Professional Documents
Culture Documents
Team 5-Crafts Matrix Final
Team 5-Crafts Matrix Final
Cecilia Garcia
Araski Salatyan
Jack Stauber
Miguel Talavera
BUS 302#13693
FROM: Team #5
You will be pleased to find in this report a comprehensive legal study and a statistical
analysis combining accounting and macroeconomic concepts that explain where you are in the
case, your choices, and our team's suggestions. Our brilliant team of specialists have carefully
and thoroughly examined all facts and problems linked to the case, as well as addressed any of
Thank you for providing us the chance to work with you on behalf of all of us. We
greatly appreciate it. If you have any questions, please do not hesitate to contact us.
TABLE OF CONTENTS
Contents
Executive Summary:......................................................................................................................2
Address Questions:.......................................................................................................................3
Question 1: Would the Merchant’s Defense Relieve Crafts Matrix From Liability Under The
Cause Of Action Of False Imprisonment?.................................................................................3
Question 2: Determining Mrs. Kim’s real income.......................................................................4
Can You Use Mean Income To Forecast Future Earnings?......................................................5
Question 3: Can You Use The Regression Equation To Predict The Price Indices?................6
Question 4: What Standard Will A Court Consider In Determining Whether Mrs. Kim is
Entitled To Compensation?........................................................................................................8
Question 5: What would be the likely amount of an award to Mrs. Kim?...................................9
Ethical Considerations:................................................................................................................10
Legal Analysis Concerning False Imprisonment:.....................................................................13
Legal Analysis: Negligence......................................................................................................18
Strategic Considerations:............................................................................................................21
Recommendations:......................................................................................................................24
References:.................................................................................................................................25
Appendix......................................................................................................................................26
Executive Summary:
This report showcases the legal aspects of the lawsuit made against Crafts Matrix Inc. the
problem arose when a customer named Susan Kim visited the store to acquire a fountain pen set
for her daughter’s school project. When the store’s employees accused Ms. Kim of shoplifting,
they quickly rushed to stop her before she could leave the store. As the employees went to grab
Ms. Kim, she lost her balance and fell to the floor. Standing up in embarrassment and pain from
the fall, she was escorted to the Loss Prevention room. Jennifer Parker, the store manager
returned and once she arrived, she asked Ms. Kim to empty her pockets. When nothing was
found she apologized for the inconvenience, gave her a gift certificate, and let her go. Later that
day. Ms. Kim was admitted to Cedar Sinai for severe back pain; she then had three surgeries
which left her permanently disabled. She is now asking Crafts Matrix to pay for her past and
future medical bills while also demanding compensation for the loss of future income.
For the statistical analysis, we calculated that Ms. Kim’s average real income to be
around $44,856.33 from the past fifteen years. While calculating the future income, we
concluded that there will be a 4.6% inflation that will increase with each year, her real income
For the key recommendations of this case, we focused on Utilitarianism which comes
from our ethical considerations. This states that business ethics will identify and understand the
values, outcomes, and consequences of every and all cases. We recommend settling with Ms.
Kim and firing Mr. Lee to prevent future lawsuits about him in the future. For strategic
that to prevent competition from other businesses, Craft Matrix must stay loyal and have secure
relationships with their customers which will then ensure steady business for years to come.
Address Questions:
Question 1: Would the Merchant’s Defense Relieve Crafts Matrix From Liability Under
The Cause Of Action Of False Imprisonment?
