Business Lawsuit - McDonalds - Essay Example

?Running head: Business Lawsuit Business Lawsuit On February 1992 in Albuquerque, New Mexico, Stella Liebeck bought McDonalds coffee from the drive through. While she was opening the lid to add creamer and sugar the coffee splashed on her lap causing third degree burn. It took two years for Stella Liebeck’s injury to heal completely. Stella Liebeck sued McDonalds for the damages. The case was tried in The Second Judicial District Court in Bernalillo county. The two main issue at the trial was of the temperature of the coffee served at McDonalds was not the normal that is usually brewed at home, instead it was striking 180 to 190 Fahrenheit. And secondly the cup in which the coffee was served did not indicate “caution”. Even though McDonalds knew about this situation as they had 700 claims filed on the same issue as Stella Liebeck they did not take any action. On August 18th 1994, jury reached its verdict, by applying the concept of comparative and punitive damages. Ms Liebeck was awarded 160.000$ as compensatory damages which included her medical expense and the loss of salary while she was away from her job, while 480,000$ were awarded as punitive damages by the trial court. McDonalds and Stella Liebeck later settled out of court for a confidential amount less than 600,000$. BUSINESS LAWSUITS McDonald’s is a cooperation that is in business since 1955. It has more than 33,000 restaurants worldwide, 1.7 million employees and is located in 119 countries. It has received several awards over the course of 56 years. Being the leading franchise they hold themselves and conduct of their business to high standards of fairness, honesty and integrity. But even though there top priority is customer satisfaction, sometimes unavoidable situations do arise, as happened in Liebeck v McDonald’s. This case is more commonly referred to as “McDonald’s coffee case”. The incident took place in Albuquerque, New Mexico, February 1992. Stella Liebeck, 79 year old women purchased coffee from McDonalds drive-through, she was accompanied by her grandson. To avoid any accident her grandson parked the car until she added sugar and creamer to her coffee. Stella placed the coffee cup between her knees and pulled the lid towards her in order to remove it, the entire content of the coffee spilled on her lap. As Stella Liebeck was wearing cotton sweatpants the coffee got absorbed instantly. She remained drenched in the hot coffee for about 90 seconds before she was rushed to the hospital. Ms.Liebecks injuries were grave. She suffered third degree burns which affected her thighs and buttocks she remained hospitalized for eight days, where she underwent dreadful medical procedure to remove dead skin and skin grafting. It took total of two years for Ms Liebeck to recover completely from McDonalds coffee accident. The case was tried in The Second Judicial District Court in Bernalillo County, New Mexico. The presiding Judge was Honorable Roberts Hayes Scott. During the trial it was found out that the coffee served at McDonalds was 180-190 Fahrenheit which was capable of causing third degree burn in just fraction of seconds, Reed Morgan the prosecution lawyer argued before the court that the coffee should be served not hotter than 140 Fahrenheit in order to avoid accidents which is normally the temperature at which coffee is brewed at home. The total amount of Ms Liebeck medical expenses was 10,000$ for which she claimed 20,000$ as compensation. Big business and multinational firms can do many things to avoid unpleasant situations like these from arising. On trial it was found that McDonalds had 700 other claims by people burned by coffee over the past ten years, in which some of the cases were similar to Ms.Liebeck on third degree burn. This shows the company’s attitude towards their business, as they very well knew of the danger and hazard but didn’t bother to protect the customers against that risk. The quality assurance manager admitted that burns would occur, but testified that McDonalds had no intention of reducing the "holding temperature" of its coffee. Even though the temperature at which it was poured in the Styrofoam cup was unfit for human consumption as it would burn the mouth. The company even admitted during the trial that the customers were unaware that they could suffer thirds degree burn. Secondly the most crucial point disclosed during the trial and which also became one of the aggravating factor later on was the statement on the lid of the coffee was not “warning, or caution” instead it was “reminder” which would not warn the customers what so ever. Considering the fact that McDonalds was aware of the danger they could have easily avoided further lawsuits by altering the temperature of the beverage. McDonalds gave much evidence in the contrary to prove the prosecution wrong. One argument presented forward