McDonald's legal cases

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McDonald's
Type Public
Traded as NYSEMCD
Dow Jones Industrial Average Component
S&P 500 Component
Industry Restaurants
Founded May 15, 1940 in San Bernardino, California;
McDonald's Corporation, April 15, 1955 in Des Plaines, Illinois
Founder(s) Richard and Maurice McDonald McDonald's restaurant concept;
Ray Kroc, McDonald's Corporation founder.
Headquarters Oak Brook, Illinois, U.S.
Number of locations 34,000+ worldwide[1]
Area served Worldwide
Key people Andrew J. McKenna
(Chairman)
Don Thompson
(President and CEO)
Products Fast food
(hamburgers • chicken • french fries • soft drinks • coffee • milkshakes • salads • desserts • breakfast)
Revenue Increase US$27.56 billion (2012)[2]
Operating income Increase US$8.60 billion (2012)[2]
Net income Decrease US$5.46 billion (2012)[2]
Total assets Increase US$35.39 billion (2012)[2]
Total equity Increase US$15.29 billion (2012)[2]
Employees 1,800,000 (2013) [3]
Website Global Corporate Website

McDonald's has been involved in a number of lawsuits and other legal cases in the course of the fast food chain's 70-year history. Many of these have involved trademark issues, but McDonald's has also launched a defamation suit constituting "the biggest corporate PR disaster in history".[4]

Partnership Suits[edit]

McDonald's India - Vikram Bakshi Partnership Case[edit]

On 30 August 2013, McDonald's published a public notice in select newspapers, declaring that McDonald's India partner Vikram Bakshi had ceased to be the managing director of Connaught Plaza Restaurants (CPRL) pursuant to the expiration of his term on July 17, 2013. CPRL, a joint venture between McDonald's and Vikram Bakshi is responsible for managing the over 150 McDonald's outlets in North and East regions of India. Bakshi had been the face of the company in India for almost two decades. After being ousted abruptly, Bakshi sought to fight for his stake and rights in the Company Law Board (CLB). Bakshi claims to have clocked over 490 crore worth of revenue for the American food chain. While McDonald's seeks to buyout Vikram's share despite a huge profit margin, it's other joint venture with Amit Jatia, who manages the chain in West and South India under Hardcastle Restaurants, has been brought under radar. On books, McDonald's sold their share of the Hardcastle Restaurants joint venture to co-owner Amit Jatia at a reported loss of 99% in 2011, making it a master franchisee. While the American food chain seeks to buyout Bakshi's share despite it posting profits. The controversy has questioned McDonald's dealings in the country and their way of business. The court is currently under the ambit of CBL with next hearing scheduled in early October.[5]

Defamation[edit]

McLibel (UK)[edit]

In 1990, McDonald's took environmental campaigners Helen Steel and Dave Morris to court after they distributed leaflets entitled "What's Wrong with McDonald's?" on the streets of London. The high-profile trial, which came to be known as the McLibel Case, lasted seven and a half years, the longest in English legal history.

An anti-McDonald’s leafletting campaign in front of the McDonald’s restaurant in Leicester Square, London, during the European Social Forum season, 2004-10-16.

Though a High Court judge eventually ruled in favour of McDonald's on some counts, John Vidal called it a Pyrrhic victory. The extended legal battle was a PR disaster, with every aspect of the company's working practices being scrutinised and the media presenting the case as a David and Goliath battle. Additionally, the damages received were negligible compared to the company's estimated £10 million legal costs because the court ruled in favour of a number of the defendants' claims, including that McDonald's exploited children in its advertising, was anti-trade union and indirectly exploited and caused suffering to animals. McDonald's was awarded £60,000 damages, which was later reduced to £40,000 by the Court of Appeal. Steel and Morris announced they had no intention of ever paying, and the company later confirmed it would not be pursuing the money. Steel and Morris went on to challenge UK libel laws in the European Court of Human Rights, claiming that the lack of access to legal aid and the heavy burden of proof that lay with them, as the defendants' requirement to prove their claims under UK law was a breach of the right to a fair trial and freedom of expression. The court ruled in their favour[6] and the UK Government was forced to introduce legislation to change defamation laws.[citation needed]

