acted recklessly and awarded Stella $$200,000$ in compensatory damages, which was then reduced by $$40,000$ because of her own negligence, and $$2\mathrm{.}7$ million in punitive damages. The trial court judge reduced the amount of punitive damages to $$480,000,$ which was three times the amount of compensatory damages. McDonald's now places a warning on its coffee cups that its coffee is hot. Liebeck $v.$ McDonald's Restaurants, P$.$T$.$S$.,$ Inc. $($New Mexico District Court, Bernalillo County, New Mexico, $1994)$

Ethics Questions

Do you think that McDonald's properly warned Stella Liebeck of the dangers of drinking McDonald's hot coffee?

Do you think McDonald's acted ethically in offering Stella an $$800$ settlement? Was the award of punitive damages justified in this case? Why or why not?