Judge Allows Shareholder Lawsuit Against McDonald’s Corporate Officers To Proceed, Could Have Big Implications For Future Of Corporate Law

According to a report from The Wall Street Journal, a Delaware Court of Chancery will allow a shareholder lawsuit against a former executive of McDonald’s to proceed. The case is centered around allegations that the company failed to properly handle workplace sexual harassment. It is an important legal matter because it could have big implications for the future of officer and director liability claims. Within this article, our Miami shareholder litigation attorneys provide an overview of the lawsuit and explain why it could have important implications for the future of corporate law.

Background: Allegations that Officers/Directors Failed in Sexual Harassment Scandal 

Steve Easterbrook served as the Chief Executive Officer (CEO) of McDonald’s from 2015 to 2019. He was terminated from his position after the Board of Directors determined that he violated company policy by having a relationship with a subordinate. At the same time, other issues regarding alleged “systematic” failures regarding sexual harassment were being raised. At the time, David Fairhurst was the Chief Human Resources Officer at the company. McDonald’s fired him in 2020 for allegations that he committed workplace sexual harassment. Shareholders filed a lawsuit against both Mr. Easterbrook and Mr. Fairhurst for breach of fiduciary duty. The Board of Directors at McDonald’s was named in the shareholder lawsuit as well.

 What Did the Delaware Court of Chancery Rule? 

The recent ruling by Delaware Court of Chancery is related specifically to the case involving former McDonald’s executive David Fairhurst. Specifically, the court will allow the shareholder claim to proceed against Mr. Fairhurst. The shareholders are seeking to hold him personally liable. As stated by The Wall Street Journal, it is a “first-of-its-kind” ruling that could have major implications for the future of corporate law. The lawsuit against Mr. Easterbrook has already been dismissed. Notably, Mr. Easterbrook returned more than $100 million to McDonald’s following his termination.

 Why this Case is Being Watched Closely By Many Corporations and Corporate Leaders

 This case is being watched closely by many corporations and corporate leaders because it has the potential to make it easier for shareholders to hold corporate officers and directors personally liable for misconduct. By not dismissing the lawsuit, the Delaware Court of Chancery has already taken a major step. Shareholders argue that liability against executives could lead to greater accountability and a shift in corporate culture towards more responsible decision-making. The matter bears close attention. Corporations may have to re-assess their risk management strategies, as well as the insurance coverage they carry to protect against personal liability claims.

Consult With a Shareholder Litigation Attorney in Southeastern Florida Today,

At Pike & Lustig, LLP, our South Florida shareholder litigation lawyers are standing by, ready to advocate for your best interests. We have the professional expertise needed to handle all types of shareholder law cases. Have questions? Contact us today for a confidential initial case review. From our legal office in Miami, our legal office in West Palm Beach, and our legal office in Wellington, we handle shareholder litigation throughout Southeastern Florida.

Source:

wsj.com/articles/mcdonalds-ruling-shifts-oversight-liability-focus-to-corporate-officers-11675381792?mod=hp_minor_pos12