Upon legal analysis of false imprisonment, the merchant's defense will relieve Crafts
Matrix Inc. from liability under the cause of action of false imprisonment, yet the way in which
false imprisonment was enforced is unacceptable. Throughout the report we have used the case
Roy Thompson et. al. vs Paul C. Leblanc et. al, to identify the five elements of false
imprisonment. It is determined that false imprisonment is recognized by the courts as having the
following structure: (1) it must be intentional; (2) complete confinement of an individual (3)
appreciable amount of time while under confinement (4) individual has full knowledge of being
detained and (5) reasonable care was given while under confinement. In our case, the act to
detain the plaintiff Mrs. Kim was done because the Crafts Matrix Inc. employee believed that
Mrs. Kim would be caught with the fountain pen sets in her possession. Employees at a business
organization should be permitted to conduct investigations based on the possibility that their
owned and paid-for items are being stolen; Nevertheless, the length of the investigation should
be limited to the time required. The study that we did reveals that there is sufficient evidence to
warrant an inquiry in the case of theft; Nevertheless, the time it took for the matter to be resolved
was so long that it became illogical to hold the verdict. Based on the evidence from exhibit one
by Jimmie Lee, the Loss Prevention Manager declares that the altercation between the plaintiff
and the employee took a significant amount of time. With that being said, the length of time in
which it took for the owner of Crafts Matrix to conduct her investigation was far too long, not
fulfilling the element of false imprisonment. Although that element is not met, the remaining
elements of false imprisonment have been met, including the intent to hold Mrs. Kim for
shoplifting, complete confinement within their premises, and the amount of time that she was
held in contempt. To support the basis of content, businesses have certain rights and legal
privileges that they may use to protect their business from theft. The example from the case
library, Green Code Crim.Pro.Art.215 supports this claim. Our report of this case goes into
further detail in our legal analysis sections. However, we can conclude from the case library
sources and from the elements of false imprisonment that Craft Matrix Inc. did not follow the
proper procedures that one must go through when detaining an individual for such reasons.
To compute Mrs. Kim's real income for the past fifteen years, we must use the data
included in Exhibit 2. First, to convert the included price index to the adjusted price index we
must divide the included price index by 100. For Example, 2001- Price Index 177.10/100 =
1.771, 2002- Price Index 179.90/100 = 1.799 and so forth. Subsequently, after computing the
appropriate adjusted price index, we can now calculate the real income. To accomplish this, we
must divide the given year's gross salary by its corresponding adjusted price index. For Example,
2001- Gross Income $81,278/1.771 = $45,893. Subsequently, once computing the real income
for the remaining years, we are now able to calculate the mean of her past income which
computes to $44,856.33. This is the average real income calculated from 2001-2015 for Mrs.
Kim. This calculation is very salient because it will help define and appropriately predict her
future income. This will help construct an appropriate approximation of compensation for Mrs.
Kim. Subsequently, we are now able to construct the median real income for Mrs. Kim, which is
$44,672. The median income simply is the middle income, after organizing each income from
smallest to largest.
After converting each price index to an appropriate adjusted price index, calculating real
income, calculating the mean income, and discovering the median income, we are now able to
calculate the standard deviation of $1,582.16. The standard deviation represents a measurement
of how spread out a data set is; in finance this simply means the volatility of Ms. Kim’s real
income from 2001-2015. Lastly, we will compute the variance of Mrs. Kim's past real income, in
this data set the variance is $2,503,236.24. The variance showcases the measurement of
difference between actual and expected results. The larger the variance number the further the
distance between the number sets and the mean, the smaller the variance the shorter and closer it
is to the mean.
accurately. What linear regression does is it gives us a better idea of what future economic
change may look like for each year so we can more accurately predict what her future income
may look like. We can use the equation Y= -90.91 + 0.046x, which includes the Y-intercept, and
the slope times the independent variable to predict that the inflation rate will increase by a
minimum of 4.6% each year. However, we also need to take into consideration non-statistical
considerations. Some examples include but are not limited to: unemployment, furlough, global
pandemic, economy, promotion, bonuses, commission. These factors could potentially alter how
Question 3: Can You Use The Regression Equation To Predict The Price Indices?
Linear regression attempts to model the relationship between two variables, the price
index and the referenced year, by fitting a linear equation to observed data. A linear regression
line has an equation of the form Y = a + bX, where X is the explanatory variable and Y is the
dependent variable. The slope of the line is b, and a is the intercept (the value of y when x = 0).
We can use the regression findings (refer to excel) to compute the equation to be Y= -90.91 +
10
0.046x. This equation showcases that we should expect a 4.6% rate of inflation each year. As
such, we can use the regression equation like this to predict future price indices and how much
the cost of living and products may go up. The coefficient of determination, also known as the R-
square, was determined to be 0.98. The R-square determines the percentage spread between the
independent and dependent variables. A perfect R-squared score would be 1. A score of 0.98 is
an example of high correlation between these two variables. Thus, the adjusted price index
(dependent) and the year (independent) grow 98% closer to each other. However, once again, we
also need to take into consideration non-statistical considerations as mentioned previously. The
P-value of -.00000000000018 < 0.05, therefore, we reject the Null Hypothesis, meaning there is
Coefficients
Intercept -90.91079048
Year 0.046317857
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Question 4: What Standard Will A Court Consider In Determining Whether Mrs. Kim is
Entitled To Compensation?
