Tag: Starbucks

The Hot Coffee Case Revisited: Has Proximate Cause Changed in the 25 Years Since Liebeck v. McDonald’s Restaurants?

Two cases decided 25 years apart, but there were some facts in common: a hot drink, a consumer alleging that she was burned by the drink, and a lawsuit. These are the facts of the 1994 case Liebeck v. McDonald’s Restaurants that resulted in an award of millions to the consumer, but also the facts from Shih v. Starbucks, a case decided last year. In Shih, however, the court found in favor of the product supplier. What’s different about these cases? The answer: how the courts interpreted proximate cause.

In 1994, Liebeck v. McDonald’s Restaurants sparked a nationwide tort reform debate after a jury found McDonald’s liable for a consumer’s injuries after she spilled McDonald’s coffee on herself. At the time, many commentators predicted a wave of frivolous lawsuits and large judgments against businesses. But 25 years later, those predictions have not materialized. While consumers continue to sue, the doctrine of proximate cause limits the liability that businesses face from claims for injuries related to hot drinks.

Liebeck v. McDonald’s Restaurants

In 1992, Stella Liebeck bought a cup of hot coffee from a McDonald’s drive-through in New Mexico. While parked, she placed the cup of coffee between her legs and attempted to peel the cap off. The coffee spilled and Ms. Liebeck sustained second- and third-degree burns.

Liebeck sued McDonald’s, alleging that the hot coffee was defectively manufactured, that it violated the implied warranties of merchantability and fitness for a particular purpose, and that the defect caused her injuries. At trial, Liebeck’s attorneys offered evidence that McDonald’s asked franchisees to brew coffee at 180-190 degrees Fahrenheit. Additionally, the attorneys offered evidence that McDonald’s had received more than 700 reports of burns resulting from coffee spills out of billions of hot coffees sold during the time period.

The jury ruled in favor of Liebeck and awarded her compensatory damages of $200,000 and punitive damages of $2.7 million. But the jury determined that Liebeck was 20 percent at fault for her own injuries, and the court reduced the punitive award significantly, resulting in compensatory damages of $160,000 and punitive damages of $480,000.

Shih v. Starbucks

Shih v. Starbucks presents a similar set of facts, but with a different outcome. In June 2016, Tina Shih went to Starbucks with a friend, and each ordered a hot tea. Each tea was given to Shih in a double-cup – one full cup placed within an empty cup. Neither cup had a sleeve. Shih carried both teas to her table and sat down.

Shih claimed that because the cup of tea was filled to the top and was very hot, she did not want to lift it. Instead, she pulled the lid off the cup and moved her chair back to sip from the cup while it was on the table. Shih pushed her chair back to lean over the cup, lost her balance, and put her hand on the table to steady herself – causing the hot tea to spill in her lap. Shih sustained second-degree burns from the incident.

Shih sued Starbucks. She alleged that the double-cup without a sleeve was a manufacturing defect, which – combined with the cup being filled to the brim with hot tea – caused her injuries. Starbucks moved for summary judgment on Shih’s claims, arguing that Shih could not prove the alleged manufacturing defect proximately caused her injuries. The court agreed, granted Starbucks’s motion, and entered judgment in favor of Starbucks. In 2020, the appeals court affirmed.

Proximate Cause is Key the Difference

The differences between Liebeck and Shih are the litigants’ defect claims and their respective theories of proximate causation. The proximate cause inquiry examines the relationship between the defendant’s alleged conduct and the plaintiff’s injury: if the defendant’s conduct is too attenuated from the consumer’s injuries, the defendant cannot be held liable for those injuries. Proximate cause exists when the defect in question increased the risk of harm to the consumer, and the consumer sustained injuries resulting from the increased risk. Courts generally test proximate cause by looking at whether the harm was a foreseeable result of the defect – meaning the business could reasonably have predicted the harm.

Liebeck’s attorneys successfully argued that the coffee was defective because it was served too hot and that the excessively hot temperature put Liebeck at an increased risk of burns. Liebeck established proximate cause by showing that her burn injuries were a foreseeable result of the alleged defect – the coffee being served very hot.

Shih could not establish proximate cause because the court held that the alleged defect was too attenuated from her injuries. Shih’s attorneys argued that the lack of a cup sleeve and the fact that the hot tea was full made it defective. Specifically, Shih would not have removed the tea lid, leaned forward, moved her chair, lost her balance and grabbed the table – causing it to wobble and spill the tea on her – if Starbucks had given her a cup sleeve or not filled the cup to the brim.

The court held that the alleged defect did not increase the risk of Shih being burned or otherwise injured by the hot tea; therefore, the defect was not the proximate cause of her injuries. The lack of a sleeve and the fullness of the tea did not increase Shih’s risk of losing her balance “while attempting to execute [this] kind of unorthodox drinking maneuver,” and spilling the tea on herself. The court’s use of “unorthodox” illustrates that, in the court’s view, Shih’s injuries were not a foreseeable result of the alleged defect. The court noted that while it is foreseeable that consumers could lose their balance and spill their drinks, losing one’s balance is not “within the scope of the risk” created by Starbucks’ decision to use a double cup and to fill the cup to the brim. Thus, Shih could not prove Starbucks’ actions proximately caused her injuries.

