Legal Myths: The McDonald's "Hot Coffee" Case
In 1992 Stella Liebeck, a 79-year old retired sales clerk, bought a 49-cent cup of coffee from a drive-through McDonald’s in Albuquerque, New Mexico. She was in the passenger seat of a car driven by her grandson. Ms. Liebeck placed the cup between her legs and removed the lid to add cream and sugar when the hot coffee spilled out on her lap causing third-degree burns on her groin, inner thighs and buttocks.
This infamous case[1]has become a leading rallying point for those advocating restrictions on the ability of consumers to use the U.S. civil justice system to hold corporations accountable for the injuries they cause. A New Mexico jury awarded Ms. Liebeck $160,000 in compensatory damages and $2.7 million in punitive damages and, in an instant, the media and legal communities were up in arms. Newspaper headlines such as “Hot cup of coffee costs $2.9 million,”[2]or “Coffee Spill Burns Woman; Jury Awards $2.9 Million”[3]painted the picture of a “runaway jury,” an unreasonable award and a perverted system of justice. However, both the media and those who want to take away consumers’ legal rights conveniently overlooked the facts of the case, creating a “legal myth,” a poster-case for corporate entities with a vested interest in limiting the legal rights of consumers.
The Real Facts
A detailed look at the facts of this case reveal that, in light of McDonalds’ reckless actions, the awards were justified:
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By its own corporate standards, McDonald’s sells coffee at 180 to 190 degrees Fahrenheit. A scientist testifying for McDonald’s argued that any coffee hotter than 130 degrees could produce third degree burns. However, a doctor testifying on behalf of Ms. Liebeck noted that it takes less than three seconds to produce a third degree burn at 190 degrees.[4]
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During trial, McDonald’s admitted that it had known about the risk of serious burns from its coffee for more than 10 years. From 1982 to 1992, McDonald’s received more than 700 reports of burns from scalding coffee; some of the injured were children and infants. Many customers received severe burns to the genital area, perineum, inner thighs and buttocks.[5]In addition, many of these claims were settled, amounting to more than $500,000.[6]
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As a result of her injuries, Ms. Liebeck spent eight days in a hospital. In that time she underwent expensive treatments for third-degree burns including debridement (removal of dead tissue) and skin grafting. The burns left her scarred and disabled for more than two years.[8]Before a suit was ever filed, Liebeck informed McDonald’s about her injuries and asked for compensation for her medical bills, which totaled almost $11,000.[9]McDonald’s countered with a ludicrously low $800 offer.
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McDonald’s had several other chances to settle the case before trial: At one point, Liebeck’s attorney offered to settle for $300,000.[10] In addition, days before the trial, the judge ordered both sides into a mediated settlement conference where the mediator, a retired judge, recommended that McDonald’s settle for $225,000.[11] McDonald’s refused all attempts to settle the case.
The Findings
The jury found that Ms. Liebeck suffered $200,000 in compensatory damages for her medical costs and disability. The award was reduced to $160,000 since the jury determined that 20 percent of the fault for the injury belonged with Ms. Liebeck for spilling the coffee.[12]
Based on its finding that McDonald’s had engaged in willful, reckless, malicious or wanton conduct, the jury then awarded $2.7 million in punitive damages; essential to the size of the award was the fact that at the time McDonald’s made $1.35 million in coffee sales daily.[13]
Since the purposes of awarding punitive damages are to punish the person or company doing the wrongful act and to discourage him and others from similar conduct in the future, the degree of punishment or deterrence resulting from a judgment is in proportion to the wealth of the guilty person.[14]Punitive damages are supposed to be large enough to send a message to the wrongdoer; limited punitive awards when applied to wealthy corporations, means the signal they are designed to send will not be heard. The trial court refused to grant McDonald’s a retrial, finding that its behavior was “callous.” The judge, however, announced in open court a few days after the trial that he would reduce the punitive damages award to $480,000.[15]Both sides appealed the decision.
Before the appeals could be heard the parties reached an out-of-court agreement for an undisclosed amount of money. As part of this settlement, McDonald’s demanded that no one could release the details of the case.[16]
Based on the facts, Corporate America’s and much of the media’s trivial portrayal of the case is deceptive and disgraceful. They have painted a misleading picture of a “legal horror story” when in fact, the case demonstrates a legal system that punishes corporations for misconduct and protects consumers who may be victims of their wrongdoing.
