McDonald's to Pay $4 Million Damage Settlement

WASHINGTON, June 29, 1999 -- McDonald's Corp.has agreed to pay the government $4 million in damages for failing to inform the Consumer Product Ssafety Commission of playground injuries at some of its restaurants.

The settlement resolves a dispute arising from enforcement of a 1995 Playground Equipment Reporting Agreement between McDonald's and the government. The cooperative agreement announced today also establishes important new playground facility reporting and safety guidelines.

The injuries involve the "Big Mac Climber," a metal platform resembling a hamburger, that is no longer in any McDonald's playgrounds.

According to CPSC, from the 1970s through the 1980s, more than 400 children were injured on Big Mac Climbers, mostly in falls, including nearly 20 who suffered concussions or skull fractures and 80 who suffered broken bones. Injuries declined significantly in the 1990s as McDonald's began removing the climbers. All the climbers have now been removed and scrapped.

According to the CPSC, today's settlement marks the second time that McDonald's has failed to report dangerous playground equipment to CPSC.

The first violation involved numerous injuries, including broken bones, suffered by children who played on "Tug-N-Turn" merry-go-round rides, another old piece of equipment that no longer exists at McDonald's.

In 1995, McDonald's settled that case by agreeing to develop, execute and finance a $5 million children's safety campaign with CPSC. Additionally, McDonald's agreed to report other dangerous playground equipment to CPSC, and pay up to $5 million if it failed to do so.

The new agreement resolves the issues based on McDonald's failure to inform CPSC about risks associated with the Big Mac Climber. In an effort to resolve the dispute amicably, to clarify McDonald's reporting duties so that similar disputes do not arise in the future, and to avoid the cost of taking the dispute to court, McDonald's has agreed to the $4 million settlement announced today.

McDonald's maintains that it has fully complied with the letter and spirit of the reporting requirements of the 1995 Agreement.

"McDonald's is pleased to settle old issues about equipment that is no longer in our system. We've resolved our dispute over the Big Mac Climber and we're moving on cooperatively," said Joe Beckwith, McDonald's Corporation Senior Vice President and Corporate Safety Officer. "We regard this settlement as an investment in safety because it establishes important new safety guidelines. We want to add that this resolution has nothing to do with the safety of our current play facilities, nor with making them safe -- they already are."

CPSC Chairman Ann Brown stated, "Companies that make commitments to CPSC, as McDonald's did in 1995, must keep them. Because McDonald's received a second chance in 1995, we were particularly disturbed that it failed to adhere to the agreement by not telling CPSC about another unsafe piece of playground equipment. The terms of this settlement show that CPSC takes playground safety very seriously and that we will not tolerate the failure of any company to report dangerous products to us. This issue has now been resolved and I'm pleased that McDonald's is working with us to keep kids safer."

David W. Ogden, Acting Assistant Attorney General of the Civil Division, commented, "I commend the CPSC and McDonald's for resolving their differences without additional litigation. The Playground Equipment Reporting Agreement negotiated in 1995 between McDonald's, the CPSC and the Justice Department, and supplemented today, established an excellent framework for protecting children who play at McDonald's playgrounds."