Trademark and copyright[edit]

MacJoy (Philippines)[edit]

In 2004, McDonald's sued Cebu-based fast food restaurant MacJoy for using a very similar trade name. In its defense, MacJoy insisted that it was the first user of the mark under the title "MACJOY & DEVICE" for its business in Cebu City which started in 1987, five years before McDonald's opened its first outlet in the same city. MacJoy stated that the requirement of “actual use” in commerce in the Philippines before one may register a trademark pertains to the territorial jurisdiction on a national scale and is not merely confined to a certain locality or region. It added that "MacJoy" is a term of endearment for the owner's niece whose name is Scarlett Yu Carcel. In response, McDonald's claimed that there was no connection with the name Scarlett Yu Carcel to merit the coinage of the word "MacJoy" and that the only logical conclusion over the name is to help the Cebu restaurant ride high on their (McDonald's) established reputation.

On February 2007, the Philippine Supreme Court upheld the right of McDonald's over its registered and internationally-recognized trademarks.[7] As a result, the owners of MacJoy, the Espina family, was forced to change its trademark into MyJoy,[8] which went into effect with the re-opening of its two branches in Cebu City on August that year.

McCoffee (US)[edit]

In 1994, McDonald's successfully forced Elizabeth McCaughey of the San Francisco Bay Area to change the trading name of her coffee shop McCoffee, which had operated under that name for 17 years. "This is the moment I surrendered the little 'c' to corporate America," said Elizabeth McCaughey, who had named it as an adaptation of her surname.[9]

Norman McDonald's Country Drive-Inn (US)[edit]

From the early 1960s to the mid-1980s, Norman McDonald ran a small "Country Drive-Inn" restaurant in Philpot, Kentucky called simply "McDonald's Hamburgers; Country Drive-Inn", which at the time also had a gas station and convenience store. To confuse customers and make more money by cheating them to think it was the real McDonald's, Norman also included a couple of lit "golden arches". McDonald's the restaurant chain forced Norman to remove the arches and add the full Norman McDonald's name to its sign so customers would not be confused into thinking the restaurant was affiliated with the McDonald's restaurant chain. The restaurant is still open to this day (though it no longer has the gas station).

McChina Wok Away (UK)[edit]

In 2001, McDonald’s lost a nine-year legal action against Frank Yuen, owner of McChina Wok Away, a small chain of Chinese takeaway outlets in London. Justice David Neuberger ruled the McChina name would not cause any confusion among customers and that McDonald's had no right to the prefix Mc.[10]

McMunchies (UK)[edit]

In 1996, McDonald's forced Scottish sandwich shop owner Mary Blair of Fenny Stratford, Buckinghamshire to drop McMunchies as her trading name. Mrs. Blair did not sell burgers or chips. She said she chose the name because she liked the word munchies and wanted the cafe to have a Scottish feel. The cafe's sign reflected this, featuring a Scottish thistle and a St Andrew's flag. But in a statement to Mrs. Blair's solicitors, McDonald's said if someone used the Mc prefix, even unintentionally, they were using something that does not belong to them.[11]

MacDonald's (UK - Cayman Islands)[edit]

McDonald's filed a lawsuit against MacDonald's Family Restaurant, located in Grand Cayman. McDonald's lost the case, and in addition, was banned from ever opening a McDonald's location on Grand Cayman. This ruling still stands today.