Upon legal analysis of assuming that Crafts Matrix Inc, is liable for false imprisonment
and assuming that the plaintiff, Mrs. Kim is deemed unable to locate another job for life due to
her present medical condition, we must determine the whether the court will likely award
compensation to the plaintiff for the loss of future income. As we know, the plaintiffs’ injuries
occurred during the time of apprehension, yet from a legal standpoint that does not prove
negligence. Negligence is a tort that arises from a failure to use reasonable care in carrying out a
duty to another person. There are three elements to negligence: (1) duty, (2) breach of duty, (3)
causation of injury. The plaintiff may argue that the duty of Jimmie Lee, the Loss Prevention
Manager owes her an obligation to be arrested without using any undue force that may injure
Mrs. Kim. Therefore, the plaintiff is very likely to claim that the Loss Prevention Manager at
Crafts Matrix Inc. was negligent. When and if this claim is made the judge must determine the
awarded amount of compensation to the plaintiff. The judge must consider all necessary correct
steps are taken to appropriately award the compensation to the plaintiff. When calculating the
plaintiff’s future loss of income, the judge must use the plaintiffs net income. Based on stare
decisis and prior cases such as, Paul Caldwell v. Todd Khler which supports that the main goal
of damages in personal injury actions is to fairly compensate the injured party. As a team we
have concluded that awarding the plaintiffs damages based on gross income would be unfair to
the defendants. This would be considered unfair because the plaintiff would be awarded much
more than necessary. Our team further discusses the issue of negligence in our legal analysis
sections. However, we can conclude from prior cases and from the elements of negligence that
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the correct standard of using the plaintiffs net income rather than gross income would be the
Our team has concluded that a lump sum value of loss of future income would be
estimated at $920,947.15. Our team reached this conclusion after using the linear regression
equation as stated previously to project the adjusted price index of the next twelve years.
Subsequently, after our forecasted price indices, we then would use Mrs. Kim median real
income from 2001 - 2015, which is $44,672.00. Mrs. Kim median real income would be used as
an assumption that her income will not change over the next twelve years. Thereafter, with the
projected price indices and the assumed real income for the next twelve years we can now
multiply each year with their respective price index to forecast a projected gross income for the
following twelve years. If Mrs. Kim pays 27.5% of her gross income in taxes and that Green will
not provide state assistance, we can compute her projected net income. With the assumption that
the discount rate is 5.5% we can compute the present value of each of Mrs. Kim projected yearly
net income. Finally, once every year is computed we can thus add each value for a total sum of
all years projected loss income. This amount totaled to be an estimated $920,947.15. However,
there could be a plethora of factors that could cause Mrs. Kim’s future income to differ. Some of
these factors include but are not limited to: loss of sales resulting in loss of commission, loss of
bonus, overtime pay, sick days, global pandemic, inflation and change of tax bracket.
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Ethical Considerations:
Ethical decision making is important to any business operation, and so for Craft Matrix
Inc. to continue to be successful, they must seek to create greater value for their customers.
Creating value such as being able to understand and concern fairness on the customer's desires,
goals, and concerns. Considering Tucker’s five questions approach, we can apply the
Utilitarianism of business ethics, to identify and understand values, outcomes, and consequences.
Utilitarianism: Doing the greatest good for the greatest number of people. Should Craft
Matrix consider settling with Susan Kim and fire Jimmie Lee to prevent lawsuits pertaining to
him in the future? What is the best outcome to take in this situation? After further consideration,
Mr. Lee should partake in the consequences of his actions for using unnecessary force on Mrs.
Kim, therefore it is legal to fire him. Firing Mr. Lee is justified because he committed a tortious
act against Mrs. Kim, leading to her injury, so it is fair that Mrs. Kim get compensated, but only
for compensatory benefits, which is for the loss of her future income and her medical bills.
