McDonald’s Allowed to Continue Lawsuit Against Former CEO

    The chain is accusing Steve Easterbrook of fraud and breach of fiduciary duty.

    Fast Food | February 3, 2021 | Ben Coley
    McDonald's fries package on a gravel background.
    Unsplash/Lucas van Oort
    McDonald’s said the decision will allow it to move forward with its lawsuit.

    A Delaware judge decided against dismissing a McDonald’s lawsuit aimed at recovering millions in severance from former CEO Steve Easterbrook, who’s been accused of hiding multiple affairs while at the company.

    The back-and-forth began in August when the fast-food chain said it found evidence that Easterbrook covered up sexual relationships with three employees and approved a stock grant worth “hundreds of thousands of dollars” for one of those workers. The company accused Easterbrook of deleting photos and messages from his phone, but not removing them from the company servers.

    The revelation came after Easterbrook was fired in November 2019 for having a consensual relationship with an employee. At the time of McDonald’s August lawsuit, Easterbrook’s package was estimated to be worth $57.3 million, according to executive-pay firm Equilar. McDonald’s said it would have never agreed to the separation agreement if it had known about Easterbrook’s alleged affairs. 

    In response, Easterbrook’s legal team claimed McDonald’s had access to the information on the company servers in October, adding that “any attempt by McDonald’s to point to ‘new’ information is futile.” The former CEO also said he should keep his severance because he’s complied with all the terms of the separation agreement, such as not speaking publicly about McDonald’s, refraining from filing a lawsuit against the company, sending apology letters to employees, and not working for a rival company.

    The judge, however, noted that McDonald’s has “pled a reasonably conceivable basis” for the court to find that the chain “reasonably relied on Easterbrook’s alleged ‘falsehoods’ in a manner that caused it harm.”

    “Separation Agreement is not so broad that it would deny McDonald’s the right to hold its former CEO and member of its board of directors accountable for breach of fiduciary duty and fraud on the Company,” the judge wrote.

    The judge also denied Easterbrook’s claim that the case should move from Delaware to Illinois because there’s no basis to “imply a restriction on McDonald’s presumptive right to choose its forum.”

    McDonald’s said the decision will allow it to move forward with its lawsuit.

    "He violated the company's policies, disrespected its values, and abused the trust of his co-workers, the board, our franchisees and our shareholders," the company said in a statement. "We look forward to bringing the evidence of Easterbrook's misconduct before the court and to proving our case.”

    In a motion full of redactions, Easterbrook’s team requested a protective order that would protect the identities of those involved in the alleged relationships.