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McDonald's Corp v Easterbrook

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发表于 9-12-2020 12:42:51 | 显示全部楼层 |阅读模式
McDonald's Corp v Easterbrook. Delaware Chancery Court (Wilmington), No 2020-0658
https://www.sec.gov/Archives/edg ... 00056/complaint.htm
was commenced on Aug 10, 2020.

Note:
(a) The complaint is designated as Verified Complaint, but said only: "McDonald's Corporation ('McDonald's' or the 'Company'), by and through its undersigned counsel, alleges based upon personal knowledge as to itself and its own conduct and upon information and belief as to all other matters, as follows:"

There is no oath. That is, this kind of complaint needs to say "state under penalty of perjury" or "state under oath".” See
Verified Complaint. WestLaw, undated
https://content.next.westlaw.com ... lt&contextData=(sc.Default)&firstPage=true  
("A complaint where the plaintiff (or, in limited cases, the plaintiff's counsel) swears to the allegations, demonstrating to a court that the plaintiff has investigated the charges against the defendant and found them to be of substance. In many jurisdictions, a complaint does not need to be verified")  

(b) Now we turn to paragraphs 3, 4, and 5/
(i) paragraph 3 and 4: "On November 1, [2019] the McDonald’s board decided to fire Easterbrook. * * * Based on the information available to it, and after carefully weighing the alternatives, the board decided to negotiate a separation agreement with Easterbrook under which he would be terminated “without cause,” which entitled him to receive substantial severance benefits."
(ii) paragraph 5 (in part): "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 and would not have agreed that his termination was 'without cause.' "

Where an employment is terminated "for cause,"there is no severance package. Termination "without cause" will result in severance package.

(c) The complaint at paragraph 9 stated in part: "McDonald's is a Delaware corporation.  Its principal executive offices are located at 110 North Carpenter Street, Chicago, Illinois."
(i) "McDonald's is a Delaware corporation."  This means that the firm was incorporated in Delaware.

In what state a corporation is incorporated is important, because corporate governance (including its dissolution) is dictated by law of the state of incorporation. Here, McDonald's sued its former CEO in Delaware. But in cases where McDonald's is a plaintiff or defendant in a case filed in other states BUT about corporate governance (ordinary example is a shareholder derivative case)
the courts (in other states) will have to look to and apply Delaware state law, rather than law of the state where those courts sit.
(ii) McDonald's "principal executive offices are" in Chicago. Ordinarily we say headquarters, and in legalese it is "principal place of business."

(d) Toward the bottom of the complaint is "PRAYER FOR RELIEF   WHEREFORE, McDonald's requests that this Court enter a judgment: * * * C. in the alternative, ordering rescission of the Separation Agreement and directing Easterbrook to return all cash and stock awards granted pursuant to said agreement"
(i) On the day the case was initiated, on Aug 10, 2020 the severance package for Easterbrrok was worth $57.3 million. The package included McDonald's stocks, so its value fluctuates.
(ii) The prayer is equivalent to "Faithless servant doctrine" of New York State, which allows clawback of compensation, but not more than that, of a dismissed employee.
(A) Feiger v Iral Jewelry, Ltd (NY 1977) 41 NY 2d 928, 928
https://scholar.google.com/scholar_case?case=17806390180405953414
("One who owes a duty of fidelity to a principal and who is faithless in the performance of his services is generally disentitled to recover his compensation, whether commissions or salary (Restatement, Agency 2d, § 469)" )

There is no need to read the rest of this opinion.
(B) Astra USA, Inc v Bildman (Mass 2009) 455 Mass 116, 119
https://scholar.google.com/scholar_case?case=10232640338644734405
(the faithless servant doctrine under “law of New York, the State where Astra is incorporated. * * * [Astra has] its principal place of business in Westborough,” Mass, where events developed)

Just read facts, which begins with "We now summarize the salient facts."
(C)  James McQuade, Payback Time: Using the Faithless Servant Doctrine to Combat Trade Secret Theft. Trade Secrets Watch (blog), San Francisco: Orrick, Herrington & Sutcliffe LLP, Feb 5, 2014
https://blogs.orrick.com/trade-s ... trade-secret-theft/
("The faithless servant doctrine originated in New York and has been adopted in various forms in a number of other states including California, Massachusetts, Delaware, and Pennsylvania")

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