Melanie Carbullido

Cecilia Garcia

Araski Salatyan

Jack Stauber

Miguel Talavera

Amarjot “Joe” Thiara

BUS 302#13693

DATE: October 27, 2021

TO: Mr. Donald West

FROM: Team #5

SUBJECT: Crafts Matrix Inc.

Hello Mr. West,

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

your questions and concerns.

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

will also stay close to equivalent to her future 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

consideration, we used Micheal E. Porter’s five forces of business strategies. We recommend

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.

Question 2: Determining Mrs. Kim’s real income

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.

Can You Use Mean Income To Forecast Future Earnings?

With linear regression, we can use her mean income to calculate her future earnings more

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

to determine Mrs. Kim’s future earnings.

 9

Year Gross Income Adjusted Price Real Income Average Real

Index Income

2001 $81,278 1.771 $45,893 $44,856.33

2002 $81,664 1.799 $45,394

2003 $84,906 1.84 $46,144

2004 $91,653 1.889 $48,519

2005 $85,573 1.953 $43,816

2006 $92,858 2.016 $46,060

2007 $95,444 2.073 $46,041

2008 $96,180 2.153 $44,672

2009 $94,184 2.145 $43,908

2010 $96,214 2.181 $44,114

2011 $101,769 2.249 $45,250

2012 $101,249 2.296 $44,097

2013 $100,956 2.33 $43,328

2014 $99,136 2.367 $41,882

2015 $103,635 2.37 $43,727

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

no correlation between the data sets.

Coefficients

Intercept -90.91079048

Year 0.046317857
 11

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
 12

the correct standard of using the plaintiffs net income rather than gross income would be the

appropriate procedure to compensate the cases plaintiff, Mrs. Kim.

Question 5: What would be the likely amount of an award to Mrs. Kim?

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.
 13

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

and give back to their communities.

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
 14

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.

Deontology: According to the “Stanford Encyclopedia of Philosophy, Business Ethics,”

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

shopping safe and inclusive for its customers.

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

mentioned in the “Stanford Encyclopedia of Philosophy, Business Ethics,” pay tends to be a

 15

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

(Sternberg 2000). As such exploitation of employees being overworked for little to no

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.
 16

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 right to defend themselves against any form of harm or paternalism.

Legal Analysis Concerning False Imprisonment:

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

of potential shoplifting. It is reasonable for employees of a merchant to be able to investigate

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

privilege of legal confinement would be revoked.

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
 17

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

suspected shoplifters was overstepped and no longer legally valid.

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
 18

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

because it's unreasonable to hold somebody for that long.

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.

Thompson, under the assumption that she committed theft.

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
 19

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

false imprisonment charges.

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

in the next paragraph, the outcomes are very different.

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
 20

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.
 21

Legal Analysis: Negligence

Negligence is a tort that arises from a failure to use reasonable care in carrying out a duty

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

situation, such as limitations on what sort of obligation is due to a suspected shoplifter.

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
 22

information, we then question whether the loss prevention manager carried out any duties due to

the plaintiff in an efficient and correct manner.

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

disabilities which prevent her from working.

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
 23

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

would pay the plaintiff too much.

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.
 24

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

loyalty towards Craft Matrix.

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
 25

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

and services” (Gerard Bruijl, 2018).

 26

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

cheap alternatives at lower prices compared to their competition.

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.
 27

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

future incidents and lawsuits.

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References:

American Civil Liberties Union. “Freedom of Speech.” American Civil Liberties Union,

2019, https://www.aclu.org/other/freedom-expression.

Baron Art Mart, Inc. Library. Case Library.

Bruijl, Gerard H. Th., The Relevance of Porter's Five Forces in Today's Innovative and

Changing Business Environment (June 7, 2018).

https://dx.doi.org/10.2139/ssrn.3192207

Crafts Matrix, Inc. Case Library

Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy:

Text & cases. Researchgate.net.

https://www.researchgate.net/publication/

272353374_Exploring_Corporate_Strategy_Text_Cases.

Moriarty, Jeffrey, "Business Ethics", The Stanford Encyclopedia of Philosophy (Fall 2021

Edition), Edward N. Zalta (ed.),

https://plato.stanford.edu/archives/fall2021/entries/ethics-business/.

Porter, Michael. (1985). On competition. Updated and Expanded Edition. Boston, MA:

Harvard Business School Publishing.

Slater, S., & Olsen, E. (2002). A fresh look at industry and market analysis. Business

Horizons, 45(1), 15-22.

https://pdfs.semanticscholar.org/49e0/adde99500456cc1116758f7ec1ddbd0adca1.

pdf

Business Horizons, 45(1), 15-22. Retrieved from

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Triola, Mario F. Elementary Statistics., 2017. Print.

Appendix
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