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How a Lawsuit Over Hot Coffee Helped Erode the 7th Amendment (2014) (priceonomics.com)
81 points by ryan_j_naughton on Dec 3, 2016 | hide | past | favorite | 67 comments



>Nurses, housekeepers, and lab techs crammed into a conference room where hospital administrators presented a form and told them to sign. Signing meant agreeing to submit any future employment-related complaints to an arbitrator hired by the hospital and waiving the right to sue in court. Refusing to sign meant they'd be fired.

Can you sue for wrongful termination if you get fired for refusing to sign such a waiver?


In some jurisdictions, yes. In others, no.

I've tried to make such arguments on behalf of terminated employees in federal district courts in the Fifth Circuit, but have not been successful to date.

But some courts have held that a demand to arbitrate or be fired, and then firing the employee for refusing to sign, is unlawful retaliation when there is a pending claim. See, e.g., Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1267-1268 (11th Cir. Ala. 2008):

The main issue in this appeal is whether Bagby Elevator Company was entitled to a judgment as a matter of law against Greg Goldsmith's claim of retaliation when it is undisputed that Goldsmith's employment was terminated based on his refusal to sign a dispute resolution agreement that applied to his charge of racial discrimination pending with the Equal Employment Opportunity Commission. Bagby Elevator appeals a jury verdict that awarded compensatory and punitive damages to Goldsmith based on his complaint of both racial discrimination and retaliation. See 42 U.S.C. § 1981; 42 U.S.C. §§ 2000e-2000e-17. In Weeks v. Harden Manufacturing [1268] Corp., 291 F.3d 1307 (11th Cir. 2002), we ruled that a refusal to sign an arbitration agreement was not a protected activity that could support a claim of retaliation, but we did not address an employee's refusal to sign an agreement that applied to a pending charge of discrimination. Goldsmith was willing to execute an amended dispute resolution agreement that would not have applied to his pending charge, but Bagby Elevator insisted that Goldsmith sign an agreement that applied to the pending charge and fired him immediately after he refused to do so. We conclude that Bagby Elevator was not entitled to a judgment as a matter of law against Goldsmith's claim of retaliation because there was sufficient evidence of a causal relation between the filing of his pending charge and later termination. As a result, we need not decide any issue about the verdict regarding Goldsmith's alternative claim that he was terminated based on his race.


> Can you sue for wrongful termination if you get fired for refusing to sign such a waiver?

It seems unlikely, because the Supreme Court has ruled it's permissible for employers to compel employees to sign arbitration agreements as a condition of employment.


How did the Supreme Court reason that? It seems to be a violation of Amendment 7.


The case is Circuit City Stores, Inc. v. Adams but it doesn't really turn on constitutional issues like that from what I can tell. I suppose the reasoning is you're both equal parties and you can just turn down the employment if you don't like the provision (this argument is a ridiculous fiction since you need to work to live but whatever).

I mean honestly I think this is ideologically motivated just like the rash of decisions that have practically made it impossible to file a class action lawsuit by letting companies require their customers to use arbitration.


It sucks I agree, but, companies are not obligated to hire people or to not fire them because people need to eat or else a company could be forced, legally, to hire far more than they need or can afford. This would drive them out of business and all their employees would be on the street.


Whether that's correct or not it's beside the point of what I'm saying. What I mean to say is that the premise that an employee and and an employer are two equals entering into an agreement on equal footing is divorced from reality. That's the reason a minimum wage law and so on is needed in the first place.


why should they be "on equal footing", and what could that possibly mean? They are two sides of an equation who each want different things out of the relationship. The employee wants to sell his services. The employer wants to purchase services.

Unless you subscribe to the Marxist doctrine that every economic interaction is "really" a question of one party having power over the other, which is delusional like the rest of Marxism.


Why don't you go back and read the discussion again?


> Businesses complaining about greedy Americans being overly litigious may want to look in a mirror.

This is excellent. In fact, the patent office should require arbitration agreements which the patent office would oversee for any patent disputes. Maybe it would be a small step forward over the patent mess that exists now.


That is not a bad idea. Not at all.


This is a great example of how the modern media is a cancer to the truth. I wish there was a media source that wasn't incentivized by clicks and ads. I would pay monthly for a news source that doesn't lie to me.


Great news! You should buy the New York Times. You can even do so monthly!

