Case Study 3: Tort Law and Punitive Damages
EC 337: Economic Analysis of Legal Issues
Economics Department
Boston University
Dr. Koskinen
1 The Hot Coffee Case: Liebeck v. McDonald’s Restaurants
The infamous “hot coffee case” in which an elderly woman in NewMexico spilled hot coffee from a McDonald’s
drive-thru on her lap is a turning point in punitive damage awards. Most see it as the beginning of frivolous
lawsuits and incentivizing willful negligence, and started a push in many states to reform punitive damage
awards.
In this case, you will ignore any social or moral arguments of the case and focus solely on seeking economic
efficiency both in regard to precaution and activity. The case was ultimately settled out of court, and thus
only the trial court’s opinion is available. However, Jim Dedman of Abnormal Use 1 provides an excellent
summary:
The Stella Liebeck McDonalds Hot Coffee Case FAQ
First entering the public consciousness in 1994, the Stella Liebeck trial, known as the McDonalds hot
coffee case, has become such a fixture of litigation lore that many are unaware of the basic facts of the
case, or even where and when it was tried. Litigated and reported upon before the rise of the Internet,
much of what appears online about the case is the worst sort of unsourced speculation and conjecture.
Our friends at Overlawyered have done an excellent job over the years dispelling the various myths
about the case, including those that have arisen suggesting that the industry standard was to serve coffee
at temperatures lower than that of McDonalds. In an effort to publish some of the basic facts of the
case, we here at Abnormal Use have created the following FAQ file regarding the matter. In so doing, we
have relied solely upon the original pleadings and motions in the case and some contemporary news coverage.
On Fe
uary 27, 1992, seventy-nine year old department store clerk Stella Liebeck was in the pas-
senger seat of her grandsons Ford Probe when she ordered a 49 cent cup of coffee at the drive through of
a McDonalds franchise in Albuquerque, New Mexico. Shortly thereafter, she spilled the coffee into her lap
and sustained a series of burns. Her original state court lawsuit was filed in March of 1993, tried in August
of 1994, and ultimately settled for an undisclosed sum in late 1994. Media coverage of the jurys original
verdict was, shall we say, immense.
Where was the case filed and tried?
The Second Judicial District Court in Bernalillo County, New Mexico.
1http:
abnormaluse.com/2011/01/stella-liebeck-mcdonalds-hot-coffee.html
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What did the complaint allege?
Filed on October 5, 1993 the Plaintiffs Amended Complaint recited the following allegations:
A. The coffee purchased by her on 2/27/92 was unreasonably dangerous because it was excessively
hot and Defendants are liable to her for the physical and mental harm which it caused at the time of its sale
and consumption on 2/27/92.
B. The product in question, coffee, was and is routinely sold and manufactured by the Defendants,
and it reached Plaintiff in the same condition as it was at the time of the sale; further, Plaintiff in no way is
guilty of any fault and the Defendants are strictly liable to Plaintiff under the Restatement of Torts Second,
§402(a);
C. The coffee was defectively manufactured, served in a container that had design defects, and the
coffee itself was manufactured defectively due to excessive heat; further, the container that it was sold in had
no warnings, or had a lack of warnings, rendering the product defectively marketed;
D. The producing cause of Stella Liebecks injuries was the exclusive fault of the Defendants;
E. At all material times Defendants were aware of the dangerous condition of the coffee inherent in
serving it at the temperature at which it was sold; they knew of the likely consequences of such acts; they
knew of the risks involved and acted with a conscious indifference and willful and wanton disregard for the
safety of Stella Liebeck and any other consumer of the product;
F. Defendants are expert manufacturers, distributors, and sellers of coffee and had a duty to test
and inspect the product for unreasonably dangerous conditions, which they either failed to do, or alterna-
tively, which they did negligently, or in the alternative, did with malice with complete disregard for the
dangers inherent in selling coffee at the temperature at which it was sold causing a high probability of severe
urns in connection with the sale of the product.
What damages were alleged in the amended complaint?
As set forth in the Amended Complaint, the damages purportedly sustained and sought were:
VI. As a result of spillage of the defective coffee, Plaintiff sustained burns on her perineum, uppe
inner thighs, buttocks, genital areas, and lower abdominal wall including the left groin. The burns consisted
of both second and third degree burns and were of such severity as to require de
idement and skin grafting,
causing enormous conscious pain and suffering, mental anguish, and loss of lifes enjoyment, for which
she seeks damages. The foregoing treatment caused Plaintiff to incur medical expenses in the past, at the
present, and into the reasonable future as follows: (a) past medical expenses: approximately $10,500.00; (b)
future medical expenses: approximately $2, XXXXXXXXXXTotal: $12,500.00.
VII.
Plaintiff Stella Liebeck was born on XX/XX/12 and was 79 years old at the time of the injury. At
the time in question Plaintiff was a healthy, robust, and gainfully employed person, who worked as a sales
clerk and earned in excess of $5,000.00 per year; Stella Liebeck has incu
ed lost earnings of approximately
$5, XXXXXXXXXX
IX.
