In a world of get-rich-quick schemes, few are mentioned more frequently than law

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In a world of get-rich-quick schemes, few are mentioned more frequently than
lawsuits. One of the reasons is the infamous McDonald’s coffee case (Liebeck v.
McDonald’s Restaurants). This is what happened in 1992 in Albuquerque, New
Mexico. Stella Liebeck, seventy-nine, was riding in a car driven by her
grandson. They stopped at a McDonald’s drive-through, where she purchased a
Styrofoam cup of coffee. Wanting to add cream and sugar, she squeezed the cup
between her knees and pulled off the plastic lid. The entire thing spilled back
into her lap. The searing liquid left her with extensive third-degree burns. Eight
days of hospitalization—which included skin grafts—were required.
Initially, she sought $20,000 from McDonald’s, which was more or less the cost
of her medical bills. McDonald’s refused. They went to court. There it came to
light that about seven hundred claims had been made by consumers between
1982 and 1992 for similar incidents. This seems to indicate that McDonald’s
knew—or at least should have known—that the hot coffee was a problem.
Most of the rest of the case turned around temperature questions. McDonald’s
admitted that they served their coffee at 185 degrees, which will burn the
mouth and throat and is about 50 degrees higher than typical homemade
coffee. More importantly, coffee served at temperatures up to 155 degrees
won’t cause burns, but the danger rises abruptly with each degree above that
limit. So why did McDonald’s serve it so hot? Most customers, the company
claimed, bought on the way to work or home and would drink it on arrival. The
high temperature would keep it fresh until then. Unfortunately, internal
documents showed that McDonald’s knew their customers intended to drink
the coffee in the car immediately after purchase. Next, McDonald’s asserted
that their customers wanted their coffee hot. The restaurant conceded,
Chapter 12 The Selling Office: Advertising and Consumer Protection
12.5 Case Studies 640
however, that customers were unaware of the serious burn danger and that no
adequate warning of the threat’s severity was provided.
Finally, the jury awarded Liebeck $160,000 in compensatory damages and $2.7
million in punitive damages (about two days’ worth of Mcdonald’s coffee sales).
The judge, however, reduced the $2.7 million to $480,000. McDonald’s
threatened to appeal, and the two sides eventually came to a private settlement
agreement. Consumer Attorneys of California, “The Actual Facts About the
McDonalds’ Coffee Case,” The ‘Lectric Law Library, 1995, accessed June 2, 2011,
http://www.lectlaw.com/files/cur78.htm.
Questions
1. What does caveat emptor mean?
◦ According to this doctrine, who is responsible for Stella
Liebeck’s burns? Explain.
◦ Does the fact that she’s seventy-nine years old make it more
difficult to justify a caveat emptor attitude in this case?
◦ One aspect of the caveat emptor doctrine is that it maximizes
respect for the consumer as an independent and autonomous
decider. Could that be a reason for affirming that a seventy-nine-year-old is a better candidate than most for a caveat
emptor ethics of consumption?
2. In general terms, what does it mean to claim that an implicit contract
arises around a transaction? How does that contract protect the
consumer?
3. From the information provided, and from your own experience,
what are the main terms of the implicit contract surrounding the
purchase of coffee at a fast-food drive-through?
◦ What does the restaurant owe the consumer?
◦ What does the consumer owe the restaurant?
4. In order for an implicit contract to arise, the following three
conditions must be met:
◦ Both sides must enter the contract freely.
◦ Both sides must be reasonably informed of the agreement’s
terms.
◦ Both sides must be honest.
Were these three conditions met in the McDonald’s coffee case?
Explain..
5. Make the case that the original offer by Liebeck—$20,000 from
McDonald’s to cover the medical bills—is ethically recom endable
within the structure of an implicit contract. Use the concept of an
implied warranty
6. The concept of manufacturer liability gives consumers the right
to sue manufacturers for defective goods. There are three kinds
of product defects:
◦ Design defects (errors in the product’s design)
◦ Manufacturing defects (errors in the production of one
specific case of a generally safe product)
◦ Instructional defects (poor or incomplete instructions for a
product’s safe use)
Which (if any) of these defects are applicable in the McDonald’s
coffee case? Explain.
7. What is the concept of strict product liability, and how could it be
applicable in this case?
8. In ethical terms, justify the original jury award to Liebeck: $160,000 in
compensatory damages, and $2.7 million in punitive damages (about two
days of Mcdonald’s coffee sales).
9. Of these three ethical structures for conceiving of the coffee-buying
consumer and her protections—caveat emptor, the implicit contract,
and manufacturer liability—which do you believe is best? Why?

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