Their original article on this subject is at http://www.nytimes.com/1994/08/19/business/big-jury-award-fo....

Note how it doesn't lie to you. It's the "just the facts" approach people worship.

Arguably, if they had foreseen what that story would become in mainstream folklore, they would have wanted to add some graphic images etc. But I doubt anybody knew at the time how interested parties would instrumentalize this story.


I'm not sure I'd hold out a stub of a story like that as a model of Times reporting. For what it's worth, here's a more in-depth story on coffee temperature from a few months later that mentions the case, although it doesn't go into detail on the case itself:

http://www.nytimes.com/1994/10/12/garden/coffee-tea-or-ouch....

On the other hand, this article from 1995 on lawsuits against restaurants, which also mentions it, is quite sympathetic to the restaurants:

http://www.nytimes.com/1995/03/12/weekinreview/the-nation-he...

But not unreasonably so, I think. There are two sides to every story.


The New York Times needs to give up all pretenses of objectivity and openly declare itself as a propaganda organ. At least if it is going to continue on it's current path.


The same New York Times that reported as late as November 16th that Clinton won 50.4% of the popular vote (with no qualification)?


Wait, isn't that actually true? And doesn't she have plenty of qualifications? I mean – she's passed the bar exam, right?


I think what buddy means there (the grandparent post) is that the NYTimes statement/claim in its article had not been qualified by reference (i.e. attribution), rather than that Clinton herself was unqualified for the job. That's how I read it.


Yeah, I was joking.

Of course they meant a qualification to remind people that she lost the election.

(...which I think is quite far 'out there' with regards to examples of lies spread by the media. But maybe the NYT and I are wrong in assuming that everybody knows about President-elect by now.)


...She didn't win 50.4% of the popular vote. She won 48.2% to Trump's 46.3%, as of the latest count. But I'd like a citation for New York Times reporting that she did.


The exact quote through at least the 16th, as pointed out on HN at the time:

"Popular vote For Clinton 50.4% ... For Trump 49.6%"

Check the Wayback Machine for this page:

http://www.nytimes.com/interactive/2016/11/16/us/politics/10...

Then look at its accurate rewording now.


I see. The earliest copy of that page on the Wayback Machine includes the label about only counting Clinton and Trump, but I'll take your word for it that it was originally missing. It seems like a pretty minor error given that it was a small part of an article primarily focused on comparing the counties won by Clinton and Trump, and was apparently promptly corrected, but eh. (And of course their main election results page has the right numbers.)


No, the claim had no qualification that they were omitting all other candidates from the totals and stating the percentages of the total votes for just those two candidates (a contortion they had never used before, not even in 2000). They simply stated that Clinton had won 50.4% of the popular vote (exact wording: "Popular vote For Clinton 50.4% ... For Trump 49.6%").

It wasn't until sometime after the 16th that it was accurately restated.

Perhaps the original edition can be found on the Wayback Machine, but this page was pointed out on HN at the time.


I'd appreciate a link.


And such news services used to exist, and nobody paid for them once it became free on the Internet. I saw it happen as I grew up--my dad worked in a newsroom as a journalist.


I think people reduced their consumption of commercial media in general when they found, partly as a result of being able to see unfiltered, original sources via the internet, that they were being spun (and outright lied to) by those very news services.


I think one of the big problems we're facing is that unfiltered original sources, while not "spun", can be misleading without context.

For example, every time Trump tweets "i never said that" we need the context ("he did say that") or we're just guessing at the truth.


It really isn't, at all. Media sources owned by companies that sell other products and services are all you need to have your media sources twist stories towards caps on liability. It doesn't matter whether you pay them or they're sponsored - or whether they're giving it away for free without sponsorship.


Sensationalism in the media is not driven by advertising. It doesn't matter wether a publication's revenue comes from ads or from subscriptions: they need more readers for more revenue and sensationalism is they how they get them.


Financial Times? Foreign Affairs? Im sure there must be others. I'm in the process of exploring and evaluating right now. Make sure you check their boards and partners for potential biases you might not want.


a lot of times the further the audience is from the story the more of a condensed version they get. what is front page locally ends up buried in a small available space on the other side of the country.

now getting that blurb in another paper likely requires packaging it in such a way that the word count is acceptable and the text is interesting. sadly as the count goes down the facts fall out.


