Group items tagged

What Really Happened? Stella Liebeck, 79-years-old, was sitting in the passenger seat of her grandson's car having purchased a cup of McDonald's coffee. After the car stopped, she tried to hold the cup securely between her knees while removing the lid. However, the cup tipped over, pouring scalding hot coffee onto her lap. She received third-degree burns over 16 percent of her body, necessitating hospitalization for eight days, whirlpool treatment for debridement of her wounds, skin grafting, scarring, and disability for more than two years. Despite these extensive injuries, she offered to settle with McDonald's for $20,000. However, McDonald's refused to settle for this small amount and, in fact, never offered more than $800. The jury awarded Liebeck $200,000 in compensatory damages - reduced to $160,000 because the jury found her 20 percent at fault - and $2.7 million in punitive damages for McDonald's callous conduct. (To put this in perspective, McDonald's revenue from coffee sales alone was in excess of $1.3 million a day.) The trial judge reduced the punitive damages to $480,000, but did state that McDonald's had engaged in "willful, wanton, and reckless" behavior. Mrs. Liebeck and McDonald's eventually settled for a confidential amount. The jury heard the following evidence in the case: McDonald's Operations Manual required the franchisee to hold its coffee at 180 to 190 degrees Fahrenheit; Coffee at that temperature, if spilled, causes third-degree burns (the worst kind of burn) in three to seven seconds; Third-degree burns do not heal without skin grafting, debridement and whirlpool treatments that cost tens of thousands of dollars and result in permanent disfigurement, extreme pain and disability of the victim for many months, and in some cases, years; The chairman of the department of mechanical engineering and bio-mechanical engineering at the University of Texas testified that this risk of harm is unacceptable, as did a wid

Businesses have had at least 25 to 30 years near complete certainty -- certainty that they will pay lower and lower taxes, that they' will face less and less regulation, that they can outsource to their hearts' content (which when it does produce savings, comes at a loss of control, increased business system rigidity, and loss of critical know how). They have also been certain that unions will be weak to powerless, that states and municipalities will give them huge subsidies to relocate, that boards of directors will put top executives on the up escalator for more and more compensation because director pay benefits from this cozy collusion, that the financial markets will always look to short term earnings no matter how dodgy the accounting, that the accounting firms will provide plenty of cover, that the SEC will never investigate anything more serious than insider trading (Enron being the exception that proved the rule). So this haranguing about certainty simply reveals how warped big commerce has become in the US. Top management of supposedly capitalist enterprises want a high degree of certainty in their own profits and pay. Rather than earn their returns the old fashioned way, by serving customers well, by innovating, by expanding into new markets, their 'certainty' amounts to being paid handsomely for doing things that carry no risk. But since risk and uncertainty are inherent to the human condition, what they instead have engaged in is a massive scheme of risk transfer, of increasing rewards to themselves to the long term detriment of their enterprises and ultimately society as a whole.