Note: The nature of the private settlement and lack of public court documents resulted in the use of primarily newspaper sources.
November 30, 1999
[1]. Liebeck v. McDonald’s Restaurants, No. CV-93-02419, 1995 (N.M. Dist. Aug. 18, 1994).
[2]. “Hot cup of coffee costs $2.9 million; Damages awarded to woman scalded at McDonald’s.” The Orange County Register, Aug. 19, 1994, at C1.
[3]. “Coffee Spill Burns Woman; Jury Awards $2.9 Million,” Wall Street Journal, Aug. 19, 1994, at B3.
[4]. Gerlin, Andrea, “A Matter of Degree: How a Jury Decided McDonald’s Should Pay a Woman Millions for a Hot-Coffee Spill,” Wall Street Journal, Sept. 1, 1994, at A1.
[5]. Morgan, S. Reed, “Verdict Against McDonald’s is Fully Justified,” The National Law Journal, Vol. 17 No. 8; Oct. 24, 1996, at A20.
[6]. Gerlin, supra note 4, at A4.
[7]. Morgan, S. Reed, “McDonald’s Burned Itself,” The Legal Times, Sept. 19, 1994, pg. 26.
[8]. Morgan, supra note 5, at A20.
[9]. Sherowski, Elizabeth, “Hot Coffee, Cold Cash: Making the Most of Alternative Dispute Resolution in High Stakes Personal Injury Lawsuits,” 11 Ohio St. J. on Disp. Resol. 521, 1996.
[10]“McDonald’s Settles Lawsuit of Woman Burned by Coffee,” Liability Week, Vol. 9 No. 47; Dec. 5, 1994.
[11]. Gerlin, supra note 4, at A4.
[12] Morgan, supra note 5, at A20.
[13]. Morgan, supra note 7, pg. 26.
[14]. § 908 (a); § 908 (e) Punitive Damages, Restatement of the Law, Second, Torts, American Law Institute (1979)
[15]. Morgan, supra note 5, pg. 26.
[16]. Howard, Theresa, “McDonald’s Settles Coffee Suit in Out-of-Court Agreement,” Nation’s Restaurant News, Dec. 12, 1994, pg. 1.
Other Personal Injury Myths
Our civil justice system was created to ensure citizens a way to enforce their legal rights. Without our system, all power lies with those in the best position to assert it, usually big corporations with money and resources not available to the average person. Those corporations, among them several major insurance companies, have used their money and power to wage a campaign against personal injury plaintiffs, personal injury lawyers, and the personal injury system in America.
The campaign has been very successful in creating myths about personal injury law in the United States, myths that not only impact voters and legislators, but aims to discourage people who have suffered personal injuries and have legitimate costs and losses from pursuing fair compensation.
If you're uncertain about pursuing a personal injury case or speaking with a personal injury attorney, consider the truth behind some of the most popular personal injury myths:
Personal Injury Myth # 1:
Personal Injury Lawyers Get Rich Filing Frivolous Lawsuits
One of the most popular ideas advanced by the insurance companies and their lobbyist is that personal injury lawyers are getting rich on your dime. They lie and state that frivolous lawsuits are costing the average citizen thousands of dollars a year in insurance premiums, taxes to support the judicial system, and other expenses.
Their hired gun lobbyists paint pictures of opportunistic personal injury attorneys and opportunistic plaintiffs stealing verdicts from poor, victimized corporations and insurance companies. While it's a compelling picture, it's not an accurate one. Our court system is designed to screen out such cases, and does so very effectively. A personal injury case without merit can be dismissed by the judge. Perhaps more importantly, provisions in the law and court rules impose sanctions on any unscrupulous lawyer who files frivolous claims.
Of course, no personal injury lawyer gets rich by paying fines and no personal injury lawyer wants to be sanctioned by the court in which he makes his living. Thus, it's in the best interests of the personal injury lawyer and the personal injury plaintiff for the attorney to make honest, good, reasonable decisions about the validity of a claim before he files the case.
