Liebeck versus McDonald's Restaurants - Essay Example

Product Liability: Frivolous? Both the McDonald’s Coffee Case and The American Pants Case were landmark cases concerning the somewhat controversial nature of product liability tort law in the US. Both were branded as ‘frivolous’ for their excessive, unreasonable nature – including their considered complete waste of time of the judicial system. But where are the limits in defining the law of product liability? In what manner should blame be placed, and what implications could reforms have for the future of the law in this area? Where the McDonald’s case portrays the courts’ willingness to massively punish large corporations financially, the latter ironically suggests what claims could arise if such a practice were to be over-applied. It is clear by both cases that a balance must be struck which finds a middle-ground between the two extremes. Liebeck v McDonalds Restaurants Facts In 1992, Stella Liebeck bought a cup of coffee from her local drive-through McDonald’s restaurant in New Mexico. Having stopped to sugar the coffee, she spilled the contents over her lap upon trying to remove the lid. Her upper legs, groin and buttocks suffered third-degree burns and she spent over a week in hospital to undergo skin grafts and a further two years of treatment. As a result, she lost a considerable deal of weight, and incurred medical costs. A battle then ensued between McDonald’s and Steinbeck, over a settlement for Steinbeck’s medical costs – McDonald’s initially would not cover even the medical costs, and offered a modest $800. Steinbeck then brought a claim of gross negligence, stating that the coffee manufactured by McDonald’s was defective and unreasonably dangerous. McDonald’s refused all offers to settle for various sums of money before the trial took place. Issues The main issue surrounding Liebeck’s case was the temperature at which McDonald’s served its coffee. It was argued that the high temperature would cause third-degree burns in very little time, and that a slight reduction would provide valuable time allowing the spillage to be removed from the skin and reduce the extent of burns. McDonald’s argued that serving coffee at such a temperature would allow it to be drinkable for a long period of time, and that those buying it at the drive-through would want to drink the coffee over (or after) a prolonged period of time. It came to light that 700 other reports and claims existed of other customers being burned by McDonald’s coffee (McDonald’s v Greenlee), although McDonald’s argued that this was not a sufficient number to lower the temperature of the coffee or assess the issue. A clear conflict has arisen here, between product requirements to maximise customer satisfaction, and the preservation of customer safety. At which point does the latter take priority over the former? It was evident at the time that the outcome of such a case would have implications for other vendors who sold their coffee at the same temperature, or even higher. At the time of the incident, McDonald’s outlets served its coffee at 180-190 degrees Fahrenheit, and the National Coffee Association of U.S.A. recommends that coffee be maintained at 180-185 degrees Fahrenheit (http://www.ncausa.org). Yet should we really blame the companies who merely serve their coffee at a temperature which maximises taste and flavour? Another issue in such cases is fault-attribution. A sound-minded person, it could be argued, should be trusted to understand that coffee will be served at a hot temperature, and must thus take care to not spill it. More at issue here seems to be the conduct of McDonald’s pre-trial and their refusal to pay Liebeck’s medical bills. But should it be considered in the first place that McDonald’s should pay for any accident occurring with its products? This is not a simple case of contaminated food, or gross negligence in the form of food poisoning caused by out-of-date food served. Law A claim of negligence in product liability requires a breach of a duty owed which caused the injury of the plaintiff (Winterbottom v Wright). Although the general law of product liability is split into manufacturing defect, design defect and failure to warn (Restatement (Third) of Torts: Products Liability, Section 2), this is an overview, and combinations of the criteria can also be put forth. If McDonald’s served the coffee at a temperature recommended by the National Coffee Association, where does fault – and the basis of this case lie? The issue, and the argument of Liebeck subsequently turned to that of the unsatisfactory warning on the cup of the hot contents. It had been argued that the coffee was ‘defective’. Indeed, when deciding the percentages of comparative negligence. The jury decided that the warning on the coffee cup was not large enough. Decision McDonald’s was found to be 80% responsible for Liebeck’s injuries, and was to compensate her for the sum of $160,000. It was also decided that Liebeck should be awarded just under $3 million in punitive damages, a sum amounting to two days of coffee sales for McDonald’s. This initial sum was reduced to approximately $640,000 by the judge, and both parties appealed the decision. Eventually, they settled the case out of court for an unreleased amount thought to be less than the judge’s actual decision. An Appropriate Decision? The