McAllan (Denmark)[edit]

In 1996, McDonald's lost a legal battle at the Danish Supreme Court to force Allan Pedersen, a hotdog vendor, to drop his shop name McAllan.[12] Pedersen had previously visited Scotland on whisky-tasting tours. He named his business after his favorite brand of whisky, MacAllan's, after contacting the distillery to see if they would object. They did not, but McDonald's did. However, the court ruled customers could tell the difference between a one-man vendor and a multi-national chain and ordered McDonald's to pay 40,000 kroner ($6,900) in court costs. The verdict cannot be appealed.

McCurry (Malaysia)[edit]

In 2006, McDonald's won an initial judgment after a five-year legal battle in Malaysia against a small restaurant named "McCurry". The defendant claimed that McCurry stood for Malaysian Chicken Curry, but a High Court judge ruled that the prefix Mc and the use of colors distinctive of the McDonald's brand could confuse and deceive customers.[13]

In April 2009, however, a retrial overturned the verdict, and in September 2009, McDonald’s lost the eight-year trademark battle in a precedent-setting judgment by Malaysia’s highest court. The Federal Court ruled that McDonald’s cannot appeal against another court’s verdict that had allowed McCurry to use "Mc" in its name. The ruling by a three-member panel of the Federal Court ends all legal avenues for McDonald’s to protect its name from what it said was a trademark infringement. “On the basis of unanimous decision, our view is that McDonald’s plea to carry the case forward has no merit," said chief judge Arifin Zakaria. “It is unfortunate that we have to dismiss the application with costs,” he said. McDonald’s will have to pay RM10,000 to McCurry, a popular eatery in Jalan Ipoh on the edge of Kuala Lumpur’s downtown.[14][15]

McDonald’s lawyers refused to comment, except to say the company will abide by the judgment. A three-member Appeal Court panel had ruled in favour of McCurry Restaurant in April, 2009, when it overturned a 2006 High Court ruling that had upheld McDonald’s contention. Arifin said McDonald’s lawyers were unable to point out faults in the Appeal Court judgment, which had said there was no evidence to show that McCurry was passing off its own product as that of McDonald’s. The Appeals Court also said McDonald’s cannot claim an exclusive right to the "Mc" prefix in the country.

South African trademark law[edit]

Apartheid politics had prevented earlier expansion into South Africa, but as the apartheid regime came to an end in the early 1990s, McDonald's decided to expand there. The company had already recognized South Africa as a potentially significant market and had registered its name as a trademark there in 1968.

Under South African law, trademarks cease to be the property of a company if they are not used for a certain amount of time. McDonald's had renewed the 1968 registration several times, but missed a renewal deadline. The registration expired and McDonald’s discovered two fast food restaurants in South Africa were trading under the name MacDonalds. Moreover, a businessman had applied to register the McDonald’s name.

Multiple lawsuits were filed. The fast food chain was stunned when the court ruled it had lost the rights to its world-famous name in South Africa. However, the company eventually won on appeal.[16]

The real Ronald McDonald (US)[edit]

The company waged an unsuccessful 26-year legal action against McDonald's Family Restaurant which was opened by a man legally named Ronald McDonald in Fairbury, Illinois in 1956.[17] Mr. McDonald ultimately continued to use his name on his restaurant, despite objections by the franchise.[18]

The McBrat case (Australia)[edit]

In 2005, McDonald’s tried to stop a Queensland lawyer, Malcolm McBratney, from using the name 'McBrat' on the shorts of the Brisbane Irish Rugby team. McDonald’s claimed the McBrat name should not be registered because it was too similar to its McKids trade mark, since the word 'brat' is another term for 'kid'. McBratney, a solicitor specialising in trademarks and intellectual property, argued that his family name had been used in Ireland since the 1600s, and that he had a right to use an abbreviation of that name. In 2006, the Delegate of the Register of Trade Marks held that McBratney could register 'McBrat' as a trademark and that McDonald's had no intellectual property rights over 'Mc' and 'Mac' prefixed words.[19]

McBratney, who specialises in intellectual property law, then brought a suit against McDonald's for its registration, in Australia in 1987, of 'McKids'.[citation needed] This trademark had never been used in Australia and can therefore be removed for non-use.[citation needed]