Personal Injury Myth # 2:
Punitive Damages Make it Too Expensive for Companies to do Business and Cost Consumers Money
In a sense, this one is true. Punitive damages do make it more expensive for companies to do business, but not in the way you've been led to believe. The real reason punitive damages make it more expensive for companies to do business isn't because they're paying out huge, unwarranted punitive damage awards, or even because their insurance premiums are escalating. Punitive damages make it expensive for a corporation to do business because punitive damages make it dangerous for a corporation to disregard consumer safety.
Corporations make business decisions based primarily on profitability. In many cases, it's more profitable for a business to cut a few corners and take a few risks, and major corporations have repeatedly proven themselves willing to take risks with the lives of a few customers here and there in the interests of profit. They're somewhat less willing to take risks with their own money, and so the scepter of punitive damages-where punitive damage statutes haven't been gutted-forces them to make decisions more in line with the public interest. Often, those decisions do cost these corporations money, but that money is spent making safer products.
One of the most dramatic and well documented examples of this kind of corporate thinking came in the early 1970s when Ford Motor Company discovered that the Ford Pinto was designed in such a way that the fuel tank was susceptible to leakage and catching fire in relatively low-speed, low-impact collisions. Due to personal injury attorneys' efforts, evidence emerged that Ford had been aware of the defect, and had conducted a cost-benefit analysis in which it determined that it would be less expensive to pay damages for the projected burn deaths the design defect would cause than it would be to recall and repair the cars. Thus, Ford decided not to correct the problem, and many people unecessarily burned to death in relatively minor Pinto collisions. Without the intervention of dedicated personal injury attorneys who represented early victims of these accidents, Ford might have waited much longer to recall the cars, or never have recalled them, and many more deaths and injuries might have occurred. The plaintiffs in those early cases and their personal injury lawyers undoubtedly saved untold many lives.
Punitive damages in litigation against Ford at that time were intended, as explicitly stated by jurors, to make certain that it was not profitable for Ford to have engaged in that kind of thinking, and to discourage Ford and other companies from expecting to profit from that kind of decision-making in the future.
Limitations on punitive damage awards in the past several years have impacted this scenario in two important ways. First, they have largely removed the possibility, in many states, of punitive damage awards significantly impacting a company's cost of doing business. Unfortunately, that change has resulted in a new ability on the part of those companies to comfortably disregard consumer safety.
Personal Injury Myth # 3:
Punitive Damages Give Personal Injury Plaintiffs an Undeserved Windfall
Another common objection to punitive damage awards is that the plaintiff in the personal injury case doesn't "deserve" all that money. The purpose of punitive damages, of course, is to discourage the wrongdoer and not to provide the personal injury plaintiff with a windfall, but many people are still uncomfortable with the idea that some personal injury victim is going to "get rich off" a personal injury claim.
If the occasional personal injury victim did get more than he deserved in the effort to discourage corporations from playing fast and loose with consumer safety, it would probably be a small price to pay. The truth, however, is that such windfalls are extremely rare.
Personal Injury Myth # 4:
Only People Who Want More than Their Fair Share File Personal Injury Cases
In a perfect world where every business and insurance company honored its commitments and obligations, this myth might hold true. Unfortunately, that's rarely the case. The vast majority of personal injury cases involve insurance companies, and insurance companies make their money by collecting premiums and then not paying out claims. The more they have to pay out in claims, the lower their profits. That means that insurance company representatives are trained to encourage personal injury victims to accept less than they're entitled to, to believe that they don't have legitimate claims, to delay payment of medical bills and other pressing expenses as a means of putting pressure on the victim to accept a lower personal injury settlement. Some insurance companies even interfere with medical treatment by refusing to authorize procedures or delaying payment.
Thus, hiring a personal injury lawyer is often the only way a personal injury victim can get his legitimate expenses covered by the person or company responsible for his injuries. Insurance companies are well aware of this, and so train their representatives to make every effort to discourage-or even prevent-injury victims from retaining personal injury lawyers. So it's true that personal injury victims who work with personal injury lawyers are more likely to receive larger personal injury settlements. It's not, however, because those personal injury lawyers are "holding up" the insurance companies; it's because victims who aren't represented by personal injury lawyers often get cheated.
Don't Let These Myths Keep You From Getting the Help You Need
If you've been the victim of a personal injury and you believe someone else was responsible, find out more about your rights and options today, before you talk to the insurance company representatives and put your claim at risk. Call us at (801) 333-7300 or contact us to arrange a free consultation with a personal injury attorney in your area.
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