opinions surrounding the decision are at each end of the scale. Some call it a frivolous litigation (Greenlee, 1995) while others have recognised it as a landmark case entering the era of tort law reform in the US. Was the decision based on actual tort issues, or was it an attempt by the courts to make a statement against major corporations in relation to their practices? Branded largely as ‘the poster child of excessive lawsuits’ (ABC News, 2007), the question as to whether someone should be awarded millions of dollars for spilling hot coffee on themselves does raise major questions about the future of liability law in the US. It could be construed as an opportunity seen by the courts to make an example of large corporations. Is this fair? Indeed, Liebeck’s injuries were extremely serious, but if Liebeck’s cup at the time had a larger warning on it, would she have acted differently? Does one really need to be told that coffee is hot? To justify the outcome of the case based on the seriousness of Liebeck’s injuries (Nader & Smith, 1996) does appear to soften its blow as a frivolous case, and this is by no means an attempt to undermine her injuries. It could be argued that the courts should have taken a more neutral route, thus encouraging both parties to take more care rather than focusing on the ‘punishment’ of McDonald’s (Meese, 1999). However, the fact that 700 other cases had been brought against McDonald’s in the past does change the issue; they conveyed a strong suggestion that perhaps McDonald’s should rethink its practices in this area. For such a multi-national, multi-million dollar corporation, it would not prove a difficult task. It is important that boundaries be placed on the potentially vast reach of the law in this area. At least, it could be argued that compensation reflect the actual loss, and that punitive damages be awarded with control and caution. Indeed, examples such as the case of BMW of North America v Gore have attempted to place guidelines in relation to how much punitive damages should be awarded. A study conducted (Cohen, 2001) does suggest that judges are eager to award punitive damages, and indeed product liability claims had significantly increased after the decision (Winter, 2001). Ethical Issues The case appears to recognise the tendency of large corporations to favour profit over customer safety and consider that a few successful claims has little impact on such a company’s finances, in light of the massive profits made in respect of a certain practice. The main question is thus: was the decision of this case based on principles of justice, and fair compensation, or was it an attempt by the judges to ‘lash out’ at large corporations? Was it an attempt by Liebeck to simply ‘sue for as much as possible’? Is it really a case of ‘Plaintiffs v Any Available Deep Pockets and The US Justice System’? (www.stellaawards.com/stella.html) Additionally, the 700 other incidents must be assessed in a relative manner – the 700 incidents represents 1 injury per 24 million cups of coffee sold. Is it really ethical to punish McDonald’s to such an extent for such a rare occurrence? From the viewpoint of the consumer, the ethical issues appear to run on a somewhat different grain. Indeed, if a company is causing injury to its consumers by way of negligent practices and profit-maximising tactics, then it should be ‘punished’ for acts, and expectedly so. Yet, one finds it difficult to find the negligence on the part of McDonald’s in this case; it is rather difficult to find any negligent profit-maximising technique here. The fundamental question is thus: to what point must corporations be expected to help protect their consumers? This case indeed calls for a fundamental balance that is required between appropriately awarding damages for injury, and the apparent contention of the courts that the ‘deep pockets’ of large corporations should be punished for any injury caused by their products, irrespective of fault. Frivolous? Indeed, many have called – and still call – this case frivolous. On the other hand, there is plausibility in respect of the warnings McDonald’s should have put on its cups containing hot liquids. Whether the pre-existing warnings could be considered sufficient is an issue of debate, although this appears to be the most concrete element upon which the court placed its decision. The area in which the frivolous label seems to apply is in relation to the amount awarded in punitive damages – thus it could be considered so in this manner. It is also worth recognising decisions in other cases for similar circumstances – a judge in a similar case involving Bunn-O-Matic had held that coffee served at 179 degrees Farenheit was not unreasonably dangerous (McMahon v. Bunn-O-Matic Corp). In personal opinion, one would suggest that its frivolous element is indeed present; in relation to the amount awarded by the judge. One considers it to be an outrageous amount which delves beyond ‘damages’ and moves into an area of simply punishing large corporations for their success. Indeed, there appeared to be little viable basis for the decision, and arguably no specific area of principle or law was appropriately referred to in relation to the decision. Prevention Indeed, McDonald’s have reduced the temperature at which it serves coffee following the case (Cambridge News, 2007), and bigger warnings