Settling with Mrs. Kim would be in the best interest of the company and its stakeholders since
the costs incurred would be much larger if taken to court, since the judge would almost certainly
favor Mrs. Kim, which could result in the company paying higher compensatory and punitive
damages, so the best outcome for Craft Matrix would be to settle out of court. If they settle with
Mrs. Kim, they could use the extra money that they saved from the lawsuits to create more jobs
Corporate Social Responsibility: What is Corporate Social Responsibility, and how can
companies push for more ethical change in their communities? According to Jeffrey Moriarty,
author of “Business Ethics for the Stanford Encyclopedia,” explains that they are actions taken
by businesses, generally to benefit third parties other than themselves and are not legally
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required but incentivized to for the betterment of society. As such, companies like Craft Matrix
should consider training their employees more extensively on how to become better customer
service representatives so they can better deal with the influx of customer issues. This will help
to prevent such situations like with Mrs. Kim from happening again. Transitioning from physical
stores to E-commerce could be another way for Craft Matrix to better serve their community
because it could be safer and more convenient for customers to order their products online,
saving time from having to commute. Craft Matrix could consider running their own volunteer
programs to help their communities or being more ecofriendly by cutting down on excessive
emissions.
there are two main views about the proper ends of corporate governance. According to one view,
firms should be managed in the best interests of shareholders. It is typically assumed that
managing firms in shareholders’ best interests requires maximizing their wealth (cf. Hart &
Zingales 2017; Robson 2019). The other view according to stakeholder theory which was refined
over the years by (Freeman 1994; Freeman et al. 2010; Freeman, Harrison, & Zyglidopoulos
2018 et al.) states that managers should balance the interests of all stakeholders because in doing
so, the interests of employees will also be met with higher wages, and customers will benefit
from higher quality of goods and services. Craft Matrix has an inherent duty and a responsibility
to provide the best service for its customers. The company also has a responsibility to make
Justice Theory: Justice and fairness entail treating individuals with the desired dignity
and equity that they are respected to and should be fairly compensated for the work they do. As
justice problem because figuring out how to fairly compensate employees for their labor is hard
based solely on their contributions, so supply and demand also need to be taken into
consideration. The first theory mentioned is called “agreement view,” which is when the
employer and employee come to a mutual agreement on how much the employee should be
compensated without fraud or coercion (Boatright 2010). The second theory of “contribution
view” follows two different trajectories, the first states that employees should receive equal pay
to the value amount of contributions that they made (D. Miller 1999). The second argues that
employees should receive fair compensation that reflects the relative value of their contributions
compensation are problems that need to be addressed so employees can be fairly compensated
for their work relative to their contributions. Another situation that must be addressed is in the
case of Craft Matrix v. Mrs. Kim, how should an individual who was injured on company
premises be handled? Was it the fault of the company or the individual? What kind of
compensation would lead to them being whole again? Should compensatory damages be paid out
for loss of future income, or should only their medical bills be considered? Should the company
take the case to court to fight the charges? After much consideration, a settlement with Mrs. Kim
for compensatory damages including her medical bills would be justified and legal because that
would lead to her being whole again, and Craft Matrix would avoid paying punitive damages.
Rights Theory: According to the “American Civil Liberties Union,” individuals have a
fundamental right to freedom, liberty, and to be able to express themselves without fearing for
their safety. Companies have an obligation to respect and treat their employees with dignity and
to protect them from physical, emotional, or psychological abuse within company premises.
Companies should never subject employees to any form of humiliation at the expense of profits.
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Individuals of all different kinds of ethnicities, race, gender, and religious beliefs have the
freewill and the right to make their own choices in what they want to buy and in what they want
to wear, and companies should respect that. These rights should be taken as an integral issue in
all company procedures and take it as a moral responsibility to protect individual rights. Mrs.
Kim has the right to be treated fairly and equally by society and companies have an obligation to
respect individual rights, freedom of speech, and their personal space. As such, Individuals have
The dispute between Crafts Matrix Inc and Susan Kim presented to us the issue of
whether Craft Matrix had the legal right to hold Susan Kim in custody based on the speculation
customers on the suspicion of shoplifting. However, the investigation must be done within a
reasonable time period. Another problem that must be discussed is whether the employees were
justified in holding Mrs. Kim for investigation, especially considering how long it took for the
investigation to occur. The analysis that we conducted shows us that there is evidence supporting
an investigation of shoplifting; however, the length of time which she was detained, over an hour
to be exact, is unreasonable that such a case would constitute false imprisonment and the owner's
In the case between Craft Matrix Inc. and Susan Kim, Ms. Parker’s detention of Mrs.