This story has been highly politicized and is proof that even in the 90s everybody was like tl;dr. It is the perfect example of lies and inneuendo trumping the facts and reality. And it is a perfect illustration of why we are in the mess we are in today.


So next time I buy a car, if I put a line through paragraphs that I don't agree with in the contract are they going to walk away from the deal? I'm sure that the dealership doesn't want this to happen, but the sales personnel are more deal focused than anything else. I'm bloody minded enough to try this half a dozen times.


I tried it twice, asking the manager flat out "what happens if I don't agree to arbitration?" And he said "Then we can't sell you a car."


Make sure you strike out the line about not being able to modify the contract as well.


> Businesses complaining about greedy Americans being overly litigious may want to look in a mirror.

Sure, but it goes both ways.

On one hand, companies are overly litigious for reasons described in the post. I've been frustrated at least once that I couldn't be part of a class action suit because there wasn't a recall for a design flaw costing me thousands; I knew however that a class action suit probably would've resulting in a small check at most.

On the other hand, there are law firms that advertise on television to get people to claim malpractice, etc. and "get money." And there are patent trolls that are purely exploiting.

I think it's fair to say there is a lot that could be done for reform.


The article is wrong in one very important detail regarding the Federal Arbitration Act. The author states,

  The legal basis for outsourcing legal proceedings is a 1925
  law passed by Congress specifying arbitration as an option
  for “merchants” who agree to a private alternative.
Actually, nowhere in the statute is the word merchant or merchants used. That word is used in the legislative history (i.e. the debates and arguments). But from the plain text of the statute, a layman reading would have it apply to all commerce that would otherwise be governed by federal law. You have to rely on some presently out of favor legal interpretative devices to believe that the law should only apply between merchants.

The _real_ issues are,

1) What kinds of commerce are reachable? This bill passed in a time when the Federal Courts held a substantially narrower interpretation of Congress' powers over commerce. And even proponents of modern, so-called plain text interpretation usually admit that in some circumstances, especially involving constitutional issues of powers, you want to see a more clear articulation of an intent to extend power so broadly.

2) SCOTUS upended over half a century of settled precedent. First when it held that the FAA was enforceable in state courts applying state law, and again when it decided that state law defenses to enforceability (i.e. state-specific definitions of unconscionability) could not be used.

3) Deciding that state law defenses are not useable is ironic give the plain text limitation that arbitration agreements are enforceable "save upon any grounds that exist at law or in equity for the revocation of any contract". There's a sound argument that this exclusion doesn't capture state-based grounds. But that argument necessarily depends on the historical legal context--at the time the law couldn't have reached nearly as much commerce as SCOTUS allows today. And it wasn't until 1938 until Erie Railroad v. Tompkins exalted state law in choice of law matters.

These details matter because if you try to debate the Federal Arbitration Act with knowledgeable defenders you lose all credibility by repeating falsehoods like the author did. We really need change in this regard: 1) stop so-called tort reform, and 2) fix SCOTUS' error in applying the FAA so broadly. It helps if people stick to facts.

Many conservatives love the FAA; and many conservatives love so-called tort reform. But the inevitable outcome of both these things will be centralization of consumer protection in federal government agencies. A modern democracy simply won't stand-by while corporations cheat and injure people. The question is, which system do you want:

1) One that is decentralized, relatively equitable (1000 years of careful balancing of interests between plaintiff and defendant), and with more freedom for states to experiment, or

2) One that is centralized in a few government regulatory bodies, where the little guy will almost always get screwed, and businesses are subject to the whims of each passing administration on major issues, turning every major business dispute into a political issue.

The latter is what you get when you take away the ability for people to seek out individualized justice in the courts. And the outcome will not (and is not) good for anybody.


> A modern democracy simply won't stand-by while corporations cheat and injure people.

This is essentially a religious belief.


No, it just follows from the definition of democracy. If McDonalds starts shooting every fifth customer in the head, no matter how deeply in the pockets the police and legislators are, in a functional democracy representatives will be responsive to the electorate to some substantial degree.

But note that what change the electorate gets might not be very effective. It might be just barely adequate, or it might just obscure the problem. And that's my point: conservatives are taking away the tools to seek out justice. Liberals are replacing some of those tools, but the newer tools suck. They'll not only be less effective in protecting consumers, but they're likely to be even more stifling to business. Everybody will be worse off.

