We all remember the McDonald’s hot coffee case from a few years ago. Let’s use that as an example.
Whoever coined the phrase, “all publicity is good publicity”, did not envision the McDonald’s coffee debacle. The most pressing negative impact the organization would face if they refused to settle is continuous bad media coverage. Although many entertainment outlets commented on the Albuquerque case in a joking manner, there was also uproar about the brash methods McDonald’s chose to address the issue. One online site had this to say, “McDonald’s enforced a franchise-wide policy of serving undrinkable scalding coffee that would cause third degree burns in two to three seconds. McDonald’s had received over 700 complaints of burns and yet did nothing about it and had no plans to do so.”(MacElree, Harvey. 2011).
On the contrary, by agreeing to settle the case, the organization could be admitting fault and encourage others to submit similar claims in search of monetary gain. One broadcast news station in Kentucky told a comparable story. “Margie Ann Faesy claimed that she fell on Aug. 29, 2012, while carrying her coffee on a sidewalk outside the restaurant, spilling the hot beverage and leaving burns. She claimed she spent more than $5,000 on medical treatment and was in severe pain for weeks. The coffee was between 195-205 degrees and McDonald's failed to keep it at a reasonable temperature, according to the lawsuit.” (Riley, Jason. 2015). This claim was later found to be false and was thrown out by a Franklin County Circuit Court judge. Faesy reportedly admitted it was her fault she fell and would not have been burned otherwise.
If we further analyze the McDonald’s case, we can see how an organization can benefit from settling in on-going litigation. Reputation can often be the most important factor when a prospective client or investor is deciding on a company for their needs. “Statistical analysis of results in 2011 showed that product perceptions explained only 39 percent of people's purchase intentions. In contrast, 61 percent of their purchase intentions were explained by their perceptions of the companies behind those products.” (Fombrun, C. J., & Low, J. 2011. The real value of reputation. Communication world).
One pro of settling out of court would be putting a customer before the organization in a caring manner. This would not be a positive aspect for the organization’s reputation because it gives off a level of honesty and humility.
To take a look further down the rabbit hole, let’s review how continuing litigation could have a positive spin. One of our assigned readings states, “Our legal system has numerous checks and balances and control measures in place that deter and penalize frivolous lawsuits and curb excessive jury verdicts.” (Cain, Kevin. Journal of Consumer & Commercial Law). In other words, by letting the legal system work, the organization isn’t admitting fault. You also are not cornered into an inopportune settlement for damages that may not have been entirely your fault. Each of these aspects is important when analyzing when to settle and when to push forward with litigation.