Punitive damages are the part of American law most misunderstood in Europe, and the one that produces the figures that make the headlines. The jury sets an amount intended to hit the company; the higher courts then reduce it, sometimes massively.
The case of Stella Liebeck is the exact illustration of the mechanism, and of its distortion by the media. The jury awarded 2.7 million dollars in punitive damages; the judge reduced them to 480,000 dollars, bringing the total to around 640,000 dollars. The figure that stuck in people's minds — “millions for spilled coffee” — is precisely the one the courts corrected.
The courts' reasoning is not moral, it is constitutional: a disproportionate penalty deprives the defendant of fair notice of what it risks.