S. Reed Morgan litigates against McDonald's and becomes the lightning rod in the debate on tort reform.
by Nick Marinello, "Tulane Lawyer", Fall 1995

S. REED MORGAN (L '76) was born, raised and schooled in law in New Orleans, a town where a good, hot cup of coffee is easier to find than an RC Cola. Get it French roasted, au lait or flamed with brandy. Fancy stuff, yet no local cup is quite so notable as the one served in Las Cruces, N.M., that led Morgan into one of the most highly observed and controversial product liability cases of the century.

Yes, Morgan, who now lives in Sisterdale, Texas, is the attorney in the notorious McDonald's coffee-burn lawsuit and the brew master of the (both) coveted and disdained $2.9 million cup of coffee. That was the figure originally awarded his client, Stella Liebeck, by an Albuquerque jury back in September 1994, for injuries sustained two years earlier when she accidentally tumbled a cup of McDonald's coffee into her lap while leaving a drive-through window. Forget that the judge later reduced the amount to a mere $640,000. It is the nearly $3 million that stuck in everyone's mind as it was bandied about in the media and became the standard in a legislative call to arms for tort reform.

And while an out-of-court settlement has silenced Morgan from speaking on-the-record about the case, he'll gladly talk about the issues surrounding it and why it should not be used as an example by those who say the legal system has gone haywire.

It's a summer's day and Morgan, in town to visit family, is babysitting his 6-year-old grandson, Tommy, at his Algiers condo that looks over and across the Mississippi River to the New Orleans downtown skyline.

"The reason this call for tort reform has occurred is because of an absolute abuse of the information system," says Morgan, his baritone voice sustained above the soft whir of a ceiling fan. "People don't want to look at the facts and see what is behind this whole situation, because if you took the number of punitive damage awards that, in the last 25 years in the U.S., were in excess of a million dollars, I'd bet you it is less than $100 million in judgments. In 1993, more people froze to death in Texas than were awarded punitive damages."

That last line has a well-worn feel to it, as if Morgan has stepped to the plate and swung with it before. Yet there is passion in Morgan's voice. Last spring saw two separate tort reform bills pass in both the House of Representatives and the Senate, and the nation's anti-litigation climate is as hot as a mouthful of java. What vexes Morgan is not that tort reform will hurt his business - he says he's asked for and received punitive damages only two times in his 20-year career - but that the outraged call for reform are little more than a politically motivated tampering of a legal system that doesn't need to be fixed.

Morgan tells the story of a freshman congressman who had announced that he was going to vote for tort reform. When asked what he liked least about tort reform the congressman replied, "I don't know. I haven't read the bill."

"There's a rule in Texas that imposes sanctions against lawyers who file frivolous law suits," says Morgan, leaning forward as he presents his opening argument. "A federal judge has the absolute discretion to not even allow you to submit an issue on punitive damages if he doesn't think you have enough evidence in the record by the time it's ready to go to the jury. In Louisiana and Texas a judge has the power to remit the damages to a level he thinks is fair and reasonable."

Look at the Liebeck case. After deliberating for four hours, the jury found for Liebeck in a big way, awarding her $200,000 in compensatory damages. The jury, taking into account Liebeck's own role in the accident, reduced the amount by 20 percent to $160,000, but it then slapped McDonald's with $2.7 million in punitive damages. Trial Judge Robert H. Scott, however, subsequently reduced the punitive damages to $480,000.

Morgan not only sees tort reform as "totally unnecessary" but also an assault on free enterprise. "The general public doesn't understand that the vast majority of attorneys who handle plaintiffs' cases are entrepreneurs who don't have the financial wherewithal to do what an insurance company can do with ease - to spend as much money as it takes to win. A plaintiff's attorney is at severe risk in handling these cases. He's got a very tight budget. He's got to use common sense on what he can prove and what it is going to cost to prove it. He must ask himself, 'Does this case have merit?"'

According to Morgan, the "specter of punitive damage" becomes the great equalizer in a case by giving the insurance company its own very tangible risk to think about. "That risk - if you believe in a free market system - needs to be there," says Morgan.

Morgan then switches gears, taking the offensive. "If you want tort reform, there ought to be a law against insurance companies who force these confidentiality agreements that prohibit the plaintiff or attorney from talking about a case."

He cites a case he settled with a company that "holds itself as being experts in manufacturing home garden tillers." According to Morgan, the company designed a tiller so poorly that if it hit a rock or hard piece of clay it would do a nose dive, sending the sharp, rotating tines into the user's crotch. "There was no warning in their brochures, even though there were hundreds of incidents of injury and several deaths."

Litigating for a client who was badly injured by the device, Morgan deposed the engineer in charge of the tiller's design. "I asked the guy, 'How do you justify continuing selling these products when you know more people are going to be cut up' and, I swear, he told me that everyone of those people who had had an accident knew fully well this could happen and they took the risk. He said that if they didn't want the product, they shouldn't have bought it."

Morgan goes on to lament that a condition of the case's settlement was a confidentiality agreement. "We had to return the tapes of the stupid testimony and all the documents we had assembled," says Morgan. "It is just as wrong as can be."

