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“A Day at the Beach”

“A Day at the Beach”. Nelly Altamirano Bill Bowker Dmitriy Novak Vanessa Graciano Yiwen Zhang. Main Points. Background facts Do flip flops in fact cause car accidents? Who is liable in this case? Calculation of damages Recommendations. Nelly Altamirano Group 7.

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“A Day at the Beach”

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  1. “A Day at the Beach” Nelly Altamirano Bill Bowker Dmitriy Novak Vanessa Graciano Yiwen Zhang

  2. Main Points • Background facts • Do flip flops in fact cause car accidents? • Who is liable in this case? • Calculation of damages • Recommendations Nelly Altamirano Group 7

  3. Background Facts • In summer 2009, Ms. JitsyJetson was driving home from the beach • Apparently, Jetson’s Sandpiper flip flop got caught under her gas pedal • Jetson then lost control of her vehicle and collided head-on into a car driven by Mr. Patrick McDuff • As a result of the accident, Mr. McDuff became a quadriplegic • McDuffcan no longer work to support himself Nelly Altamirano Group 7

  4. Are Flip Flops a Cause of Car Accidents? • Did flip flops cause this accident? • Analysis of government survey data Vanessa Graciano Group 7

  5. The Issue of Causality • Correlation does not necessarily mean causation. • Some other factor(s) may explain the observed difference in accident rates. Other factors that should be considered include: • Youth of the drivers • Lifestyle • Use of mobile phones while driving • Driving under the influence Vanessa Graciano Group 7

  6. Who is Liable? • Jitsy Jetson • A tortfeasoris always liable for his or her own torts • Jetson was negligent in wearing flip flops while driving • Sandpiper Footwear • Probably will not be found negligent in this case • Probably will not be found strictly liable • Comparison with other cases William Bowker Group 7

  7. Who is Liable? • Fogal v. Get n’ Go • Defendant was found liable for negligence. • Plaintiff had no reason to be aware of the potential hazard. • Wayans v. Albert Landon and Black & Decker • Defendant was found strictly liable for plaintiff’s injury. • An additional component would have made the product safer. • “No responsibility to warn for damages that are generally known or obvious.” • Article: “The Flip Flop Craze” (Viewspeak, January 2009) • Demonstrates that problems related to wearing flip flops were common knowledge to some extent before the accident occurred. William Bowker Group 7

  8. How to Proceed with Sandpiper? • Sandpiper probably not legally liable but may have some ethical responsibility for the accident. • Approach Sandpiper and attempt to get a settlement: • The company’s reputation will be negatively affected if the case goes to court, they may agree to settle. • We must advise Mr. McDuff that a lawsuit probably will not be successful and he will lose legal fees. • If Mr. McDuff wants to pursue a lawsuit regardless, that is his decision to make. Yiwen Zhang Group 7

  9. Calculation of Damages:Lost Wages • Mr. McDuff was 53 years old at the time of the accident. • Mr. McDuff’s yearly salary for 2009: $48000 • Estimated mean inflation per year: 3.333% • Real increase in wages per year: 3% • Tax Rate: 25% • Present value rate: 8% • Mr. McDuff is owed over $411000 in lost wages through 2021. Dmitriy Novak Group 7

  10. Calculation of Damages • Lost wages ≈ $411000 • Medical expenses = ? • Pain and suffering = ? • Caretaker expenses = ? • Mr. McDuff’s life expectancy is 77 years and he will need someone to help take care of him daily for the rest of his life. • The total amount for damages that Mr. McDuffis owed may well be several times the amount for his lost wages. Dmitriy Novak Group 7

  11. Recommendations • Approach Sandpiper and try to negotiate a settlement out of court. • Advise Mr. McDuffthat a lawsuit against the company probably will not succeed. • Mr. McDuff may still decide to pursue a lawsuit against the company. • Pursue the negligence case against Jetson, as she will be found liable.

  12. Questions?

  13. Appendix A: Statistical Analysis • μ = the population difference in accident rates between drivers wearing flip flops and those wearing other footwear • Sample mean of the difference in accident rates = 5.8 • Population standard deviation is unknown. • Standard error of the sample mean SE ≈ .611 • H0: μ = 0 • Ha: μ ≠ 0 • T-statistic calculation: • The corresponding p-value is extremely small, nearly zero. Thus, • we reject the null hypothesis that the difference in accident rates • between drivers wearing flip flops and those wearing other • footwear is zero.

  14. Appendix B: Calculation of Lost Wages Calculation of mean expected inflation rate: • We estimate that the mean annual inflation rate will be about 3.333%. • This figure, however, is based on the assumption that the Fed’s monetary policy over the next 12 years will remain consistent to keep inflation at about this level.

  15. Appendix B: Calculation of Lost Wages • Mr. McDuff’s 2009 Yearly Salary: $48000 • Mean Inflation Rate Per Year: 3.333% • Real Increase in Wages Per Year: 3% • Tax Rate: 25% • Discount rate: 8% • Wages per year for any future year: (wages for previous year)(1.0333)(1.03) • [e.g. wages for 2010: (wages for 2009 = $48000)(1.0333)(1.03) = $51086.35] • Yearly wages after tax: (yearly wages)(.75) • Present value of future wages per year: (wages per year)(present value factor)

  16. Appendix B: Calculation of Lost Wages • Half of wages for 2009, after tax: $48000/2(.75) = $18000 • Total wages owed: $393275.79 + $18000 = $411275.79

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