Question

In a world of get-rich-quick schemes, few are mentioned more frequently than lawsuits. One of the reasons is the infamous McDonald’s coffee case (Liebeck v. McDonald’s Restaurants). This is what happened in 1992 in Albuquerque, New Mexico. Stella Liebeck, seventy-nine, was riding in a car driven by her grandson. They stopped at a McDonald’s drive-through, where she purchased a Styrofoam cup of coffee. Wanting to add cream and sugar, she squeezed the cup between her knees and pulled off the plastic lid. The entire thing spilled back into her lap. The searing liquid left her with extensive third-degree burns. Eight days of hospitalization—which included skin grafts—were required. Initially, she sought $20,000 from McDonald’s, which was more or less the cost of her medical bills. McDonald’s refused. They went to court. There it came to light that about seven hundred claims had been made by consumers between 1982 and 1992 for similar incidents. This seems to indicate that McDonald’s knew—or at least should have known—that the hot coffee was a problem. Most of the rest of the case turned around temperature questions. McDonald’s admitted that they served their coffee at 185 degrees, which will burn the mouth and throat and is about 50 degrees higher than typical homemade coffee. More importantly, coffee served at temperatures up to 155 degrees won’t cause burns, but the danger rises abruptly with each degree above that limit. So why did McDonald’s serve it so hot? Most customers, the company claimed, bought on the way to work or home and would drink it on arrival. The high temperature would keep it fresh until then. Unfortunately, internal documents showed that McDonald’s knew their customers intended to drink the coffee in the car immediately after purchase. Next, McDonald’s asserted that their customers wanted their coffee hot. The restaurant conceded, however, that customers were unaware of the serious burn danger and that no adequate warning of the threat’s severity was provided. Finally, the jury awarded Liebeck $160,000 in compensatory damages and $2.7 million in punitive damages (about two days’ worth of McDonalds’ coffee sales). The judge, however, reduced the $2.7 million to $480,000. McDonald’s threatened to appeal, and the two sides eventually came to a private settlement agreement.

In ethical terms, justify the original jury award to Liebeck: $160,000 in compensatory damages and $2.7 million in punitive damages (about two days of McDonalds’ coffee sales).

Of these three ethical structures for conceiving of the coffee-buying consumer and her protections—caveat emptor, the implicit contract, and manufacturer liability—which do you believe is best? Why?

Answer 1

a)The original award of $160,000 in compensatory damages was given to her because the jury felt that she was indeed in the right when it came to the temperature and recklessness of the restaurant. On the other hand they found her 20% at fault which is why she received that amount in the first place. In other words she was not responsible by putting a hot beverage in between her legs. They were basically implying that she knows the risks of hot beverages. The second amount of money of $2.7 million was excessive from the beginning. That damage awards was then brought down to $480,000 because the trail judge found McDonald’s actions “willful and reckless”.

b)I think that of the three the ethical structure that is best is caveat emptor. I believe that the consumer should be responsible for not only examining the product but making sure that the product is edible. In my opinion the consumer should’ve been responsible for not putting the coffee between her legs. And she should’ve been responsible for verifying how hot it was.