Frivolous Lawsuits:
A Comparison of the McDonalds Case and the
Pearson Case
Michelle DeWald
University of Maryland University College

Introduction

“When there are too many policemen, there can be no liberty.
When there are too many soldiers, there can be no peace.
Where there are too many lawyers, there can be no justice.”
- Lin Yu-Tang Chinese Writer and Inventor
Suing companies in hopes of accumulating big money is popular in today’s society. However, many people get immensely creative with their claims, creating lawsuits over ludicrous motivations. Many cases endure for years or longer. Nevertheless, the costs involved in defending a claim can be exorbitant. Unfortunately, despite every precaution, we live in a society where anyone, any business can be sued for anything. Solely because a lawsuit has been filed, however, does not mean the case has merit. This paper discusses two legal cases related to frivolous lawsuits. The first lawsuit was filed against the McDonald’s Corporation by Stella Liebeck in 1994. The second lawsuit was filed against Custom Cleaners by Roy L. Pearson, an administrative judge, in 2007. Both cases are notable and played a major role in guiding small and large companies in their responsibilities to their customers, reducing the risk of litigation, and protecting their assets to avoid unnecessary liability. Both cases will be analyzed by comparing and contrasting the facts, law, and merit. In addition, this paper will examine ethical issues and address the topic of frivolous lawsuits as they apply to the two cases. Finally, this paper will argue ways in which each company could have used better risk management techniques to avoid the lawsuits.

The Facts
McDonald’s
No matter the precaution one tries to take when handling hot substances, there is always a chance of an accident, as was the case in Liebeck v. McDonald’s Restaurants. Knowledge of all of the facts is imperative to having any true understanding on the matter. In 1994 a lawsuit became widely publicized when Stella Liebeck was riding in the passenger seat of a vehicle when her grandson drove his car to a McDonald’s drive-thru window to order coffee for Liebeck. The coffee was served in a McDonald’s styrofoam cup. Liebeck’s grandson paid, pulled his car to the side of the parking lot and stopped for his grandmother to add sugar and cream to her coffee. The car was not in motion and Liebeck was not driving. While the car was still parked, Liebeck placed the cup between her legs to remove the plastic lid from the cup. As she attempted to remove the lid, the very hot contents of the cup spilled onto her lap. The coffee was estimated to be somewhere between 180 to 190 degrees. A vascular surgeon diagnosed Liebeck as having suffered third-degree burns over most of her lower extremities, extending through to the bone in some places. Liebeck was hospitalized for eight days. She underwent skin grafting and debridement treatments. Liebeck was permanently disfigured as a result of this incident (Cain, 2007, p. 15). As a result, Liebeck sued McDonald’s. In fact, after 700 other burn claims that were settled prior to this incident, McDonalds did not change its procedures. After discovering the true facts of the McDonald’s Coffee Case, it is shockingly emblematic to discover that Ms. Liebeck’s side of the case is far from facetious. The facts are quite apparent and the evidence, which includes photographs, is also statistical.

