Posted 12/4/04

Truth the first casualty in insurance war

The insurance industry and big business use many devices to increase profits and limit recompense to consumers.

One of their most effective weapons are urban myths that they dress up as factual reports about huge and undeserving Court awards to maimed consumers. They post these myths to websites to cultivate their propaganda that the public is better off without a powerful justice system.

Some are complete fabrications - like the man who was "awarded $5million dollars for injuries received after using a lawn mower as a hedge trimmer." (This one is completely false.)

Others are distortions of true cases.

Almost everyone has heard of the McDonald's coffee case. The website myth is that the victim, Stella Liebeck was awarded $50 million for being scalded with McDonald's coffee.

Director Peter Carter recently had the pleasure of meeting the judge in the case and can now tell you the true facts. You decide whether the judgement was fair.

Stella Liebeck was a passenger in her grandson's car. After ordering coffee from the drive-thru window, Liebeck's grandson pulled over and as she removed the lid, the entire contents spilled into her lap.

She suffered third-degree burns over 6% of her body, including her inner thighs, perineum, buttocks, and genital and groin areas. She was hospitalized for 8 days. She underwent skin grafting. Liebeck, who also underwent debridement treatments, sought to settle her claim for $20,000, but McDonald's refused.

During discovery, McDonald's produced documents showing over 700 claims by people burned by its coffee from 1982-1992. Some claims involved third-degree burns similar to Liebeck's. This history proved McDonald's knowledge of the hazard.

McDonald's also said during discovery that it held its coffee at 180°F-190°F to maintain optimum taste (and therefore maximise sales) - way above the accepted safe temperature of 140°F.

McDonald's own experts testified that their coffee was a dangerous burn hazard.

The jury awarded Liebeck $200,000 in compensatory damages. This was reduced to $160,000 because the jury found Liebeck 20% at fault. The jury also awarded Liebeck $2.7 million in punitive damages - equal to about two days of McDonald's coffee sales.

The trial court subsequently reduced the punitive award to $480,000 even though the judge called McDonald's conduct reckless, callous and willful.