There seems to be more and more criticism of personal injury lawsuits. People have tried to claim compensation for some very frivolous injuries. We hate frivolous lawsuits more than anyone. We make our living pursuing justice in the courts, and frivolous lawsuits give the courts and justice a bad name. Most personal injury suits are not only valid – they are the only way to ensure that insurance companies and bad drivers are held accountable, and good people are able to pay their medical bills.
The McDonald’s Coffee case is one of the most famous personal injury lawsuits, but it is commonly misunderstood. People think they know all about the McDonald’s coffee case. But there are some facts that are not widely known, that might change your opinion of the verdict. Was the lawsuit frivolous? Here are the facts. You decide.
Stella Liebeck was in the passenger seat of her grandson’s car. She was 79 years old. After picking up coffee at a drive-through window, her grandson pulled over and came to a complete stop so Ms. Liebeck could open the lid to add cream and sugar. She was not driving, and the car was not moving. As she removed the lid, she spilled the entire cup into her lap.
- She received third-degree burns over 6% of her skin, and lesser burns over 16% of her body.
- She was hospitalized for eight days, and required skin grafts and debridement (medical removal of dead tissue).
- Two years of treatment followed.
- Liebeck asked McDonald’s to settle the claim for $20,000, but they refused.
- During trial preparation, McDonald’s admitted to more than 700 similar claims over the past 10 years.
- McDonald’s admitted that it held coffee at between 180 and 190 degrees. Coffee served at home is usually 135 to 140 degrees.
- A few days before trial, the judge ordered both sides to attend mediation. The mediator, a retired judge, recommended that McDonald’s settle for $225,000. The company refused again.
- At trial, a thermodynamics expert testified that if the coffee had been served at 155 degrees or less, Ms. Liebeck would have avoided serious burns.
- The Shriners’ Burn Institute had published warnings to the fast food industry that they were unnecessarily causing serious burns by serving beverages above 130 degrees.
- A McDonald’s executive who testified for McDonald’s at the trial said McDonald’s knew its coffee could cause serious burns, but had made the decision not to lower the temperature or to warn customers about it.
- The jury awarded Ms. Liebeck $200,000 to make up for her burns. But they also decided she was 20% at fault, so they took away 20% of that money.
- The jury also awarded $2.7 million in punitive damages, which equals about two days of McDonald’s coffee sales. (In Oregon, the state keeps 70% of punitive damages. See Chapter 3 for details.)
- The judge then reduced the $2.7 million to $480,000, which is equal to about eight hours of McDonald’s coffee sales.
- Finally, Ms. Liebeck settled with McDonald’s in a confidential deal, so we will never know how much McDonald’s ended up paying, though it has been reported to be less than $600,000.
Punitive damages are difficult to prove. You are not allowed to even ask for them until after you show a judge that you have good reason to. Then you have to prove it at a very high level of proof called “clear and convincing” proof. And even if you win and the jury awards punitive damages, the insurance company will often appeal the punitive damages, and the U.S. Supreme Court has gotten more and more hostile to high punitive damages awards, so if the award is quite high, it will often be reduced on appeal.
As if that weren’t bad enough, in Oregon the State takes 70% of any punitive damages award. Your lawyer will then take 20% as a fee (less than the normal fee of 33% to 40%), leaving the beneficiaries with only 10%. That 10% is then taxable, so the final amount in the pocket of the beneficiary may be as little as 5% and will never be more than 10%.
Despite all of this, it is still usually a good strategy to plead punitive damages when they are appropriate, for a few reasons:
- Even though the beneficiary receives very little of the money, the insurance company still has to pay out that money, so the threat of a high punitive damages verdict can be useful in negotiations.
- If you can get a judge to allow the pleading of punitive damages, you are allowed to ask all sorts of questions of the defendant that you would not otherwise be allowed to ask. For example, you can ask about the defendant’s finances. Why shouldn’t a jury know if the company you are suing has hundreds of millions in earnings? There are many honest and truthful facts that the rules of evidence do not allow a jury to hear. Successfully pleading punitive damages allows a jury to hear more facts, and more truth generally helps our side and hurts insurance companies.
- Punitive damages can also focus the jury more intently on the bad behavior of the defendant, which can also be helpful.
All of this can be quite confusing. The law says exactly what can be recovered, but then many of the terms turn out to be undefined. “Economic” and “non-economic” damages must be differentiated because of the $500,000 cap. Punitive damages are difficult to get, often appealed, and heavily taxed. But pursuing them can still be a good idea at times. We hope that this chapter has been some help to you in understanding this complicated area.