The Legal Infrastructure of Business

Cold case, hot coffee

I write this blog with all due respect to the old lady and sympathize with her. Since the day I heard about this case I was always intrigued by it. My interest in this case is based on two main factors a) does this case in particular or do cases like these belong in the courts and b) what additional costs did consumers incur due to this and other such cases?

If anyone does not already know about this case here are the details:

Stella Liebeck, 79, of Albuquerque, New Mexico, was in the passenger seat of her grandson's car when she was severely burned by McDonalds' coffee in February 1992.  They purchased the order from a drive through window and stopped so that Ms. Liebeck could add cream and sugar to her coffee. She placed the cup between her knees and attempted to remove the plastic lid from the cup. As she removed the lid, the entire contents of the cup spilled into her lap.

The sweatpants Liebeck was wearing absorbed the coffee and held it next to her skin. She suffered full third-degree burns over 6 percent of her body. She was hospitalized for eight days, during which time she underwent skin grafting. She sought to settle her claim for $20,000, but McDonalds refused, they offered $800.

During the discovery period for the case it was found that between 1982 and 1992 over 700 people had claimed that they suffered burns due to similar coffee spills. The claims vary but point to the fact that McDonalds was aware of this problem. The McDonalds coffee was thought to be sold at 180 to 190 F for optimal taste. Other establishments were supposedly serving coffee at 135 to 140 F. At either of these temperatures there is an obvious possibility of burn damage but accounts vary on the level of the burns. McDonalds was aware that a good number of its customers drank coffee on the move hence the high temperature and use of Styrofoam cups do not make sense, they did have warnings printed on the cups though. But would customers be dissatisfied if the coffee was, say, just 110 F?

The jury awarded Ms. Liebeck $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Ms. Liebeck 20 percent at fault in the spill. The jury also awarded $2.7 million in punitive damages, about two days of McDonalds' coffee sales. Post-verdict investigation found that the temperature of coffee at the local Albuquerque McDonalds had dropped to 158 F. The trial court subsequently reduced the punitive award to $480,000 -- or three times compensatory damages -- even though the judge called McDonalds' conduct reckless, callous and willful. The parties eventually entered into a secret settlement which has never been revealed to the public, despite the fact that this was a public case.

A cup of coffee that cost 49c in 1992 ended up costing McDonalds a lot more.  From the company’s standpoint this was an absolute blunder. What could have been solved for $20000 ended up costing a lot more with the added burden of the PR nightmare and during the course of the case they probably had some of their dirty laundry aired out. Surprisingly majority of the public were outraged by the settlement and sided with McDonalds on this. But it also points to the fact that despite receiving many complaints about burns due to the coffee temperature the company continued to skirt the issue. I still cannot completely come to terms with the fact that McDonalds was 80% responsible for this particular incident.

From an individual’s standpoint where does the responsibility begin? Even if this is not a frivolous lawsuit, a result I have arrived at after reading the many articles on this case, was it okay for the 79 year old Ms. Liebeck to hold hot coffee between her knees in order to add the sugar? We will never know the circumstances of the other 700 odd cases. Would Ms. Liebeck have sued if the coffee was bought at a local cup of Joes and not McDonalds? Would the local coffee shop have had the same reaction as McDonalds or if its reaction was different might Ms. Liebeck have accepted the offer even if it was lower than the $20000? I guess we will never know the answers to those questions. I was not able to find out if the price of a cup of McDonalds coffee increased after 1994 because of this lawsuit. I’m assuming there were some innovations in the cup and lid domain post 1994 and not only all the coffee retailers but other companies too improved their safety practices.

Finally, whatever side one takes on this case, I would rather reside in a country where there are democratic institutions willing to take note the possibility of injustice and hear arguments about this, than in a country that has no such institutions or intention to provide justice.