Regulatory agencies are worse for business because unlike courts, regulatory agencies can _prevent_ businesses from innovating on the pretense of consumer protection. While as a general matter courts can only respond to manifest harm.

Because regulatory agencies don't and cannot provide individualized justice, when they work well to protect consumers they do so by being overly protective. Usually it's beneficial to society to let businesses take more risk as long as they can compensate those people who are harmed. I'm not saying regulatory agencies are always a bad idea, just that vesting the power in consumers to sue on their own behalf, and relying on them to do so, is a much more powerful mechanism for correcting bad behavior than people think. It's administratively inefficient in many respects, but at least it's uncoupled from politics and more directly tied to manifest harms. I think in real economic terms it's less costly for society.


The problem with this line of thinking is that McDonald's has a team of people to lobby tirelessly on their behalf and individual voters don't really know or care about these issues until they're affected personally. So by one small change after another the court system can become less and less favorable to individuals by very small steps. The idea that regulation is becoming more stringent is simply not borne out by reality.


Just world fallacy, perhaps. ;) "The karma will get them eventually!!"


> But the inevitable outcome of both these things will be centralization of consumer protection in federal government agencies. A modern democracy simply won't stand-by while corporations cheat and injure people.

I don't share your optimism.


The most recent obvious example is the Consumer Financial Protection Bureau (CFPB), created in 2010 as part of Dodd-Frank.

Less obvious examples are the increasing role of, and the public's increasing reliance upon, the FCC and FTC in arbitrating consumer disputes. This is happening because the federal government has been monopolizing for itself regulation of industry by pre-empting state law and, in the case of the FAA, preventing class-action civil suits.

It might be two-steps backwards, one-step ahead. But both conservatives and liberals in both Congress and SCOTUS are centralizing control in the Federal government. Conservatives because they think it's better for business, liberals because they think having watchdog agencies are always a good thing. And both because they don't trust state governments. And both are wrong. Or, at least, the intentional and unintentional centralization is not necessary to their aims, and likely to result in a worse mess for everybody.


The CFB was fought tooth and nail and is very likely to be dismantled altogether with the Republicans having full control of the federal government.


I think you're 100% correct and I've been telling state and federal regulators (as well as federal judges in the rare chance when I'm permitted oral argument on a motion to compel arbitration) exactly that. The alternative to consumer class action lawsuits is government oversight like we see in the EU and the U.K. Conservatives usually recoil in horror at that thought.


It's pretty amazing that her initial week in the hospital only racked up 10k in bills. I had a hernia repair recently and it was ~7k for a few hours in-and-out. Wouldn't want to see the bill for spending a week in the hospital these days.


Is there any statistics about the performance of jury trial?

I am from Europe and to be honest I don't have much experience with US legal system. But what I watch from news and stuff, it is a utility to force people, out of court settlements or guilty pleas. What I see is going on a jury trial is a probabilistic decision. You would most likely settle out of court for your Expected Value at jury trial.

I strongly feel this should not be what justice should be.


Point of view from Europe: doesn't matter that Coffee sue wasn't about millions just thousands, the main issue is that she won. That is what we laugh about. You can act as brainless and won money. If you order hot coffee you can pay your own bill when you spill it on you. So thanks to her and only her Gourleys got limited money.


As an European myself, I fully disagree; getting a cup of coffee at 82ºC is not reasonable, and spilling it on yourself should never cause 2nd degree burns. The payout was completely justified. And the fact that it was standard policy and not an error further solidifies the point.


Seriously. Coffee is hot. Traditional methods of preparing it involve boiling water. If you are not smart enough to avoid pouring boiling hot coffee in your lap, I have little sympathy for you.


Still seems totally ridiculous that it would go to court. 180F is 82C. If you're stupid enough to burn yourself with it (and I am) blaming someone else for your stupidity and suing is not moronic, it's amoral. The problem of medical bills is one to take up with your elected representatives rather than blaming coffee for being coffee ffs.


IIRC one of the issues in the case was that the coffee was being served as if it was immediately consumable despite the fact that it was in a state that made it impossible to consume without injury.

It's as if I served you a plate of lutefisk after the "soaking in lye" stage but before the "soak in water to get rid of the lye" stage.