Further, as a direct result of the fault, or in the alternative, the negligence of the Defendants, Plain-
tiff has sustained severe disfigurement and permanent sca
ing to her body, which she claims has damaged
her in an amount of not less than $100,000.
X.
As a result of the severe and painful burns described herein, Plaintiff sues the Defendants in the
amount of $125,000 for physical pain, mental pain and anguish, and loss of lifes enjoyment during the
pendency of treatment including skin grafting, de
idement, and general recovery from painful sca
ing,
as well as pain and discomfort associated with drawn and tight skin in the sca
ed areas, which pain and
discomfort persists at the present and will persist into the future.
XI.
Plaintiff comes now and sues McDonalds Corporation and McDonalds Restaurants P.T.S., Inc. fo
gross negligence, for willful and wanton disregrad of the rights, safety, and welfare of Stella Liebeck and any
other consumers that purchase coffee in the defective state in which it is sold by Defendants, and for the
marketing defect of no warning, or in the alternative, insufficient warning, because McDonalds Corporation
and McDonalds Restaurants P.T.S., Inc. fully know of and are aware of innumerable burn cases caused
y the fault, or in the alternative, negligence of their operations in the manufacture, sale, and marketing
of extremely hot coffee. For this, Plaintiff comes now and sues in the amount of three times compensatory
damages for punitive damages.
What were McDonalds defenses?
In its Answer to the Amended Complaint, filed on September 22, 1993, McDonalds asserted the fol-
lowing affirmative defenses:
SECOND DEFENSE
If the Plaintiff was injured and damaged as alleged, then her injuries and damages were the result
of her own negligence or of the negligence of a third person or party for whom this Defendant may not be
held responsible.
THIRD DEFENSE
If the Plaintiff was injured and damaged as alleged, which is specifically denied, then her injuries o
damages were the result of an accident or inadvertence which was not the fault or responsibility of this
Defendant.
FOURTH DEFENSE
Plaintiff has failed to mitigate her damages.
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FIFTH DEFENSE
Plaintiff should be required to make a prima facie showing of entitlement to punitive damages be-
fore any evidence hearing thereupon is adduced before a jury.
SIXTH DEFENSE
Plaintiffs claims for excessively hot coffee fail to state a claim for which this Court might grant re-
lief.
SEVENTH DEFENSE
At all material times, these Defendants adhered to the applicable standard of care and engaged in
easonable conduct.
Who was sued?
In the original complaint, which was filed on March 21, 1993, Plaintiff only sued P.T.S., Inc., a New
Mexico corporation and the local franchise operator. In the amended complaint, however, the McDonalds
corporation was added as a defendant. Ultimately, P.T.S., Inc. was dismissed as a defendant prior to the
matter being submitted to the jury.
Where was the McDonalds franchise in question?
The franchise was located at 5001 Gibson Blvd., S.E., Albuquerque, New Mexico XXXXXXXXXXAccording
to Google Maps, theres still a McDonalds franchise at that location: ?
Is there a reported opinion?
Yes. The trial courts original order entering the jury verdict is available on Westlaw as Liebeck v.
McDonalds Restaurants, P.T.S., Inc., No. CV XXXXXXXXXX, 1995 WL 360309, (In the Second Judicial District
Court of New Mexico, Bernalillo County, August 14, XXXXXXXXXXHowever, there is no reported appellate opinion
due to a confidential settlement several months after the verdict.
Who was the judge?
The Honorable Robert Hayes Scott was the state court district judge who presided over the case.
He is now a United States Magistrate Judge for the U.S. District Court for the District of New Mexico in
Albuquerque. He was initially appointed to the position in 2003.
Who were the Plaintiffs attorneys?
The lead Plaintiffs attorney was S. Reed Morgan of S. Reed Morgan & Associates (now of the Law
Offices of S. Reed Morgan, P.C.) of Comfort, Texas. Serving as counsel with him were Je
y R. McKenney
of Houston, Texas (who at the time of the filing of the original complaint, had been licensed just two years)
and local counsel Kenneth R. Wagner of Kenneth R. Wagner & Associates, P.A. (now of Wagner Ford Law,
P.A.) in Albuquerque, New Mexico.
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Who were the defense attorneys?
Bruce Hall, Tracy McGee, Susan S. Throckmorton, and Charles K. Purcell, all of the Rodey, Dicka-
son, Sloan, Akin, & Ro
, P.A. firm in Albuquerque, New Mexico. Now the managing partner of the
Albuquerque office of Jackson Lewis, Danny W. Ja
ett was then a law clerk at the Rodey firm who
executed a summary judgment affidavit setting forth coffee temperature measurements he took at six local
estaurants as a part of the defense case.
What were some of the pretrial motions filed in the case?
On January 21, 1994, the defendants moved for summary judgment. The motion was denied. On
July 29,