Slide 1

YOUR COFFEE SHOP

Hot Coffee at McDonald’s

INVESTOR OPPORTUNITY
 1992 Liebeck vs. McDonald’s
Restaurants

Your Coffee Shop 2

 CAUSE OF EVENTS IN THE CASE
Slide 6
Stella Liebeck, the so-called “McDonald’s lady,” was 79 years old at the time of this accident. She
was a passenger in her grandson’s car. She ordered a cup of coffee at the drive-through and it
was served to her in a Styrofoam cup.

After their order was completed, her grandson pulled the car forward out of the drive-through lane
and stopped again to allow Stella to add cream and sugar to her coffee. Stella placed the coffee
between her knees so she could use both hands to open the lid and add her sugar.

While removing the lid the cup tipped over and poured the entire cup of 190 degree coffee all over
her sweatpants, which absorbed the hot liquid and held it against her skin.

She was rushed to the emergency room and had to stay in the hospital.
 CAUSE OF EVENTS IN THE CASE
Slide 5
Stella suffered third-degree burns (the most serious kind of burns) over her lap, which included large
portions of her inner thighs and other sensitive areas.

She was hospitalized for 8 days and endured several very painful procedures to clean her wounds
followed by two years of medical treatment. She required skin grafts and suffered serious and permanent
scarring.

Liebeck asked for $20,000 from McDonald’s, which was the cost of her medical treatment.

The restaurant countered with an offer of under $1,000.

Liebeck then hired a lawyer who made an offer to McDonald’s in the amount of $300,000.
The case ended up being litigated before the court in a jury trial.
 CASE CAUSE OF EVENTS IN CASE
Slide 6
From 1983-92, nearly 700 people claimed they had been burned by McDonald’s coffee.

The jury awarded Stella $200,000 for her injuries, which the judge reduced to $160,000 because
Stella was 20% at fault for her accident. The jury then also awarded $2.7 million in punitive
damages against McDonald’s because they knew their coffee was dangerously hot and they served
it like that anyway because it “tasted better.”

The judge then reduced this award to $480,000. McDonald’s appealed and eventually the case
settled for an undisclosed amount.

A 1994 product law suit that became a flashpoint in the debate in the United States over tort reform.
 ETHICAL ISSUES ON AN INDIVIDUAL LEVEL
Slide 2
Liebeck was an older woman, senior citizen who had to receive grafts from the burns
that she received, she also did not choose to sue based off of greed, but to pay for
expenses she could not afford, due to the negligence of a franchised company and even
still was not going to be awarded the cost of her medical bills due to McDonald’s lack of
customer service.
ETHICAL ISSUES ON AN ORGANIZATIONAL LEVEL
Slide 5
McDonald's is the world's leading global food service retailer with more than 35,000
locations serving approximately 70 million customers in more than 100 countries each day.
More than 80% of McDonald's restaurants worldwide are owned and operated by
independent local business men and women.

Although corporations are not people, they are collective entities that in some sense really
exist, and they have an identity above and beyond the people whom they comprise at any
given time. And the law recognizes them as “persons.”
ETHICAL ISSUE ON A SOCIETAL LEVEL
Slide 6
No one can deny that in the public’s mind a corporation can break the law and be guilty of unethical
and amoral conduct. events . . . such as corporate violation of federal laws and failure of full
disclosure [have] confirmed that both our government and our citizenry expect corporations to act
lawfully, ethically, and responsibly. Business corporations are limited-liability companies—that is,
their owners or stockholders are liable for corporate debts only up to the extent of their investments.
 Dunkin Doughnuts or wherever they choose without
Capitalism: To each their own. Markets should be free of worrying about the consequences of shopping there?
government intervention and the principles of supply and
ETHICAL THEORIES – Rule Base
Slide 2
demand will produce the best economic outcome for Should McDonalds implement policies and do what they
society as a whole. Government should not be involved as wish without considering the impact of their policies on
the market will provide the most efficient responses society?
needed..
 Is shopping at local Coffee Shops or McDonald’s more
Utilitarianism: The ethical theory that considers the beneficial for the greater good?
consequences of acts to decide whether they are good or
ETHICAL THEORIES – Consequence Should
Slide 2 bad.
The greatest good for the greatest number.
McDonald’s heat the coffee much higher than
necessary and enough to where it could cause serious
injuries ?
 Comparative Outcome of Ethical Theories on an
Slide 6 Individual Level

RULE-BASED (DEONTOLOGICAL)
Capitalism: The best products for the best prices. That's because consumers will pay
more for what they want the most. Capitalism doesn't provide for those who lack
competitive skills. This includes the elderly, children, the developmentally disabled, and
caretakers. To keep society functioning, capitalism requires government policies that
value the family unit.