Kim, would constitute a violation of false imprisonment. According to the legal documents
related to Roy Thompson et. al. vs Paul C. Leblanc et. al. it is determined that false
imprisonment is recognized by the courts as having the following structure: there must be intent
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by the merchant or employee to detain; must be reasonable cause for detention to occur; must
take place on business premises; such conduct was handled in a reasonable manner; and within a
reasonable amount of time. The main concern that we have between Mrs. Kim and Craft Matrix
is whether there was applicable room for consent. The act to detain Mrs. Kim was done with the
intent that she would be caught with the fountain pens in her possession. In addition, the
altercation between the two parties did involve complete confinement of Mrs. Kim as well as full
knowledge that she was being detained. Evidence displayed in Exhibit one by Jimmie Lee states
that the altercation took a rather significant amount of time to conclude. From further analysis, it
seems there was satisfactory consent to continue with the search on Mrs. Kim; but because the
investigation did not occur within a reasonable time frame, the merchant’s privilege to detain
Including consent, false imprisonment also includes conscious intent to physically detain
someone for a certain length of time. Craft Matrix employees made conscious efforts to detain
Ms. Kim, physically prevented her from leaving the property, and intended to hold her for an
appropriate amount of time for an investigation to be done. Susan Kim was informed by the
owner that she was being detained due to possible theft. As for the basis of consent, businesses
have certain rights and legal privileges that they can use to protect their businesses from theft.
Such an example as explained in the Crafts Matrix case library, “Green Code Crim.Pro.Art. 215”
involving the case between Thompson and Leblanc, explains that businesses have the right to
legally detain someone with reasonable force within company premises so long as it is within a
certain amount of time and procedures are strictly followed. Jimmie Lee, the manager of the
Loss Prevention department, had the right to detain Mrs. Kim and put her in confinement under
the assumption that she had committed theft. However, since Mr. Lee used excessive force when
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handling Mrs. Kim, leading to her subsequent fall and neck injury, such action would constitute a
violation of false imprisonment since he had no right to use excessive force to detain her.
Because Ms. Parker did not show up until an hour after Mrs. Kim had been detained at 2:30pm,
the privilege of detainment would then be revoked, and consent would no longer be valid
Ms. Parker’s strongest claim against violation of false imprisonment would be that she
and Craft Matrix had the proper consent to go through with detaining Mrs. Kim on suspicion of
shoplifting. While it is true that Ms. Parker had the consent and legality to detain Mrs. Kim, the
way in which she conducted the investigation would not hold up if it were brought to court
because she did not follow the proper procedures that one has to go through when detaining an
individual. False imprisonment can result from holding someone for an unreasonable amount of
time, excessive force used to detain or illegal confinement. By referencing these points, we can
conclude that Craft Matrix’s detention of Mrs. Kim falls under the definition of false
imprisonment. Going back to the case library between Thompson and Leblanc, both companies
enacted consent and privilege to detain an individual who they thought had shoplifted, and just
like Ms. Parker, Leblanc had full capacity to exercise his legal rights in detaining Ms.
Under the precedent of stare decisis, most cases that go to court tend to follow similar
case outcomes so long as the information pertaining to the cases follow a similar structure of
facts and issues before it. The case with Mrs. Thompson and Mr. Leblanc would be no different
because the structure and facts that are discussed in that case follow a very similar structure to
that of Mrs. Kim and Mrs. Parker. As discussed in the case between Mrs. Thompson and Mr.
