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BUSINESS ETHICS : A

CASE STUDY
Lie beck vs McDonalds
Restaurants

Group members
Anika
Ashwini
Rahana
Siji
Zubair

Contents
CASE FACTS

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IS IT ILLEGAL

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IS IT ETHICAL

6/24

WHO ARE ALL EFFECTED

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SELLERS PERSPECTIVE

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BUYERS PERSPECTIVE

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QUESTION AND ANSWERS

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Case Facts

McDonald's coffee was served at temperature between


180 and 190 degrees Fahrenheit.

The plaintiff in the case was 79-year old Stella Lie beck

Spilt coffee into her lap and suffered 3rd degree burns
and was badly injured.

Stella Lie beck spent seven days in the hospital.

Stella Lie beck's family initially asked McDonald's


tocover her out-of-pocket expenses of about $20,000,
McDonald's refused and offered $800.
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Case Facts

McDonald's knew of the risk of dangerously hot coffee.


The company had no plans to either turn down the
heat or warn their customers of the scalding danger
because of this, they had received 700 complaints
before Stella Lie beck's case.

The jury awarded Lie beck $160,000 in compensatory


damages and $2.7 million in punitive damages and
reduced the $2.7 million to $480,000 as they found
20% fault with Stella Lie beck.

McDonald's still hasn't learned its lesson. In


September 1997, a seventy-three year old woman
suffered first and second degree burns when a cup of
McDonald's coffee spilled on her lap. At the time,
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McDonald's still kept its coffee at 180 o F.

Is it Illegal?

The serving of very hot coffee by the McDonalds


violates the product liability law .

Coffee at temperatures between 180-190


degrees is well known to burn when spilt.

The fast food chain knew this very well and it still
continued serving this very hot coffee even after
over 700 previous cases of burnt reported to it.

This demonstrated very well that the food chain


was not ready to take any responsibility for any
health effect its product could cause and prevent
them earlier by serving coffee at lower
temperatures.
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Is it Illegal?

The company admitted knowing well that such temperatures


for coffee could cause scald but still argued that its
costumers liked the coffee that hot because they can take it
over a long distance on their journey before it cools down.

It claimed that such temperatures allowed every costumer to


have his or her coffee at her preferred temperature as one
will allow it to cool until the right temperatures.

However, what would happen in cases it spill before cooling


down.
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Is it Ethical?

It is unethical for any restaurant to sell any item of


consumption that is hot enough to physically harm someone.

The company broke the ethical principle such as giving


someone something that can cause harm .

The manufacturer has more knowledge of a product than the


consumer.

Ethical behaviour requires that consumers be warned about


the dangers of a product.
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Is it Ethical?

Moreover, the product could have been sold at a


temperature at which a scalding problem did not exist

Considering the coffee was to be taken on drive, the


chances of spilling were too high.

From studies it is proved that coffee between 180-190


degrees case cause third degree burn just between a
short time of six to nine seconds.
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Who all are affected?


Mrs Lie beck

Involvement of Mrs Lie beck in the case made her


received several harms.

Her burns not only made her hospitalized to eight days


and receive two years of medication, it caused her lots of
money on medication since she underwent skin grafting,
lose of income and also emotional distress.
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Who all are affected?


The McDonalds Restaurants

McDonalds on the other hand had to pay a lot of money as


settlement of the case, payment for cases expenses such as
lawyers and also suffered public defamation. It also forced
the chain to start serving coffee at lower temperatures that
not all costumers liked. The restaurant had to put a lot of
effort to rebuild its image after the case and this lead to
even more spending on both radio and TV adverts that it
originally had budgeted. It also lost some customers who got
biased after seeing what a McDonalds coffee can cause.
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McDonalds - Seller perspective

The fact that billions of cups of McDonalds coffee


are sold prove that it was serving its coffee at a
temperature that consumers desired, rather than
too hot. No one was forced to buy the hotter
McDonalds coffee instead of the lukewarm coffee
supposedly served elsewhere; if McDonalds
coffee was really undesirably too hot, it would
be punished in the marketplace for this flaw.

A product that, through open and obvious


consequences, injures one in 24 million people is
not
unreasonably dangerous. From the
deontological perspective, it is unethical.
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McDonalds - Seller perspective

A defendant who is not the proximate cause of


an injury should not be held liable for that injury.

From their market research, they analysed that


most customers prefer coffee at the high
temperature to get the special taste. They
claimed that only very rarely customers suffered
such burns, so from utilitarian perspective it is
ethical.

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Buyer Perspective

No adequate warning of the threats severity


was provided.

McDonald's coffee was served at a temperature


between 180 and 190 degrees Fahrenheit.

In the ten years before the case, more than 700


people who were scalded by coffee burns made
claims against the company. But McDonald's
never lowered the temperature of its coffee.

