ACME ELECTRONICS

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York University *

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2700

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Business

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Apr 3, 2024

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INTRODUCTION The case of Otto Gunter (plaintiff) v. ACME Electronics (defendant) is evaluated in this report. Mr. Gunter suffered significant financial damages because of ACME Electronics' negligence in failing to return a defective hard drive that belonged to him. At a steep cost of $800, Mr. Gunter hired Ron Retriever, a technician, based on a recommendation from ACME Electronics. Even though Mr. Gunter was able to retrieve up to 90% of the data, he subsequently found out that the information on the hard drive was not his own. Mr. Gunter is requesting $15,800 in monetary compensation. This amount includes $5,000 for lost consulting business income, $800 for data recovery from an incorrect hard drive, and $10,000 in punitive damages for carelessness and improper handling of the given matter. This case highlights the significance of this business law by considering several different legal, statistical, ethical, and strategic issues. The case integrates concepts from business law and statistics and is intended for upper-division interdisciplinary business courses. Analysis of the negligence claims against Acme Electronics, application of statistical concepts like proportions, sample size calculations, and confidence intervals, and discussion of the case's ethical and strategic issues are the main goals. Concepts related to negligence, such as negligence per se, causation, damages, and potential defenses like contributory vs. comparative negligence, are the focus of the legal issues. In the statistical component, sample size adequacy is evaluated to estimate the percentage of cases involving negligence, a confidence interval is constructed, and the expected value of settlement is calculated using statistical probabilities. Furthermore, when Acme Electronics thinks about reaching a settlement outside of court, moral and tactical considerations are at play. The moral conundrum concerns how much of the error Acme should own, and the strategic choice considers possible financial settlements while taking statistical and legal factors into account. To summarise, this case offers a thorough scenario that pushes students to combine their legal and statistical expertise to assess the problem, make recommendations, and negotiate the moral and tactical ramifications of conducting business. Problem Statement Analyzing the following queries is essential to comprehending the issue raised by this case study:  How much of ACME Electronics' handling of Mr. Gunter's case was careless?  Does Mr. Gunter bear any portion of the blame for his negligence?  Is Mr. Gunter's requested financial compensation reasonable and fair?  Any other possibilities for resolving the conflict?  In terms of statistics, is the sample size adequate? Case A Questions – Legal Issues – Negligence 1. Has Acme been negligent in its actions regarding keeping track of replaced computer components and failing to return the parts to Gunter? Case A Questions – Legal Issues – Negligence 1. Has Acme been negligent in its actions regarding keeping track of replaced computer components

and failing to return the parts to Gunter? Case A Questions – Legal Issues – Negligence 1. Has Acme been negligent in its actions regarding keeping track of replaced computer components and failing to return the parts to Gunter? To bring charges of negligence against ACME Electronics, Mr. Gunter must realistically establish the six essential components of negligence: conduct, duty, breach of duty, actual cause, proximate cause, and damages.  Conduct : It can be proven that the repair department of ACME Electronics committed an omission (failure to act) when they neglected to tag the hard drive and gave Mr. Gunter the wrong hard drive.  Duty : After failing to return customer property, ACME Electronics put Mr. Gunter at serious risk due to their actions. It was ACME's responsibility to handle Mr. Gunter's hard drive with the proper standards of care.  Breach of Duty: Ideally, ACME would have had appropriate procedures in place to monitor the high volume of hard disk replacements. However, their failure to do so and their acknowledgement of the error that caused Mr. Gunter to lose important information amounts to a breach of duty.  Actual Cause: Mr. Gunter's irresponsibility in returning the incorrect hard drive and the sensitive data that was lost because of the carelessness.  Proximate Cause: The carelessness of ACME caused Mr. Gunter's consulting business to lose revenue, and it also took time and effort to retrieve data from the incorrect hard drive.  Damages: In this case, Mr. Gunter would be entitled to $800 in direct financial damages, which are reasonable and justified. The $5,000 request is irrational because Mr. Gunter's backup could have easily prevented any data loss and allowed the lost information to be stored safely. Ten thousand dollars in punitive damages would probably not be awarded because ACME Electronics had no intention of hurting or damaging Mr. Gunter. 2. Assuming Acme has been negligent, what defense(s) may be available to Acme to lessen or eliminate any liability on its part? To lessen their own liability, ACME may raise the following legal defenses:  Contributory Negligence: This situation, in which Mr. Gunter caused himself to suffer a loss due to his own carelessness, can be classified as "contributory negligence." Mr. Gunter could have reduced the actual damage if he had adhered to basic data protection and safety procedures, such as maintaining an external backup of the hard drive. Mr. Gunter would not be compensated for any losses he sustained because of ACME's negligence because he broke the duty to himself voluntarily.  Comparative Negligence: It evaluates, using the total damages, the percentage of damages awarded to Mr. Gunter and ACME Electronics. There are two types of this defense: pure comparative negligence and modified comparative negligence. Mr. Gunter will not be entitled to damages in a modified comparative negligence case if he is judged to be equally or more at

