MGT393H5 Study Guide - Midterm Guide: Harry Rosen Inc., Vehicle Insurance, Target Corporation

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Published on 13 Apr 2015
School
UTM
Department
Management
Course
MGT393H5
1
WINTER 2015
MGT 393 ASSIGNMENT #1 value 5%; DUE DATE As assigned in class.
Please Note: This assignment must be completed in groups of 2 and be no longer than 6 pages (typed, double-
spaced; Times New Roman Font 11; 1 ½ inch margins) in length.
Note: The events described below took place over a period of time.
Luigi Sarto was trained as a tailor in Italy and immigrated to Canada in 1980. Upon arriving in Canada, Luigi began to
work for Harry Rosen Inc. (“HRI”), a high end men’s clothing retailer as a tailor. Luigi worked at the HRI Bloor Street store,
primarily doing men’s suit alterations. In 2010. Luigi’s wife, Sofia, was killed in a car accident for which it was determined
that she was “at fault”. As the car insurance was capped at $500,000 and the lawsuit against Sofia’s estate by the driver
she hit was $1.6 million, all of Luigi’s and Sofia’s assets were depleted in this lawsuit. Unfortunately at the time of the
accident, the house and savings were all in Sofia’s name. In 2011, post lawsuit, Luigi in effect was starting over with no
assets.
After the death of his wife Luigi was quite depressed and this impacted his work performance. He was terminated from
HRI. Luigi’s twin brother, Mario, who operated a highly successful restaurant in Italy, sold it for a lot of money and moved
to Canada to help his brother.
As part of the starting over process, Luigi decided to commence a new venture. It was right around that time that Target
Stores were getting established in Canada (2012). Luigi made a deal with the Target store manager at Bloor and Kipling
(“Target Bloor”) 1. That he would provide “tailor services” to Target Bloor customers. More specifically this would be
shortening jeans and other clothing purchased in the store. He would be able to charge the customers a fee for this; 2.
That he could operate a “tailor shop” (200 square feet) within the Target-Bloor store for which he could charge customers
whatever fee he decided was appropriate. In exchange for the space, Target-Bloor would receive 30 percent of the
profits of the tailor shop operations.
Mario, before he opened his restaurant in Italy and subsequently came to Canada, was also a tailor. Mario worked with
Luigi in the tailor shop located at the Target location. Mario did all the accounting; met with customers; was involved in
the banking; was involved in any discussions with Target management. Mario did not need money but Luigi in his goal
for fairness and general equity with his brother gave Mario 35 percent of the profits at the end of the year. Mario always
gave the money back to his brother by paying for different personal expenses. Mario has not filed a Canadian tax return.
Luigi’s son, Pasquale had worked for three years for Canada Goose and was well connected with that company’s
management. Given his connections, Pasquale was given the rights to sell Canada Goose coats, which he did at his
father’s space at the Target store. When a coat is sold, the contribution margin on a coat is 40%. Pasquale gave his
father one-half of the contribution margin to reflect his father’s contribution in providing space and help. Once Pasquale
started selling Canada Goose coats, Luigi put up a large sign in the store which said, “Sarto Family Enterprises”.
A few things have recently happened that are of concern. First, Target has recently announced that it will be closing its
stores in Canada, including that at Bloor and Kipling. Target- Bloor rents that location from Plaza Realty Inc. (“PRI”). A
representative from PRI was talking to Luigi last Friday and said, “Target-Bloor has a 20 year lease. Right now it looks
like Target may be bankrupt. If we do not get all of our rents we will be suing you, your brother and son for all your
money as it is obvious that Target-Bloor and the three of you are carrying on business together and so all owe us money
for rent. The second problem had to do with an employee of Luigi. Apparently this employee, Frank Foley, had installed
a small hidden camera in the change room that was located in the 200 square feet that was occupied by the tailor shop.
Individuals that came to the shop used that change room to put on their new jeans (etc.) when they were being measured
for alterations. The employee was using the camera to take pictures of customers in various stages of undress. A
customer, Sarah Smiley, discovered the camera. Smiley has stated that she will be starting a class action lawsuit against
“the firm”which she described as “all those Sartos people”.
Luigi is very upset. He has stated, it is one thing for him to have trouble, but Pasquale and Mario should have nothing to
do with it. He has asked you, Bea Calm, to provide a complete legal analysis of the issues that you see may potentially
exist and to provide your preliminary conclusions and advice.
Mario has stated, I have spoke to a lawyer in Italy that definitively has stated, “Luigi, Pasquale and you are each doing
your own thing. Our case law basically supports that you have no liability for each other.”
REQUIRED: Assume the role of Bea Calm and prepare the information requested. (Do not discuss specific contract,
employment law or tort law issues nor issues pertaining to the quantum of damages)
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Document Summary

Mgt 393 assignment #1 value 5%; due date as assigned in class. Please note: this assignment must be completed in groups of 2 and be no longer than 6 pages (typed, double- spaced; times new roman font 11; 1 inch margins) in length. Note: the events described below took place over a period of time. Luigi sarto was trained as a tailor in italy and immigrated to canada in 1980. Upon arriving in canada, luigi began to work for harry rosen inc. ( hri ), a high end men"s clothing retailer as a tailor. Luigi worked at the hri bloor street store, primarily doing men"s suit alterations. Luigi"s wife, sofia, was killed in a car accident for which it was determined that she was at fault . As the car insurance was capped at ,000 and the lawsuit against sofia"s estate by the driver she hit was . 6 million, all of luigi"s and sofia"s assets were depleted in this lawsuit.

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