In Albuquerque, an 80+ year old woman named Stella Liebeck was awarded millions for spilling McDonald’s coffee while driving in her car. Or at least that’s the story we’ve all heard.
HBO is currently featuring a documentary called Hot Coffee, directed by Susan Saladoff, that examines the truth behind what has become the cause calibre for all who argue for tort-reform laws by arguing the need to wrangle all those greedy plaintiff’s attorneys or those who sue, looking for jack-pot justice.
The documentary also examines other tort-reform issues. Below is a summary of the Hot Coffee movie. To hear from the actual victims, to see the actual injuries, to have the below illustrated is so powerful. For the full experience, please watch the actual documentary (now playing on HBO).
In the Liebeck v. McDonalds case, here’s what the media failed to mention: Ms. Liebeck was in the passenger seat of a car, driven by her nephew, who had just accepted food from the drive-thru. They were parked when Ms. Liebeck spilled the hot coffee after struggling to remove the lid. The hot coffee scalded Mr. Liebeck’s groin, thighs, and buttocks and, after going to the hospital, where she remained for eight days, it was determined that there were third-degree burns on six percent of her body and lesser burns over 16%. During her hospital stay, Ms. Liebeck lost 20 pounds (which lowered her weight to 83 pounds) as she underwent multiple skin graft operations. Two more years of treatment and more skin grafting would be necessary.
Ms. Liebeck attempted to settle with McDonalds for $20,000 to cover her past medical expenses, future medical expenses and loss of income. McDonalds countered with a settlement offer of $800 (that is not a misprint – eight-hundred-dollars).
During trial, it became apparent that McDonald’s desired to have the hottest coffee available. All McDonald’s franchises are tightly regulated and it was their policy to require coffee be served extra hot (between 180 and 190 degrees fahrenheit). At that temperature, the coffee would likely cause third-degree burns (second degree if the victim was lucky and could potentially causing full-thickness burns, if not so lucky).
The trial also revealed that McDonalds had over 700 burn complaints prior to Ms. Liebeck’s law suit for their hot coffee. McDonalds quality-control manager explained that, in his opinion, such a small number of complaints did not warrant the company to take any action.
BUT WHAT ABOUT THE FACT THAT SHE SPILLED THE COFFEE? ITS NOT LIKE A MCDONALD’S EMPLOYEE THREW HOT COFFEE AT HER!!!! What also went under-reported is the fact that the jury considered this information and apportioned her with 20% of the fault associated with spilling the hot coffee. As would happen in any trial, this apportionment of liability, by the jury, reduced Ms. Liebeck’s verdict by 20%.
In the end, the jury awarded $160K in compensatory damages (medical bills, lost wages, pain & suffering) and $2.7 Million in punitive damages. The punitive damages represented two-days’ worth of McDonald’s coffee sales.
What also went largely unreported is the fact that the $2.7MM in punitive damages was reduced, by the judge, to $480,000! Not only that, but Ms. Liebeck settled her case with McDonald’s for an undisclosed sum before the case could go up on appeal. While she would have been entitled to $640,000 ($160K + $480K) minus 20% for the apportionment of liability, Ms. Liebeck most likely settled for an even smaller amount to forgo having to wait many months or years for the appeal.
Unfortunately, the media, with the support of big-corporate America, took the verdict and spinned the facts to use as a catalyst to get Americans on board with tort reform. Tort reform usually refers to placing a cap (or limit) on damages, making it more difficult to bring certain claims to trial. The hot coffee case was used as the primary evidence to get Americans onboard.
In reality, tort reform really acts to restrict average American’s ability to get to the courthouse.
Before tort reform, our judicial branch was really the only place where the average consumer would be able to go head-to-head against big corporations that wronged them on a level playing field. The two other branches of government are mostly controlled by special-interest groups, money and politics….but you can’t wine and dine jurors.
As a big corporation, with a lot of money, you have two potential solutions: (i) try to influence all potential jurors through multi-million dollar advertising and PR campaigns; and (ii) pour lots of money into judicial elections – only supporting candidates that are pro-big business and anti-consumer.
They did both.
