For July at the Multiplex Case, The days had been extremely hot. It had been hot

Question

For July at the Multiplex Case, The days had been extremely hot. It had been hotter than normal. In addition, the moisture coming up from the gulf had increased the humidity to almost unbearable levels. It was under these circumstances that Tommy decided to go see a movie. The theater would at least be air conditioned and would provide some welcome relief from the weather.
Tommy looked in the movie section of the newspaper to see what movies were being screened in his area. He saw that the highly anticipated movie “The Governator” was being shown at the nearby Royal 16 Theater complex in the Eastfield Mall. The newspaper advertisement indicated that the movie was scheduled to begin in 30 minutes, at 1:00 pm.
Tommy got his wallet and car keys, jumped into his car, and sped off to the mall. Since he always had difficulty finding a seat in the dark, one thing Tommy did not want was to be late for the beginning of the movie. Once the lights were out, he could barely see where he was going.
Tommy made it to the Royal Theater in 15 minutes. While at the ticket window to purchase his ticket, Tommy asked the cashier when the movie was scheduled to begin. The cashier told him that the movie would begin in 15 minutes, at 1:00 pm, the time posted on the marquee.
Tommy asked what was the cost of an admission ticket to see “The Governator.” The clerk replied, “nine dollars.” Tommy exclaimed, “Nine dollars, why so expensive? Don’t you give any discount for an early movie?” The cashier replied that because this was a long awaited “blockbuster movie” the theater owner was not reducing the price for early afternoon showings. Tommy reluctantly paid the nine dollars and was given a ticket of admission that stated the movie would begin at 1 pm. The ticket contained no other relevant statements.
Tommy was not a regular moviegoer. He had not been to the movies for several years because he was too busy. He was a business major at the local university and worked about 20 hours a week. Attending classes, studying, and working left him very little time for entertainment.
Having already parted with nine hard earned dollars, Tommy reluctantly decided to stop at the refreshment counter. The line was long, but Tommy got in line anyway. After spending another nine dollars for a large tub of buttered popcorn, a large iced soda, and a super-sized candy bar, Tommy hurried off in the direction of the sixteen movie viewing rooms in search of the one showing “The Governator.”
Tommy found the right theatre room at 12:58 p.m. He walked down the aisle, found a suitable row, and headed for a selected seat. Tommy softly exclaimed, “Pardon me, excuse me, pardon me,” as he squeezed and climbed past other moviegoers to finally get to his seat. Tommy settled into his seat as best he could (with a little less popcorn and soda, but still clutching his candy bar). He let out a big sigh of relief. He was seated with 10 seconds to spare. The lights began to dim, and then Tommy uttered “. . . what the (expletive deleted) was this? A commercial!” Tommy was outraged. He had paid eighteen dollars to watch commercials? All that hurrying, all that worrying, all that anxiety to find his seat before the movie would begin. All that, just to see commercials!
As a matter of fact, twenty minutes of commercials were shown before the movie began. Tommy endured the commercials. After all, the theater was air conditioned and comfortable. Finally the movie started. However, very early into the showing, it was clear to Tommy that this was the worst movie ever made. He decided to give the movie a chance to improve. Tommy watched the movie for another 30 minutes, but the movie did not get any better. Tommy stumbled and fumbled his way out of the viewing

Assume that a contract exists between Tommy and the Royal Theater. Further assume that one of the terms of the contract provides that the movie will begin at 1 PM. What liability, if any, does Royal Theater have for fraud? You have reviewed Royal Theater’s potential legal liability. Mr. Plex seeks additional guidance. With respect to surveying moviegoers, Mr. Plex wants advice on how a survey could be conducted and how the data will be analyzed once it is collected. After considering the survey design issue, your firm provided Mr. Plex with guidance on the survey design and the costs associated with conducting a random sampling of moviegoers. After reviewing the information provided by your firm, Mr. Plex and the consortium decided to have your firm randomly sample 100 patrons and analyze the results. The sample revealed that 6 out of the 100 patrons surveyed agreed with Tommy and resented the ads.

Explanation / Answer

The essential requirements to establish a fraud are as follows.

(a) Misrepresentation of facts

(b) Knowledge of falsity on the part of the defendant

(c) Intent to induce alliance

(d) Justifiable reliance

(e) Damages caused as a result.

The misrepresentation is valid, as the ticket as well as timings indicated on the marquee suggested that the show will start at 1 PM. The owners of the theatre knew the fact that show in fact starts at 1:20 PM, but with an intention to lure the customers, made a false prepresentation. Further, the plaintiff relied on the misrepresentation and bought the ticket, thus entered into contract. The last point however, is difficult to establish, as the plaintiff did not suffer any significant damages as a result of show starting late. The fact that he did not like the movie, is another issue, but without proving that a reasonable financial loss incurred as the misrepresentation, the fraud can not be established.

The survey should be used to find out whether the sample observations were purely out of chance or influenced by a non random cause. For this, a limit needs to be fixed as a percentage of patrons, above which there is bound to have a cause behind the pattern. We take the confidence interval as 95%.

We establish hypotheses as

Null hypothesis - The observations are entirely out of chance

H0 : P = n%

Alternate Hypothesis - The observations are influenced by a non random cause

H1 : P<n%

For the survey

n= 100

x=6

confidence interval = 95%

p values are determined as 0.0134 and 0.106

which suggst that the probability of the people resenting the advertisements is between 1.34% and 10.6%.

The comapny needs to see if this limit is within or beyond their predetermined value of n% and decide whether to reject the null hypothesis or not, and take correective actions on the basis of the findings. For example if they take n= 10%, there is significant cause of resentment among viewers. On other hand if n=15%, the resentment of 6 out of 100 can be seen as a random event without any non random cause.

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