CONSEQUENCE –BASED (TELEOLOGICAL) Utilitarianism: a theory that the aim of

action should be the largest possible balance of pleasure over pain or the greatest
happiness of the greatest number. When consumers use products the way in which they
are intended to be used and are seriously injured, the companies may be liable to pay
damages to compensate them for their losses.
 Comparative Outcome of Ethical Theories on a
Slide 6 Organizational Level
RULE-BASED (DEONTOLOGICAL)
Supply and demand and the ability of buyers and sellers to make the best decisions for them
will ensure effective pricing in the markets. There is an emphasis on individual profit versus
making decisions to benefit society as a whole. Individuals who make bad decisions or do
not contribute are on their own.

CONSEQUENCE –BASED (TELEOLOGICAL) Utilitarianism: a theory that the aim of action

should be the largest possible balance of pleasure over pain or the greatest happiness of the
greatest number. Manufacturers are responsible for warning consumers of all of the potential
risks of their products. When a product is inherently dangerous and the benefits of the
dangers outweigh any benefits.
 Comparative Outcome of Ethical Theories on a
Slide 6 Societal Level
RULE-BASED (DEONTOLOGICAL)
Capitalism: All individuals make their own decisions and will make the best one for them as
they know they will live with the consequences. McDonald’s also admitted that its customers
were not aware of the risk of burn injuries from its coffee and that it had done nothing to warn
them about the risk.

CONSEQUENCE –BASED (TELEOLOGICAL) Utilitarianism: a system of ethics based on

the premise that something's value may be measured by its usefulness. Some of the jurors
reported that the punitive damages that they awarded were because of the callous manner
in which the restaurant treated the injuries and the potential for injuries.
 Consequences of the Actor’s behavior
Slide 6 it could cause serious injuries. The restaurant was liable under a theory of products
McDonald’s restaurant was negligent because it heated the coffee much higher than necessary and
enough to where
liability.. McDonald’s operating manual actually required the coffee to be heated to that temperature
range.
Company: The actions of Mc Donald’s restaurant are particularly egregious in nature, juries may award
punitive damages that far exceed the actual losses.
Societal: Liebeck was using it as it was intended
Special Interest Group: Rule base Fairness or justice demands that we subject our actions to rule, and
that the rule be the same for all who are similarly situated.

Alternatives for the Actor’s in the case –

McDonald’s – could have Inform customers of the product , product makers and
suppliers owe a duty of care to consumers to keep their products safe and hazard-free
when the consumers use them as intended.

McDonald’s could have offered the senior citizen, Ms. Liebeck a cup holder. No for
seeable constraints for the alternatives.
 Potential Solutions
Slide 2
Consumers don’t have to buy coffee from McDonald’s exclusively.
They can shop at other establishments such as Starbucks, Dunkin Doughnuts Coffee Bean, that have
more consideration of their customers.
Consumers can support other stores that would offer reduced priced coffee for senior citizens. My
decision is justified by, If McDonald’s had simply been willing to engage in real negotiations and to
settle the claim, it could have done so at a much-reduced cost as compared to what it actually was
forced to pay. In the end, many people who have formed opinions about this case have done so
without understanding the facts of what actually occurred. Starbucks offers!
 THANK
Slide 15 YOU!
This case enforces justice, by promoting an even-handed compromise. Both sides
find the state of peace with the other, especially with regard to the concessions they
had to make to obtain it. But the fact that they both had to make concessions, and
that they are to stick to the deal they made, makes it fair, even though the fairness
may be much more evident to a dispassionate outsider than it is to the parties.
After much research of this case anyone who criticizes the case as a “frivolous
lawsuit” that resulted in “jackpot justice” they have done the same.

Rose Marie Dymally

https://www.huffpost.com/entry/the-mcdonalds-coffee-case_b_14002362?
https://bookshelf.vitalsource.com 6.2 Hot coffee at McDonalds Shaw Moral Issues In Business
https://www.caoc.org/?pg=facts

Your Coffee Shop 16