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McDonald’s Sued by Pension Funds Over ‘Pervasive’ Harassment (2)

Aug. 12, 2020, 3:11 PM; Updated: Aug. 13, 2020, 3:54 PM

McDonald’s Corp. was sued for records in Delaware on Wednesday by a group of Teamsters pension funds claiming the fast food giant has “a pervasive sexual harassment and gender discrimination problem.”

“McDonald’s suffers from a toxic work culture marked by sexual harassment, bullying, and abuse of the company’s female employees at the hands of their supervisors, co-workers, and customers,” the Chancery Court complaint says. “That offensive behavior reaches even the most vulnerable group—teenage female workers.”

The lawsuit cites “countless stories” about an “intimidating, hostile, and offensive work environment, in which female workers are regularly subjected to groping, physical assaults, sexually charged crude jokes and epithets.”

McDonald’s said in a statement late Wednesday that it “had been working cooperatively with the plaintiffs and had already offered to make documents available.”

“We are not sure why the plaintiffs saw a strategic advantage to filing a lawsuit rather than continuing our discussions, but we will now respond to the lawsuit through the appropriate channels,” the company said.

In their suit, the Teamsters funds say public news reports and court records show that the “widespread misconduct” has “persisted for at least a decade” at “all corporate levels, including within the company’s highest ranks.”

Those records allegedly include a 2012 lawsuit by the U.S. Equal Employment Opportunity Commission, “more than a dozen” EEOC complaints filed in 2016 by workers nationwide, and a $500 million proposed class action brought in April by employees alleging “systemic sexual harassment.”

“Fed up with their unfair treatment and frustrated by the company’s persistent ignoring of their grievances, McDonald’s employees from 10 cities across the United States went on a one-day strike to protest the culture of sexual harassment and McDonald’s management’s failure to remedy the ongoing problem,” the suit says.

The court cases and worker unrest have drawn scrutiny from regulators and lawmakers, including in the U.S. Senate, according to the complaint.

It also cites the firing late last year of former CEO Steve Easterbrook over workplace affairs. McDonald’s sued Easterbrook on Aug. 10, seeking to claw back his severance pay.

That same day, the company told employees it had initiated a “values refresh,” including by “partnering with a third party to conduct a cultural assessment” aimed at understanding its “bright spots and blind spots,” according to an internal document obtained by Bloomberg Law.

The document urged employees with “concerns about behavior that is not in line with our values” to reach out to HR or through its “business integrity reporting line.”

“I can promise you that you will be listened to and respected, and you need not have any fear of retaliation,” it said, adding that the company would “thoroughly investigate” and “take serious and decisive action to hold those accountable for wrongdoing, no matter what.”

The Teamsters records suit invokes a Delaware law giving corporate shareholders broad inspection rights if they credibly suspect board wrongdoing. McDonald’s books are needed to determine what its leadership knew and did—or didn’t do—about the harassment and discrimination, according to the complaint.

Cause of Action: Section 220 of the Delaware General Corporation Law.

Relief: An order requiring the company to turn over relevant records; costs and fees.

Response: McDonald’s didn’t immediately respond to a request for comment Wednesday.

Attorneys: The pension funds are represented by Cooch & Taylor PA, Lowey Dannenberg PC, and Newman Ferrara LLP.

The case is Teamsters Local 237 Add’l Sec. Fund v. McDonald’s Corp., Del. Ch., No. 2020-0663, complaint filed 8/12/20.

(Updates Aug. 12 story to add fourth and fifth paragraphs with McDonald's response and 11th through 13th paragraphs with additional reporting about the internal document.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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