Twenty-five years after Liebeck sparked a national conversation about hot coffee and corporate liability, Shih demonstrates that courts continue to follow public policy limitations like proximate cause to protect businesses from unforeseeable consumer injuries.

© 2021 Schiff Hardin LLP

Article by Emilie McGuire and Jeffrey Skinner with Schiff Hardin LLP.

For more articles on class action lawsuits, visit the NLR Litigation section.

Consumer Public Interest Lawsuit Seeks 21 Million RMB for Counterfeit Trademark Sales of Starbucks in China

On November 22, 2020, the Jiangsu Provincial Consumer Protection Committee announced they filed a public interest lawsuit on October 26, 2020 against Shuangshan Food (Xiamen) Co., Ltd. for selling counterfeited Starbucks coffee.  Shuangshan was previously subject to criminal prosecution for the sale of the counterfeit coffee amounting to 7 million RMB (~$1 million USD). This is the first consumer civil punitive damages public interest litigation in Jiangsu Province and the demand for compensation of 21 million RMB is the highest demand ever made in China in a consumer civil public interest litigation.

In February 2018, the Wuxi City Market Supervision Department received a report stating that there were counterfeit “Starbucks” brand coffee being sold. An investigation determined the “Starbucks” coffee sold by Shuangshan was a counterfeit product. After verification, the market supervision department notified the Wuxi public security department. Later, it was found that the coffee sold by Shuangshan Company was not authorized by the owner of the “Starbucks” brand. Under the premise of knowing that the purchased products were counterfeit, Shuangshan still forged customs declaration documents and false authorization documents, and sold the products. The counterfeit Starbucks coffee went to more than 50 merchants in 18 provinces across China, and finally sold to end consumers.  In 2019, the Xinwu District Procuratorate prosecuted Shuangshan Company and related personnel with a verdict reached  in December. At the same time, the Xinwu District Procuratorate recommended that the Jiangsu Provincial Consumer Protection Committee file a consumer civil public interest lawsuit.

The Jiangsu Provincial Consumer Protection Committee concluded that the case was an intellectual property case involving counterfeit trademarks. The facts were clear and fixed, the amount involved was huge, and the infringement was serious.  The fake coffee sales constituted fraud and the Committee therefore claimed punitive compensation of three times the amount involved. On October 26, 2020, the Wuxi Intermediate People’s Court formally accepted the case.

How to distribute any funds collected by the Committee as a result of the lawsuit has yet to be determined.

 

Starbucks Thanks You Letter

ARTICLE BY Aaron Wininger of Schwegman, Lundberg & Woessner, P.A.
For more articles on IP law, visit the National Law Review Intellectual Property section.

Two Class Actions Alleging Starbucks Violated FCRA’s Background Report Disclosure Requirements Are Grinding Toward Settlement

Two pending class action lawsuits alleging coffee giant Starbucks violated the Fair Credit Reporting Act (“FCRA”) by relying on flawed background reports to decline employment to over 8,000 job applicants will likely settle in the coming months.  The two suits are being consolidated in the U.S. District Court for the Northern District of Georgia for the purpose of a directing notice to a single nationwide class.

Before taking adverse action against an applicant based on a background report, 15 U.S.C. §1681b(b)(3) requires the employer to provide the applicant with a copy of the report and a written summary of the applicant’s rights under 15 U.S.C. §1681g(c)(1).  The purpose of this requirement is to allow the applicant an opportunity to correct any errors on the report before the adverse action is taken.

In the first suit, pending in the U.S. District Court for the Western District of Washington, the lead plaintiff, Jonathan Santiago Rosario (“Rosario”), alleges that he was denied employment as a Starbucks barista based on an inaccurate background report Starbucks obtained from Accurate Background, Inc. (“Accurate Background”).  Rosario claims he was taken out of consideration for the position based on several criminal charges and convictions that appeared on his report.  Rosario maintains that the report was inaccurate and that Starbucks took the adverse action weeks before he was provided with the report and the written summary of rights.  Rosario argues that he never had a meaningful opportunity to dispute the report and that Starbucks never reconsidered him for the position.

Similarly, the lead plaintiff in the second suit, Kevin Wills (“Wills”) of Georgia, alleges that Starbucks took adverse employment action against him without providing proper notice and a written summary of rights under FCRA.  Starbucks allegedly hired Wills pending the results of his criminal background check.  Starbucks allegedly received a report from Accurate Background stating that “Kevin Willis” of Minnesota had two prior convictions for domestic violence.  As a result of the report, Starbucks informed Wills over the telephone that he could not work for Starbucks.  Days later, Wills received a letter enclosing the background report.

According to an April 17, 2019 order issued by Judge Richard Jones, who presides over the Rosario action, the parties from both cases jointly participated in several sessions with a private mediator and have reached an agreement in principle to settle both cases on a class basis.

On April 24, 2019, Magistrate Judge Catherine M. Salinas issued a report and recommendation in the Wills case recommending that the Clerk in the Northern District of Georgia consolidate the Rosario case into the Wills case.  After fourteen days, if no party objects, the cases will likely be consolidated.

To date, no details about the terms of the settlement have been released.

 

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.
This post was written by Nadia Adams of Womble Bond Dickinson (US) LLP.
Read more on FCRA Litigation on the National Law Review’s Litigation Type of Law page.