Pearson
The Pearson case became famous as the "pants lawsuit" in 2007. Roy L. Pearson, an administrative law judge, sued Custom Cleaners in Washington, D.C. for allegedly losing a pair of the judge’s pants. Pearson demanded $54 million for mental anguish, inconvenience and lawyer’s fees for defending himself. Pearson represented himself. Pearson also called himself as a witness and explained that he brought in several suits to Custom Cleaners for alterations (Takruri, 2007, p 6). Pearson requested his pants two days later from the dry cleaners and discovered that the pants were missing. Pearson said Soo Chung, the owner, gave him a pair of grey pants that did not even match the original blue and maroon suit with which the pants belonged. Pearson originally asked the dry cleaners for reimbursement of $1000, the full price of the suit. The dry cleaners insisted that they had given Pearson the correct pants and they refused to pay. As a result, Pearson sued. After reviewing the facts given by the Pants Lawsuit, it is easy to identify the fact that necessary evidence is missing. In this case, Pearson alleges that the dry cleaners lost his pants, yet Pearson provides no evidence to the support his allegation.
The Issues
McDonald’s
The main issue related to the McDonald's coffee case was product liability. Liebeck's attorneys argued that the McDonald's coffee served to Liebeck that day was defective, claiming it was too hot and likely to cause serious injury. In Fact, Liebeck’s attorneys proved that the temperature of the coffee was between 180-190◦F. Liebeck’s attorneys filed a lawsuit against McDonald's for "gross negligence" for selling defective and exceedingly dangerously hot coffee. McDonald’s refused an offer to settle for $90,000. A mediator was brought in before the trial in an attempt to settle. McDonald’s refused the final offer.
Pearson
This case surrounded the sign posted in the store reading “Satisfaction Guaranteed.” Judge Pearson’s pants were allegedly misplaced by Custom Cleaners. This led to a law suit concerning fraud and the definition of “Satisfaction Guaranteed.” The only facts known are that Custom Cleaners gave Mr. Pearson a pair of pants that he insisted did not belong to him. They were, however, altered to his specifications and Pearson’s size.
What Law Applies?
McDonald’s
A tort law is “an injury to another’s person or property” (Kubasek, Brennan & Browne, 2013, p. 149). According to the facts, the McDonald’s case covered a myriad of tort laws. ‘Cause-in-Fact’ negligent tort law applies here because McDonald’s never moved forward to change their product to prevent future harm. Liebeck’s attorney spelled out three specific laws in application here. The McDonald’s product was inherently dangerous due to the coffee’s extremely hot temperature. McDonald’s failed to alert its customers with necessary and crucial warnings of the temperature of the coffee. As a result, customers who ordered their coffee could not drink it at the time that is was served, thereby creating a breach of warranty (Cain, 2007). The injuries and doctor bills were both compensatory. Because McDonald’s was aware of the danger of the temperature of their product and did not change it, Liebeck was also covered by punitive damages.
Pearson
In this case it appears that Pearson made a poor attempt at manipulating the law to claim that he was defrauded by Custom Cleaners due to the “Satisfaction Guaranteed” sign. Pearson also sued for emotional distress, legal and attorney fees. Pearson sued under Intentional Torts, specifically under emotional distress. Aside from the lack of evidence on the side of the plaintiff, emotional distress is quite ambiguous. In this case, it can be argued that emotional distress for one person can be different for another. Not only did Pearson manipulate the definition of the law with little substantiation, it is my opinion that the defendant could have attempted to sue for retribution but chose not to do so.
What did the Judge and Jury Decide?
McDonald’s
Due to the amount of evidence, the McDonald’s case went through a lengthy jury trial. The jury sided with Liebeck due to McDonalds’ negligence in refusing to acknowledge the multiple, earlier warnings about the temperature of their coffee. The jury awarded Liebeck the equivalent of two days of coffee revenues, $2.7 million in punitive damages. (Preston, 2011, para. 6).
Pearson
The Pearson case went to trial by judge which concluded in two days. The judge ruled for the defendant on all counts, and ordered Pearson to pay the dry cleaner’s court costs (CNN, 2007, para. 14).
Did the Judge or Jury Make an Appropriate Decision
Based on the Applicable Law Controlling the Case?
McDonald’s
In the McDonald’s Case, the jury made the correct verdict decision in finding for the plaintiff. In contrast, the jury made an incorrect decision in awarding damages to Liebeck. The dollar amount they chose was so outrageous that the judge overturned the jury’s original $2.7 million award to $480,000. Here, the jury became overzealous in their attempt to change the company policy of McDonald’s.
Pearson
In the Pearson case, the judge made appropriate decision in considering the verdict and damages according to the definition of tort law. This is important because the judge must interpret the law, justly review it, yet dismiss the absurd. In the judge’s review of the missing pants case, it was clear that Pearson was unjustly victimizing the owners of the dry cleaners. Pearson did not lose work time because of the alleged missing pair of pants nor was he harmed in any way.
Ethical Issues
McDonald’s
Various ethical issues exist in the McDonald’s case. In this case, the defendant was responsible for unethical and illegal behavior. The primary issue is consumer and social responsibility. McDonald’s failed to listen to its consumers on multiple occasions. This is a company responsibility. Additionally, McDonald’s is responsible for knowingly harming another person. McDonald’s knew their coffee had caused severe burns in the past. However, McDonald’s never made changes to prevent repeat occurrences. Here, the ethical issues and the legal issues are equivalent. Each ethical issue corresponds to a legal issue. In order to improve McDonalds’ organizational effectiveness, it is imperative that the successful development and implementation of social responsibility and core values be embedded into the company’s culture.
Pearson
In this case, the plaintiff is responsible for both unethical and illegal issues. It was clearly unethical in the first place for Pearson to be allowed to sue the dry cleaners for $54 million for a pair of pants. He was, nonetheless, lawfully allowed to do so. It was also unethical and unlawful for Pearson to demand over $1000 from Custom Cleaners for a new suit although he was legally authorized to attempt to do so.
Is Either Case Frivolous?
McDonald’s
Theoretically, Liebeck’s case appears frivolous at first. Once exposed to the true facts, it no longer appears to be frivolous at all. According to Page (2010) of the U.S. Financial Education Foundation, a frivolous lawsuit is one that is started or carried out and has an infinitesimal chance of winning. It has no legal merit and the plaintiff is well aware of the case being futile from the beginning (Section 1, para.6). Liebeck spilled coffee on herself and was severely burned. She was burned from the hazardous temperature at which McDonald’s kept the coffee. Without knowing the facts, most of society presumes the case is frivolous due to the initial monetary award. Although many people seek to capitalize on these types of law suits, the evidence of Liebeck’s injuries prevents this case from being frivolous.
Pearson
The Pearson case, on the other hand, was clearly a frivolous suit. Refer to the definition of a frivolous lawsuit above. Undeniably, due to the fact that the plaintiff was a judge, one can beckon Pearson’s knowledge that the suit was futile from the beginning. Pearson may have assumed a scare tactic as someone with his power could potentially gain $1000. The end result for the plaintiff, regrettably cost him greatly.
How Could the Business Owners Have Prevented the Lawsuits?
Every business must take into consideration possible variables and uncertainties that may come into the life of a business. Failure to prepare for this had a big impact on both companies. One potential protection is to develop and implement an effective loss control program to prevent product liability claims. Using existing resources efficiently to achieve a specified objective is important. This means planning, organizing, staffing and directing a strategy that involves all departments. Systems thinking is the most effective way to communicate and commit to product safety throughout all phases of the product life within the company. Another key factor is communication outside the company with key stakeholders, customers, vendors and partners. Product warning labels, well written instructions, safety videos and advertisement should successfully impart the communication for the company. In addition, preparation and prevention of product liability should include the purchase of sufficient liability insurance with adequate coverage. It is better to be over-insured than under-insured. Finally, asset protection is an important consideration here. Many states offer financial protection mechanisms and federal exemptions. These mechanisms make a clear distinction between personal and business assets.
McDonald’s
First, McDonald’s should understand and communicate ethical standards. Merely obeying the law serves no purpose without ensuring that the coffee is served morally and ethically.
Next, management should use organizational policies and procedures to govern their own ethical standards and decision-making. McDonald’s should incorporate a moral stance throughout the company culture to create an environment where employees know how to act ethically when they encounter circumstances.
Lastly, McDonald’s should invest in safer packaging, preventing accidents and a safer design of the cup which includes more specific safety labeling. Management should incorporate all of these elements in alignment with their strategic plan and continually evaluate trends to prevent future lawsuits.
Pearson
In the Pearson Case, perhaps the most important step that could have been taken to avoid becoming the victim here was to provide thorough, adequate and well-placed warnings about the product service. The dry cleaners have a duty to warn about damage to or loss of clothing. An adequate warning should communicate the potential hazard, the nature and consequences, and how to avoid the risk. In this case, a “Satisfaction Guaranteed” sign was not adequate. Well placed signs such as “Not Responsible for Lost or Damaged Articles” as well as store policy signs are necessary. Custom Dry Cleaners should not assume anything when it comes to protection of its assets. Management should consider these implications when making decisions in alignment with the company’s strategic plan. Continual evaluation of external and internal factors should be used to prevent future lawsuits. Finally, product liability insurance can protect the business from accidents, injuries and liability.