Leblanc, false imprisonment could not be proven because the business conducted themselves in
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an ethical manner and were professional and spoke to Mrs. Thompson immediately and informed
her as to why she was being detained and the situation was resolved. When she understood that
she was being accused of shoplifting, Mrs. Thompson denied the allegation and consented to
being searched. She then entered the store and voluntarily emptied what was in her purse so an
investigation could be conducted, so both parties benefited from the transparency and swiftness
of action. Since the investigation was voluntary and conducted in a timely manner; the elements
of false imprisonment requiring that someone be detained for an unreasonable amount of time
and be held without their consent do not apply, thus Mr. Leblanc could not be held liable for
Businesses are allowed to protect themselves under reasonable suspicion, and because of
that they have the privilege of being able to detain someone who they think might be hurting
their business. As stated in the case law library, “Green Code Crim. Pro.Art. 215,” grants
businesses the ability to legally detain someone to protect their interests, which by law is
factually correct, but the law will not protect them if they break the law to do so. As we know in
the case between Thompson and Leblanc, Ms. Thompson was detained, but Mr. Leblanc
followed all the necessary procedures when doing so, and then immediately after, was able to
resolve the issue within a reasonable amount of time after she was verified to have nothing in her
possession. Therefore, Mr. Leblanc was able to avoid any kind of legal action on his part and on
the side of the customer since this situation was resolved quickly and efficiently. As such, the
two cases do seem to follow similar precedent and actions up to a certain point, but as we explain
What makes the Craft Matrix case different from the case between Thompson and
Leblanc is that Ms. Parker handled the situation much differently than Mr. Leblanc. Ms. Parker
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took a much longer time to conduct the investigation and given that Mrs. Kim had to wait a full
hour before she was informed as to why she was detained, Ms. Parker is already in violation of
detaining someone for an unreasonable amount of time. So even if Mrs. Kim were to consent to
an investigation, her consent would have been void since the time it took to conduct the
investigation was unreasonably long, so Ms. Parker’s privilege of being able to detain Mrs. Kim
would never hold up in court. The courts recognized early on that there was consent for the
previous case concerning Thompson and Leblanc since the matters were handled swiftly and
were resolved within a brief amount of time. However, the incident concerning Craft Matrix and
Mrs. Kim took significantly longer and the investigation did not occur until an hour after the fact.
In addition, Mr. Lee, while acting within his capacity as loss prevention manager, used
unreasonable force to detain Mrs. Kim. By detaining Mrs. Kim is for so long without conducting
the investigation, Craft Matrix is in direct violation of rule three of “Green Code Crim.Pro.Art
215,” which states that detention must be conducted in a reasonable manner, meaning that the
owner’s privilege would no longer stand, and thus would be a case of false imprisonment.
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due to another person. To establish a reasonable case, sufficient evidence must be given that
meets the requirements of the negligence tort. The three elements of negligence are duty, breach
of duty, and causation of injury. Mrs. Susan Kim's injuries occurred during a period of
apprehension; However, this does not substantiate a negligence claim against Crafts Matrix Inc.
The current case deals with an unusual situation involving loss prevention rights that companies
set in place. Some of the criteria of negligence may be altered as a result of this unusual
As reported earlier, Mrs. Susan Kim was involved in a shoplifting incident at her local
Crafts Matrix Inc. where she suffered from permanent injuries and disability because of the
confrontation. To determine if these injuries were caused by an act of negligence on behalf of the
Crafts Matrix Inc. employees, we must retrace all evidence involved during the conflict. Mrs.
Susan Kim was initially noticed by the store's loss prevention manager, Jimmie Lee, who was
observing the customers from afar and took notice of Ms. Kim when it looked like she was
attempting to shoplift one of the fountain pen sets. According to Mr. Lee, Mrs. Kim was racing
towards the exit with what looked like a packed pocket when he realized one of the fountain pen
sets was missing from the recently stocked supply rack. At that moment, Jimmie Lee assumed
there was a legitimate cause of shoplifting that would keep her from leaving the store if all the
information was true. With that, he proceeded to stop her from leaving by grabbing her arm and
pulling her back into the store. Mrs. Kim lost her balance due to the incident, which caused her
to collapse and hit her back on the counter, leading to seriously injuring herself. With all this
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information, we then question whether the loss prevention manager carried out any duties due to
Mrs. Kim, who is the plaintiff in this case may argue that the loss prevention manager
owes her as a suspect the obligation to arrest her without using harmful force that could lead to
injury. Even though Ms. Kim has not supplied much evidence to sustain a negligence tort, the
plaintiff can make a claim which states the loss prevention manager at Craft Matrix Inc. was
negligent. The harm was inflicted immediately by Mr. Lee's physical contact during
apprehension, this act would typically be sufficient to establish a breach of duty owed. We can
determine this because if Mrs. Kim was not pulled by her arm, she would not have lost her
balance causing her to fall against the counter which resulted in severe long-lasting pain.
