Starbucks ordered to pay $50 million for hot tea spill
Starbucks has been ordered to pay $50 million to a customer who was burned when hot tea spilled on his lap at a California drive-through.
Lawyers for Michael Garcia said the server who handed him three super-sized drinks in February 2020 did not push one of them into the cardboard cupholder properly.
When he took the tray, the drink tipped over, "causing third degree burns to his penis, groin, and inner thighs," according to a statement from Trial Lawyers for Justice.
"After a hospitalisation and multiple skin grafts, Michael has lived for five years with the disfigurement, pain, dysfunction, and psychological harm caused by the burns."
The firm, which specialises in no-win-no-fee claims, said Starbucks had denied responsibility for Garcia's suffering, but before a jury trial had offered to settle for $30 million.
However, the coffee giant balked at the demand for a public apology and a change in policy that Garcia wanted, so the case went to trial.
A jury in Los Angeles on Friday awarded him $50 million, a figure his attorneys said would eventually cost Starbucks more than $60 million once pre-judgment interest, costs and attorneys' fees are added.
"Starbucks Corporation consistently denied responsibility for five years, all the way up to and through trial, and attempted to escape responsibility," the lawyers' statement said.
"The trial was a perfect example of frivolous defenses and victim-blaming.
"We are proud of Michael for standing up for himself and having the courage to tell his story."
A spokesperson for Starbucks said the company would appeal the award.
"We sympathise with Mr. Garcia, but we disagree with the jury's decision that we were at fault for this incident and believe the damages awarded to be excessive," Jaci Anderson, director of corporate communications, said in a statement to AFP.
"We have always been committed to the highest safety standards in our stores, including the handling of hot drinks."
The case is redolent of a 1994 landmark legal action against McDonald's in New Mexico, when 79-year-old Stella Liebeck was awarded over $2.8 million after spilling hot coffee on herself.
Although the award was reduced on appeal, the Liebeck case became a touchstone issue in US tort reform, and was often mocked as an example of how readily Americans resort to the law.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Gulf Today
2 days ago
- Gulf Today
Weekly jobless claims hit 7-month high; imports post record decline
The number of Americans filing new applications for unemployment benefits increased to a seven-month high last week, pointing to softening labour market conditions amid mounting economic headwinds from tariffs. The report from the labour Department also continued to show workers losing their jobs having a tough time landing new opportunities as uncertainty caused by President Donald Trump's aggressive trade policy leaves employers reluctant to increase headcount. The data included the Memorial Day holiday, which economists said could have caused difficulties with the seasonal adjustment and likely contributed to the second straight weekly increase in unemployment claims. Still, they said the report offered some evidence of labour market strains. 'We won't dismiss the rise in claims over the last two weeks, which may be signaling weakening labour market conditions in response to the Trump administration's tariff policies and uncertainty,' said Nancy Vanden Houten, lead US economist at Oxford Economics. 'However, seasonal quirks might have contributed to the rise in claims.' Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 247,000 for the week ended May 31, the highest level since last October. Economists polled by Reuters had forecast 235,000 claims for the latest week. With the start of the school holidays this month, claims could remain elevated as some states allow non-teaching staff to collect benefits. There were notable rises in unadjusted claims in Kentucky and Tennessee, likely related to layoffs in the motor vehicle industry amid duties on imported parts. Claims surged in the prior week in Michigan, attributed to layoffs in the manufacturing industry. But companies are generally hoarding workers after struggling to find labour during and after the COVID-19 pandemic. The Federal Reserve's Beige Book report on Wednesday showed 'comments about uncertainty delaying hiring were widespread,' noting that 'all districts described lower labour demand, citing declining hours worked and overtime, hiring pauses and staff reduction plans.' It said while some districts reported layoffs in certain sectors, 'these layoffs were not pervasive.' Stocks on Wall Street were higher. The dollar was steady against a basket of currencies. US Treasury yields rose. The number of people receiving benefits after an initial week of aid, a proxy for hiring, slipped 3,000 to a seasonally adjusted 1.904 million during the week ending May 24, the claims report showed. The elevation in the so-called continuing claims aligns with consumers' ebbing confidence in the labour market. SLACKENING labour MARKET The claims data have no bearing on the labour Department's closely watched employment report for May, scheduled to be released on Friday, as it falls outside the survey period. Nonfarm payrolls likely increased by 130,000 jobs last month after advancing by 177,000 in April, a Reuters survey of economists showed. The unemployment rate is forecast being unchanged at 4.2%. 