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 casehas 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,”or “Coffee Spill Burns Woman; Jury Awards $2.9 Million”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.
A detailed look at the facts of this case reveal that in light of McDonalds’ actions, the awards were justified:
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.
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.
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.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.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.
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
. Liebeck v. McDonald’s Restaurants, No. CV-93-02419, 1995 (N.M. Dist. Aug. 18, 1994).
. “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.
. “Coffee Spill Burns Woman; Jury Awards $2.9 Million,” Wall Street Journal, Aug. 19, 1994, at B3.
. 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.
. Gerlin, supra note 4, at A4.
. Morgan, S. Reed, “McDonald’s Burned Itself,” The Legal Times, Sept. 19, 1994, pg. 26.
. Morgan, supra note 5, at A20.
. 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.
. Gerlin, supra note 4, at A4.
. Morgan, supra note 7, pg. 26.
. § 908 (a); § 908 (e) Punitive Damages, Restatement of the Law, Second, Torts, American Law Institute (1979)
. Morgan, supra note 5, pg. 26.
. Howard, Theresa, “McDonald’s Settles Coffee Suit in Out-of-Court Agreement,” Nation’s Restaurant News, Dec. 12, 1994, pg. 1.