Stella Liebeck & the Stella Awards

Originally written Friday, January 21, 2005

A close friend and relation, Denise R., recently forwarded an email to me called “The Stella Awards for 2003”, subtitled “Annual Stella Awards for the Best Frivolous Law Suits of the Year”. These “awards” are named after Stella Liebeck, described in the email as an 81-year-old who “spilled coffee on herself & successfully sued McDonalds.” You might remember this famous lawsuit, which created a storm of controversy and spurred calls for litigation reform.

The email goes on to list lawsuits the writer deems frivolous, for example:

Kara Walton of Claymont, Delaware, sued the owner of a night club in a neighbouring city when she fell from the bathroom window to the floor & knocked out two of her front teeth. This occurred whilst Ms. Walton was trying to crawl through the window in the ladies room to avoid paying the $3.50 cover charge. She was awarded $12,000 & dental expenses.

And the winner:

This year’s runaway winner was Mr. Merv Grazinski of Oklahoma City, Oklahoma Mr. Grazinski purchased a brand new Winnebago Motor Home. On his trip home from an OU football game, having driven onto the freeway, he set the cruise control at 70 mph & calmly left the drivers seat to go into the back & make himself a cup of coffee.Not surprisingly, the RV left the freeway, crashed & then overturned. Mr. Grazinski sued Winnebago for not advising him, by reading the owner’s manual, that he actually could not do this. The jury awarded him $1,750,000 plus a new Winnebago Motor Home.

The “lawsuits” are certainly an entertaining read, although their validity is in question – I researched the “winner” to find that this story is just another version of an urban legend that began in the late 1970s when cruise control was first available for RVs. But that’s beside the point – the point is Stella Liebeck, whose story Denise would not have known about when she sent me the email.

Liebeck’s successful lawsuit against McDonald’s for spilling coffee on herself is often used as an example of how litigation is out of control. I didn’t question this until I came across the facts about her lawsuit in a book called “The Good Fight” by Ralph Nader. Here’s what you should know about the “frivolous” lawsuit that she brought against McDonald’s:

– The coffee at McDonald’s was far hotter than ordinary coffee.
– McDonald’s had already received 700 complaints of burns, but hadn’t lowered the temperature or placed a warning on the cups.
– Stella Liebeck, who was 79 at the time, suffered third-degree burns to her thighs, buttocks and genitals which required a week in the hospital and skin grafts!
– After the incident she wrote McDonald’s saying that she didn’t want to sue them, but only wanted them to cover her medical costs and examine their coffee procedures to avoid more burns.
– McDonald’s declined to change anything and offered her just $800.
– Out of the $2.9 million verdict only $160,000 went to Liebeck – $200,000 was arrived at as compensation for her but 20% was knocked off the total because of her negligence in spilling it. The remainder of the damages was punitive, designed to make McDonald’s cool their coffee (which they did).
– The trial judge reduced the punitive damages by 82% to $480,000.

So the lawsuit was not frivolous at all, and to the extent that the verdict was unfair, mechanisms after the trial ensured the verdict was reduced. In the end, an elderly woman was compensated for pain and suffering and a giant corporation was punished for ignoring the safety of consumers. This is a far cry from being an example of why the civil justice system needs to be reformed!

This made me think about how much influence corporations have over what we think. Why is it that so many people, myself included until recently, believe that we really do need to overhaul the litigation system? Could it be because that’s what corporations want us to think? In the same book, Nader points out that many of the companies calling for reform (including limits on the amount of compensation you can receive as a result of a lawsuit) make huge profits each year. According to Ernst & Young and the Insurance Risk Management Society, in the US in 1999 liability costs amounted to just $5.20 for every $1,000 in revenue. And only a tiny percentage of the people injured by companies bring lawsuits, and an even tinier percentage of them receive large verdicts.

I think the common perception that lawsuits against companies “just trying to make an honest living” are out of control is one created and fostered by those same companies. I think that is the same reason many people are anti-union, something I hope to write about later. When it comes common perceptions like these, I think it’s worth wondering: who benefits?