Cases brought against McDonald's[edit]

H.R. Pufnstuf / McDonaldland[edit]

In 1973, Sid and Marty Krofft, the creators of H.R. Pufnstuf, successfully sued McDonald's in Sid & Marty Krofft Television Productions Inc. v. McDonald's Corp., arguing that the entire McDonaldland premise was essentially a ripoff of their television show. In specific, the Kroffts claimed that the character Mayor McCheese was a direct copy of their character, "H.R. Pufnstuf" (being a mayor himself). McDonald's initially was ordered to pay $50,000.[20] The case was later remanded as to damages, and McDonald's was ordered to pay the Kroffts more than $1 million.[21]

McDonaldland itself, as it was depicted in the commercials, was a magical place where plants, foods, and inanimate objects were living, speaking characters. In addition to being the home to Ronald and the other core characters, McDonaldland boasted "Thick shake volcanoes", anthropomorphized "Apple pie trees", "The Hamburger Patch" (where McDonald's hamburgers grew out of the ground like plants), "Filet-O-Fish Lake", and many other fanciful features based around various McDonald's menu items. In the commercials, the various beings are played by puppets or costumed performers, very similar to the popular H.R. Pufnstuf program.

McDonald's had originally hoped the Kroffts would agree to license its characters for commercial promotions. When they declined, McDonaldland was created, purposely based on the H.R. Pufnstuf show in an attempt to duplicate the appeal.

After the lawsuit, the concept of the "magical place" was all but phased out of the commercials, as were many of the original characters. Those that remained would be Ronald, Grimace, The Hamburglar, and the Fry Kids.

McSleep (Quality Inns International)[edit]

In 1988, Quality Inns (now Choice Hotels) was planning to open a new chain of economy hotels under the name "McSleep." After McDonald's demanded that Quality Inns not use the name because it infringed, the hotel company filed a suit in federal court seeking a declaratory judgment that "McSleep" did not infringe. McDonald's counterclaimed, alleging trademark infringement and unfair competition. Eventually, McDonald's prevailed. The court's opinion noted that the prefix "Mc" added to a generic word has acquired secondary meaning, so that in the eyes of the public it means McDonalds, and therefore the name "McSleep" would infringe on McDonald's trademarks.[22]

Viz top tips (UK)[edit]

In 1996, British adult comic Viz accused McDonald's of plagiarizing the name and format of its longstanding Top Tips feature, in which readers offer sarcastic tips. McDonald's had created an advertising campaign of the same name, which showcased the Top Tips (and then suggested the money-saving alternative - going to McDonald's). Some of the similarities were almost word-for-word:

"Save a fortune on laundry bills. Give your dirty shirts to Oxfam. They will wash and iron them, and then you can buy them back for 50p." – Viz Top Tip, published May 1989.
"Save a fortune on laundry bills. Give your dirty shirts to a second-hand shop. They will wash and iron them, and then you can buy them back for 50p." – McDonald's advert, 1996

The case was settled out of court for an undisclosed sum, which was donated to the charity appeal Comic Relief. However, many Viz readers believed that the comic had given permission for their use, leading to Top Tips submissions such as: "Geordie magazine editors. Continue paying your mortgage and buying expensive train sets ... by simply licensing the Top Tips concept to a multinational burger corporation."[23]

Beef French fries[edit]

Lawsuits were brought against the McDonald's Corporation in the early 1990s for including beef in its French fries despite claims that the fries were vegetarian. In fact, beef flavoring is added to the fries during the production phase.[24] The case revolved around a 1990 McDonald’s press release stating that the company's French fries would be cooked in 100% vegetable oil and a 1993 letter to a customer that claimed their French fries are vegetarian.[25] McDonald's denied this.[26] The lawsuits ended in 2002 when McDonald's announced it would issue another apology and pay $100M to vegetarians and religious groups. Subsequent oversight by the courts was required to ensure that the money that was paid by McDonald's: "to use the funds for programs serving the interests of people following vegetarian dietary practices in the broadest sense." There was some controversy in this ruling, as it benefited non-vegetarian groups such as research institutions that research vegetarian diets but do not benefit vegetarians. In 2005, the appeal filed by vegetarians against the list of recipients in this case was denied, and the recipients of the $10M chosen by McDonald's was upheld.