'A gradual but genuine slackening of the labour market is underway,' said Oliver Allen, senior US economist at Pantheon Macroeconomics. There was, however, some welcome news on the economy. A separate report from the Commerce Department's Bureau of Economic Analysis showed the trade deficit narrowed sharply in April, with imports decreasing by the most on record as the front-running of goods ahead of tariffs ebbed, which could provide a lift to economic growth this quarter. The trade gap contracted by a record 55.5% to $61.6 billion, the lowest level since September 2023. The goods trade deficit eased by a record 46.2% to $87.4 billion, the lowest level since October 2023. A rush to beat import duties helped to widen the trade deficit in the first quarter, which accounted for a large part of the 0.2% annualized rate of decline in gross domestic product last quarter. The contraction in the deficit, at face value, suggests that trade could significantly add to GDP this quarter, but much would depend on the state of inventories. 'The collapse in the trade gap, although unlikely to be sustained, points to a massive trade addition to GDP growth and, if the offset to the import swing is not measured in inventories, second-quarter measured GDP growth could be eye-popping, possibly in the area of 5%, but as meaningless as the first-quarter's decline in output,' said Conrad DeQuadros, senior economic advisor at Brean Capital. Imports decreased by a record 16.3% to $351.0 billion in April. Goods imports slumped by a record 19.9% to $277.9 billion, held down by a $33.0 billion decline in consumer goods, mostly pharmaceutical preparations from Ireland. Agencies
Gulf Today
3 days ago
- Gulf Today
Why Medicaid work requirements won't work
Kathryn Anne Edwards, Tribune News Service The US labour market is a truly astonishing thing to behold. It includes 171 million Americans, as young as 14 and older than 90, some who never finished elementary school and others with PhDs. It is resilient and dynamic, shrinking during recessions but growing again after. It provides the majority of Americans with the majority of their income. All of which is to say: It is common to look to the labor market as a kind of salve for all economic wounds. Whatever the problem is, the solution is to get people working. Unfortunately, it's not that simple. For all its strength, the labor market is encumbered by the low-wage labor market — where work doesn't support a stable living, and where jobs are so bad they're more salt than salve. This is a reality that Republicans in Congress, in their current push to impose work requirements on Medicaid recipients, ignore. They are making policy for a labor market that doesn't exist. The 'low-wage labor market' is a vague designation. It's typically defined as those workers who have relatively or absolutely low hourly earnings, such as the bottom quintile or quarter of wage earners, or earners below some nominal wage cutoff. Whatever the definition, however, there are some aspects of the low-wage labor market that are obvious: The low-wage labor market is large. At least 39 million workers in the US earn less than $17 an hour, which is the equivalent of $35,360 annually. That is just below 138% of the poverty threshold for a family of three — the income needed for parents to be eligible for Medicaid in states that expanded it under the Affordable Care Act. Earnings in the low-wage labor market are volatile. Earnings volatility measures change in wage income from one month to the next. Instability at both the very top and very bottom is so great that economists have a term for it: the 'wild ride.' Recent research from the Brookings Institution's Hamilton Project shows that low-wage earners see more spikes and dips in income than any other group, with the dips being especially large. They have the most volatile earnings when measured by the coefficient of variation, regardless of whether the household has a single or multiple earners. That volatility can be partly attributed to unpredictable hours. Many low-wage earners are employed in shift work, in which their hours and schedule can vary week to week, often with little notice. According to Harvard's Shift Project, two-thirds of workers in retail and food service get less than two weeks' notice of their schedule, half get less than one week's notice, and 70% report that the timing of their scheduled shifts changes at least once a month. This flexibility is more likely to be imposed by employers rather than requested by employees; the more volatile the hours, the fewer hours typically worked. Low-wage jobs usually also have low-quality benefits. Of private-sector workers in the bottom 25% of the wage distribution, 30% do not have access to any type of leave, whether it is sick, holiday, vacation or personal. Some 56% do not have access to an employer-sponsored health-care plan, while 84% do not have access to an employer-sponsored dental plan. And 50% do not have access to a defined-contribution retirement plan. The bottom line is clear. Working Americans are eligible for social benefits such as Medicaid not only because their pay isn't high enough, but also because it isn't reliable enough. Classic labour theory holds that workers are balancing two conflicting goals: the consumption of purchased goods, and the consumption of leisure time. The former requires time at work; the latter requires time away from work. It is up to the worker to calibrate how much of each they want. Of course, economists will try to predict how workers and consumers will react to any change in their earnings. If a worker gets a wage increase, the 'income effect' would push them to work less: They can still consume the same amount of purchased goods but also have more leisure time. Alternatively, a wage increase could trigger the 'substitution effect,' pushing them to work more: The price of leisure (foregone wages) is now more expensive. But what if that worker gets a non-wage increase from a public benefit? There is no substitution effect, just the income effect — that is, they would work less. This is the economic foundation for the idea that public benefits discourage work. Work requirements are meant to counter this incentive. It sounds reasonable. But for at least 39 million Americans, work brings low wages, unstable earnings, unpredictable hours and few benefits.
