Court Battles

McDonald’s sues ousted CEO, accusing him of relationships with employees

McDonald’s on Monday sued former CEO Steve Easterbrook, accusing him of concealing three affairs with subordinates while running the fast-food giant.

Easterbrook was fired in 2019 for sexting with another employee, but the new allegation only emerged last month, according to The New York Times. In the lawsuit, the company accuses him of lying, fraud and concealment of evidence. The suit further alleges Easterbrook gave one of the employees a large amount of shares in the company.

McDonald’s is seeking the return of the stock options and other compensation Easterbrook was allowed to walk away from the company with, worth more than $40 million, according to the Times.

Although companies have ousted CEOs over allegations of sexual misconduct in the past, the potential public fight over them in Easterbrook’s case largely represents new territory. However, the lawsuit also acknowledges the company did not conduct a detailed investigation before allowing Easterbrook to leave with the compensation package. It concedes, for example, that the company did not search his email account during its initial review.

“One would think that it would be internal investigation 101 to look at all electronic records right away,” Brandon L. Garrett, a professor who specializes in corporate criminal law at Duke University School of Law, told the Times. “The concern, if an investigation doesn’t look at emails, is that it was a halfhearted investigation.”

McDonald’s said in the lawsuit that it decided not to fire Easterbrook for cause — that is, for a specific offense such as a crime or dishonesty — because it would be “certain to embroil the company in a lengthy dispute with him.” However, it said the severance plan contained a clause allowing it to recoup the payout if it later determined he should have been fired for cause.

A more thorough review of Easterbrook’s email, conducted after receiving an anonymous tip last month, returned “dozens of nude, partially nude, or sexually explicit photographs and videos of various women, including photographs of these company employees, that Easterbrook had sent as attachments to messages from his company email account to his personal email account,” according to the lawsuit.

“Had Easterbrook been candid with McDonald’s investigators and not concealed evidence, McDonald’s would have known that it had legal cause to terminate him in 2019,” the suit states, according to the Times.

Tags McDonald's Steve Easterbrook

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