Various types of warranties including implied and express, and how such warranties may be disclaimed. This DF will look at the issue of warranties through the lens of litigation.
Perhaps, there is no greater case standing for the excesses of litigation than the McDonald's Coffee case. If you are not familiar with this case, Mrs. Stella Liebeck (79 years old) was riding shotgun in the McDonald's drive-thru and ordered a cup of coffee. She set the cup of coffee between her legs and as her son took off, the lid on the coffee came loose resulting in scalding hot coffee burning Mrs. Liebeck's groin. She sued McDonald's alleging several different theories including breach of warranty. At the conclusion of her jury trial, Mrs. Liebeck received $160,000 in compensatory damages and $2.7 million in punitive damages, much to the outrage of the general public. In fact, in one of the great television parodies on this case and our legal system, an episode of Seinfeld lampooned Mrs. Liebeck's result.
But if we dig deeper, you might find some interesting facts about Mrs. Liebeck's case. For example:
- McDonald's served its coffee generally at 180-190 degrees Faherenheit.
- During discovery, McDonald's had faced more than 700 claims by customers who had been burned by their coffee between 1982 and 1992.
- Generally, most other establishments serve coffee at 135-140 degrees.
- McDonald's quality assurance manager testified that burn hazards exist on any food substance served above 140 degrees.
- Mrs. Liebeck required a vascular surgeon to repair her burns by skin graft over 6% of her body.
- The trial court reduced the punitive damage award to $480,000.
- Mrs. Liebeck initially offered to settle for $20,000 to cover her medical costs. McDonald's refused.
The questions to be discussed this week are as follows: Do you think McDonald's breached it's implied warranty when it sold Ms Liebeck her coffee? Do you think the trial court should have downwardly reduced the punitive damages award from $2.7M to $480K? Could there be any business justification for McDonald's to essentially ignore the 700 claims for hot coffee made between 1982-1992? Explain.