On Feb. 27, 1992, Stella Liebeck ordered a 49 cent cup of coffee from a McDonald’s drive-thru in Albuquerque, New Mexico.
What happened next forever changed trial jury awards and has had a lasting impact on multiple industries across the U.S., especially commercial transportation.
Liebeck, who was in the passenger seat of her grandson’s car, spilled the entire cup of coffee on her lap, scalding her thighs, buttocks and groin.
The 79-year-old woman was taken to a hospital, where she was treated for third-degree burns on 6% of her skin. Liebeck needed surgery to repair the damage caused by the hot coffee, which was later determined to have had a temperature between 180 and 190 degrees.
Liebeck reportedly didn’t want to go to court at first, only asking McDonald’s to pay her $20,000 medical expenses. McDonald’s refused, leading her to file a lawsuit against the company in 1993.
In 1994, a jury concluded that McDonald’s handling of its coffee was irresponsible and awarded Liebeck $2.9 million (equivalent to more than $6 million in 2022). Liebeck later settled for less than $600,000.
The exponential rise of nuclear verdicts
Nuclear verdicts have become prominent in the trucking industry relatively recently but have been around in other sectors of the economy for decades.
In 1994, a jury awarded $5 billion in the Exxon Valdez oil spill case to thousands of Alaska commercial fishermen and property owners. In 1999, a Los Angeles jury awarded $4.9 billion
against General Motors to six burn victims who were permanently disfigured when the GM car they were riding in on Christmas Eve 1993 burst into flames after being hit in a rear-end collision.
While there had been other famous cases before it, the American Transportation Research Institute (ATRI) said Liebeck’s 1994 lawsuit against McDonald’s captured the country’s attention in a way jury awards had never done before in its 2020 report “Understanding the Impact of Nuclear Verdicts on the Trucking Industry.”
“While this amount was reduced after appeal and settled for an undisclosed amount, large verdicts captured America’s attention, becoming fodder for late-night television and legal scholars alike,” ATRI said in the report.
ATRI defines a “nuclear verdict” as a monetary award in excess of $10 million.
Nuclear verdicts against the trucking industry seem to be an American phenomenon and don’t occur in neighboring countries.
“Mexico is much different,” Mark Vickers, executive vice president of international logistics at Chattanooga, Tennessee-based trucking industry provider Reliance Partners, told FreightWaves.
“There is limited legal recourse and liability claims in Mexico will most likely not have the same catastrophic consequences as we are seeing for fleets and brokerages in the U.S.,” Vickers said. “But that’s not to say it can’t happen. When legal teams in Mexico realize what is sticking in the United States, they will begin to pattern their cases accordingly.”
In the U.S., the watershed moment in trucking-related nuclear verdicts came in 2011, when a jury in Cobb County, Georgia, awarded $40 million in a wrongful death suit, according to ATRI.
The case was filed by Theresa Foster, who was seeking to hold a Florida trucking company accountable for a 2007 collision that killed her husband, William Foster, as well as a friend, Jay Demont, and caused her serious injuries.
“The jury deliberated for five hours, and it resulted in a verdict of $40 million, with $28.7 million being attributed to the value of the life of [William Foster] for his future business venture,” ATRI said.
Vickers said nuclear verdicts are now extending beyond the trucking company, with freight brokerages getting pulled into lawsuits.
“It’s costing them big,” Vickers said.
The National Law Journal reported the average jury award among the top 100 U.S. verdicts more than tripled between 2015 and 2019, skyrocketing from $64 million to $214 million. More than 30% of verdicts surpassed the $100 million threshold in 2019 compared to 2015.
According to research from Reliance Partners, there have been 11 adverse rulings against brokers at the circuit, federal or state court levels in just the last 17 months finding that a broker may be held liable under state common law for the actions of a motor carrier.
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John D Thomas
I often recall the CH Robinson 23 million dollar law suit to my clients in an effort to keep them from taking too much control over a driver thus breaking the independent contractor arrangement. They get the point.