Further ingredient-related lawsuits have been brought against McDonald's since 2006. McDonald's had included its French fries on its website in a list of gluten-free products; these lawsuits claim children suffered severe intestinal damage as a result of unpublicized changes to McDonald's French fry recipe. McDonald's has provided a more complete ingredient list for its French fries more recently. Over 20 lawsuits have been brought against McDonald's regarding this issue, which the McDonald's Corporation has attempted to consolidate.[citation needed]

Labor[edit]

Coalition of Immokalee workers (US)[edit]

In March 2001, the Coalition of Immokalee Workers, a group of South Florida farmworkers, began a campaign demanding better wages for the people who pick the tomatoes used by McDonald's and other fast food companies.[27] McDonald's was the second target after the group succeeded against Taco Bell.[28]

Strip search Suit (US)[edit]

Advertising[edit]

Fries advertisement (UK)[edit]

In 2003, a ruling by the UK Advertising Standards Authority determined that the corporation had acted in breach of the codes of practice in describing how its French fries were prepared.[29] A McDonald's print ad stated that "after selecting certain potatoes", "we peel them, slice them, fry them and that's it." It showed a picture of a potato in a McDonald's fries box. In fact, the product was sliced, pre-fried, sometimes had dextrose added, was then frozen, shipped, and re-fried and then had salt added.

"McMatch and Win Monopoly" Promotion (Australia)[edit]

In 2001, 34 claimants (representing some 7,000 claimants)[30] filed in a class action against McDonald's for false and misleading conduct arising from the "McMatch & Win Monopoly" promotion before Justice John Dowsett of the Federal Court of Australia.[31] The claimants had attempted to claim prizes from the 1999 promotion using game tokens from the 1998 promotion, arguing unsuccessfully that the remaining 1998 tokens may have been distributed accidentally by McDonald's in 1999.

Health and safety[edit]

Also known as the "McDonald's coffee case", Liebeck v. McDonald's is a well-known product liability lawsuit that became a flash point in the debate in the U.S. over tort reform after a jury awarded $2.9 million to Stella Liebeck, a 79-year-old woman from Albuquerque, New Mexico, who sued McDonald's after she suffered third-degree burns from hot coffee that was spilled on her at one of the company's drive-thrus in 1992.[32] The trial judge reduced the total award to $640,000, and the parties settled for a confidential amount before an appeal was decided. The case entered popular understanding as an example of frivolous litigation;[33] ABC News calls the case "the poster child of excessive lawsuits."[34] Trial-lawyer groups such as the Association of Trial Lawyers of America and other opponents of tort reform sometimes argue that the suit was justified because of the extent of Liebeck's injuries.In addition, McDonalds failed to provide proper warning. Warning consumers of possible dangers of their products is strictly enforced by the FDA. Furthermore, McDonalds should not be serving substances that are potentially harmful to their consumers.[35]

See also[edit]

References[edit]

