Beyond Meat Named in Investor’s Lawsuit Over Stock Drop Reportedly Caused by Legal Battle
by Erin Shaak
Tran v. Beyond Meat, Inc. et al.
Filed: January 30, 2020 ◆§ 2:20-cv-00963
Beyond Meat is facing a stockholder's proposed class action lawsuit filed over recent revelations in a litigation battle between the company and former supplier Don Lee Farms.
An investor has filed a proposed class action lawsuit in which he claims Beyond Meat, Inc., the company behind the popular plant-based Beyond Burger product, made misleading statements concerning its relationship with a supplier, which injured stockholders when the truth was revealed. According to the complaint, revelations in a litigation battle between Beyond Burger and Don Lee Farms triggered a drop in stock price that the plaintiff says was fueled by the defendants’ deceptively positive assurances concerning the lawsuit.
The timeline in the suit begins in 2014, when Beyond Meat entered into an exclusive supply agreement with Don Lee that reportedly led to the development of the Beyond Burger product. After the launch of the popular meat burger alternative, Beyond Meat in early 2017 terminated its agreement with Don Lee, which led the supplier to file a lawsuit alleging breach of contract and stolen trade secrets, among other claims, the case says.
Notwithstanding the ongoing litigation, Beyond Meat, the suit alleges, conducted its initial public offering (IPO) in May 2019 and assured stockholders in a registration statement that the company and its top executives—who are also named as defendants in the proposed class action—intended to “vigorously defend” against Don Lee’s claims, which they purportedly believed to be unjustified. According to the lawsuit, the defendants continued to assure investors in quarterly reports that the allegations in the Don Lee litigation were meritless despite being fully aware that the company was exposed to legal liability for its actions and reputational harm.
The case alleges that in late January 2020, the truth was revealed when Don Lee issued a press release in which the company announced that a judge had ruled Don Lee Farms was “likely” to obtain judgment in the suit against Beyond Meat. According to the case, the press release not only stated that Don Lee had “proved the probable validity of its claim” that Beyond Meat had breached its manufacturing agreement, but revealed that several of the company’s high-level employees had been named in a separate suit in which they were accused of doctoring a food safety consultant’s report that was submitted to Don Lee Farms.
Upon this news, Beyond Meat’s stock price reportedly fell 3.71 percent, which the case says caused stockholders “significant losses and damages.”
The lawsuit seeks to cover anyone who purchased or otherwise acquired Beyond Meat securities between May 2, 2019 and January 27, 2020.
The full complaint can be read below.
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