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McDonald's need not give investors more records on CEO scandal: judge

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A seagull stands on a table marked off with tape to prevent customers from sitting down to eat at a McDonald's restaurant during a lockdown to curb the spread of a coronavirus disease (COVID-19) outbreak in Sydney, Australia, July 15, 2021. REUTERS/Loren Elliott

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  • Investors wanted investigation reports, internal communications
  • Delaware Chancery Court judge says investors didn't show documents were essential

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(Reuters) - McDonald’s Corp does not have to provide additional documents to shareholders related to the company’s handling of sexual misconduct claims against former CEO Steve Easterbrook as the fast food giant faces several lawsuits over the scandal.

Vice Chancellor Joseph Slights III of the Delaware Chancery Court on Monday rejected the McDonald's shareholders' bid to see the documents, including investigation reports about Easterbrook's and another executive's terminations, and information sent to the McDonald's audit committee.

Slights' ruling that the investors “have not proven that they’re entitled to more than what they already have" saves McDonald's from releasing emails and records that shareholders have said could detail other potential misconduct complaints made against executives and how the company responded.

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The Bernstein Litowitz Berger & Grossmann attorneys representing the shareholders did not immediately respond to requests for comment Monday, nor did the Munger, Tolles & Olson attorneys representing the company. Robbins attorneys representing the shareholders declined to comment.

The shareholders, including union The Detectives' Endowment Association Inc, sued the company for more records in August after receiving board-level documents. They had hoped to investigate if the company's board breached its fiduciary duty during its promotions and later dismissals of Easterbrook and former McDonald's human resources chief, David Fairhurst.

The shareholders said other documents they received from the company were heavily redacted and omitted information about Easterbrook’s 2019 exit. The CEO was fired for having an improper consensual relationship with an employee.

McDonald’s, which did not immediately respond to request for comment Monday, had said in an earlier filing that the shareholders’ request for more information was “unreasonable."

McDonald’s has sued Easterbrook to recoup his severance pay, estimated to be worth $41.8 million, alleging he lied about the number of employees with whom he had inappropriate relationships. Easterbrook has not been accused of harassment.

Shawn Naunton of Zuckerman Spaeder, who is representing Easterbook in that case, did not respond to a request for comment Monday.

The case is The Detectives' Endowment Association Inc v. McDonald's Corp, Delaware Court of Chancery, No. 2021-0673.

For the shareholders: Mark Lebovitch and Gregory Varallo of Bernstein Litowitz Berger & Grossmann; Brian Robbins and Gregory Del Gaizo of Robbins

For McDonald's: George Garvey, Robert Dell Angelo and Jonathan Kravis of Munger, Tolles & Olson

Read more:

More McDonald’s investors sue to see records over misconduct scandals

McDonald’s board, Morgan Lewis sued over harassment, discrimination scandals

Chancery’s harsh new message to defendants: ‘Egregious’ Section 220 fights will cost you big

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Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes. Reach her at sierra.jackson@thomsonreuters.com

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