  1. ^ McDonald's publication. "Corporate FAQ". McDonald's Corporation. Retrieved 2012-11-27. 
  2. ^ a b c d e "2010 Form 10-K, McDonald's Corporation". United States Securities and Exchange Commission. Retrieved 2011-03-03. 
  3. ^ McDonald Corporation. "Corporate Info". 
  4. ^ Timmons, Heather (2005-02-16). "The infamous McLibel case". The New York Times. Retrieved 2010-05-12. 
  5. ^ http://articles.economictimes.indiatimes.com/2013-08-31/news/41619251_1_vikram-bakshi-director-jv-partner-mcdonald
  6. ^ ECHR, Steel and Morris v. the United Kingdom, February 15, 2005, application no. 68416/01
  7. ^ Philippine Supreme Court upholds McDonald's trademark rights. MarketWatch. February 7, 2007.
  8. ^ "MyJoy: Smiling through it all". Sun.Star Cebu. July 30, 2007. 
  9. ^ "McSpotlight.org article on the McCoffee lawsuit". 
  10. ^ Elan, Elissa (2001). "McChina UK vs McDonald's USA". Nation's Restaurant News. 
  11. ^ "McSpotlight article on the McMunchies lawsuit". 
  12. ^ "Findlaw.com article on the McAllan lawsuit". 
  13. ^ "'McCurry' to pay damages over name". News.com.au. September 8, 2006. [dead link]
  14. ^ "McDonald's loses court battle against McCurry". thestar.com.my. 
  15. ^ "Malaysia McCurry beats McDonald over trademark". Bangkok Post. 
  16. ^ "Gblaw.com article on the South African trademark lawsuits". 
  17. ^ "Sentienttimes.com article on the 26-year real Ronald McDonald legal action". 
  18. ^ "Seattle Times reports on outcome of lawsuit". The Seattle Times. August 16, 1996. 
  19. ^ "The McBattle over McBrat". 
  20. ^ Carter, James M. (Oct 12, 1977). "562 F.2d 1157: Sid & Marty Krofft Television Productions, Inc. and Sid &marty Krofft Productions, Inc., Plaintiffs-appellants, v. Mcdonald's Corporation and Needham, Harper & Steers, Inc.,defendants". United States Court of Appeals, Ninth Circuit. Retrieved 2012-06-24. 
  21. ^ Weil, Roman L.; Frank, Peter B.; Hughes, Christian W.; Michael J. Wagner (2007-02-09). Litigation Services Handbook: The Role of the Financial Expert. John Wiley & Sons. p. 20.23. ISBN 978-0-471-76908-8. Retrieved 2012-06-25. 
  22. ^ Quality Inns Int'l v. McDonald's Corp, PDF 695 F. Supp. 198 ((D. Md. 1988).
  23. ^ "Press article: 'Viz' challenges McDonald's over TV money tips". 
  24. ^ (Block vs. McDonald's Corp., Sharma vs. McDonald's Corp., Bansal v. McDonald's Corp., Zimmerman v. McDonald's Corp.) PDF
  25. ^ "McDonald's Letter: May 5, 1993". 
  26. ^ "Fat flap at McDonald's: McDonald's refutes class action suit alleging deceptive use of beef flavoring". CNN Money. May 3, 2001. 
  27. ^ "Ciw-online.com article on the Coalition of Immokalee workers demands". 
  28. ^ "Monthlyreview.org article on the Coalition of Immokalee workers". 
  29. ^ "Article on Fries advertisement at Asa.org". 
  30. ^ "ABC News Australia (The World Today) - report on March 9, 2001". 
  31. ^ "Hurley v McDonald's Limited 2001 FCA 209". 
  32. ^ Liebeck v. McDonald's Restaurants, P.T.S., Inc., No. D-202 CV-93-02419, 1995 WL 360309 (Bernalillo County, N.M. Dist. Ct. Aug. 18, 1994) details from nmcourts.com
  33. ^ Mark B. Greenlee, "Kramer v. Java World: Images, Issues, and Idols in the Debate Over Tort Reform," 26 Cap. U.L. Rev. 701
  34. ^ ABC News, "I'm Being Sued for What?", May 2, 2007
  35. ^ See Gerlin. See also Ralph Nader & Wesley J. Smith, No Contest: Corporate Lawyers and the Perversion of Justice in America (1996) ISBN 0-375-75258-7, 268

External links[edit]