Beyond Meat Inc. (BYND) Accused of Breach of Contract and Fraud
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between May 2, 2019 and January 27, 2020, in 2014, Beyond Meat Inc. (BYND) entered into an exclusive supply agreement with Don Lee Farms (“Don Lee”) to produce all of Beyond Meat’s products. However, in early 2017, Beyond Meat terminated the supply agreement and transferred its production from Don Lee to other food manufacturers. As a result, on May 25, 2017, Don Lee filed a complaint against Beyond Meat alleging breach of contract, misappropriation of trade secrets, and unfair competition. As the litigation proceeded, Don Lee further alleged it found plastics, cardboard, and even a metal nozzle in ingredients that Beyond Meat supplied. Consequently, in March 2019, Don Lee added fraud claims that Beyond Meat had altered a copy of a food-safety audit of its manufacturing facilities and gave it to Don Lee. Beyond Meat consistently denied these claims, however, on January 27, 2020, Don Lee revealed in a press release that a judge had ruled it proved probable validity that Beyond Meat had breached its manufacturing agreement. On this news, Beyond Meat’s stock price fell almost 4% to close at $120.12 per share. The stock continues to decline.
