Best Avenue to pursue?

It does sound like your daughter was used through the holidays and then let go unfairly, but I want to pose a question to you instead of going through the legal jargon since for the time, money and effort it would take to file a suit against this manager over $50 would be a waste of your time. Your daughter is 17 and this is such a great example of a situation that has provided you the opportunity to teach your daughter something, the question is what would you like to teach her?

You can file a lawsuit, spend money on lawyers for him calling your daughter a thief or you can teach your daughter that suing people doesn't help anyone and that things happen and you have to know you didn't steal it and teach her the steps to set things right at least for herself. Here is what I think would be a better option to teach your daughter how to deal with real world problems, false accusations and bad bosses - tell her to:

1) Go to the manager again and say that she wants to let him know that she did not steal the item
2) If the manager still says she stole it then file a complaint with the district manager above him
3) Look for a new job and learn to keep receipts if you purchase something

If she is unwilling to do that, you may have to accept that maybe she did steal it. I was a straight A student, but teenagers make bad choices sometimes. This way she can use this as a learning experience.

Unless he is pressing some sort of legal charges against your daughter it really isn't worth any legal action. It would cost way more and more hassles then it is worth.

Learn to keep your receipts. Tell her to go find another job, which shouldn't be hard if she is a straight A student.

Yes, he probably was in the wrong. but that is his karma, and something he will have to live with.

This should be chalked up to lesson learned. Keep your receipts always. She really has no grounds for a suit and it will just end up costing you a lot of money. I would just move on and only take action if that employer says anything negative to a new employer about her. That is against the law. In the future be sure to follow all store policies requiring employee purchases and make sure you cover yourself with receipts and even a signature or something from manager.