By Lynn Ashby 18 July 2011
GROUNDS FOR A SUIT
Soon to be made into a major motion picture. In fact, HBO has just made it into a movie. The story is called “Hot Coffee” and involves the well-known but vastly twisted story of 79-year-old Stella Liebeck, her Houston lawyer, the McDonald’s company and a $2.9 million award for spilled coffee. The story has gone up on billboards, quoted by politicians and there are even the annual “Stella Awards,” given to any frivolous lawsuit.
So let’s play myth-busters again and set the story straight, just remembering that people believe what they want to believe – facts don’t matter. It is agreed that in February of 1992 Liebeck, in a Ford Probe, went to a McDonald’s take-out window in Albuquerque where she ordered a 49-cent cup of coffee. Soon thereafter the coffee spilled into her lap, burning her. She sued and received $2.9 million, a payout which has served as the poster child these 19 years as the Awful Example of trial lawyer abuse and excess rewards.
Now the facts: Liebeck was not driving; her nephew, Chris, was. So no story about driving-while-not-concentrating. They were not moving when the accident occurred. Liebeck was in the passenger’s seat when Chris parked the car a short distance from the take-out window so that Liebeck could add cream and sugar to her coffee. She placed the coffee cup between her knees and pulled the far side of the lid. It spilled.
She was rushed to a hospital where, her treating physician later testified, it was determined she had third degree burns over 6 percent of her body and lesser burns over 16 percent. She remained in the hospital for eight days while she underwent skin grafting. During this period, Liebeck lost 20 pounds, nearly 20 percent of her body weight, reducing her down to 83 pounds. Two years of medical treatment followed. The surgeon also testified it was one of the worst scald burns he had ever seen. A professor from UT-Austin who was a burn expert testified the risk involved was unacceptable.
Liebeck sought to settle with McDonald’s for $20,000 to cover her actual and anticipated expenses. It broke down to $10,500 for her past medical expenses, her anticipated future medical expenses were approximately $2,500; and her loss of income was approximately $5,000 for a total of $18,000. (I guess the remaining $2,000 was the lawyer’s cut.) McDonald’s offered $800 and wouldn’t budge. So she retained Houston attorney Reed Morgan who filed suit in New Mexico District Court accusing McDonald’s of “gross negligence” for selling coffee that was “unreasonably dangerous” and “defectively manufactured.” Morgan offered to settle for $90,000. Mickey D again refused. Just before the trial, Morgan came back with an even higher offer: $300,000, and a mediator suggested $225,000, but McDonald’s refused.
Soon that 300k offer looked like a bargain, because during the trial jurors learned that McDonald’s, according to corporate rules, sold its coffee at 180-190 degrees. Other establishments, it was charged, sold coffee at substantially lower temperatures, and coffee served at home is generally 135 to 140 degrees. (It is argued other major vendors of coffee, including Starbucks, Dunkin’ Donuts, Wendy’s, and Burger King, produce coffee at a similar or higher temperature, and have been sued over third-degree burns.)
At McDonald’s temperatures the coffee, if spilled, could cause third-degree burns in two to seven seconds. It was too hot to drink, therefore under the “implied warranty of fitness” imposed by the Uniform Commercial Code, the coffee was not fit for consumption as sold. Another point: McDonald’s had known about its hot-coffee hazard for more than 10 years and had been hit with at least 700 lawsuits from 1982 to ’92 based on scaldings similar to those of Liebeck’s.
A McDonald’s expert witness said the number of burned people was statistically “trivial.” McDonald’s quality control manager, Christopher Appleton, testified that this number of injuries was insufficient to cause the company to evaluate its practices. He argued that all foods hotter than 130 degrees constituted a burn hazard, and that restaurants had more pressing dangers to warn about.
McDonald’s did not warn its customers about the scalding coffee, admitted the coffee was “not fit for consumption” but had no plans to change anything. McDonald’s also asserted that customers buy coffee on their way to work or home, intending to consume it there. Yet the company’s own research showed that customers intend to consume the coffee immediately while driving.
The jury found for Liebeck and awarded her $2.86 million. Why that specific amount of money? This last point is most important: the judge didn’t award those millions, the lawyers didn’t do it. The amount was set by the jurors – people like you and me. They awarded Liebeck $200,000 for compensatory damages, reduced by 20 percent for her own negligence to $160,000. McDonald’s sells 1 billion cups of coffee a year — it generates $1.3 million a day for the company. So the jury fined McDonald’s two days’ coffee sales, or $2.7 million in punitive damages. It all came to about $2.86 million, minus $50,000 in expenses not counting legal fees.
But wait: the judge let stand the compensatory damages but cut the punitive award to $480,000 or three times compensatory damages. Thus that $2.86 million wound up as $640,000. The judge said the amount was appropriate for McDonald’s “willful, wanton, reckless and what the court finds was callous” behavior.The decision was appealed by both McDonald’s and Liebeck in December 1994, but the parties settled out of court for an undisclosed amount less than $600,000. It is not clear if Liebeck’s legal fees were deducted from that amount.
In any event, the next time someone trots out the “two-million dollar coffee burn,” hand them this column (which you will no doubt will be carrying in your wallet). Then ask what amount of McMoney they would take to sit still while you pour scalding coffee on their McCrotch. Include hospital bills.
Ashby sips cold coffee at email@example.com