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McDonald’s: The Coffee spill Heard ‘Round the World’

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    The case Stella Liebeck v. McDonald is one of the most talked about consumer lawsuit, sparking interest in people of not only the United States, but across the globe. Those who have studied the case in details pity the, at the time, 79 years old Stella Leibeck and those who are have only studied the synopsis of this case, find her lawsuit outrageous and frivolous. In either case, virtually everyone who has heard this case has an opinion of Stella Leibeck and her lawsuit against McDonalds.

    On the morning of February 27, 1992, Stella Leibeck and her grandson Chris Tiano stopped at a McDonalds for breakfast in Albuquerque, New Mexico. They placed an order at the drive through and upon receiving their order; Chris stopped the car for Stella to add cream and sugar to her coffee. When failed to locate a flat surface in the car to place the hot coffee cup, Stella held the hot cup of coffee in between her knees to get the lid off the cup.

    As she tried to pull the lid off the cup, she spilled the hot coffee on her lap, leaving her squirming as her sweat pants absorbed the170 degree coffee, which burned her groin, inner thighs, and buttocks. This accident had lead to her eight days stay at the hospital followed by nearly three weeks of recuperating at home under the care of the two daughters, Nancy Tiano and Judy Allen. A vascular surgeon at the hospital informed the family that Stella has suffered from third degree (full thickness) burns over six percent of her body.

    She was later hospitalized for skin graft. All the medical procedures had lead Stella to lose 20 pounds and she was practically immobilized at times. Financially, this accident cost Leiback close to $2,000 out of pocket for medical treatment and the lost wages of her two daughters who stayed home to take of their mother. In 1994, Stella Leibeck wrote to McDonalds Corporation and McDonalds offered her $800. After which oint, she filed a lawsuit against McDonalds for “gross negligence” for selling coffee that was “unreasonably dangerous” and “defectively manufactured” with the help of Reed Morgan, a Houston based attorney. Attorney Morgan arranged to offer a chance to settle outside the court, which McDonald refused to accept.

    The mediator before the case went to the court also suggested to McDonalds an out of court settlement, which McDonalds once again refused. Case went on to the trial and the jury found McDonalds guilty and decided to award $2. million in punitive damages and $160,000 in compensatory damages to Stella Leiback. The judge later reduced the jury award to $640,000 total, to which Leibeck appealed and McDonalds continued to fight the award as excessive. In December 1994, the case settled out-of-court under the confidentiality provision. Although this particular lawsuit against McDonalds garnered a lot of media attention, it was far from the end of series of lawsuits McDonalds faced globally in the following decade.

    In a way, this case opened up a floodgate of lawsuits over issues ranging from third degree coffee burns to second degree burns from hot pickle that McDonalds either settled out-of-court or fought. Different Stakeholders The stakeholders for this case are the consumers, shareholders and the media. The consumers are a primary stakeholder in this case because there have been many instances where customers complained about the high temperature coffee and getting burned by the coffees. The consumers are being burned because of McDonalds’ services.

    Up until this McDonalds case, 700 burn complaints have been issued over ten-year period. That is one in every 24 million cups sold. Also the shareholders or the owners are a stakeholder in this case because if the managers or the executives don’t make the decision to lower the temperatures of their coffee, the question if McDonalds care about its customers and not just high sales numbers could result in more severe impact on the company. This was not the first complaint against the company and it won’t be the last.

    This has opened up a floodgate of similar suits against the company and may continue as long as the upper management of the company doesn’t take any action to resolve this issue. It may eventually affect the owner’s investments in the company. Secondary stakeholders may be the media. Media generated its high ratings by publicizing the case through out the nation. Also you may include Stella Liebeck’s daughter Nancy Tiano, who stayed with Stella Liebeck during her recuperation from the injury.

    During that time she lost wages, as she had to leave her job for 3 weeks. Extra Literature Punitive damages are monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is to punish the wrongdoer. Compensatory damages are a sum of money awarded in a civil action by a court to identify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another. In the case of Stella Leibeck, she was entitled to both the damages.

    Compensatory damages are easier to prove in this case as she had evidence of how severe she was burnt by the coffee. However, her attorney Reed Morgan successfully demonstrated to the jury that McDonalds failed to take preventative actions despite of receiving 700 complaints in the last decade, which lead to the jury awarding her the $2. 7 million in punitive damages. Company Actions McDonalds offered Stella Leiback $800 upon receiving a complaint from her in August 1994, which didn’t suffice Leibeck’s expectations.

    During the process of the trial, McDonald’s refused to settle the case out-of-court. After the jury found McDonald’s guilty and awarded outrageous amount of money in punitive and compensatory damages, they continued to fight the case as excessive jury award. Ultimately, McDonalds settled out of the court in December 1994 under the confidentially provision allowing the terms of settlement undisclosed. Solutions There was no drastic change that McDonalds made to their coffee temperature, as their coffee temperature standards are the same the chains like Starbucks.

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