Morgan joined the entrepreneurial ranks in 1990, when he opened S. Reed Morgan & Associates in Clear Lake, Texas, just outside Houston, a city whose gravitational pull got hold of Morgan even before he left Tulane Law School. "I graduated in 1976, in the top third of the class, but the employment opportunities in New Orleans back then were not very good," says Morgan. I remember a little two-by-four-inch card on a school bulletin board from a plaintiff's lawyer in Houston looking for a local lawyer to work with him on maritime cases."

The firm represented the National Maritime Union seamen from New Orleans to Brownsville and, after passing bar exams in both Louisiana and Texas, Morgan joined it, working in Houston for a year before returning to New Orleans to open a branch office.

"It was an impossible situation," recalls Morgan. "I had one year's experience and I had to manage the office, bring in business, handle the deposition and try the cases. I had something like 200 files and after three years, I got pretty burned out."

In 1981 Morgan joined the New Orleans firm of Adams & Reese to work the other side of the maritime field as a defense attorney, gaining a new perspective on the profession. "The work was given to me and I was billed by the hour. If you needed help it was available through legal assistants, law clerks, partners. They had a big law library, Westlaw, the whole nine yards."

After three years, however, Morgan was headed back to Texas. "I wanted to get away from New Orleans because I wanted to broaden my horizons," he says of his move back to Houston to practice at a maritime defense firm.

The circular chase between the two cities would ultimately bring him full circle professionally, as well. "After doing defense work on these offshore cases I came to the realization that my philosophy - my fundamental beliefs - are much more in line with the plaintiff than with the insurance company," says Morgan. "My mother raised my brother and me in New Orleans, and we were quite poor. It indelibly stamped me with an affinity for the underdog, I suppose."

According to Morgan, S. Reed Morgan & Associates handles only plaintiff's cases in a variety of areas: maritime, business torts, insurance and bank fraud. "We've kept it small," says Morgan. "There's only me and one other lawyer, and I've tried to handle a small docket of about 15 active files. It's not an overloaded practice, and that's the way I like it."

It's difficult for a lawyer involved in a $2.9 million product liability case to get much sympathy as an underdog. Morgan says that during the month between the jury's verdict and the case's settlement, he and the 79-year-old Liebeck were flown to New York to be interviewed for an NBC special, "The Blame Game." "We had a 45-minute interview with [reporter] John Stossel where I explained the case in detail. He cut every question and answer out of the entire interview except for, 'How much is your fee?'"

Morgan insists the truth about the Liebeck case and, indeed, the very moral imperative of what he does for a living, lies in the details. In a September 1994 commentary written for Texas Lawyer (when he was still able to talk about it), Morgan outlined the principal facts that emerged during the course of the Liebeck case.

According to the commentary, court testimony revealed that McDonald's sells its coffee at 180-190 degrees, a temperature that can cause third-degree burns in two to seven seconds. Liebeck's treating physician testified this was one of the worst scald burns he had ever seen (Liebeck spent seven days in the hospital). And although more than 700 reported claims about burns from McDonald's coffee were filed from 1982-92, McDonald's representatives acknowledged that consumers were unaware of the risk of serious burns, yet testified that the company did not intend to lower the heat.

It's interesting to note that much of the information disclosed during the trial had been sitting in Morgan's files for several years. Liebeck's family, in fact, had contacted Morgan because he had gone toe-to-toe with McDonald's once before, in 1988, after he was approached by a client with third-degree burns from a coffee spill. The case was eventually settled for less than $30,000, but the experience was invaluable. During a deposition, a McDonald's quality assurance manager told Morgan that the 180-190 degree temperature of the coffee was a design parameter to ensure the best taste. "He had the data to back him up," says Morgan, "but I didn't care too much about his reports; I know that that's not the temperature I drink coffee over at the house and it tastes fine."

It was when Morgan began asking questions about the number of people injured through burns that he discovered "a really incredible document": a computer printout of the more than 700 people burned by hot liquid, 90 percent of which was by coffee. "What is really mysterious about it is that McDonald's has apparently gone through the trouble of making a compilation of claims from all over the country, despite the fact that they have different insurance companies. This tells me a bunch of things: that they are concerned about it; that they are tracking the nature of the claims, the quantity of claims, and what they are spending on them; and that they've got some kind of integral network where they bring all this information together. Which is very important because it shows they had noticed that this was a real problem."

At the end of the deposition Morgan says the quality assurance manager was asked if he intended to confer with medical doctors or burn specialists about the pervasive occurrence of burns. "He said no," says Morgan, "and I thought that was an unusual answer since I had just shown him a picture of my badly burned client. As you can imagine, all that information was very helpful in the Liebeck case."

And, perhaps, beyond. Morgan is currently handling a case in New York where a child received second-degree burns at a McDonald's drive-up window. He is also gearing up to represent a McDonald's franchise owner in the Netherlands who is suing the hamburger giant over unfair practices and alleged fraud.

The bigger the adversary, it seems, the better. Morgan is also currently representing a seaman in a suit against Sea River Maritime Inc., a subsidiary of Exxon.

"I have a client who worked for Sea River for 18 years...," he begins, launching into another opening statement, his voice still strong, steady and persuasive even though he's been talking non-stop for a couple of hours. It is some time later, as the afternoon sun turns the river's shimmer to orange, before Morgan rests his case.

"There are a lot of times when lawyers are the last stop for people who are seriously injured," he says. "If they can't get a lawyer who will help them then they won't get help - period."