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

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Presentation on theme: "“A Day at the Beach” Nelly Altamirano Bill Bowker Dmitriy Novak Vanessa Graciano Yiwen Zhang."— Presentation transcript:

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

2 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  In summer 2009, Ms. Jitsy Jetson 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  McDuff can no longer work to support himself Nelly Altamirano Group 7

4  Did flip flops cause this accident?  Analysis of government survey data Government Survey Data: YearDifference in Accident Rates = Flip Flops - Other Footwear 14% 25% 33% 44% 56% 65% 77% 88% 97% 109% Mean:5.8% Vanessa Graciano Group 7

5 Vanessa Graciano Group 7  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

6  Jitsy Jetson A tortfeasor is 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  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  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 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  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. McDuff is owed may well be several times the amount for his lost wages. Dmitriy Novak Group 7

11 Approach Sandpiper and try to negotiate a settlement out of court.  Advise Mr. McDuff that 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.


13 Government Survey Data: Year Difference in Accident Rates = Flip Flops - Other Footwear 14 25 33 44 56 65 77 88 97 109 Mean difference:5.8 Standard Error:0.611010093

14 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. YearYear End CPI Value% Change Relative to Previous Year 1999148.2— 2000152.42.834008097 2001156.62.755905512 2002162.53.767560664 2003166.22.276923077 2004169.82.166064982 20051763.651354535 2006183.14.034090909 2007192.65.188421628 20081993.322949117 Total:29.99727852 Mean Inflation Rate Per Year:3.333030947

15 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% 1.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] 2.Yearly wages after tax: (yearly wages)(.75) 3.Present value of future wages per year: (wages per year)(present value factor)

16 YearWages Per YearAfter Tax WagesPresent Value FactorPresent Value of Wages 2010$51,086.35$38,314.760.92593$35,476.79 2011$54,371.15$40,778.370.85734$34,960.92 2012$57,867.16$43,400.370.79383$34,452.52 2013$61,587.96$46,190.970.73503$33,951.75 2014$65,548.01$49,161.010.68058$33,458.00 2015$69,762.68$52,322.010.63017$32,971.76 2016$74,248.35$55,686.260.58349$32,492.38 2017$79,022.45$59,266.830.54027$32,020.09 2018$84,103.51$63,077.630.50025$31,554.59 2019$89,511.28$67,133.460.46319$31,095.55 2020$95,266.77$71,450.080.42888$30,643.51 2021$101,392.33$76,044.240.39711$30,197.93 Total Present Value of Future Wages:$393,275.79  Half of wages for 2009, after tax: $48000/2(.75) = $18000  Total wages owed: $393275.79 + $18000 = $411275.79

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