Edit: oh, and that serving it that way was corporate policy and that there had been hundreds of prior problems, some also involving injuries. I suspect the "corporate policy" part was a big factor in the punitive damages portion of the case which was based on 2 days of coffee sales.


I'm upvoting you since this is a common mistake. We think people should use common sense when dealing with hot coffee. I've spilled coffee I made on myself plenty of times. It burned and made my skin a bit red. That's all. Since that's what hot coffee usually does.

Then, to cut costs, McDonalds raised the temperature of their coffee without telling people what it could do. I personally lost the ability to taste anything after taking one sip. Came back after a day or two but no coffee has ever done that. Then, this woman gets third degree burns from something she expects to hurt and make her skin red at worst.

That's nothing even a smart person or coffee junkie should expect to happen. It's unusual. That's because it was a dangerous thing McDonalds did to squeeze more money out of their operation. The danger damaged people who couldn't see it coming. They should pay for it.


> Then, to cut costs, McDonalds raised the temperature of their coffee without telling people what it could do.

How does raising the temperature of coffee cut costs?


It was a combination of things in the legal text I read a while back. For one, they were having to brew coffee more often to keep it at the desired, sane temperature. Two, the coffee quickly turned to a mild temperature on the road for some customers that drove a lot. They dramatically increased the temperature to reduce number of pots brewed & attract that one demographic more. They also didn't tell anyone the new temperature could cause 3rd degree burns.

Profit went up with most people taking damage thinking they couldn't win against legal team of a giant. They just put in complaints instead of lawsuits. The suit that won got watered down a lot on appeal. The marketing team combined with the media, which makes a fortune on McDonalds ads, turned her into a laughing stock. McDonalds added a warning or something afterward but the cost-benefit analysis was good enough to justify all of it.


It is better able to extract flavors from the coffee grounds, of which you therefore need less.


If someone asks for a coffee you'd just casually hand them a cup capable of causing third degree burns (which the lady did suffer)? Seems too hot. I mean, if you spill this on yourself your skin will end up looking like a hot dog roasted over a campfire; third degree burns mean the skin is charred.


Hot Coffee lawsuits constantly come up in the US court system at temperatures that were as hot or hotter than the coffee in the Liebeck case, and they almost always gets thrown out as frivolous (source: https://en.wikipedia.org/wiki/Liebeck_v._McDonald%27s_Restau... ). The liebeck case was more of an exception than the rule.

Also, 180 degrees is considered standard serving temperature for coffee according to the Specialty Coffee Association of America. Starbucks, Dunkin Donuts, and a host of companies serve at this temperature as well. While some might complain this is still too hot, I would not say that mcdonald's serves it's coffee UNUSUALLY hot.


As I understand it coffee lasts longer at higher temperatures, so the incentive to keep really hot coffee is economic beyond just customer preference.


source?


McDonalds made this claim during the court case. they said holding coffee at 180f to 190f maintained optimum taste.


Some TV piece at least ten years ago.


McDonald's were serving coffee hotter than most other places. (And hotter than coffee made at home.) McDonalds had already settled on previous cases (700 or so) where customers had been burned by hot coffee. McDonalds decided that this number of injuries is insufficient to cause them to change their practice. (Remember that some of these people also had full thickness burns, which is a significant injury with life long scaring.)

The coffee was hot enough to cause full thickness ("3rd degree") burns. It remained hot enough to cause these burns after they left the restaurant, and after a short drive.

Warning labels do not work - if warning labels worked no-one would ever get a speeding ticket. A warning label on the side of coffee is ignored by the people making it and the people drinking it.

A jury looked at the facts of this case and decided McDonalds was negligent and that the woman deserved punitive damages.

Although, if you hate this lawsuit, most of them (and they continue to happen, McDonalds didn't change the temperature of their coffee after the case) get thrown out of courts.


They didn't settle on 700 cases. They had received that many complaints.


Their coffee was way too hot. It was ridiculous.


What does "180F is 82C" prove? Does water boil at a high temperature for smart people?


> What does "180F is 82C" prove? Does water boil at a high temperature for smart people?

Why so hostile?

Not everyone who reads HN is from an imperial or customary units country. The inline conversion provides context for those readers, in addition to being a natural form of speech, the same way you might say "60 meters? That's like 200 feet! How can they hold their breath that deep?".

I really don't think GP was lording primary school math skills over the HN populace.




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