Ex-CEO ordered to respond to McDonald’s information requests

DOVER, Del. — A Delaware judge has rejected a request by former McDonald’s Corp. CEO Stephen Easterbrook to limit initial information sharing in a lawsuit in which the company claims he lied about having sexual relations with employees and seeks to claw back millions of dollars in severance pay he received in a separation agreement.

Vice Chancellor Joseph Slights Jr. on Monday also ordered Easterbrook to provide McDonald’s with various documents and answers it has requested in an effort to prove that he breached his fiduciary duties by engaging in, and lying about, improper conduct.

McDonald’s forced out Easterbrook in November 2019 over an inappropriate relationship with an employee. The company then filed a lawsuit last year seeking to reclaim millions of dollars in compensation paid to him as part of a separation agreement, alleging that it later learned he had covered up sexual relationships with at least three other employees and destroyed evidence.

“With today’s ruling, we can finally move forward with our case against Steve Easterbrook and gather the evidence necessary to hold him accountable for his conduct and failure to live up to McDonald’s expectations and values,” the company said in a prepared statement.

Attorneys for Easterbrook, who have argued that McDonald’s is simply trying to harass and embarrass him with its information requests, did not immediately respond to an email seeking comment.

Slights, who last month denied Easterbrook’s motion to dismiss the case, said he has seen nothing to suggest that McDonald’s has been acting in bad faith.

“While I’m sympathetic to the fact that the discovery here seeks personally sensitive information, there is little doubt that the information requested is substantively relevant to McDonald’s claims here — claims which are, by themselves, personally sensitive,” the judge noted.

In objecting to the company’s information requests, Easterbrook has argued that they are disproportionate and invade the privacy rights of third parties. His attorneys filed a motion last month to limit initial discovery to the issue of whether McDonald’s relied on his denials of sexual relationships with other employees when it agreed to enter a separation agreement and terminate him “without cause,” rather than firing him.

Shawn Naunton, a lawyer for Easterbrook, suggested Monday that initial discovery will show that McDonald’s “did know or chose not to know about Mr. Easterbrook’s prohibited relationships.” If the court agrees, he said, the case would essentially be over. If not, attorneys could then move to additional information exchanges.

“We believe discovery will show that McDonald’s knew that Mr. Easterbrook had prohibited relationships with McDonald’s employees but believed it to be in McDonald’s best interests to avoid an investigation that would demonstrate that,” Naunton said.

Jonathan Kravis, an attorney for McDonald’s, said Easterbrook’s purported concerns about the privacy of others were unfounded, given a confidentiality order that has been entered in the case.

Kravis argued that Easterbrook is not trying to protect information from being released to the public but instead is trying to keep information about the scope of his misconduct from the company itself.

“What he’s really saying is, he does not want McDonald’s to know about all of the employees that he had improper sexual relationships with when he was CEO,” Kravis said.

In response to Easterbrook’s refusal of their information requests, attorneys for McDonald’s asked Slights to compel him to respond to their queries regarding his sexual relationships with employees, his alleged failure to disclose those relationships, explicit photos and videos that were found in his work email account, and his alleged approval of a stock award for an employee with whom he was having a sexual relationship.

Slights agreed that the privacy interests of Easterbrook and third-party employees are sufficiently protected by the confidentiality order and directed Easterbrook to respond to most of the company’s requests. The lone exception regards whether he admitted or denied relationships other than the one that led to his ouster when he was interviewed by company investigators. Slights noted that Easterbrook has said he does not have sufficient information to admit or deny what he told investigators.

“In other words, he appears to be saying he doesn’t recall,” Slights said. “Of course that can certainly be tested at deposition, and may prove to be not credible. But for now, a party cannot be compelled by court order to remember what he swears by oath he does not remember.”