in this case being $37,608.61, and we multiply it by our adjusted price index. After this step is complete, we can now know figure out her gross income. We multiply gross income by percentage rate of 65% to find the net income (exhibit 3). The formula we used to find present value was net income/(1+interest)^n.

(Exhibit 3) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$45,882.50 $47,386.85 $48,891.19 $50,395.54 $51,899.88 $53,404.23 $54,908.57 $56,412.92 $57,917.26 $59,421.60 $60,925.95

122 126 130 134 138 142 146 150 154 158 162

1.22 1.26 1.30 1.34 1.38 1.42 1.46 1.50 1.54 1.58 1.62

$37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61 $37,608.61

$29,823.63 $30,801.45 $31,779.28 $32,757.10 $33,734.92 $34,712.75 $35,690.57 $36,668.39 $37,646.22 $38,624.04 $39,601.87

$28,336.00 $27,805.30 $27,256.98 $26,694.21 $26,119.76 $25,536.21 $24,945.90 $24,350.90 $23,753.22 $23,154.60 $22,556.51

Table 1- Present Value There can be multiple factors that could cause the decrease and increase of her salary including and up to, loss of sales, and variable expenses. As Los Toros consulting based solely on the accounting principles that were taken, it would be best if Baron Art Mart would review the strategic considerations and recommendations that have been provided by the team.

Legal Analysis Concerning False Imprisonment The altercation between the Baron Art Mart and Susan Kim presents to us a concern on whether or not the business entity had the legal right toward detention based on the premise for potential theftery. In addition, another issue that is at question is whether or not it was moral and just for the employees of the business to hold Ms.Kim for investigation, especially considering the period of time that it took for matters to finally resolve. It is reasonable for employees at a

business organization to be able to investigate on the basis that their owned and paid-for materials could potentially be subject to theft; however, the length of the matter in which it is done should only take as long as it is needed. Our analysis shows us that there is necessary evidence that would constitute the need to undergo an investigation in light of theftery; however, the time in which it took for the matter to resolve were in such great length that it then becomes irrational to hold the verdict. The underlying issues that are present themselves clearly between Baron Art Mart and Susan Kim fall align with the tort of false imprisonment. According to the case concerning Roy Thompson et. al. vs Paul C. Leblanc et. al. -- a case that is detrimental in concluding our analysis of the discussion based on precedential law --, it is determined that false imprisonment is recognized by the courts as having the following structure: it must (1) be intentional, (2) a complete confinement of another for an (3) appreciable amount of time while having (4) full knowledge of the confinement and (5) without proper consent. The main element that is up for discussion on its validity in our scenario between Ms.Kim and the business entity is whether or not there was applicable room for consent. The act to detain Ms.Kim was very much so done with full intent. In addition, the altercation between the two parties did involve complete confinement as well as full knowledge that the detainment was occuring in the present. Evidence displayed in Exhibit 1 by Jimmie Lee states that the altercation between the two took a rather significant amount of time. What is up for analysis is whether the consent aspect of false imprisonment is satisfied. From further analysis, there initially was satisfactory consent to continue with the search; however, elements within the privilege that provide shopkeepers the necessary consent are violated, in large part of how long it took for the the shopkeeper to enact her investigation.

Aside from consent, the remaining elements of false imprisonment that require intent, complete confinement, appreciable time, and full knowledge of confinement are all satisfied in the surface details of the case. Employees at the business organization exercised their duty to completely confine Ms.Kim with full intention due to the belief that she had attempted theftery. As for the basis of consent, shopkeepers are given the right to exercise the legal privilege assigned to them concerning the belief that an individual might have unrightfully stole from their business. This reflects the written text of the Green Code Crim.Pro.Art 215 within the Baron Art Library involving Thompson and Leblanc, which states that shopkeepers are given the privilege to detain someone through the use of reasonable force as long as it is on the merchant’s premise and enacted within a reasonable length of time, especially when there is reasonable cause that he/she has committed theft. This condition of shopkeeper’s privilege provides the necessary and legal consent for the store manager, Jennifer Parker, to hold Ms.Kim based on the grounds of potential theft. In addition, also within the aforementioned text is that the consent is given if it was enacted within a reasonable amount of time. The very fact that it had taken Ms.Parker an hour before she could provide the inspection is deemed appreciable. Because of this, the shopkeeper’s privilege is revoked and consent is then deprived. Legislative bodies determine all court cases through the standard of stare decisis, which is definitive for the idea that the judge-made case law must apply the rule of precedents to future cases that present similar issues. The case concerning Ms.Thompson and Mr.Leblanc serves as a clear precedent because it follows a similar, if not reflective, alignment of the structure of facts between Ms.Kim and Ms.Parker. In the case between Ms.Thompson and Mr.Leblanc, what ultimately led to the tort of false imprisonment from not being in violation was that the matter to resolve the situation was brief. Upon accusation of Ms.Thompson’s potential theftery, she

