HAMDARD UNIVERSITY

KARACHI

HAMDARD INSTITUTE OF MANAGEMENT

SCIENCES

BUSINESS LAW
HAMDARD INSTITUTE OF MANAGEMENT
SCEINCES

TERM REPOT::
BUSINESS LAW
TOPIC::
COFFEE BURN CASE OF McDONALD,S

NAME::

TANVEER AHMED
Gr# ::
281003
SUBMITTED TO::
SIR WAQAR USMNI
 Acknowledgements

We wish to acknowledge Mr. Waqar Usmani, our course instructor for

his utmost support and guidance at every step during the course
that helped us in the preparation of this report. We thank him for
being patient and helpful in answering our queries, and clarifying
all our confusions and misconceptions of Business law.
 Executive summery

This famous case occurred when Stella Liebeck of Albuquerque, New

Mexico was sitting in a passenger seat of her grandson’s Car and was
scalded with hot coffee. She had ordered coffee that was served in a
Styrofoam cup at the drive through a window of a local McDonald.
In the event jury awarded Liebeck $200000 in competency damages. The
court also noted that McDonald had been reckless and irresponsible
making coffee that was so hot just because it might improve the flavor.
 Table of Contacts

Introduction……………………………

Law suit…………………………..
Facts
Mc Fact about Lawsuit McDonald…
Settlement offers………………………
Trail…………………………………..
Verdict……………………………….
Similar Law suit……………………..
Liebeck v. McDonald's Restaurants
There is a lot of hype about the McDonalds' scalding coffee case. No one is in favor of
frivolous cases of outlandish results; however, it is important to understand some points
that were not reported in most of the stories about the case. McDonalds coffee was not
only hot, it was scalding -- capable of almost instantaneous destruction of skin, flesh and
muscle. Here's the whole story.

Stella Liebeck 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. Liebeck, 79
at the time, ordered coffee that was served in a styrofoam cup at the drivethrough window
of a local McDonalds.

After receiving the order, the grandson pulled his car forward and stopped momentarily
so that Liebeck could add cream and sugar to her coffee. (Critics of civil justice, who
have pounced on this case, often charge that Liebeck was driving the car or that the
vehicle was in motion when she spilled the coffee; neither is true.) Liebeck 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. A
vascular surgeon determined that Liebeck suffered full thickness burns (or third-degree
burns) over 6 percent of her body, including her inner thighs, perineum, buttocks, and
genital and groin areas. She was hospitalized for eight days, during which time she
underwent skin grafting. Liebeck, who also underwent debridement treatments, sought to
settle her claim for $20,000, but McDonalds refused.

During discovery, McDonalds produced documents showing more than 700 claims by
people burned by its coffee between 1982 and 1992. Some claims involved third-degree
burns substantially similar to Liebecks. This history documented McDonalds' knowledge
about the extent and nature of this hazard.

McDonalds also said during discovery that, based on a consultants advice, it held its
coffee at between 180 and 190 degrees fahrenheit to maintain optimum taste. He admitted
that he had not evaluated the safety ramifications at this temperature. Other
establishments sell coffee at substantially lower temperatures, and coffee served at home
is generally 135 to 140 degrees.

Further, McDonalds' quality assurance manager testified that the company actively
enforces a requirement that coffee be held in the pot at 185 degrees, plus or minus five
degrees. He also testified that a burn hazard exists with any food substance served at 140
degrees or above, and that McDonalds coffee, at the temperature at which it was poured
into Styrofoam cups, was not fit for consumption because it would burn the mouth and
throat. The quality assurance manager admitted that burns would occur, but testified that
McDonalds had no intention of reducing the "holding temperature" of its coffee.

Plaintiffs' expert, a scholar in thermodynamics applied to human skin burns, testified that
liquids, at 180 degrees, will cause a full thickness burn to human skin in two to seven
seconds. Other testimony showed that as the temperature decreases toward 155 degrees,
the extent of the burn relative to that temperature decreases exponentially. Thus, if
Liebeck's spill had involved coffee at 155 degrees, the liquid would have cooled and
given her time to avoid a serious burn.

McDonalds asserted that customers buy coffee on their way to work or home, intending
to consume it there. However, the companys own research showed that customers intend
to consume the coffee immediately while driving.

McDonalds also argued that consumers know coffee is hot and that its customers want it
that way. The company admitted its customers were unaware that they could suffer
thirddegree burns from the coffee and that a statement on the side of the cup was not a
"warning" but a "reminder" since the location of the writing would not warn customers of
the hazard.

