Presentation on theme: "“A Day at the Beach” Nelly Altamirano Bill Bowker Dmitriy Novak"— Presentation transcript:
1 “A Day at the Beach” Nelly Altamirano Bill Bowker Dmitriy Novak Vanessa GracianoYiwen Zhang
2 Main Points Background facts Do flip flops in fact cause car accidents?Who is liable in this case?Calculation of damagesRecommendationsNelly AltamiranoGroup 7
3 Background FactsIn summer 2009, Ms. Jitsy Jetson was driving home from the beachApparently, Jetson’s Sandpiper flip flop got caught under her gas pedalJetson then lost control of her vehicle and collided head-on into a car driven by Mr. Patrick McDuffAs a result of the accident, Mr. McDuff became a quadriplegicMcDuff can no longer work to support himselfNelly AltamiranoGroup 7
4 Are Flip Flops a Cause of Car Accidents? Did flip flops cause this accident?Analysis of government survey dataGovernment Survey Data:YearDifference in Accident Rates = Flip Flops - Other Footwear14%25%33%456%677%88%9109%Mean:5.8%Vanessa GracianoGroup 7
5 The Issue of CausalityCorrelation 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 driversLifestyleUse of mobile phones while drivingDriving under the influenceVanessa GracianoGroup 7
6 Who is Liable? Jitsy Jetson A tortfeasor is always liable for his or her own tortsJetson was negligent in wearing flip flops while drivingSandpiper FootwearProbably will not be found negligent in this caseProbably will not be found strictly liableComparison with other casesWilliam BowkerGroup 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 & DeckerDefendant 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 BowkerGroup 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 ZhangGroup 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: $48000Estimated 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 $ in lost wages through 2021.Dmitriy NovakGroup 7
10 Calculation of Damages Lost wages ≈ $411000Medical 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 NovakGroup 7
11 RecommendationsApproach 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 Appendix A: Statistical Analysis μ = the population difference in accident rates between drivers wearing flip flops and those wearing other footwearSample mean of the difference in accident rates x = 5.8Population standard deviation is unknown.Standard error of the sample mean SE ≈ .611H0: μ = 0Ha: μ ≠ 0T-statistic calculation:𝑡= 𝑥 − 𝜇 𝑆𝐸 = 5.8− ≈9.49The corresponding p-value is extremely small, nearly zero. Thus,we reject the null hypothesis that the difference in accident ratesbetween drivers wearing flip flops and those wearing otherfootwear is zero.Government Survey Data:YearDifference in Accident Rates = Flip Flops - Other Footwear14253678910Mean difference:5.8Standard Error:
14 Appendix B: Calculation of Lost Wages Calculation of mean expected inflation rate:YearYear End CPI Value% Change Relative to Previous Year1999148.2—2000152.42001156.62002162.52003166.22004169.820051762006183.12007192.62008199Total:Mean Inflation Rate Per Year: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: $48000Mean 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) = $ ]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 YearWages Per YearAfter Tax WagesPresent Value FactorPresent Value of Wages2010$51,086.35$38,314.76$35,476.792011$54,371.15$40,778.37$34,960.922012$57,867.16$43,400.37$34,452.522013$61,587.96$46,190.97$33,951.752014$65,548.01$49,161.01$33,458.002015$69,762.68$52,322.01$32,971.762016$74,248.35$55,686.26$32,492.382017$79,022.45$59,266.83$32,020.092018$84,103.51$63,077.63$31,554.592019$89,511.28$67,133.46$31,095.552020$95,266.77$71,450.08$30,643.512021$101,392.33$76,044.24$30,197.93Total Present Value of Future Wages:$393,275.79Half of wages for 2009, after tax: $48000/2(.75) = $18000Total wages owed: $ $18000 = $