quickly emptied the contents of her purse so the investigation can be done in a prompt and swift manner. The third element of false imprisonment requiring an appreciable amount of time is essential, because it speaks volumes about whether the verdict was wrongfully detained for an extended and otherwise unnecessary amount of time. In the scenario between Thompson and Leblanc, the altercation was brief, thus, not being able to satisfy the third element that composes false imprisonment. It is important to observe the precedential law concerning Ms.Thompson and Mr.Leblanc, because it shows a clear and stark contrast that speaks volumes about the final nature on the reality of false imprisonment. Upon the material facts stated within the memorandum of Exhibit 1, the loss prevention manager, Jimmie Lee, states that it took approximately a full hour before the store manager could exercise her investigation. To have Ms.Kim be detained for the full course of the hour provides for false imprisonment as the time of investigation should not have been as extensive as it was. The strongest point that could be approached in order to negate the violation of false imprisonment is through claiming that Ms.Parker and her business had the proper consent. However, it is deemed unpersuasive in the sense that consent is provided for through a series of rigid premises that must be appropriately followed; especially when consent is given to a shopkeeper, or a store owner. Referring back to the Baron Art Mart, Inc. Library, the case between Roy Thompson and LeBlanc presents a similar fact regarding the intersection between privilege and consent. In the precedent, the shopkeeper, Mr.LeBlanc, had the full capacity to exercise his legal rights in detaining the customer, Ms.Thompson, under speculation that the act of shoplifting might have occurred. This follows the same structure and is, if not reflective, of the situation concerning Baron Art Mart and Ms.Kim.

Essentially, when situations concerning false imprisonment arise, it is often in the case where shoplifting is at due. In such an instance, the verdict that is accused of the act is required for detention so further inspection can then be imposed. The consent that store owners are legally entitled to is often called shopkeeper’s privilege -- the very basis that was quoted as the Green Code Crim.Pro.Art 215 in the Baron Art Mart case library. Shopkeeper’s privilege grants store owners and shopkeepers the ability to legally detain a verdict in light of possible stolen merchandise. The provision is deemed relevant and important due to the very fact that the legal governing bodies wish to protect those that play an integral role in the economy. In the case between Thompson and Leblanc, Thompson was allowed to exercise his legal power as a shopkeeper. Following the necessary steps to resolve the issue, Thompson was then able to verify whether the merchandise really was stolen. Afterwards, since there was no proven evidence of stolen merchandise, Leblanc was able to go about her day and legal action halted from there. The sequence of actions taken in order to resolve the case between Thompson and Leblanc do reflect the sequence of actions taken between Baron Art Mart and Susan Kim, and it would be reasonable why such an approach to compare the two would seem appropriate. However, an issue that makes the altercation between Susan Kim and Baron Art Mart special and uniquely different is that it took the shopkeeper, Ms.Parker, a substantial amount of time to provide the investigation. The condition that is provided for shopkeepers to detain an individual must not only be for a reasonable cause, but it must be done with reasonable manner as well as reasonable time. Judicial bodies were able to recognize the consent for the precedential case concerning Thompson and Leblanc since the altercation was brief and the matters to resolve the issue were prompt and seemingly instantaneous. In the current case between Baron Art Mart and Ms.Kim, it took significantly long for matters to resolve. Because of the very fact that it took

more than an hour just for the proper inspection to be held, the consent that could have given Ms.Parker and her company, Baron Art Mart, the privilege to detain are then taken from her. It should not have taken an hour to resolve the matter, and if such an instance were allowed in the federal courts, then the context that the shopkeeper’s privilege has the authority to search for a reasonable time is then distorted. The sole fact on the total duration concerning how long it took for the shopkeeper to exercise her the privilege initially given to her does not change the idea that there was indeed false imprisonment.

Legal Analysis Concerning Negligence The fact that Mrs. Susan Kim sustained injuries during time of apprehension does not justify a negligence case against Baron Art Mart. Negligence pertains to a tort that results from the failure of sufficient care in fulfilling a duty owed to another individual. In order for there to be a reasonable case, sufficient evidence that satisfy the elements of the negligence tort must be presented. The three elements of negligence are (1) duty, (2) breach of duty and (3) causation of injury. The present case deals with special circumstances having to do with loss prevention rights businesses have. These circumstances may alter some of the elements of negligence such as the limits on what kind of duty is owed to a suspected shoplifter. Mrs. Susan Kim as stated previously was involved in a shoplifting incident at her local Baron Art Mart and unfortunately sustained permanent injuries during the altercation. To find out if these injuries were caused by an act of negligence on the part of Baron Art Mart we must retrace all evidence involved during the altercation. To begin, Mrs. Susan Kim was first spotted

by the loss prevention manager Jimmie Lee standing next to calligraphy sets in the...