The jury awarded Liebeck $200,000 in compensatory damages. This amount was reduced
to $160,000 because the jury found Liebeck 20 percent at fault in the spill. The jury also
awarded Liebeck $2.7 million in punitive damages, which equals 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 degrees Fahrenheit.

Liebeck v. McDonald's Restaurants,[1] also known as the "McDonald's coffee

case," is a 1994 product liability lawsuit that became a flashpoint in the debate in
the U.S. over tort reform after a jury awarded $2.86 million to a woman who
scalded herself with hot coffee she purchased from fast food
restaurant McDonald's. The trial judge reduced the total award to $640,000, and
the parties settled for a confidential amount before anappeal was decided. The
case entered popular lore as an example of frivolous;[2] ABC News called the
case “the poster child of excessive lawsuits.”[3]

Liebeck's attorneys argued that McDonald's coffee was "defective", claiming that it was
too hot and more likely to cause serious injury than coffee served at any other place.
Moreover, McDonald's had refused several prior opportunities to settle for less than the
$640,000 ultimately awarded.[4] Reformers defend the popular understanding of the case
as materially accurate, note that the vast majority of judges who consider similar cases
dismiss them before they get to a jury,[5] and argue that McDonald's refusal to offer more
than a nuisance settlement reflects the meritless nature of the suit rather than any
wrongdoing.[6]

Lawsuit
Facts
On February 27, 1992, Stella Liebeck, a 79-year-old woman
from Albuquerque, New Mexico, ordered a 49¢ cup of coffee from the drive-
through window of a local McDonald's restaurant. Liebeck was in the passenger's
seat of her Ford Probe, and her grandson Chris parked the car so that Liebeck
could add cream and sugar to her coffee. She placed the coffee cup between her
knees and pulled the far side of the lid toward her to remove it. In the process,
she spilled the entire cup of coffee on her lap.[9] Liebeck was wearing cotton

sweatpants; they absorbed the coffee and held it against her skin as she sat in
the puddle of hot liquid for over 90 seconds, scalding her thighs, buttocks,
and groin.[10] Liebeck was taken to the hospital, where it was determined that she
had suffered third-degree burns on six percent of her skin and lesser burns over
sixteen percent.[11] She remained in the hospital for eight days while she
underwent skin grafting. During this period, Liebeck lost 20 pounds (nearly 20%
of her body weight), reducing her down to 83 pounds.[12] Two years of medical
treatment followed.

McFacts about the Coffee Lawsuit McDonalds

Everyone knows what you're talking about when you mention "the McDonald's lawsuit."
Even though this case was decided in August of 1994, for many Americans it continues
to represent the "problem" with our civil justice system.

The business community and insurance industry have done much to perpetuate this case.
They don't want us to forget it. They know it helps them convince politicians that "tort
reform" and other restrictions on juries is needed. And worse, they know it poisons the
minds of citizens who sit on juries.

Unfortunately, not all the facts have been communicated - facts that put the case and the
monetary award to the 81-year old plaintiff in a significantly different light.

According to the Wall Street journal, McDonald's callousness was the issue and even
jurors who thought the case was just a tempest in a coffee pot were overwhelmed by the
evidence against the Corporation.

The facts of the case, which caused a jury of six men and six women to find McDonald's
coffee was unreasonably dangerous and had caused enough human misery and
suffering that no one should be made to suffer exposure to such excessively hot coffee
again, will shock and amaze you:

McFact No. 1: For years, McDonald's had known they had a problem with the way
they make their coffee - that their coffee was served much hotter (at least 20 degrees
more so) than at other restaurants.

McFact No. 2: McDonald's knew its coffee sometimes caused serious injuries - more
than 700 incidents of scalding coffee burns in the past decade have been settled by the
Corporation - and yet they never so much as consulted a burn expert regarding the issue.
McFact No. 3: The woman involved in this infamous case suffered very serious
injuries - third degree burns on her groin, thighs and buttocks that required skin grafts and
a seven-day hospital stay.

McFact No. 4: The woman, an 81-year old former department store clerk who had
never before filed suit against anyone, said she wouldn't have brought the lawsuit against
McDonald's had the Corporation not dismissed her request for compensation for medical
bills.

McFact No. 5: A McDonald's quality assurance manager testified in the case that the
Corporation was aware of the risk of serving dangerously hot coffee and had no plans to
either turn down the heat or to post warning about the possibility of severe burns, even
though most customers wouldn't think it was possible.