Furthermore, if she decides to pursue the negligence case, she will be able to seek compensatory
damages for her medical bills, including all future income losses caused by the permanent
For several reasons, Craft Matrix Inc. can now argue that there was no act of negligence
involved in the apprehension. For example, Mr. Jimmie Lee, the loss prevention manager, can
claim that there was sufficient information suggesting Mrs. Kim may have shoplifted a fountain
pen set, thus providing reasonable cause to employ the required procedures to prevent her from
escaping the scene. It’s part of the job or obligation of loss prevention workers to stop or
apprehend anyone suspected of shoplifting. Another argument that can be made by Craft Matrix
Inc. is that the loss prevention manager's actions were necessary to stop Mrs. Kim from leaving
and did not entail the use of excessive force because he just grabbed her arm to prevent her from
leaving. A peace officer, merchant, or a properly authorized employee may use reasonable force
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to hold a person for interrogation on the business's premises, according to Article 215. As a
result, the loss prevention manager of Craft Matrix was justified in his actions.
If Craft Matrix Inc. is found to be responsible for negligence, and Mrs. Kim is unable to
find future work as a result of her injuries, the court would most likely award compensation for
loss of future income based on the plaintiff's net income rather than gross income. Prior cases
and stare decisis can be used to assess this such as the case called Paul Caldwell v. Todd Khler,
in the case library. Mrs. Kim has presented her gross income for the past 15 years and is seeking
$570,000 for medical care expenses and $950,000 for the loss of future earnings. The court is
likely to apply the same approach as in the Paul Caldwell v. Todd Khler case, assessing future
income using net income to arrive at a reasonable and accurate estimate. According to the case
library, the main goal of damages in personal injury actions is to fairly compensate the injured
party. Deemer v. Silk City Textile Mach. Co., 475 A.2d 648 (App.Div.1984)."The purpose, then,
of personal injury compensation is neither to reward the plaintiff, nor to punish the defendant,
but to replace plaintiff's losses." Domeracki v. Humble Oil & Ref. Co., 443 F.2d 1245, 1250 (3d
Cir.), (1971). Awarding damages based on gross income would be unfair to the defendant since it
Based on our past case analysis and the facts we have already provided; We have decided
that Mrs. Kim's settlement offer is not reasonable. To compute the required amount in loss of
future revenue, we would need to establish net income and present value.
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Strategic Considerations:
After considering the Craft Matrix case, we recommend Michael E. Porter’s five forces
of business strategies. The use of these forces can help Craft Matrix compete and be successful
in a very competitive industry. With application of these five forces, we can effectively help
Craft Matrix maintain their customer base and boost their operations to have an edge against
other leading competitors, considering the current situation that we find ourselves in.
The first force that must be overcome is the threat of new entrants that seek to benefit in
the stationery and drawing supply industry. According to Gerard Bruijl, author of “The
Relevance of Porter’s Five Forces In Today’s Changing Environment” explains that the threat of
new entrants will largely depend on how high entry barriers are and the number of organizations
in the industry (Johnson et al., 2008). Given the industry that Craft Matrix is in, supplies can
easily be duplicated by other stores and the barrier of entry is very low. Suppliers and different
art brands are constantly selling their products and services to other art supply stores as well. For
Craft Matrix to have a competitive edge over their rivals, they must be willing to implement
measures such as giving out discounts, introducing new products, and have incremental service
improvements (Porter, 1985). After careful consideration, it would be in the best interest of Craft
Matrix to sell some of their items for a discount, due to the recent event. Doing so can appeal to
customers who may otherwise have gone elsewhere, leading to more business and customer
The second force is the threat of substitutes that could replace products provided by Craft
Matrix. Customers are always looking for the best products at the cheapest price possible. Gerard
Bruijl mentions that a possible threat of substitute products can come from companies “switching
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costs between substitute and industry products” and cheaper alternatives are influencing
customers to buy cheaper generic products. With the threat of substitution taking away from their
profits and leaving customers to go elsewhere, Craft Matrix must review all their products that
are on sale and make sure that it beats the quality of other competitors with the best possible
price to incentivize customers to buy. We would also consider comparing prices of products to
different industries and making our prices more competitive, such as offering price matching,
effectively giving people another alternative, so if a company does offer cheaper prices, Craft
Matrix will match their price. This allows local customers who may find a better deal at other
places a reason to come to Craft Matrix, knowing that they will be getting a similar deal. This
helps the company continue to make profits at a reasonable price and helps the customer save a
trip.