Gulf Today
4 days ago
- Gulf Today
China's export curbs on rare earth minerals worry Europe
China is flexing its economic muscle in more senses than one. Its decision to restrict exports of the rare minerals and magnets has sent shivers down the spines of global automakers in Germany and in the United States. Rare earth minerals are needed in key sectors like car manufactures, semi-conductor industry, aerospace industry. The Chinese possess half of the global rare earth mineral reserves. The Chinese decision was mainly to counter US President Donald Trump's refusal to export crucial computer chips needed for AI, and the US' refusal to allow imports from Chinese chipmaker Huawei. More importantly, what has angered the Chinese is the refusal of student visas to Chinese students, and the cancellation of the visas of those who are students in American universities. Europe is caught in a crossfire in the trade war between the giants, the US and China. Europeans, as well as Americans, have suddenly realised that it is not such a good thing to depend on China for either rare earth minerals or even manufactured goods including cars. The West is desperately looking to reduce its dependence on China and it is seeking to diversify its supply chain. European Union (EU) Commissioner for Industrial Strategy Stephane Sejourne said, 'We must reduce our dependencies on all countries, particularly on a number of countries like China, on which we are more than 100 per cent dependent.' Meanwhile EU Trade Commissioner Maros Sefcovic said that he was in touch with his Chinese counterpart and they had agreed to clarify the rare earth minerals situation. Major automakers like Mercedes and BMW are claiming that they have enough inventories and their production schedules will not be affected. But it is clear that shortages are looming on the horizon. The US-China trade talks are quite crucial, even as American President Donald Trump wrote on his social media platform, Truth Social, 'I like President Xi of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH.' Trump is blaming China for breaking the deal made in Geneva to roll back the tariffs that each side had imposed on the other, Trump reduced the tariffs from 145 per cent to 30 per cent, and China reduced it from 135 per cent. Mercedes-Benz production chief Jeorg Burzer said he was talking to top suppliers of the company about building 'buffer' stocks anticipating trouble in the future. He said that Mercedes is well stocked for now and production schedules are not affected. But automakers in Europe and America have aired their worries about the curbs on Chinese exports of the rare earth minerals. Many of the captains of industry are lobbying with their governments to solve the deadlock. Wolfgang Weber, CEO of Germany's electrical and digital industry association, ZVEI, said in an emailed statement, 'Companies currently feel abandoned by politicians and are partly looking for solutions to their difficult situation on their own in China.' Trump's declaration of the tariff war against America's trade partners had mostly caused quiet murmurs, and many countries from the EU and other countries like Japan are trying to work out a trade deal without crossing swords with the US. But China was not willing to take Trump's tariffs passively. It is aware that it has power enough to counter American tariffs with tariffs of its own. The Chinese have always been defiant of the Western world, even when they did not have the economic power they now have. There is of course the harsh fact. China needs the Western countries to maintain its economic growth. It is its exports to Western countries that have made it rich and powerful. Europe and US need the cheap labour of China, and China needs the Western markets. They have to strike a deal with each other.