McFact No. 6: After careful deliberation, the jury found McDonald's was liable
because the facts were overwhelmingly against the company. When it came to the
punitive damages, the jury found that McDonald's had engaged in willful, reckless,
malicious, or wanton conduct, and rendered a punitive damage award of 2.7 million
dollars. (The equivalent of just two days of coffee sales, McDonalds Corporation
generates revenues in excess of 1.3 million dollars daily from the sale of its coffee,
selling 1 billion cups each year.)

McFact No. 7: On appeal, a judge lowered the award to $480,000, a fact not widely
publicized in the media.

McFact No. 8: A report in Liability Week, September 29, 1997, indicated that
Kathleen Gilliam, 73, suffered first degree burns when a cup of coffee spilled onto her
lap. Reports also indicate that McDonald's consistently keeps its coffee at 185 degrees,
still approximately 20 degrees hotter than at other restaurants. Third degree burns occur
at this temperature in just two to seven seconds, requiring skin grafting, debridement and
whirlpool treatments that cost tens of thousands of dollars and result in permanent
disfigurement, extreme pain and disability to the victims for many months, and in some
cases, years.

The most important message this case has for you, the consumer, is to be aware of the
potential danger posed by your early morning pick-me-up. Take extra care to make sure
children do not come into contact with scalding liquid, and always look to the facts
before rendering your decision about any publicized case.

Settlement offers
Liebeck sought to settle with McDonald's for US $20,000 to cover her medical costs,
which were $11,000, but the company offered only $800. When McDonald's refused to
raise its offer, Liebeck retained Texas attorney Reed Morgan. Morgan filed suit in a New
Mexico District Court accusing McDonald's of "gross negligence" for selling coffee
that was "unreasonably dangerous" and "defectively manufactured". McDonald's refused

Morgan's offer to settle for $90,000.[4] Morgan offered to settle for $300,000, and a
mediator suggested $225,000 just before trial, but McDonald's refused these final pre-
trial attempts to settle.

Trial
The trial took place from August 8–17, 1994, before Judge Robert H. Scott.
[13]
During the case, Liebeck's attorneys discovered that McDonald's
required franchises to serve coffee at 180–190 °F (82–88 °C). At that
temperature, the coffee would cause a third-degree burn in two to seven
seconds. Liebeck's attorney argued that coffee should never be served hotter
than 140 °F (60 °C), and that a number of other establishments served coffee at
a substantially lower temperature than McDonald's. Liebeck's lawyers presented
the jury with evidence that 180 °F (82 °C) coffee like that McDonald’s served may
produce third-degree burns (where skin grafting is necessary) in about 12 to 15
seconds. Lowering the temperature to 160 °F (71 °C) would increase the time for
the coffee to produce such a burn to 20 seconds. (A British court later rejected
this argument as scientifically false.[14]) Liebeck's attorneys argued that these
extra seconds could provide adequate time to remove the coffee from exposed

skin, thereby preventing many burns. McDonald's claimed that the reason for
serving such hot coffee in its drive-through windows was that those who
purchased the coffee typically were commuters who wanted to drive a distance
with the coffee; the high initial temperature would keep the coffee hot during the
trip.[4]However, this claim contradicts the company's own research that showed
customers actually intend to consume the coffee while driving to their destination.
[15]

Other documents obtained from McDonald's showed that from 1982 to 1992 the
company had received more than 700 reports of people burned by McDonald's coffee to
varying degrees of severity, and had settled claims arising from scalding injuries for more

than $500,000.[4] McDonald's quality control manager, Christopher Appleton, testified

that this number of injuries was insufficient to cause the company to evaluate its
practices. He argued that all foods hotter than 130 °F (54 °C) constituted a burn hazard,
and that restaurants had more pressing dangers to warn about. The plaintiffs argued that
Appleton conceded that McDonald's coffee would burn the mouth and throat if consumed
when served.[16]

Verdict
A twelve-person jury reached its verdict on August 18, 1994.[13] Applying the
principles of comparative negligence, the jury found that McDonald's was 80%
responsible for the incident and Liebeck was 20% at fault. Though there was a
warning on the coffee cup, the jury decided that the warning was neither large
enough nor sufficient. They awarded Liebeck US$200,000 in compensatory
damages, which was then reduced by 20% to $160,000. In addition, they
awarded her $2.7 million in punitive damages. The jurors apparently arrived at
this figure from Morgan's suggestion to penalize McDonald's for one or two days'
worth of coffee revenues, which were about $1.35 million per day.[4] The judge

reduced punitive damages to $480,000, three times the compensatory amount,

for a total of $640,000. The decision was appealed by both McDonald's and
Liebeck in December 1994, but the parties settled out of court for an undisclosed
amount less than $600,000.[17]
Similar lawsuits
Similar lawsuits against McDonald's in the United Kingdom failed. In Bogle v.
McDonald’s Restaurants Ltd. Field J rejected the claim that McDonald's could
have avoided injury by serving not-so-hot coffee.

