2005-12-16 Mediation
What Happened
Without giving away any "details", which are considered confidential under the mediation agreement (of which I somehow don't have a copy, so I can't be quite sure of what is protected), my guesses as to the Opposition's feelings about settling are much as I expected they would be, i.e. they are still convinced that they are the wronged party, and their settlement wishes are basically a mirror of my own.
We're going to schedule another mediation date in January, and I need to put together an accounting of what they would have been owed if we had had a working sales agreement – which I will present with a statement that I didn't make any such agreement, so don't owe them the amounts it may show (see "So Anyway" below for more on this). The last time I did such an accounting, however, the amount they were owed was still much less than their debt to me... but Lynne apparently described (to the mediator, who described it to me) the accounting method by which she believes these things were to be figured... but I think it's even less favorable to them than my method was. I'm going to write it down here because I don't think I can reasonably be expected to consider it "confidential".
What the mediator guy said that Lynne said was this: Let's say you have orders for 8 shirts, but you have to buy 12 in order to make the supplier's minimum. Let's also say you pay $10 per shirt to the supplier, and sell the shirts for $20 each. (All this is a reasonable approximation so far). So you're down $120 to buy the shirts from the supplier, but you gain $160 from the sale, leaving you a net profit of $40. Lynne considers the "80-20 split" to be calculated from that $40, i.e. I/vbz would owe Them ($40 x 0.8 =) $32, and keep the other $8.
Calculations
Some minor loose ends, about which I'll make some assumptions:
- I will assume that cost of shipping from supplier to vbz is included in the "cost of merchandise", and that the cost of shipping from vbz to the customer is deducted from the sale price. So (for example) if it cost $2 to send each of those 8 shirts, then each one only counts as $18, for a total of ($18 x 8 =) $144, leaving a profit of only $24 to be split up.
- I will assume that the following formula is correctly extrapolated from the single example given:
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Xd = (R - C) * 0.8
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As it happens, I have a database query which can give (R-C) by month or by year. Here are the figures through 2003 (we completely stopped working together in June of 2003, although I had pulled the Hull Road inventory from the "items available" listing some time earlier, so neither Lynne nor Bubba had actually been doing any work on vbz for some months prior to that, aside from a few images Bubba produced sometime earlier in the year):
| Year | NetGain | Receipts | Restocks | ShipCosts |
| 1999 | ($478.35) | $0.00 | $478.35 | $0.00 |
| 2000 | ($5,173.09) | $0.00 | $5,137.88 | $35.21 |
| 2001 | ($5,070.84) | $11,546.75 | $14,603.51 | $2,014.08 |
| 2002 | $1,344.01 | $17,180.92 | $13,819.52 | $2,017.39 |
| 2003 | $641.01 | $17,759.04 | $14,616.62 | $2,501.41 |
- NetGain = Receipts - Restocks - ShipCosts
- Receipts = total amount paid by the customer
- Restocks = cost of merchandise to vbz, including cost of shipping from supplier
- ShipCosts = shipping charges stated to customers
- the credit card processor takes a 2.5-3.5% cut out of this before vbz gets it, but the formula calls for the amount paid by the customer rather than the amount actually received by vbz
The database didn't track all the necessary information prior to 2003 or so, so those figures are based on retroactively-entered paperwork, some of which is missing. Going on the assumption that it's close enough, however, we can add up the profits for each year in order to find out the net amount from which 80% would have been owed to the Grievers if we had actually had an agreement in effect to disburse sales in this way:
-$ 478.35 -$5,173.09 -$5,070.84 +$1,344.01 +$ 320.51 (half of 641.01) ---------- -$ 9057.76
So I would owe the Grievers 80% of negative $9057.76, i.e. they would owe me $7246.21.
So Anyway
Next thing is to create a report which shows the details. In exchange for my producing this report, the Grievers have agreed to produce an inventory of what they have remaining in stock. I should have also asked for copies of all invoices and other paperwork in their possession, but oh well.
I should note a couple of things:
- If Lynne had come up with this sometime before things got acrimonious, I probably would have been fine with it -- although I certainly would have wanted it in writing, and I would also have insisted that various logistical details be spelled out, starting with exactly what it is that the Grievers do in order to earn their 80% of net, as well as specifically how they were to do it (see Unanswered Questions).
- It's also quite possible that Lynne actually did come to me and suggest this idea as a valid division of profit, and I might well have said it seemed reasonable. However, "Yeah, that sounds reasonable" does not equate – in my mind, anyway – to a verbal promise, much less a binding contract. Again, I would definitely have wanted terms specified before actually agreeing to it (i.e. making any promises, much less binding agreements), so I find it difficult to believe that this could be considered a contract. (On the other hand, if they really want to owe me another $9k, who am I to blow against the wind?)
Status Update
2007-03-02 I never did get around to producing the report because there never was a second mediation date set. Had a date been set for mediation, I would have made sure to come prepared with the agreed-upon report for that session. (As far as I know, the Grievers did not produce the inventory they agreed to produce either; I certainly have not seen one.)