The third force that we must deal with is the bargaining power of buyers. Customers have
the power to demand and negotiate higher or lower prices if they want. Buyers have the power to
drive prices down, demand better quality of products and services, and this can have a negative
effect on an industry or a company. “When there is a monopoly market situation, buyers have the
greatest bargaining power when they are large and are able to switch comfortably to alternative
suppliers that are few in numbers” (Slater & Olson, 2002). Sellers could get around this though,
by realizing that there is an imbalance between sellers and buyers and offering higher prices for
specialized products that customers otherwise couldn’t get from anywhere else. Craft Matrix
could offer a rewards program to loyal customers to incentivize them to come back for more,
giving them advantages over their competitors. “Creating a buyer loyalty program that provides
more value than competitors provide, such as a just in time delivery system or increasing quality
The fourth force that we need to deal with is the bargaining power of suppliers. As we
know, the suppliers of Craft Matrix could stop sending its quality products if they wanted to.
“This can have a detrimental effect on profitability of an industry or company if the supplier can
threaten organizations with increasing prices of products and services” (Gerard Bruijl, 2018).
This can lead to general prices of goods and services to increase across multiple industries for
companies to recoup their losses, and the customers will be paying higher prices as a result.
However, “bargaining power of suppliers can be manipulated by the number of suppliers, the
size of the supplier, and the availability of substitute customers” (Slater & Olson, 2002). Craft
Matrix can overcome this problem by supplying and outsourcing their own products or selling
The fifth force that must be dealt with is rivalry among existing competitors. Craft Matrix
is not the only art supply company that's competing for market dominance, and since there are a
lot of other companies wishing to reach a wider audience, profitability will suffer. “When rivalry
among existing competitors is significant, profitability within the industry lessens and companies
will have to adapt to meet changing demands such as offering lower prices for goods and
services, introducing new products, advertising about certain promotions, and expanding its
services” (Porter, 1985). To have a competitive edge over other industries, Craft Matrix must be
willing to diversify to reach a larger demographic of the population or make small improvements
to its products and services and offer new products occasionally. Being able to maintain a loyal
customer base is very important for continued success and engaging your audience on social
media or through community activities is a good way to keep customers coming back. By doing
so, you will continue to have relevance in the market and continue to be successful.
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Recommendations:
In the case of Craft Matrix, INC. we recommend that the company settle with Susan Kim
outside of court for damages equal to Ms. Kim’s medical bills and adjusted net income over the
course of the next twelve years. We recommend this course of action as the employee, Jimmie
Lee, while acting within the scope of his employment, improperly and unprofessionally detained
Ms. Kim who he suspected of shoplifting. Following the Respondent Superior Doctrine, where
an employer could be held responsible for the wrongful actions of their employees if those
actions were taken within the scope of their employment, Craft Matrix could be held responsible
due to Mr. Lee’s negligent behavior. Mr. Lee was acting on the idea that Ms. Kim had shoplifted
fountain pens, and physically restrained Ms. Kim while attempting to detain her which led to her
being physically injured. He then proceeded to hold her on site for an unreasonable period of
time to be questioned by management. Both the manner in which Mr. Lee detained her and the
procedures that followed her detention were done within the scope of his employment as a loss
prevention manager. While he did believe that Ms. Kim had stolen items from the store, the
actions he took in her detention were unprofessional. Ms. Kim suffered serious back injury
because of physical harm caused by Mr. Lee, and she was detained unlawfully for one hour
before store manager Jennifer Parker arrived and informed Ms. Kim why she was being detained.
Mr. Lee acted within company guidelines, and as such the company is liable for whatever results
from Mr. Lee’s actions. Ms. Kim’s injuries left her with medical bills and resulted in her being
unable to work. We also recommend specialized training for loss prevention guards to avoid
References:
American Civil Liberties Union. “Freedom of Speech.” American Civil Liberties Union,
2019, https://www.aclu.org/other/freedom-expression.
Bruijl, Gerard H. Th., The Relevance of Porter's Five Forces in Today's Innovative and
Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy:
https://www.researchgate.net/publication/
272353374_Exploring_Corporate_Strategy_Text_Cases.
Moriarty, Jeffrey, "Business Ethics", The Stanford Encyclopedia of Philosophy (Fall 2021
https://plato.stanford.edu/archives/fall2021/entries/ethics-business/.
Porter, Michael. (1985). On competition. Updated and Expanded Edition. Boston, MA:
Slater, S., & Olsen, E. (2002). A fresh look at industry and market analysis. Business
https://pdfs.semanticscholar.org/49e0/adde99500456cc1116758f7ec1ddbd0adca1.
Appendix
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