"If this submission be right, McDonald’s should not have served drinks at any
temperature which would have caused a bad scalding injury. The evidence is that
tea or coffee served at a temperature of 65 C will cause a deep thickness burn if
it is in contact with the skin for just two seconds. Thus, if McDonald’s were going
to avoid the risk of injury by a deep thickness burn they would have had to have

served tea and coffee at between 55 C and 60 C. But tea ought to be brewed
with boiling water if it is to give its best flavour and coffee ought to be brewed at
between 85 C and 95 C. Further, people generally like to allow a hot drink to cool
to the temperature they prefer. Accordingly, I have no doubt that tea and coffee
served at between 55 C and 60 C would not have been acceptable to
McDonald's customers. Indeed, on the evidence, I find that the public want to be
able to buy tea and coffee served hot, that is to say at a temperature of at least
65 C, even though they know (as I think they must be taken to do for the
purposes of answering issues (1) and (2)) that there is a risk of a scalding injury if
the drink is spilled."[14]

Though defenders of the Liebeck verdict argue that her coffee was unusually
hotter than other coffee sold, other major vendors of coffee,
including Starbucks, Dunkin' Donuts, Wendy's, and Burger King, produce coffee
at a similar or higher temperature, and have been subjected to similar lawsuits
over third-degree burns.[18]

Home and commercial coffee makers often reach comparable temperatures.

[19]
The National Coffee Association of U.S.A. instructs that coffee should be
brewed "between 195-205 degrees Fahrenheit [91–96 °C] for optimal
extraction" and consumed "immediately". If not consumed immediately, the
coffee is to be "maintained at 180-185 degrees Fahrenheit".[20]

Liebeck's attorney, Reed Morgan, and the Association of Trial Lawyers of

America defend the lawsuit by claiming that McDonald's reduced the temperature
of their coffee after the suit. Morgan has since brought other lawsuits against
McDonald's over hot-coffee burns.[21] McDonald's policy today is to serve coffee
between 80–90 °C (176–194 °F),[22] relying on more sternly-worded warnings to
avoid future liability, though it continues to face lawsuits over hot coffee.[22]
[23]
The Specialty Coffee Associationsupports improved packaging methods rather
than lowering the temperature at which coffee is served.[21]The association has
successfully aided the defense of subsequent coffee burn cases.[24]

Judge Frank Easterbrook wrote a unanimous 7th Circuit Court of Appeals opinion
affirming dismissal of a similar lawsuit against coffeemaker manufacturer Bunn-
O-Matic. The opinion noted that hot coffee (179 °F (82 °C) in this case) is not
“unreasonably dangerous.”

The smell (and therefore the taste) of coffee depends heavily on the oils
containing aromatic compounds that are dissolved out of the beans during the
brewing process. Brewing temperature should be close to 200 °F [93 °C] to
dissolve them effectively, but without causing the premature breakdown of these
delicate molecules. Coffee smells and tastes best when these aromatic
compounds evaporate from the surface of the coffee as it is being drunk.
Compounds vital to flavor have boiling points in the range of 150–160 °F [66–
71 °C], and the beverage therefore tastes best when it is this hot and the
aromatics vaporize as it is being drunk. For coffee to be 150 °F when imbibed, it
must be hotter in the pot. Pouring a liquid increases its surface area and cools it;
more heat is lost by contact with the cooler container; if the consumer adds
cream and sugar (plus a metal spoon to stir them) the liquid's temperature falls
again. If the consumer carries the container out for later consumption, the
beverage cools still further.[25]
REFRENCE

//htpwww.google.com/mcusa
1)
//htpwww.wikipedia.com/mcdonald.pk
2)
www.scribed.com
3)
www.dost.org/pk/mc
4)
DEDICATION

This report is dedicated to

environment and oppor
formulating this report.

Dedication is also made

prayers and to our friend
would not have achieved