First written on September 22, 2004 Revised and Updated Tuesday, October 07, 2008 Business Ethics - Consumer Rights and Complaints - The Case of McDonald's Coffee - Albuquerque, New Mexico, USA The Incident: In an early morning of February 1992, a lady drove into a McDonald's restaurant in Albuquerque, New Mexico to have breakfast. She had just dropped her son at the local airport. She ordered Mcbreakfast with coffee and decided to have the breakfast in the car itself. She could not place the coffee cup on the dash board as it was slanted too steeply. Since both her hands were busy, she placed the coffee cup between her knees. She also tried to open the lid off the cup in that position. What she did not know was that the coffee supplied in that cup was heated to 170 Degrees. Many people do not know that when you pour something very hot into containers and immediately close the lid, it can be very difficult to open for scientific reasons. You need to be a Tarzan to open the lids in case of metal containers. You will also spill the contents, invariably. In case of plastic containers you might damage the container and it can be dangerous. The same thing happened to the lady. Hot coffee poured out on her thighs and she suffered second degree burns on her private parts. She was hospitalized for 3 weeks and further went for skin grafting, which can be very painful. Her experience was traumatic, lost lot of weight and she also lost further 3 to 4 weeks recuperating. Her daughter had to stay at home to look after her and she lost her salaries and wages. This lady wrote to McDonald's asking for just USD 2000 as compensation. McDonald's offered her USD 800. Her daughter decided to approach some lawyer and did so. The lawyer filed a case in courts asking for USD 100,000 as compensatory damages and 300,000 as punitive damages. The jurors were quite irritated and not amused when the case came up in courts and thought that the issue was frivolous. However, when they learnt that McDonald's had not reduced the temperature of the coffee for 10 years even after receiving 700 complaints, they changed their minds. Medical experts confirmed that at 170 degrees, coffee can cause serious second degree burn injuries. McDonald's blamed the lady completely for the incident and said it was her fault in keeping the cup between her knees. The jury decided in favor of the lady. She was awarded USD 200,000 as compensatory damages and USD 2.7 million as punitive damages. The trial judge later reduced it to USD 640,000. The case was finally decided out of court and the final settlement is a secret. Legal and Ethical issues on the above: Did McDonald's local management act with less foresight in not accepting her claim of 2000 dollars originally ? Why McDonalds did not reduce the temperature of its coffee even after receiving so many complaints? Is the lady not at fault for keeping the cup between her knees? However, in the absence of plate and cup holders in the car, is it not the responsibility of the restaurants to give such holders for people who prefer to eat in their cars? So many drive in restaurants provide this facility.  What happens in the case of small children? Compensatory damages need to be paid. However, how do we calculate it? How do we calculate the costs of mental trauma and physical pain? Are such huge punitive damages justifiable? How can businesses survive when they are always under such threats from consumers? Why can't we have some reasonable limits to punitive damages? Written  by Madhavan T Gopalachary Reference: "Business Ethics" by Ms. Rogene A Buchholz and Ms Sandra B Rosenthal,  both Professors at Loyola University of New Orleans and published by Prentice Hall, Englewood Cliffs, New Jersey, USA - 1998. The views, opinions and interpretations are personal. Sponsorship does not mean that the sponsors endorse them. Editorial Policy © Copyright, Oct-08 . www.madgopes.com . Without prejudice. All rights reserved www.mmgindia.com is the official website of Madras Management Group, Chennai, India. www.madgopes.com and www.mmg.name are personal websites and all editorials are published under their banner to retain editorial independence. We would highly appreciate feedback from readers and it may be sent to ipr@mmg.name.