have also appeared on its cups. Many suggest – and quite appropriately – that ‘the answer is in more secure packaging’ (Fleischer-Black, 2004). Indeed, it does not require a high degree of intelligence to agree with this statement; whilst it could not be personally stated that McDonald’s was at a complete fault for serving coffee at the temperature stated, there does lie some plausibility in its packaging and warnings. This appears to be the only footing of the decision of the case in general. Indeed, it also suggests that the courts should focus more on encouraging – or ordering – change in areas that require it rather than financially punishing such large corporations beyond reasonable damages for injury and medical costs. Pearson v Chung Facts Pearson took a pair of trousers to Chung’s establishment Custom Cleaners. The trousers were sent mistakenly to another establishment, which caused a delay in Pearson’s collection of them. Pearson claimed that the trousers were not his, despite his receipt confirming them to belong to him, and demanded a refund of over $1000, which he stated to be the value of the trousers. When the Chung’s declined to award Pearson the amount, he filed a claim on account of a) the trousers not being the original pair he had dropped at the establishment and, b) that the signs ‘Same Day Service’ and ‘Customer Satisfaction’ displayed were misleading. The Chung’s subsequently offered Pearson a number of out of court settlements, which he rejected. Pearson continued his claim for approximately $54 million in damages, for lawyer fees, mental distress and inconvenience, and further deterrence for other businesses. Pearson claimed that the signs guaranteeing same day service and satisfaction should be removed, for they were fraudulent. The lawyer for Chung claimed that Pearson was financially insolvent, and that this claim was an attempt by him to solve his financial problems. A number of different claims were brought by Pearson against Chung on several grounds, all of which were dismissed and will be further explained below. Issues The issues here are an example of the potential claims that could be brought under the opening of the floodgates by the Liebeck case. It is a simple case of a plaintiff seeking damages well beyond his losses suffered. Indeed, it is strongly arguable that Pearson suffered no quantifiable loss whatsoever under the circumstances. On the other hand, it provided the courts with an opportunity to place boundaries on the law in this area, and in turn dissuade future such claims from even reaching the courts. It represents a clear distinction between negligible fault and simple mistakes which can be settled by much less drastic measures. Law Pearson’s claim in relation to the potentially misleading signs on the windows of the Chung’s establishment was that of fraud. He claimed that the signs were fraudulent and should be removed, whilst also compensating Pearson for his inconvenience. Pearson specifically referred to unfair trade practice under the Consumer Protection Procedures Act, D.C. Code § 28-3901. He also claimed for negligence in relation to the trousers. The statute in question states that is in violation of the law for any person to ‘misrepresent as to a material fact which has a tendency to mislead’ (§ 28-3904(d)). Under Osbourne v. Capital City Mortgage Corporation, the court required that the Chung’s misrepresentation be proven by clear and unequivocal evidence. Decision The court decided that Pearson could not provide the level of evidence required to prove that the Chung’s had acted in a misrepresentational manner. The court also did not believe that the trousers were not those first taken to the establishment by Pearson, and dismissed Pearson’s claim that Mrs. Chung had later altered the trousers to match the description of his. The court also held that the sign guaranteeing customer satisfaction could not be defined as providing anything desired by the customer and should be read in terms of reasonableness (Alicke v. MCI Communications Corp). In general, the portrayal of Pearson by the Chungs’ lawyer was not a positive one – the court recognised that Pearson was in great financial trouble, and that he was undergoing the trial against Chung to relieve himself of the said trouble. Appropriate Decision? The decision of the court in this case is an extremely satisfactory decision, and displays an approach that more courts and judges should adopt in such similar circumstances. It is extremely different from the decision taken in the Liebeck case, although it is worth noting that in the Pearson case, no physical injury was incurred. As separate from the financial status of Pearson, the courts recognised the futility of the claims made by Pearson, and did not place such high expectations on the ‘satisfaction guaranteed’ sign as he had hoped. They took a common sense approach, and in referring to the service that a reasonable customer would expect, placed a great marker on the possibility of such future claims. It would be extremely difficult to find an error in the decision of this case – Pearson was clearly attempting to abuse the law in order to claim money which could not be rightly said to be owed him. Ethical Issues The ethical issues in this case clearly refer to the standards which can be expected of companies who represent a certain standard of