Why Suing McDonald's Could Be A Good Thing:
Compelling Companies to Bear the Costs They Inflict on Others

Last year, Bronx teenagers Ashley Pelman and Jazlyn Bradley sued McDonald's, claiming that it had caused them to become obese and unhealthy. Earlier this month, however, New York federal judge Robert Sweet dismissed their case, Pelman v. McDonald's Corp.

The problem, Judge Sweet explained, was that the girls' complaint was not specific enough. Complaints, under modern federal practice, are allowed to be quite spare, but Judge Sweet still held that the plaintiffs here had fallen short.

The judge did permit the girls to amend their complaint and presumably, they will do so. However, Judge Sweet's opinion suggests that they are unlikely ultimately to prevail.

The judge ruled that, to survive another motion to dismiss, the girls must allege (and be prepared to prove) that McDonald's has successfully fooled its customers into a state of ignorance about the health risks of eating its product and that in the absence of McDonald's deception, they would not have become overweight.

Why the Lawsuit Appears Ridiculous At First Glance

From the moment that the case was filed, it struck most people as the punchline of a joke. Question: "What do you do if you become obese from eating too much fast food?" Answer: "Sue McDonald's." From a comedian's perspective, the lawsuit was almost too good to be true. Who could be more undeserving of compensation than McDonald's customers who "supersize" their meals?

Both the girls' lawsuit, and the similar suit brought by plaintiff Caesar Barber - which was modeled quite deliberately on the tobacco litigation - have faced significant legal and public relations hurdles from the start, as Anthony Sebok has detailed in an initial and a followup column for this site.

Nonetheless, it may be beneficial for a suit to have been brought to try to force McDonald's to pay for the harm that it knowingly inflicts in the name of profits. A lawsuit, in other words, is not solely about compensating deserving plaintiffs. It is also about making companies internalize the costs of business, when those costs would otherwise fall primarily on others.

How Litigation Can Help Internalize the Costs that a Business Inflicts on Others

As now-Judge Guido Calabresi pointed out years ago, a business (or, for that matter, an individual) that imposes costs upon others, but not upon itself, is likely to pursue activities that are not cost-justified.

To put it a different way, if my conduct hurts you but makes me rich, then even if the harm to you is much greater than the benefit to me, I may nonetheless consider my conduct worthwhile. Costly though they are, my actions' costs may not bother me as much if I don't have to bear them, particularly if I am a corporation whose primary (or perhaps even sole) objective is profit.

Consider an example. Suppose I drive an enormous SUV that pollutes the air more than other vehicles do. Though I too breathe the air, most of the excess pollution that my car generates will be inhaled by others.

On the plus side, my larger car may give me prestige and allow me to transport all of the things that I might want to have throughout the week, rather than having to feel stressed each morning as I determine what I will need to pack into the car for the day. A big car may also make it easier for me to avoid being cut off on the highway and to cut off others if I am in a big hurry.

The bulk of benefits associated with my giant car apparently accrue to me, while the bulk of costs accrue to others. Accordingly, my inclination - in the absence of altruism - will be to purchase the big car, rather than a smaller one that might have greater fuel efficiency. Why not? The negative effects of my choice are experienced externally, by others rather than by me.

For me to make a decision that properly weighs all costs and benefits, a higher tax on gas might be a necessary step. Such a tax, which would make me pay more for using extra fuel and dirtying the air to a greater extent, would "internalize" some of the costs I cause - meaning that I would have to bear them.

Internalizing costs gives someone like me an incentive to keep costs down - for instance, it may motivate me not to choose an SUV.

Externalities at McDonald's: Health Effects

Perhaps that's true, you might be thinking, but what does it have to do with McDonald's? Unlike the purchaser of a gas guzzling vehicle who hurts all who must breathe the dirty air, the consumer who buys and eats her meals at McDonald's hurts only herself: She is the one who becomes obese and develops heart disease or diabetes.

Therefore, you might reasonably suggest, the consumer is already well situated to perform a valid cost/benefit analysis. If I eat Big Macs (and the other delights that McDonald's has to offer) every day and become morbidly obese and sick, it would seem that I have my own gluttony - and not some other actors' selfish disregard for my interests - to blame. Both the benefits (pleasure) and the costs (weight gain and bad health) should register on my internal balance sheet.

This position sounds persuasive. However, as anyone who has tried to diet but failed repeatedly, knows, immediate benefits often feel a lot more beneficial than more substantial, delayed costs feel costly. Therefore, McDonald's may be more like the SUV owner than meets the eye.