Links:

http://en.wikipedia.org/wiki/Liebeck_v._McDonald%27s_Restaurants

http://www.hotcoffeethemovie.com/default.asp?pg=mcdonalds_case

http://www.jtexconsumerlaw.com/V11N1/Coffee.pdf

http://www.independent.co.uk/news/world/mcdonalds-counts-the-cost-of-hot-hot-coffee-big-macs-naive-defence-crumbles-in-face-of-scalded-customers-wrath-1446536.html

http://www.justice.org/cps/rde/justice/hs.xsl/2011.htm

http://www.treehugger.com/corporate-responsibility/the-truth-about-mcdonalds-hot-coffee-lawsuit-why-it-matters-video.html

http://www.lectlaw.com/files/cur78.htm

http://socyberty.com/law/six-absolutely-preposterous-lawsuits/

Response to Privacy in the Age of Smartphones

On November 28th Hillary Wolcott wrote a fascinating post on privacy concerns for mobile devices. Consumers are storing an increasing amount of data on their smartphones and are transmiting a growing amount of this data in unencrypted formats over wireless and broadband networks. As the Senate debates requirements for police warrants for email searches and mobile data recovery, the conversation is increasingly viewing the usage of mobile and the standard web as being similar if not identical. As Hillary mentioned, one thing is certain, there is not agreement on this issue across the US court system. A Rhode Island judge recently threw out evidence that contained cellphone data connecting a man to a child's murder since the police didn't have a warrant for the records.

As mentioned in other blog posts, U.S. District Judge Joy Flowers Conti recently ruled that internet subscribers, especially those stealing Internet, do not "have an expectation of privacy in that connection." In her ruling, Judge Conti explained, “An internet subscriber does not have a reasonable expectation of privacy in his IP address or the information he provides to his Internet Service Provider, such as Comcast, in order to legally establish an internet connection...” Jude Conti compared this verdict to the 1979 Supreme Court case where they ruled that a search warrant was not necessary to record what telephone numbers are dialed by a suspect. In both cases, the information is being voluntarily surrendered to a third party, she pointed out, and are therefore not being treated as private or secret information by the suspect.

Now many are comparing mobile rights to those of PC web usage. I take issue with this general comparison to both internet and indirectly phone usage. First, people aren't often aware what information they are surrendering to mobile websites or mobile applications. Even a standard web URL may encode personal information that may contain device specs, previous browsing behavior, location, or other very personal information. Many consumers aren't aware that standard GET requests to a web server may include personal information that is unencrypted and readily viewable to ISPs, mobile carriers, and in most jurisdictions law enforcement agencies. The amount of data transferred in this capacity continues to increase as mobile applications and mobile-enabled websites attempt to optimize performance on bandwidth constrained networks -- this generally results in data being transfered to and from clients in small, standalone data requests. Therefore by accessing just what URLs are visited from a mobile device oftentimes includes a lot more information than what the user believes. Summarily, technical constraints on mobile devices encourage developers to expose more personal data (unencrypted on more transparent modes of communication) than they would on similar internet requests. 

I think we are in danger of assuming mobile usage is similar to PC web requests or even phone connections when considering Fourth Amendment protection. In reality, mobile usage and data transmissions tend to share significantly more personal and contextual information.  

This Thursday a Senate committee is considering amending the Electronic Communications Privacy Act, to require law enforcement to obtain a warrant to search e-mail, no matter how old it is, updating a provision that currently allows warrantless searches of e-mails more than 180 days old. My believe is that mobile web connections, text messages, and other meaningful data transfers should be inlucded under this provision, becuase they contain similar amounts of personal and private information. I believe mobile data is more likely to fall under influence of the 2007 Supreme Court Ziegler decision. Here an employee viewed child pornography at work. His employer noticed the conduct, made copies of the hard drive, and gave the FBI the employee's computer. The Supreme Court concluded the employee had a reasonable expectation of privacy, however, the court found that the employer could consent to a government search of the computer without infringing on the Ziegler's Fourth Amendment rights. 

In many cases, personal data is being transmitted in basic web requests, not to mention mobile emails and text mesages. For this reason, I believe consumers should have a higher standard for government search and seizure when it comes to mobile devices.

Sources:

http://www.businessinsider.com/the-legality-of-cell-phone-searches-2012-11

http://www.digitaltrends.com/web/stealing-internet-youre-open-to-warrantless-monitoring-court-says/

http://www.aclu.org/technology-and-liberty/internet-privacy

http://en.wikipedia.org/wiki/Fourth_Amendment_to_the_United_States_Constitution