The United States Chamber of Commerce and American Tort Reform Association are conglomerates of major corporations, insurance companies, big tobacco, pharmaceutical companies, etc… and they hired multiple PR firms, that would themselves create very grass-roots-sounding organizations with names such as Citizens Against Lawsuit Abuse, People for a Fair Court System, or Citizens Partnership for a Strong Ohio, etc… to give the impression that community leaders and small businesses were spearheading these efforts (when it was really big corporate America) to launch TV commercials and distort facts of legitimate injury cases and even make up law suits that didn’t really occur (or were immediately thrown out).
The US Chamber is not representative of the local chambers made up of small businesses that we respect in our community (as they would have you believe), rather it is the largest lobbying group for the largest of corporations (e.g. Pfizer, ConocoPhilips, Lockeed Martin, Dow Chemical, etc… are on their board of directors).
You may not be surprised to hear that these efforts were being orchestrated by none other than Mr. Karl Rove. A genius at political maneuvering, and while simultaneously on the payroll of Philip Morris, Mr. Rove saw the political advantage for then Texas-governor candidate George Bush to emphasize tort-reform as a rallying cry for his potential electorate.
Hot Coffee also followed the case of Colin Gourley, the son of Nebraska parents. Mom was pregnant with twins. Night before an appointment, babies were not moving as usual and mom brought this up at appointment. Mrs. Gourley’s doctor said everything looks good but failed to examine her with an ultrasound and, thus, was unable to notice that she only had one placenta (when standard of care for twins is to ensure that there are two placentas). After some time, Mrs. Gourley was sent to the ER, where standard of care was to perform a c-section within 10 minutes. Unfortunately the doctors did not get to her for two hours…at which time Colin was not getting much oxygen. Nurses testified that they had the operating room ready within 10 minutes, but the doctor was nowhere to be found. As an aside, this surgeon had been sued for malpractice several times before.
At trial an economist that explained that baby Colin would need $6,000,000 to receive adequate medical care for the rest of his life (had special needs, would be mentally delayed his whole life and would require additional surgeries). Jury awarded $5.6 Million along with a finding that the doctor’s negligence did, in fact, cause Colin’s brain injury. But Nebraska had fallen prey to the tort reform movement and had enacted caps on all damages. As a result, the $5.6 Million dollar verdict was automatically reduced to $1.25 Million.
The sad reality is that the doctor’s insurance company, which otherwise would have covered Colin’s medical needs for the rest of his life, simply shifted that burden onto the American taxpayer. At some point, the reduced amount of money from the verdict will run out and Colin will have no choice but to go on Medicaid.
Colin had undergone ten surgeries as of the filming of the documentary.
The legislators who pass tort-reform bills are heavily influenced by the virtually unlimited resources and funds that come from the member corporations of the US Chamber of Commerce. The US Chamber spends so much money trying to convince legislators that they know better than juries as to the proper amounts of damages.
As background, there are three types of caps on damages:
Caps are an arbitrary number that bear no resemblance to the various ways and severity in which one can be harmed, due to the negligence of another. If you are blinded, disfigured, if a woman’s reproductive system is shut down…much of the effects of these injures are non-economic, yet few would say you should have no right to be compensated for it.
The fallacy, in the medical malpractice context, is that caps will keep cost of medical insurance down, which will in turn reduce cost of practicing medicine. But the data shows that in states that have enacted caps on medical negligence, insurance rates mostly have NOT gone down by any significant measure. In 2008, the average liability premium for doctors that practice medicine in states with caps was $46,336. In states without caps….$45,449.
It was pointed out that, in states where insurance companies (for-profit institutions that have shareholders) benefit from caps….there is no rule that savings have to be passed down to policy holders.
The bottom line is that caps on damages take a jury’s ability to determine fair value of cases. But, the right to have a jury of one’s peers, and not legislators, determine questions of fact in the courtroom is guaranteed by the U.S. Constitution (in the 7th amendment to the Bill of Rights). In the 1980s judges deemed tort reform laws as unconstitutional on a regular basis. What happened?
Corporate America has started massively funding judicial elections (remember, that was the last branch of government that was supposed to be insulated from corporate influence).
