Question

Perhaps, there is no greater case standing for the excesses of litigation than the McDonald's Coffee case. If you are not familiar with this case, Mrs. Stella Liebeck (79 years old) was riding shotgun in the McDonald's drive-thru and ordered a cup of coffee. She set the cup of coffee between her legs and as her son took off, the lid on the coffee came loose resulting in scalding hot coffee burning Mrs. Liebeck's groin. She sued McDonald's alleging several different theories including breach of warranty. At the conclusion of her jury trial, Mrs. Liebeck received $160,000 in compensatory damages and $2.7 million in punitive damages, much to the outrage of the general public. In fact, in one of the great television parodies on this case and our legal system, an episode of Seinfeld lampooned Mrs. Liebeck's result

But if we dig deeper, you might find some interesting facts about Mrs. Liebeck's case. For example:

McDonald's served its coffee generally at 180-190 degrees Faherenheit.

During discovery, McDonald's had faced more than 700 claims by customers who had been burned by their coffee between 1982 and 1992.

Generally, most other establishments serve coffee at 135-140 degrees.

McDonald's quality assurance manager testified that burn hazards exist on any food substance served above 140 degrees.

Mrs. Liebeck required a vascular surgeon to repair her burns by skin graft over 6% of her body.

The trial court reduced the punitive damage award to $480,000.

Mrs. Liebeck initially offered to settle for $20,000 to cover her medical costs. McDonald's refused.

The questions to be discussed this week are as follows: Do you think McDonald's breached it's implied warranty when it sold Ms Liebeck her coffee? Do you think the trial court should have downwardly reduced the punitive damages award from $2.7M to $480K? Could there be any business justification for McDonald's to essentially ignore the 700 claims for hot coffee made between 1982-1992? Explain.

Answer 1

Do you think McDonald's breached it's implied warranty when it sold Ms Liebeck her coffee?

Yes, McDonald's has breached it's implied warranties and fitness for perpetual purpose when it sold coffee for Ms Liebeck. During investigation it is found that McDonald's has sold the defective product. A warranty is like promise, When the McDonald's employee hands the up of coffee to a customer , it is like McDonald's saying " I promise that this coffee is drinkable and also the up of tea is served in is suit able" . McDonald's was know that the buyer of the coffee wanted to drink it and buyer will expect from McDonald's that they will sell the coffee which they can drink it.but here in this case the promise is broken ,the company was selling the coffee which was 30-40 degrees hotter than which is recommended. The coffee was not just hot , but it was dangerous hot, it caused serious burn to the customer.

Do you think the trial court should have downward reduced the punitive damages award from $2.7M to $480K?

In this case even the lady Ms Liebeck also did bear the some responsibility for the incident which happened. Initially the trial court was decided to put $2,700,000.00 in punitive damage. later it was decide that there was 20 percent fault of the plaintiff and 80 percent fault from the side of company, And also trial court probably believed that the punitive damage is too high , since there is a 20 percent fault from the plaintiff the award was reduced to  $480,000. However even though the judge reduced the punitive damage award, he was not able to conclude that company conduct was" willful, callous and reckless". I believe whatever judgement given by the court is as required.

Could there be any business justification for McDonald's to essentially ignore the 700 claims for hot coffee made between 1982-1992?   

McDonald's knew about this risk more than 10 years, More than 700 claims for the hot coffee are made against the company during 1982 - 1992. Some of the cases are settled with payment.During investigation the company has admitted that they have kept the coffee temperature between 180-190 degrees Fahrenheit, They kept this temperature based on the advice of the consultant, it was the range of heat required to maintain the taste. They also claimed that customer customers will intended to consume the coffee one after thy go to the home or work, by that time the coffee would have cooled down. They also argued that customer was knew that coffee was that hot and they want it in that way.