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:
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.
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.In addition, many of these claims were settled, amounting to more than $500,000.
Witnesses for McDonald’s testified that consumers were not aware of the extent of danger from coffee spills served at the company’s required temperature. McDonald’s admitted it did not warn customers and could offer no explanation as to why it did not.
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.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.McDonald’s countered with a ludicrously low $800 offer.
McDonald’s had several other chances to settle the case before trial: At one point, Liebeck’s attorney offered to settle for $300,000. 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. McDonald’s refused all attempts to settle the case.
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.