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Enmeshment of two economies lays communi... |
McDonald's scores epic own goal in libel case
The multinational won the day but lost the war in a public relations disaster, writes JOHN MASON
PAUL Preston, the president of McDonald's UK, cut an uncomfortable figure at a media conference after last week's High Court judgment. In theory he was acclaiming a legal victory in the company's libel action against two green activists. In practice he was struggling to defend a public relations disaster of the company's own making. McDonald's spent two-and-a-half years in court suing Helen Steel and David Morris over criticisms made in leaflets handed out on street corners. The case, which lasted 313 days, the longest trial in the English courts, tied down McDonald's management and cost it about £10-million in legal fees. The leaflets claimed that McDonald's exploited children in its advertising, were cruel to animals, destroyed rain forests and contributed to Third-World starvation. The court ruled that most of the allegations were untrue, and awarded McDonald's damages of £60 000. However, the case attracted adverse publicity globally as a "David and Goliath" struggle - McDonald's using the big stick of litigation against two people who, denied legal aid, had to defend themselves in court. The original allegations have received massive exposure - notably through a website on the Internet but also through international media coverage and a book. Among public relations professionals, there is a view that McDonald's has comprehensively shot itself in the foot. Simon Brocklebank-Fowler, managing director of Citygate Corporate, said: "McDonald's has scored one of the most extended own goals in recent history in public relations. "The vast majority of consumers would not have heard of the criticisms had McDonald's shut up and not said anything." Preston denied that the trial had been a public relations disaster or that the "David and Goliath" image would damage the company. "The sympathy of the public will lie with the truth. That is more important than big or small," he said. He restated the position McDonald's has adopted throughout - that the allegations were a serious threat to the brand and action had to be taken. "We brought this case to protect a reputation trusted by millions of customers every day. Very serious allegations were made about our company. They were proved to be false." A senior McDonald's executive insisted the brand was under such threat that the company had no choice but to act. The decision had also been taken against a background of incidents such as the firebombing of a McDonald's restaurant in the UK which led to fears for staff safety, he said. "I won't work for a company that did the things alleged. McDonald's is not perfect. We make mistakes but nobody in the company gets up in the morning thinking, how can I be evil? You can't build a successful business like that." For Brocklebank- Fowler, the key error made was to mistake the culture in which the UK subsidiary operates and attempt to apply the US solution of litigation. "McDonald's have mistaken the consumer and cultural context in the UK. Litigation is seen in the US as part of the everyday corporate armoury. In Europe we have not got there yet. Litigation is used less often than in the US, particularly against people. It is a last resort." The result has been for McDonald's to appear a "monolith" acting in an inappropriate fashion, he said. The strength of the McDonald's brand was such that the company would recover, Brocklebank-Fowler said. However the case, like that of Shell over the Brent Spar episode when it reversed its decision to dump the oil installation in the North Sea, showed that companies could make misjudgements about perceptions. "Big companies often think that being right is a defence in the public eye. Being right is not always a defence - as Shell found out,'' he said. Libel lawyers tend to the same view, arguing that the decision to resort to litigation to defend a perceived threat to the integrity of the McDonald's brand was misconceived. Sarah Webb, a libel specialist with law firm Russell Jones and Walker, said: "McDonald's could have put this case on one side on the grounds that the criticisms were insignificant. Even if they were completely successful, in these circumstances there will always be residual sympathy for the little guys. It is very unusual for a company to sue individuals. It is a risky strategy." She accepted that a court of appeal ruling allowing the two defendants great latitude in questioning witnesses posed problems for McDonald's in court and lengthened the trial. However, the company should still have realised how the trial would develop and leave its record exposed. One of the company's biggest errors was to underestimate the tenacity of its opponents, she said. "They thought these defendants would give up the ghost. They did not think they would meet two people so commitTim Hardy of law firm Cameron McKenna said that in spite of the legal victory, the trial hads been a "disaster" for McDonald's. McDonald's has a history of robust litigation but getting involved in this kind of litigation was a bad mistake. He said: "Faced with a similar dilemma, I advise my clients to spend their money on a Porsche as they will get far more satisfaction from it than they ever will out of a libel action." - Financial Times
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