But when courts continually held tort-reform laws as unconstitutional, big business sprang in to action and decided to try to promote conservative/business-minded judges. Karl Rove developed this plan and worked with US Chamber of Commerce to put it in action. The chamber started placing tens of millions of dollars into elections that would normally never get a piece of that kind of money. Karl Rove would get involved with republican candidates by offering very well-funded campaigns. The brilliant long term goal: eventually, these judges would trickle up to appellate and Supreme Court positions and tend to rule in favor big corporate America.
Conservative judges are now reversing trial court jury verdicts on an unprecedented level.
In January 2010, the US Supreme Court reversed a century of law – so now corporations may donate an unlimited amount as campaign contributions. This allows for even greater corporate influence in electing judges.
Studies referenced in the documentary, show that the side that spends the most money in a political campaign wins 90% of the time. US Chamber – backed by the insurance companies, pharmaceuticals, big corporations simply outspend the opposition. US Chamber will buy all of the TV airtime.
The final portion of Hot Coffee was devoted to the growing practice of corporations inserting Mandatory Arbitration Clauses in their contracts with consumers. Think you don’t have many contracts with big corporations? You do if you own a credit card, cell phone plan, a virtual contract is signed most times you buy anything over internet. Have a health club membership, mom or grandma in a nursing homes, ever go to a tanning salon or keep your dog in a kennel for the weekend? If you answered yes to any of the above, you are bound to a contract that probably has a mandatory-arbitration clause. As a consumer, you have no choice in the matter or bargaining power.
Mrs. Jones signed an employment contract with Halliburton that included a mandatory-arbitration clause when she was 19 years old. The mandatory-arbitration clause forced her to give up her right to seek a jury trial if she was wronged by Halliburton (and go through arbitration process).
Mrs. Jones went to Iraq, as an employee of Halliburton. While she was promised a housing arrangement that would have other females sharing a common room; she was in fact placed in a residence that was surrounded by men (a housing situation that she objected to in writing multiple times once she got to Iraq and realized that the living arrangment was not temporary). Sometime after, Mrs. Jones was severely beaten and raped by Halliburton co-workers. A rape kit was administered by medical personnel and handed over to Halliburton security (parts of kit subsequently went missing). To make matters worse, Mrs. Jones was subsequently confined to a retrofitted shipping container and held by armed guards. Only when a guard let her use his cell phone, was Mrs. Jones able to call her father, who was able to get in touch with his congressman. The congressman was able to get the State Department to send in agents to free her.
After filing a criminal suit, Mrs. Jones filed a civil suit which was forced into secret arbitration per the terms of her employment agreement.
Arbitration involves hiring someone, usually an experienced lawyer or retired judge, to resolve your case outside of the formal court system. The problem lies in the fact that the arbitrator is picked by the company entered the contract with and would normally be suing)….
So, arbitration takes place in secret, the writer of the agreement picks the arbitration company and the company chooses the arbitrator who will hear your case. The potential for abuse of this system is huge because the arbitration company wants repeat business (especially from the larger corporations) so they are incentivized to tilt their decisions in favor of the corporation. There have been reports of arbitration companies being blackballed for ruling against the client company.
The basic problem is that the people who support tort reform movements believe they are helping to do away with frivolous law suits….until they get injured. When they are injured and realize that the cap on their damages creates a situation where it is impossible to get the money the injured party needs to simply pay their medical bills for the rest of their life, they realize that a system that has enacted tort reform has no ability to discriminate the frivolous suits from the legitimate ones. So good people who are legitimately hurt and have legitimate bills to pay as a result of the negligence of another, are left with no recourse.
The American civil-justice system, that holds people and corporations accountable for their actions, is being eroded. The one institution that holds large corporations accountable is the civil jury…that is what they are most afraid of. Once corporations know that their liability is limited, our society becomes less safe.
But when you hold people and corporations accountable for negligence, especially when there are a series of negligent acts (like in the case of McDonalds) or in the case of Colin where the doctor had a significant history of medical malpractice….plaintiff’s victory is not only a victory for themselves and their family, but its a victory for the community at large.
If you would like to speak to an attorney, please call and ask for Jason Neufeld, or email him directly at email@example.com.