by the defense lawyer was that, McDonalds serves coffee in its drive through was because those who buy it are typically commuters who consume it later, and the high temperature later gets stabilizes. But later a survey report by McDonalds showed that the customers preferred having the coffee while driving. John Selden rightly said that ignorance of law is not an excuse, not everyone in the country is up to date with the law passed, but if that can be used as an excuse, then all men will have to be acquitted. It won’t be wrong to say that McDonalds coffee case has opened gateway for litigants and It is unfair to those 700 case filed in the past ten years. Although Ms Liebeck suffered great damage, as she had to undergo the painful procedure of skin grafting. But on the other hand the hefty amount of punitive damage does not do justice to this, as the mistake on part of McDonalds was one which was not major as to its nature and any reasonable person would know what risk would follow from a spilling of hot coffee, which was just handed from the drive through window. McDonalds, requires that its coffee be prepared at very high temperatures, based on recommendations of coffee consultants and industry groups that say hot temperatures are necessary to fully extract the flavor during brewing. So it’s not morally and ethically right for holding McDonalds liable for practice that was enjoyed and required for maintaining its customer base, as a spokeswoman for Starbucks Coffee Co. adds, "Coffee is traditionally a hot beverage and is served hot and I would hope that this is an isolated incident." On August 18th 1994, jury reached its verdict. Jury applied the principle of relative negligence. Relative negligence is a limited defense which reduces the amount that the plaintiff can recover, owing to his own negligence which contributed to the injury. The jury found that McDonalds was 80% responsible for Ms Liebeck injury while Ms Liebeck was 20% responsible. The jury awarded 160.000$ as compensatory damages which included her medical expense and the loss of salary while she was away from her job. While 2.7 million dollars were awarded as punitive damages, punitive damages are a way of punishing the defendant for their misconduct. However the amount of punitive damages were reduced to 480,000$ by the trial court on which Judge Scott commented that the punitive amount declared by him was justified considering the reckless and callous conduct shown on the part of McDonalds. It’s a common practice in the industry that once a wrong happens, the two parties try to resolve the matter outside the court, similarly Ms Liebeck asked McDonalds for 20,000$ for the medical expense and the loss of her salary while she was out of work. But McDonalds refused and only offered 800$ which were not sufficient and thus rejected by Ms Liebeck. Only days before the trial, the judge ordered the parties to seek ADR (Alternative Dispute Resolution) and attend a mediation session, the mediator recommended McDonalds to settle for 225,000$, saying that jury would probably award this amount only. McDonalds didn’t pay heed to the advice. Although the decision by jury was upheld, but McDonalds and Liebeck appealed in December 1994, it was later found out the both the parties settled out for court for a confidential amount which was probably less than 600,000$. Similar lawsuits against McDonalds were rejected. In Bogle v McDonalds restaurant ltd. Field justice rejected the claim that McDonalds could have served it coffee at a lower temperature, the jest of his argument was that, tea and coffee ought to be brewed at a boiling temperature in order for it to release it flavors, and people generally like their tea or coffee to be hot and allow it to cool at the temperature they prefer. Likewise Judge Frank Easterbrook wrote a unanimous 7th circuit Court of Appeals opinion affirming dismissal of similar lawsuits. The opinion noted was that hot coffee (179 Fahrenheit) is not “unreasonably dangerous” the central point of his argument was that when the liquid is poured in the cup it increases it surface area and it cools, more heat is lost when a person puts the metal spoon and stairs the creamer and the sugar. After the verdict was given, Wagner asserted that now many fast food chains have started putting warning signs, including McDonalds and the sole purpose for this is to avoid further lawsuits and make things safer. Bibliography Bohlman, H. M. (2001). The Legal, Ethical, and International Environment of Business. South-Western College Pub. Curry, E. K. (2008). MBA Fundamentals Business Law. Kaplan Publishing. Dedman, J. (n.d.). http://abnormaluse.com/2011/01/stella-liebeck-mcdonalds-hot-coffee.html. Donald L. Carper, J. A. (2011). Understanding the Law. South-Western College Pub. http://www.docstoc.com/docs/70173149/Liebeck-v-McDonald%E2%80%99s-Restaurants. (n.d.). Read More