The Case of the Hot Fajita

An Applebee’s customer was burned by his fajita when he lowered his head toward his (sizzling) plate to pray. He sued.

Where are we going? To corporate liability.

But first, the story…

The Hot Fajita Lawsuit

The gentleman who filed the lawsuit explained that he “bowed his head, then heard a loud sizzle followed by a grease pop. He then felt a burning sensation in his left eye and on his face.” Startled, he accidentally knocked his plate off the table onto his lap and suffered further bodily harm to an arm and elbow. Because the server neglected to give Applebee’s customary sizzler warning, the plaintiff said that the fast food chain was liable for his “serious and permanent injuries.”

A skillet and wooden board for sizzling food:

From: Eater.com

Applebee’s servers are supposed to warn customers that their fajitas are on a hot skillet. But, as the lower court pointed out, the need to take care is pretty evident “…since the plate of food, as described by plaintiff, was sizzling, smoking and ‘real hot.'” On appeal, the case was dismissed. The courts confirmed that a self-evident danger did not require a warning from the server.

Other Fast Food Lawsuits

McDonald’s

You probably know about the 1994 hot coffee lawsuit in which the jury ordered McDonald’s to pay the plaintiff $2.86 million. That case was about a cup of coffee that a 79-year-old woman spilled on her pelvic region. Said to have been 180-190 degrees, the coffee created third-degree burns that required skin grafts. (McDonald’s settled out of court.)

Starbucks

Not the first and surely not the last lawsuit against Starbucks, now an Oregon woman is suing the coffee chain for $132,235 ($7,235 in medical bills and $125,000 for pain and suffering). Using their drive-thru, she ordered food, hot tea and hot water. Then though she says the lid popped off a cup of water that was “far too hot for a person to drink.” Furthermore, she claims in the court’s documents that the lid was improperly secured and Starbucks’s employees should have indicated the risk of “severe burns.”

Our Bottom Line: Corporate Liability

Among the three basic forms of business ownership, one huge benefit of the corporation is limited liability. For the single proprietorship and for the traditional partnership, if the business does harm, its owners can be personally liable. That could mean losing everything in a lawsuit. By contrast, because the corporation exists as a “person” in the eyes of the law, the business itself bears the entire burden while its shareholders have limited liability. So yes, the value of their investment can plunge but they lose no more than that.

As big businesses with limited liability, corporations can have millions of owners who are shareholders. Consequently, while there are many more proprietorships than corporations in the U.S., corporations are the money makers.

Although the data (below) are from the 2012 Statistical Abstract of the U.S., the message is up-to-date. We have many more small businesses that are sole proprietorships. But the corporate form of ownership represents far more revenue.

And that is why most lawsuits against Applebee’s, McDonald’s and Starbucks do not get their shareholders too worried.