Case Study: The True Story Behind the McDonald’s Coffee Lawsuit

22 years ago in New Mexico, an elderly lady named Stella Liebeck spilled a cup of scalding hot McDonald’s coffee in her lap, suffering third degree burns as a result. She sued McDonald’s and was awarded $2.9 million, sparking a huge debate about America’s frivolous litigation trend and the urgent need for tort reform.

More than two decades later, the case is still used as an example of the legal system gone wrong, but the truth of the matter is that the system was entirely right and Stella Liebeck won her case because McDonald’s had been negligent, according to the terms of tort law.

What is tort law?

A tort is an action that causes someone harm. Tort law is the series of rights, obligations and remedies that are applied by the courts in civil proceedings to provide relief to those who are victims of physical, financial or legal harm.

Negligence torts are wrongs that occur through a person’s failure to exercise due care against risks that are known to be potentially harmful, and it was a charge of ‘gross negligence’ that Stella Liebeck’s lawyer levelled against McDonald’s.

What actually happened

The following is a brief summary of the Liebeck vs McDonald’s case, from the moment the coffee was spilled to the awarding of the damages against McDonald’s.

• In 1994, Stella Liebeck was sitting in her nephew’s parked car about to add cream and sugar to her McDonald’s coffee. As there were no cup holders in the car, she placed the coffee between her legs and attempted to remove the lid. The hot coffee spilled into her lap, soaking her track pants and scalding her. She was then taken to hospital, where she received treatment for serious third degree burns to her thighs, buttocks and groin. She remained in hospital for a week and received a number of skin grafts.
• After leaving hospital, Stella Liebeck wrote to McDonald’s, requesting that they compensate her for her medical bills – which were more than $10,000 – pointing out that she received the burns because their coffee was too hot. McDonald’s replied, offering her $800. Stella Liebeck declined the offer, but made several more attempts to recover her medical costs from them. McDonald’s declined to pay, and so eventually she hired a lawyer and brought civil proceedings against them.
• Her lawyer, Reed Morgan, argued that McDonald’s was guilty of gross negligence because they were selling coffee that they knew to be ‘unreasonably dangerous’. McDonald’s had a policy of serving their takeaway coffee at between 180 and 190 degrees Fahrenheit, so that it would remain hot until the purchaser arrived home. Morgan argued that this temperature was too hot and produced medical evidence to show that such temperatures could produce third degree burns in under fifteen seconds.
• A jury found in favour of Stella Liebeck, awarding her compensatory damages of $200,000 (reduced to $160,000 for her 20% contributory negligence) and also punitive damages of $2.7 million. The trial judge later reduced this amount to $640,000 and the two parties settled out of court prior to an appeal for a lesser amount.

What the media reported

The reaction to the outcome was heated to say the least. Those arguing for US tort law reform called it a prime example of litigation gone mad, and the media took up the catch cry.

Stories became more and more exaggerated, with Stella Liebeck portrayed as a grasping opportunist and McDonald’s as the victim of a callous scam.

Detractors argued that the accident was entirely Liebeck’s fault and that McDonald’s coffee was not defective because other chain restaurants served their coffee at the same or even higher temperatures. The story changed from Liebeck sitting in the passenger seat of her nephew’s parked car to her being behind the wheel and driving recklessly, causing her to spill her coffee.

Because Liebeck signed a confidentiality agreement when the case was settled out of court, many of the details went unreported at the time and all that was focused on was that she had received an outrageous $2.9 million in damages from McDonald’s.

What went unreported

One pertinent fact that went largely unreported was the reason the jury had awarded the punitive damages against McDonald’s. This was that McDonald’s had received some 700 earlier complaints from people who had burned themselves on McDonald’s coffee, some of which they had settled and most of which had been ignored.

McDonald’s admitted that they had known about the risk of serious burns from their coffee for 10 years and had done nothing about it. McDonald’s quality control manager testified that the previous injuries were an insignificant number and not enough to warrant them reviewing their practices.

The judge called this a callous view and the jury obviously agreed, because they adopted the suggestion by Liebeck’s lawyer to punish McDonald’s by penalising them two days of profits from their coffee sales (approx $2.7 million).

The fact that Stella Liebeck was only claiming damages for her medical expenses also went largely unreported. As she said later in an interview, she wasn’t in it for the money, but simply wanted McDonald’s to reduce the temperature of their coffee so that others wouldn’t suffer as she had. To date, they have not done so and still serve their coffee at between 180 and 190 degrees Fahrenheit.

Could it happen in Australia?

With the recent emergence of a case in Adelaide where a woman is suing McDonald’s for burns she received from their coffee, there has been renewed speculation as to whether the same kind of sums awarded in the Liebeck case could be awarded to complainants here in Australia. Our tort laws are similar to those in the US, so could we not also be open to a flood of exorbitant negligence payouts?

The answer is probably not. While we have similar tort laws to the US, there are differences. One major difference is that we do not award punitive damages in negligence cases. Another difference is that in Australia negligence cases are heard by a judge rather than by a jury, so decisions are less likely to be emotionally charged.

Australian tort law has already been put under the microscope in response to claims of frivolous litigation and new reforms have resulted, so there seems little likelihood that we will go the way of the US and become overly litigious just yet. In fact, if Stella Liebeck had made her claim here, she would probably have gotten exactly what she was asking for and not a cent more.