McDonalds refused to the initial request


compensation.
More
than
winning
compensation
amount,
she
wanted
temperature to be reduced so that it did
happen to anyone else.
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for
the
the
not

QUESTION & ANSWERS

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What does caveat emptor mean?

CAVEAT EMPTOR: LET THE BUYERS BE WARE

Caveat Emptor means A warning that notifies a


buyer that the goods he or she is buying are as
is or subject to all defects. When a sale is subject
to this warning the purchaser assumes that the
product might be either defective or unsuitable to
his or her needs.

Although the buyer is still required to make a


reasonable inspection of goods upon purchase
increased responsibilities have been placed upon
the seller and the doctrine of Caveat Venditor has
become more prevalent.

CAVEAT VENDITOR: LET THE SELLER BEWARE


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According to this doctrine, who is


responsible for Stella Lie beck's burns?
Explain

According to Caveat Emptor, Stella Lie beck


is responsible.

As She is 79 year old it makes more difficult


to justify caveat emptor attitude for this case.

According to CAVEAT VENDITOR :McDonalds


is responsible because McDonald's knew of
the risk of dangerously hot coffee. The
company had no plans to either turn down
the heat or warn their customers of the
scalding danger.
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The main terms of the implicit


contract surrounding the purchase of
coffee at a fast-food drive-through?

An implied contract of merchantability means


that the goods sold conform to the ordinary
standards of care and that they are of average
grade, quality and value as similar goods sold
under similar circumstances.

In the case of coffee purchased at its drive thru,


McDonalds would know that the buyer of the
coffee wanted to drink it and that the buyer is
relying on McDonalds to sell coffee that the
buyer can drink.
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Contd.

When the McDonalds employee hands the


customer the cup of coffee, it is as if McDonalds is
saying, "I promise this coffee is drinkable and that
the cup it is served in is suit able." If the contract of
merchantability and fitness for a particular purpose
are breached, or the promise is broken, then the
manufacturer, distributor, and/or seller of the
product are liable or responsible for the
consequences.

When buying coffee, Mc Donalds (or any other


company) implicitly assures the customer that
he/she wont be negatively affected by the product
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What is the concept of strict


product liability, and how
could it be applicable in this
case?
Product liability refers to a manufacturer or

seller being held liable for placing a defective


product into the hands of a consumer.
Responsibility for a product defect that causes
injury lies with all sellers of the product who are
in the distribution chain.

The coffee she purchased at McDonalds caused


her to suffer severe and excruciatingly painful
third-degree burns to her groin, thighs and
buttocks which required multiple surgical skin
grafts and a seven-day hospital stay. Her
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medical bills were almost $200,000.

Contd

She had never filed a lawsuit before this one and


in fact, she didnt want to file this lawsuit, but
McDonalds refused to help her pay any of her
medical bills

She was asking for just $20,000 to pay some of


her bills.

McDonalds had over 700 coffee burn claims filed


against it before this claim and was well aware
that its coffee was burning people all over the
country.

McDonalds intentionally heated the coffee to


190F despite the fact that it knew other
restaurants only heated coffee to a safer temp of
about 160 F.

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McDonalds coffee was so scalding hot it was

Contd

McDonalds tactic in the case was to blame Mrs


Lie beck for her injuries claiming she didnt take
her pants off fast enough when the coffee spilled.

It also argued that "Mrs Lie beck's age may have


caused her injuries to have been worse than they
might have been in a younger individual," since
older peoples skin is thinner.

During the case McDonald's own quality


assurance manager was forced to admit that the
Corporation was well aware of the risk of serving
dangerously hot coffee, but stated the
corporation still wasnt going to do anything
about it.
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Of these three ethical structures


which do you believe is best? Why?

From buyers and common people


perceptive: Manufacturer product liability is the
most suitable ethical structure.

No information regarding coffee temperature


was provided on coffee packs leads to product
liability for McDonalds. By providing a warning
like HOT printed on cups may increase the
consumers awareness .

McDonalds can implement a quality design in


packaging to resist the temperature of coffee.
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Of these three ethical structures


which do you believe is best? Why?

From sellers perceptive: Caveat Emptor is the best.


There is no principled construction of tort law that
holds McDonalds liable for failing to prevent injury in
the case of a foreseeable coffee spill, but not a
clothing manufacturer for failing to prevent injury in
the case of a foreseeable coffee spill, and one can
agree that the latter scenario is an absurd proposition
for liability.
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Learnings

Right to safety
Protect your consumers, ask what they really
want.

Right to information of the consumer

There must be a warning on the cup itself.

Managers need to be mindful of societies


shifting sentiments about business, shifting
social responsibility, standard of truthfulness,
transparency, customer mindfulness, and so
forth.
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REFERENCES
/

http://injuryattorneyflorida.com/mcdonalds-hot-coffee-case-anal
yzed/
http://
lustrousessays.com/a-comparative-analysis-of-the-lawsuit-against
-mcdonalds-corporation-and-custom-cleaners

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