The true story is: She was with her grandson, went through the drive through and bought coffee. His car didn't have cup holders. The coffee was between her legs, and she went to add cream and sugar. When she pulled off the lid she spilled the coffee. She was wearing cotton sweat pants. And she suffered very serious burns. It required skin grafting.
She did offer to settle for something like $20K and McDonalds wanted no part of it. When it went to trial, a jury awarded $640K compensation and $2.7 million in punitive damages. The judge reduced the actual verdict to just the $640K, and they settled for a lesser amount rather than going through the appeals process.
Whether it was a meritorious case is debatable. She claimed gross negligence and said McDonald's was selling a defective product. I think most people who used that case as a poster-child for how overly litigious this country is, focused mostly on the punitive damages. It seemed outrageous at the time, regardless of the question of McDonald's liability. And it fed a growing trend, in their view, of dubious lawsuits and outrageous damage awards.
At trial, the plaintiff showed that there had been a bunch of other people who seriously burned themselves on their coffee -- and McDonald's had actually paid out settlement checks of as much as $500K. In this case, for some reason, McD's decided to hold a line. Their view, which many people agree with, is that when you put a cup of hot coffee between your legs in the car and you spill and burn yourself with it, it's no more the restaurant's fault than it would be GE's fault if you accidentally burned your hand on the stove.
I think the one thing about that case that is true is that the story of what happened lost some of the the detail and context over the years.