The problem with this retelling is that it gets a central fact wrong, as pointed out by Ted Frank's 2005 post at Overlawyered: the temperature of the coffee was then, and is still, industry standard.
Commenter cmdicely: the industry standard was to serve at a lower temperatureThis storage temperature of 180F is still recommended today by the National Coffee Association of the USA. Moreover, a quick test yesterday on my home coffee maker shows a temperature of 175F:
False: The National Coffee Association of the USA recommends serving at 180-190 degrees; another article suggests industry standard is 160 to 185 degrees. [Note: dead link removed.]
According to a Sep. 1, 1994 Wall Street Journal interview with Reed Morgan, Liebeck’s attorney, he measured the temperature at 18 restaurants and 20 McDonald’s, and “McDonald’s was responsible for nine of the twelve highest temperature readings.” Which means that, even before one accounts for conscious or unconscious bias in the measurements, at least three, and probably more (what about the other eleven McDonald’s?), restaurants were serving coffee at a higher temperature. And Starbucks serves at a higher temperature today, and faces lawsuits over third-degree burns as a result (Jan. 2, 2004).
All of which is to say, the entire basis for Liebeck's suit was false. McDonald's coffee was well within accepted norms of how hot coffee should be. They didn't spill her coffee. The only reason we are talking about this now is that Liebeck was a sympathetic plaintiff; we know this because a subsequent similar case, McMahon v. Bunn Matic Corp., went the other way, and for exactly the reasons described.