Dive Brief:

• Teamsters Local 237 Additional Security Fund and two affiliates filed a lawsuit against McDonald's Tuesday, claiming leadership chose to pay off ousted former CEO Steve Easterbrook after his sexual misconduct scandal to quickly resolve the problem rather than "face the consequences for the leniency they long exhibited." 
• The suit claims that when Easterbrook was tapped as CEO by the board, he was romantically involved with a public relations executive responsible for her firm's relationship with McDonald's. The Teamsters funds argue that though this violated company policy, the board chose to overlook the breach in conduct. 
• McDonald's is still litigating its suit against Easterbrook, filed last summer, to claw back severance and stock options awarded as part of his severance package after it accused Easterbrook of withholding details of misconduct. The Teamsters funds argue that even if the QSR's suit against Easterbrook succeeds, the process will cost millions in legal fees, making it unlikely that McDonald's would regain the value of the contested severance package.

Dive Insight:

McDonald's has been trying to rehabilitate its reputation ever since Easterbrook was fired, with current CEO Chris Kempczinski vowing to clean up the company's culture when he joined the chain in 2019. But this lawsuit serves another blow to the mega chain. 

The complaint doesn't hold back as it describes McDonald's alleged actions over the years, stating, "The Board’s indifference to C-suite sexual misconduct is just the tip of the iceberg. Beginning in at least 2015, McDonald’s has faced wave after wave of lawsuits, allegations, and investigations into rampant sexual misconduct, harassment, and discrimination at its restaurants. By 2019, the problem was severe enough — and the Board’s response anemic enough — that the United States Senate told the Board that it 'must do more to combat workplace harassment, abuse and retaliation suffered by McDonald’s workers across the country."

Ron Olson of Munger Tolles & Olson LLP and counsel for McDonald's disagreed with the allegations in the complaint, saying in a statement sent to Restaurant Dive that there is no basis for the Teamsters funds' accusations against McDonald's board. 

"The McDonald's Board took swift and decisive action to address Easterbrook's misconduct, sending an unmistakable message that McDonald’s will not tolerate behavior inconsistent with its values at any level of the Company. The Teamsters' complaint second-guesses the Board's actions based on a fictional narrative developed in hindsight after Easterbrook's cover-up was exposed as a result of the Board and management's reinforcement of the Company's speak-up culture," Olson said. 

In addition to accusing McDonald's of "indifference to executive misconduct" and of a "deliberate attempt to try and cover up its own role in failing to stop the misconduct" in regards to Easterbrook's firing, the suit also claims the board ignored other instances of misconduct committed by former HR leader David Fairhurst. 

As McDonald's continues to deal with tumult and lawsuits over its company culture, the fast food chain has tried to take actionable steps to addressing the issues. Most recently, McDonald's announced it will require sexual harassment training at all of its 39,000 restaurants around the globe, including franchisee locations, starting in January 2022.

This is a big step forward in terms of compliance — previously, McDonald's only required this training of company-owned restaurants, which make up only 7% of the mega chain's global footprint. Franchisees will be allowed to select their own anti-sexual harassment training programs, though McDonald's has made training materials available to its operators, which could result in inconsistent results across the chain.

Even in the midst of progress, the Teamsters funds' lawsuit is a reminder of the shadow the Easterbrook scandal still casts over the company. If McDonald's loses its suit, which claims Easterbrook lied during the restaurant's internal probe into his relationship with an employee in order to obtain his compensation and 26 weeks of severance benefits, it could be a major blow to its reputation. Winning the suit may also appear like less of a victory and more the closing of a tumultuous chapter for the chain given the legal costs the company may be incurring — especially now that this Teamsters funds lawsuit is now also on the company's plate.