“If it's worth striving for, it's worth protecting.”

October 27, 2005

By Rob Lambert, President of Asset Protection Corporation

In my last newsletter I talked about our out-of-control legal system. It is no secret that I think our system is flawed and encourages frivolous lawsuits.

The first and fairest place to start when discussing frivolous lawsuits is to debunk the infamous Stella Liebeck case, which is almost always improperly sited as the archetype of abusive suits.

Stella became famous for suing McDonald’s after she was severely scalded by a cup a coffee she had purchased there. The urban legend goes that Stella was driving her car and trying to drink her coffee, which she spilled. Even though she was at fault, she sued McDonald’s and was awarded over $2.9 million. Well, this isn’t true.

Here is what happened to Stella:

• Her grandson was driving the car at the time, and had pulled over to the side of the road so Stella could add cream and sugar to her coffee.

• Stella was burned badly and needed two years of treatment and rehabilitation, including skin grafts. McDonald's refused an offer to settle with her for $20,000 in medical costs.

• Between the years 1982-1992, McDonald's coffee burned more than 700 people, usually slightly but sometimes seriously, which resulted in a number of other claims and lawsuits.

• Witnesses for McDonald's admitted in court that consumers are unaware of the extent of the risk of serious burns from spilled coffee served at McDonald's required temperature. McDonald’s further admitted it did not warn customers of this risk and could offer no explanation as to why it did not. McDonald’s testified that it did not intend to turn down the heat although it admitted its coffee is "not fit for consumption" when sold because it is too hot.

• Ms. Lieback was awarded $200,000 in compensatory damages, but this was reduced by 20 percent (to $160,000) because the jury found her 20 percent at fault. Where did the rest of the $2.9 million figure in? Ms. Lieback was awarded $2.7 million in punitive damages; however the judge later reduced that amount to $480,000, or three times the "actual" damages that were awarded.

But there are always two sides to every story. Here’s the second half:

• Liebeck and McDonald's held secret settlement negotiations rather than go to appeal. The amount of the settlement is secret.

• Although plaintiffs were able to document 700 cases of burns from McDonald's coffee over a 10 year period, (or 70 burns per year) it failed to take into account how many cups are sold each year without incident. A consultant for McDonald's pointed out the 700 cases in 10 years represents just 1 injury per 24 million cups sold! This means that for every injury, no matter how severe, 23,999,999 people managed to drink their coffee without any injury whatever.

• Finally, even in the eyes of an obviously sympathetic jury, Stella was judged to be 20 percent at fault. The car was stopped, and Stella chose to hold the coffee cup between her knees instead of safer locations as she opened it.

Coffee is supposed to be served hot, and in the range of 185 degrees or more. I don’t know about you, but when I get a tepid cup of coffee served to me, I generally send it back.

The irony in this case is that it is a frivolous lawsuit, but not as bad as the urban legend has it.

Best,

Rob

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