Misuse of Maximum Retail Price

                                                                                                                      

Regards,
Vera Causa

Petco to settle protection suit for $1.75 million

Petco stores accused of improper customer service and store maintenance

Petco Animal Supplies has agreed to settle a $1.75 million consumer protection lawsuit, generated from a suit filed in San Diego Superior Court that alleged Petco overcharged its customers and improperly cared for some animals.

In 2004, Petco paid more than $850,000 to resolve a similar case brought by California prosecutors.

Investigators from the Marin Humane Society determined that the county's Petco stores in Novato and San Rafael were in violation of the California's Pet Store Animal Care Act as they had not been adequately cleaned or maintained.

Prosecutors from Marin, Los Angeles, San Diego, San Mateo and Santa Barbara counties also alleged that Petco did not remove expired price tags from shelves in a timely manner, resulting in actual or potential customer overcharges. In addition, the prosecutors argued that Petco failed to adequately instruct its employees on weighing and charging for bulk sale items.

The case followed inspections of Petco stores throughout California from 2005 to 2008.


Regards,
Vera Causa

The McDonald's Coffee Case

Everybody “knows” the story: A lady bought coffee at a McDonald’s drive-through, spilled it on herself, and suffered minor burns. She sued McDonald’s, and with the help of a clever attorney, managed to convince a jury that it was all McDonalds’ fault for not providing adequate warning that hot coffee is indeed hot, and can scald you. The lady walked away with a multi-million dollar award.

The case has entered the popular culture as a symbol of everything that’s wrong with the justice system: frivolous lawsuits, unscrupulous attorneys, unreliable juries, greedy plaintiffs who blame others for their own mistakes, and judges who aid and abet the whole sordid process.

The McDonald’s Coffee Spill Case is a classic example of “miscarriage of justice,” right? Wrong.

But, When one looks at the real facts of the case, an entirely different picture emerges than the one painted by typical retellings of the story…

The plaintiff and the spill incident. -The plaintiff, a 79-year-old grandmother named Stella Liebeck, was not driving, nor was the vehicle moving when the injury occurred. While the car was stopped, Mrs. Liebeck, who was sitting in the passenger seat, tried to hold the coffee cup between her knees as she removed the lid. The cup tipped over, spilling the contents into her lap.

The injury. Mrs. Liebeck’s injury was anything but trivial. The scalding-hot coffee caused third-degree burns over 16% of her body, including her genital area. She had to be hospitalized for eight days. She required extensive skin grafts and was permanently scarred. She was disabled for a period of two years. During the ensuing trial, Mrs. Liebeck’s physician testified that her injury was one of the worst cases of scalding he’d ever seen.

The coffee. At the time, McDonalds’ corporate specifications explicitly called for coffee to be served at a temperature between 180 and 190 degrees Fahrenheit. An expert witness testified that liquids at this temperature will cause third degree burns of human skin in two to seven seconds. (Coffee served at home is typically 135 to 140 degrees.)

McDonalds’ culpability. During discovery, McDonald’s was required to produce corporate documents of similar cases. More than 700(!) claims had been made against McDonald’s, and many of the victims had suffered third-degree burns similar to Mrs. Liebeck’s. Yet the company had refused to change its policy, supposedly because a consultant had recommended the high temperature as a way to maintain optimum taste. Some have speculated that the real reason for the high temperature was to slow down consumption of the coffee, reducing the demand for free refills.

Greed? Despite the pain caused by her injury, and the lengthy and expensive treatments she required, Mrs. Liebeck originally offered to settle with McDonald’s for $20,000. The corporation offered her a mere $800, so the case went to trial.

The settlement. The jury awarded $200,000 in compensatory damages to Mrs. Liebeck, which was reduced to $160,000 because the jury felt that only 80% of the fault lay with McDonald’s, and 20% with her. They also awarded $2.7 million in punitive damages, essentially as punishment of McDonald’s for its callous treatment of Mrs. Liebeck, and its years of ignoring hundreds of similar injuries. This amount was held to be reasonable given that it represented only two days’ worth of McDonalds’ revenue from coffee sales alone. The trial judge reduced the punitive damages, however, to $480,000. After further negotiation, Mrs. Liebeck ultimately received $640,000.

The aftermath. In subsequent investigations, it was found that the Albuquerque McDonalds where the incident occurred had reduced the temperature of its coffee to 158 degrees. The corporation as a whole ultimately changed its policies as well, and now explicitly forbids serving coffee at the scalding temperatures that injured Mrs. Liebeck. There is no way of knowing how many additional injuries have been prevented by this case, which forced McDonald’s to change its policies, and which has doubtlessly served as a warning to other restaurants as well.

So what’s the bottom line? The case was neither about a gold-digger, nor a defendant that was taken to the cleaners based on a flimsy pretext. Rather, a huge corporation had knowingly injured hundreds of people as the direct result of a needlessly dangerous corporate policy, and was finally held accountable by one of the victims. The loss to McDonald’s soon disappeared behind the decimal point in its financial statements, in which not the dollar, but the million is the unit of reporting. Mrs. Liebeck’s financial gain hardly made her rich, but it did serve as reasonable compensation for her extensive medical bills—and for the extensive pain and suffering that her injury caused her.

Regards,

Vera Causa.

MAXIMUM RETAIL PRICE ?????

MRP is the defined as the price above which any product cannot be sold. Initially the manufacturers had the option of printing this as a number without taxes or an all inclusive price including taxes. Subsequent to several instances where the ambiguity of “taxes extra” was misused to overcharge the customers, a standardized version of the MRP, inclusive of all taxes is more in vogue as of now.

Thus, it is an offence to sell at a price higher than the marked price. It is for this reason that manufacturers provide more than adequate cushion for dealer margins while marking the MRP. It is also specifically mentioned under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006 that, no person shall sell or cause to be sold any consumer goods without the cost of production and maximum retail price of the product printed on such product after the expiry of six months from the date of coming into force of this Act

MISUSE OF MAXIMUM RETAIL PRICE.

The need of the hour is for consumers to be aware of their rights and exercise them whenever any seller indulges in unfair trade practices or adopts unscrupulous method .

Have you ever wondered why malls and theaters are so much more expensive than regular outlets?

It is also that the processed foods, beverages, mineral water etc, is sold more than the MRP.A consumer complaint was filed with the help of legal services clinic against Pepsi Co alleging “unfair trade practice” and “cheating” for higher and varied maximum retail prices (MRP) on beverages in Bangalore. This complainant was admitted before the district consumer forum in Bangalore against the company after they were sold a mineral water bottle and a couple of other beverages at higher retail cost on the pretext of charging a rate inclusive of service tax applicable at the selling outlet..

Regards,

Vera Causa