fault for the hard drive's data loss. Therefore, Gunter cannot reasonably be held liable for more than half of the loss in order to recover damages. However, pure comparative negligence would hold Mr. Gunter and ACME Electronics accountable for damages according to the proportion of their involvement in the negligence. Case B Questions – Statistical 3. Consider the sample of 600 past negligence cases. Suppose you are willing to let the 80% estimate be within .03 (3%) of the true proportion. You are willing to assume a 90% confidence. . (Hint: You may wish to review the concept of confidence intervals. Check any business statistics textbook, or go to http://www.davidmlane.com/hyperstat and check topics 8 and 10.) a) Is 600 an adequate sample size for the estimate of 80%? Show why or why not. The confidence interval, calculated with the normal approximation to the binomial distribution, is p ± Za/2√p(1-p)/n, or 0.8 ± (1.645). 600 / √ (0.8) (0.2) where n = 600 (680 is the actual sample size). 0.8 + 0.027 = 0.827 is the upper bound; 0.8 - 0.027 = 0.773 is the lower bound. Consequently, the true percentage will be included in 90% of all confidence intervals. b) Construct a 90% confidence interval on the estimate of 80%. How would you interpret it? Let 1 - α = 0.90 be the confidence interval. Consequently, α = 0.10. Each of the two tails has a probability of α/2 or 0.05. A typical table yields Za/2 (0.05) = 1.645. Za/2√p(1-p) / B is the sample size, or n = 1. 2 equals [(1.645) / (0.4)]. 2 ≈481 < 600. 4. Determine the expected value of the amount that could be paid to Gunter in a settlement. Use the 80% probability figure. Also determine a maximum and minimum expected value for the settlement figure based on the confidence interval above. Be sure to include all of the damages Gunter will be able to recover. How would you interpret your expected values? The following are the negligence claims that are being evaluated in this case: (1) $800 toward the expenses incurred by Gunter; (2) $5,000 toward the time required to replace misplaced materials. (0.8) (0.5) ($5,800) + (0.2) ($0) = $2320 is the expected value. $2,398 is the expected value based on the upper bound of the 0.827 confidence interval. Based on the lower bound of 0.773, $2,242 is the expected value. Assuming an 80% figure, the mean settlement comes to $2,320. $2,320 is a reasonable estimate if the 80% varies (assuming the 50% is correct), as the interval between $,2242 - $2,398 is small. Case C Question – Ethical & Strategic Issues

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5. Should Jetson attempt to settle the matter with Gunter before he files a lawsuit? If so, what would be the recommended monetary amount of the settlement? Be sure to include all of the statistical and legal issues involved as well as any ethical and strategic issues. Jetson should absolutely try to resolve the issue before Mr. Gunter files a lawsuit, as the estimated value of $2320 is a reasonable starting point for a settlement between the parties and far less than the initial claims put forth by Mr. Gunter. In this case, it would be prudent for ACME Electronics to submit an offer that includes the best settlement rather than incurring the lengthy and costly litigation costs of going to court. Ethical Issues: The most moral course of action for ACME Electronics would be to pay back Mr. Gunter for the money he spent on data recovery from the damaged hard drive. Based on ACME's acknowledgement, despite numerous hard drive replacements in October 2007, the incorrect hard drive was handed over, making it impossible for the company to find Mr. Gunter's hard drive. Assuming accountability for their actions is crucial and giving Mr. Gunter the $100 gift certificate as a settlement is unfair because it won't undo the harm that was done. Strategic Issues: Gunter should strategically consider the timing of his case, as he needs to file it before the Court adopts the new comparative negligence standard due to the one-year statute of limitations. It is possible that ACME will swiftly avoid liability if Gunter does not file the lawsuit within the allotted year. Furthermore, Gunter will not be able to settle the case quickly because ACME will have an advantage over him if the court does not change the law regarding the comparative negligence standard. Gunter should strategically consider the timeliness of the case, as he has a one-year statute of limitations and must file his complaint before the court adopts the new comparative negligence standard. It is possible that ACME won't be held accountable if Gunter doesn't file the lawsuit within a year. Furthermore, ACME will prevail against Gunter and the case will take longer to resolve if the Court does not change the laws governing the comparative negligence standard. Conclusion: In conclusion, the Otto Gunter v. ACME Electronics case highlights the intricate interaction between legal, statistical, ethical, and strategic factors. The carelessness with which ACME Electronics handled Mr. Gunter's hard drive is evident. The legal analysis highlights ACME's duty breach and the damages that resulted for Mr. Gunter, establishing the essential elements of negligence. Contributory and comparative negligence are two possible legal defenses that provide ACME with ways to lessen its liability. On the other hand, it seems disproportionate that Mr. Gunter is asking for $15,800 in compensation; a settlement estimate of $2,320 based on statistical probability would be more reasonable. The reliability of the statistical results is enhanced by the statistical analysis, which raises concerns about the sample size's suitability and creates a 90% confidence interval.

ACME ought to uphold ethics by accepting accountability and providing a just compensation that goes above and beyond the suggested $100 gift card. Timely resolution is strategically important to both parties, and Mr. Gunter is encouraged to file the lawsuit as soon as possible in order to take advantage of the current legal standards. Essentially, the best course of action is a fair settlement that takes Mr. Gunter's responsibilities and ACME's negligence into account. This case serves as a thorough teaching tool, pushing students to combine their legal and statistical understanding while negotiating the strategic and ethical aspects of actual business disputes.

ACME ELECTRONICS

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