This intuition, moreover, is borne out empirically. As George Ainslie demonstrates in his book, Breakdown of Will, human beings and animals both engage in a process called "hyperbolic discounting," which systematically undermines the proper internalization of future costs. This problem is only aggravated in the case of youths such as the Pelman plaintiffs, one of whom is only fourteen years old.

How can plaintiffs be made to face those future costs realistically? Taxes might work. Currently, however, McDonald's low prices fail to reflect such future costs.

Potential liability could similarly help McDonald's to internalize the health costs of its business that are otherwise disproportionately or entirely borne by consumers, who - in all likelihood - are not well-situated to consider the future suffering they will experience if they pass through those golden arches. In addition, a tax or liability could reduce the load on other cost-bearers who have little control over consumer choices: Medicare, Medicaid, and state health care systems that must pay when consumers' eating too many meals at McDonald's damages their health.

Like the consumer of the giant car that guzzles gas, the consumer of Big Macs might buy a more wholesome alternative if prices were comparable. One way to make them comparable is to impose a tax on unhealthy food. Another is lawsuits that translate suffering into liability, and force companies to raise prices in response to high damages awards.

Other Externalities at McDonald's: Suffering of Animals

Health harms are not the only costs McDonald's fails to internalize. There is an additional feature of its business that also brings harms which fail to touch (and therefore to "count" for) McDonald's. That feature is the suffering of animals kept in cruel and horrific conditions and then slaughtered on an assembly line, to produce McDonald's products.

McDonald's is reportedly one of the largest purchasers of factory farmed beef in the world. Factory farming, in turn, involves cruelty to animals on a scale that is historically unprecedented. As Matthew Scully put it in his eloquent, compelling, recent book, Dominion, "[n]o age has ever been more solicitous to animals, more curious and caring. Yet no age has ever inflicted upon animals such massive punishments with such complete disregard, as witness scenes to be found on any given day at any modern industrial farm." McDonald's is complicit in this disregard.

The factory farms at which most meat is produced are grotesque in their treatment of animals. Animals are kept in filthy enclosures in which they lack the space to lie down and the opportunity to interact with each other. They can only stare out at the people who pass, and chew on the cage wire until their mouths bleed. Though mammals and birds, including cattle, pigs, and chickens bred for slaughter and consumption at McDonald's, are social animals, they are not given opportunities to play with one another or root around in the grass - or, indeed, to do any of the things that farm animals on an old-fashioned farm do as a matter of course.

Then when it comes time to kill them, animals are put to death in view of their fellow creatures about to meet the same fate, screaming, bellowing, and fighting to the end. For many, there is no refuge from the misery and pain they endure from the moment of birth until a terrifying death, all for profit. As author Alice Walker described meat consumption in today's world, "You're just eating misery. You're eating a bitter life."

Once again, of course, the consumer must take his share of responsibility. No one forces people to eat at McDonald's or to eat meat at all, for that matter. Fast food meats are neither necessary nor even conducive to human health and flourishing.

Nonetheless, once again, it is McDonald's that profits without paying the costs it inflicts. It can charge the low prices it does because it externalizes the costs of its business. The more deprived and cruel the animal's life, it seems, the cheaper the burger at the end. And animal welfare laws - most of which do not apply to "food animals" - do virtually nothing to intervene.

Lessons from the McDonald's Litigation

Does any of this mean that the plaintiffs should necessarily win their lawsuit? Not at all.

Consider what Judge Sweet has required the plaintiffs to allege and later prove. The girls must show that McDonald's deceived them about the health risks of its food. That might be possible - they could cite, for instance, commercials with happy sports teams eating at McDonald's - but it will be an uphill battle, when nutritional information is available at McDonald's for the asking.

They must also prove that they would not have become overweight absent McDonald's deception - and that too, may be difficult, if the rest of the girls' diets are (like most Americans') far from faultless.

Meanwhile, the lawsuit does not challenge McDonald's role as a major participant in the cruel and unnecessary torture of animals, though many animal rights organizations publicize the fact.

Still, the McDonald's suit can provide some important lessons. It should remind us that a business's profits can sometimes be inflated relative to the benefits that the business truly confers. The inflation often reflects the fact that those who suffer, and those who profit from the suffering, are not the same individuals. And sometimes, there is no overlap at all. McDonald's shareholders may grow rich as its customers grow unhealthy and the animals it uses to make its products live and die in pain.

Litigation can play a role in correcting a flawed cost/benefit analysis. And it can also raise consciousness about an otherwise ignored phenomenon.

Perhaps it is the case, for example, that if paying for the obesity of its customers would drive McDonald's out of business, then McDonald's should not be in business in the first place. And if the animal welfare laws protected every sentient animal from gratuitous suffering, then it certainly would not be.