Conclusion
Regardless of how consumers are cautioned, it is difficult to close the gap between knowledge and the ability to avoid danger. Today’s social, electronic and general media create an environment of misunderstanding and sometimes unwillingness of the public to face the truth. Evidence is everywhere. The public seems to easily accept completely false mythologies, a general misunderstanding of the facts, or an unwillingness to accept the facts. As a result, today’s businesses should consider the importance of many legal aspects. Product liability can be very harmful to a business if not dealt with properly. Businesses should remain aware of the importance of product liability as well as preventive measures against liability. In the end, everyone should undertake social responsibility. Concern for social, environmental, and human well-being should be addressed so that all parties involved are protected.

References
Cain, K. (2007). And now the rest of the story....... the McDonald's coffee lawsuit. Retrieved May 14, 2014, from http://www.jtexconsumerlaw.com/V11N1/Coffee.pdf
CNN.com. (2007). Judge tosses $54 million suit over missing pants. Retrieved from http://edition.cnn.com/2007/LAW/06/25/trouser.trial/index.html?section=cnn_latest
Page, O. (2010). What is a frivolous lawsuit? Retrieved May 14, 2014, from www.usfef.org
Pearson custom resources, AMBA 610. (2013) Boston, MA: Pearson Learning
Solutions. Kubasek, N. K., Brennan, B. A. & Browne, M. N. (2012). The legal environment of business: A critical thinking approach (6th ed.) Upper Saddle River, NJ: Pearson Education, Inc.
Preston, J. (2011, January 1). The McDonald's hot coffee case. Retrieved May 15, 2014, from https://www.caoc.org/?pg=facts
Takruri, L. (2007). Judge suing dry cleaner cries over pants. The Washington Post, p. 6-7.