Lee From America Why I Incorporated Meat Again
Beyond Meat - which has just been hit with a fresh lawsuit** (run into box below) filed on behalf of shareholders accusing information technology of securities fraud following a "sharp decline" in its share price - added: "At Beyond Meat, we are known for our rigorous product standards. That is why we stopped working with Don Lee Farms in 2017.
"Nosotros simply couldn't become Don Lee Farms to meet our standards, no matter how many times we tried. Rather than risk the industry learning of their repeated prophylactic shortcomings, Don Lee Farms sought to change the narrative by filing a baseless lawsuit against Across Meat.
"Nosotros are currently in the process of litigating this matter and intend to vigorously defend ourselves confronting the claims.
Fraud and negligent misrepresentation
Don Lee Farms sued Across Meat in California in May 2017*, three years afterwards they entered into an exclusive supply agreement. (Click hereto read most the litigation in Beyond Meat's latest 10Q filing.)
According to Don Lee Farms, Across Meat wrongfully terminated the parties' fixed term contract "under the guise of purported health & safe concerns," and misappropriated trade secrets by sharing with subsequent co-manufacturers the processes for manufacturing Across Meat products, including the Across Burger (processes which Don Lee claims to have adult).
Beyond Meat then countersued, alleging that Don Lee breached its supply agreement "as sure of our products manufactured by Don Lee Farms were contaminated with salmonella and other foreign objects, and that Don Lee Farms did not take advisable actions to accost these issues."
In March 2019, Don Lee Farms filed a 2nd amended complaint to add claims of fraud and negligent misrepresentation confronting Beyond Meat, which information technology declared had employed lax food safety practices and provided an contradistinct re-create of a food-condom inspect of its manufacturing facilities.
Since then Beyond Meat has suffered a series of setbacks in the dispute, with its motility to dismiss the fraud and negligent misrepresentation claims denied on May 30, 2019 and subsequent attempts to designate documents equally confidential also rejected by the court.
In a lawsuit** filed on behalf of Beyond Meat shareholders on Jan 30, 2020, lawyers at Pomerantz LLP argue that, "As a result of Defendants' wrongful acts and omissions, and the precipitous reject in the market value of the Company's securities, Plaintiff and other Grade members have suffered meaning losses and amercement."
While Beyond Meat'south 10-Q SEC filings referenced its dispute with Don Lee Farms, says the complaint, it misled investors past issuing "generic disclaimers that were not tailored to Beyond Meat's actual known risks with respect to the Don Lee Litigation, given the Company'due south cognition of its own conduct with respect to the Supply Agreement and its collaboration with Don Lee."
Judge: Don Lee Farms has 'established the probable validity' of its breach of contract claim
The latest setback came on Jan 22, when filings from the Fifty.A. County Superior Court seen past FoodNavigator-USA evidence that Judge Mary H. Strobel granted a movement for a writ of attachment, essentially forcing Beyond Meat to agree a sure mount of money [to pay Don Lee] in escrow.
She besides noted that Don Lee Farms had "established the probable validity of the merits uponwhich the zipper is based,"simply has not ruled on the ultimate case on the claim.(A trial date is set for February 8, 2021.)
Legally, such a claim is accounted to have probable validity where it is "more likely than not that the plaintiff will obtain a judgment against the defendant on that merits," noted Judge Strobel.
Don Lee contends that Beyond Meat breached the parties' written sectional supply agreement past failing to pay for around $431,000 of product shipped by Don Lee Farms, which alleges that once late fees laid out in the supply agreement are added, information technology is owed just under $629,000.
While Beyond Meat argued that Don Lee's products were defective, Don Lee presented evidence that the appurtenances at issue "were tested for pathogens and passed inspection before shipment", said the court, noting that the agreed-upon protocol for challenging defective goods was to return them and seek a refund in a timely fashion, something Across Meat did not exercise.
Don Lee Farms: 'The facts are clearly on our side'
According to Don Lee Farms, in a split motion before a unlike gauge (which FoodNavigator-USA has non seen), the court also granted Don Lee Farms' request to proper noun Beyond Meat CFO Marker Nelson, Senior Quality Assurance Director Jessica Quetsch and Director of Operations Anthony Miller in fraud claims which allege they "intentionally doctored and omitted fabric data from a food prophylactic consultant's report, and so delivered that doctored report to Don Lee Farms and affirmatively represented that information technology was the complete stance of the consultant."
According to Don Lee Farms - a leading supplier of plant-based burgers to multiple retailers including Costco - the omitted portions "discussed significant food safe issues at Beyond Meat'southward facility."
In apress release issued on January 27, Don Lee Farms president Donald Goodman said: "The facts are conspicuously on our side. Our claims accept been shown to several judges and each ane has ruled in our favor… but it is simply the beginning. We will prove our merits that Across Meat misappropriated our trade secrets to industry the Beyond Burger and other products.
"Nosotros will prove the breach of the Exclusive Supply Agreement and fraud claim committed past Mr. Nelson and others."
Attorney: 'Information technology doesn't rule that Beyond Meat is guilty of breaching its agreement with Don Lee – but it doesn't expect good'
And then what do legal experts make of the case?
Kevin Bell, partner at Arnall Golden Gregory LLP, told FoodNavigator-USA: "This[granting of a move for a writ of zipper] is a nice win for Don Lee Farms considering it creates a perception that they will win, but the motion is more than of a procedural one. It doesn't rule that Beyond Meat is guilty of breaching its agreement with Don Lee – but information technology doesn't expect good. Sometimes, that is helpful in a well-planned litigation strategy."
The allegation that Beyond Meat executives "intentionally doctored and omitted material information from a food safety consultant's report,"is far more serious, however, noted Bell.
"These are very detailed allegations.If Across Meat altered a food prophylactic study, that's beyond meaning, forget most breach of contract, you're talking nearly allegations of fraud in a nutrient company about public safety issues and the FDA would probably take to look into this and[expect into what the]food consultant found."
Chaser: 'The Don Lee Farms litigation is clouding up the financial future and tarnishing the reputation of Across Meat'
Adam Trick, partner at Squire Patton Boggs, added: "All the same significant one might assess the litigation brought by Don Lee Farms against Beyond Meat, information technology has now become the cornerstone of a putative federal form action alleging securities fraud based on Beyond Meat's denials of the allegations made past Don Lee Farms in its registration statement, prospectus and quarterly reports.
"Although one might envision Beyond Meat's invocation of Noerr-Pennington immunity with respect to its denials in these public documents, and their mere repetition of legal positions that appear in court papers—not to mention cautionary statements about how Across Meat could lose the lawsuit—there is no question that the Don Lee Farms litigation is clouding upward the financial futurity and tarnishing the reputation of Beyond Meat."
He added: "Given the multiplication of litigation now facing Beyond Meat, it will exist fighting on multiple fronts, and the settlement of all claims may not be a simple thing. All the same, without excavation into the facts—and whether they actually support the allegations—it is difficult to predict whether these lawsuits pose any real threat to the future of the company."
*The case is Don Lee Farms vs Fell River Inc (d.b.a. Across Meat) Case #: BC662838 in Los Angeles County Superior Court, CA
** The example is Larry Tran et al vs Beyond Meat Inc, Ethan Brown, and Mark Nelson Case: 2:20-cv-00963 filed in the US district court central district of California, January xxx, 2020.
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Source: https://www.foodnavigator-usa.com/Article/2020/02/03/Further-setbacks-for-Beyond-Meat-in-legal-dispute-with-former-co-manufacturer-Don-Lee-Farms-as-securities-fraud-lawsuit-filed
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