care. As a form of advertisement, many companies often display ‘satisfaction guaranteed’ and other such promises relating to service. Whilst it cannot be expected that companies can retract from this promise, it can also not be interpreted to mean service beyond what a reasonable customer would expect. Thus the law must establish a balance between upholding such representations whilst not expanding its application beyond reason. Another important ethical issue is whether cases should even be taken to court – the Chungs had to close the shop involved and suffered great loss of earnings and court fees. Perhaps a more stringent system should be maintained to prevent such pointless cases from even reaching expensive trials. Frivolous? Indeed, this case has been referred to as one of the 101 Dumbest Moments in Business (Fortune, 2007) and given nicknames such as The Great American Pants Suit, expressing a desire for “reforms that would give the Chungs of the world a fighting chance the next time around” (Wall Street Journal, 2007). The case appears to portray nothing more than a waste of time and money, resulting in the ultimate loss of the Chungs. However, the overall decision of the judges was appropriate and fitting in the circumstances, notwithstanding criticisms that the case should not have even gone to trial in the first place. Prevention As has already been stated, although the decision of the case is not unsatisfactory and clearly represents the view of the judges that any other decision would have been simply unimaginable, it also highlights the need to prevent such claims from even lifting off the ground in the first place. A reform of the law which more stringently assesses whether such cases should reach trial appears to be necessary. On the part of the Chungs, perhaps a little more caution in the displaying of signs would be suggested. In respect of the way in which their establishment was run, there did not appear to be any pressing need for change or improvement, except perhaps for the alleged sign stating that all work was completed on the premises. In general, it is a difficult task to ask what more could have been done by the Chungs – even a complimentary ‘free service’ voucher for dissatisfied customers may prevent the future Pearsons from taking such matters further, although this remains a subject for debate. Conclusion Although both cases are inherently different, they do portray the nature of the US product liability system of law. Indeed, the decision in Liebeck’s case was distinguishable in that it concerned a big corporation, for which many similar incidents had previously occurred. Furthermore, physical injury also occurred, thus requiring the courts to assess the situation in a much more serious manner than the situation in the Chung case. In the Liebeck case, the frivolous issue was the amount that the judge decided should be awarded to Liebeck for punitive damages, thus highlighting the need for caution and perhaps even reform in this area. The Chung case is more an example of the need to assess the succession of such cases to trial, and in turn, a more stringent test to assess whether such cases should even proceed to court. In any case, both cases are clear examples that the law in this area is in need of much more stringent limitations, and indeed control tests to prevent such ‘frivolous’ cases from reoccurring. References Case Law Alicke v. MCI Communications Corp., 111 F.3d 909 D.C. Cir. (1997) BMW of North America v. Gore, 517 US 559 (1996) McDonald’s v. Greenlee, 26 Cap. U.L. Rev. 701, 724. (2004) McMahon v. Bunn-O-Matic Corp., 150 F.3d 651 7th Cir. (1997) Osbourne v. Capital City Mortgage Corp, 727 A. 2d 322, 325-326 D.C. (1999) Winterbottom v. Wright, 10 M. & W. 109 Exch. (1842) Statute Consumer Protection Procedures Act, D.C. Code Restatement (Third) of Torts: Products Liability Newspaper Articles ABC News. (2007). Im Being Sued for What? 2 May. Available at: http://abcnews.go.com/TheLaw/Story?id=3121086&page=1 Cambridge News. (2007). Burger chain sued after boys ordeal. 22 June. Available at: http://www.cambridge-news.co.uk/cn_news_huntingdon/displayarticle.asp?id=180135 Fortune. (2007) 101 Dumbest Moments in Business. 19 December. Available at: http://money.cnn.com/galleries/2007/fortune/0712/gallery.101_dumbest.fortune/37.html. Retrieved 2007-12-19 New York Times. (2001). Jury Awards Soar as Lawsuits Decline on Defective Goods. 30 June. A1 Col.4 Wall Street Journal (2007). The Great American Pants Suit. 18 June 18. Available at: http://www.opinionjournal.com/editorial/feature.html?id=110010225. Journals & Publications Cohen, T.H. (2001). Punitive damage Awards in Large Countries 2001. Available at http://bjs.ojp.usdoj.gov/index.cfm?ty=pbdetail&iid=1132 Fleischer-Black, M. (2004). One Lump or Two? Infamous coffee-burn case — which inspired both caricature and quiet reform — about to get a 10th-anniversary rerun. 4 June. The American Lawyer. ALM Media, Inc. Greenlee, K.B. (1995). Kramer v. JavaWorld: Images, Issues, and Idols in the Debate Over Tort Reform. 26 Cap. U.L. Rev. 701. Meese, A.J. (1999). Injurer Activity and Victim Precaution in a Joint Case Setting: A Correction. Marshall-Wythe College of Law: College of William & Mary. Nader, R., Smith, W.J. (1996). No Contest: Corporate Lawyers and the Perversion of Justice in America. New York: Random House Inc. Read More