Beyond Meat settles legal battles with Don Lee Farms

Dive Brief

• Beyond Meat and former co-manufacturer Don Lee Farms have agreed to settle two contentious lawsuits — one in California state court about disputes and unpaid bills arising from Don Lee’s previous work for Beyond Meat, and one in federal court accusing Beyond Meat of unfair competition because of misleading claims about its products.
• The written settlement is confidential, according to a Securities and Exchange Commission filing from Beyond Meat and a statement from Don Lee Farms. Neither party admitted liability or wrongdoing in the settlement. Beyond Meat said the terms “did not have a material impact” on its finances or operations.
• This dispute has hung over Beyond Meat since Don Lee Farms first filed its state court lawsuit in 2017. The outcome of this litigation has been listed in its financial reports as one of the risks facing the company since it filed to go public in 2019.

Dive Insight:

If this settlement is approved by the court, it brings a long, bitter and sprawling dispute to a close.

Considering the serious claims made by both sides in the litigation and the biting attacks in dueling press releases touting every potential victory as cases proceeded through court, it didn’t outwardly seem that a settlement in which “both sides are satisfied with the outcome” — a claim made by each company in their statements — was possible.

In the initial 2017 lawsuit, Don Lee Farms accused Beyond Meat of stealing its trade secrets, providing unusable and unsafe raw materials for manufacturing, failing to compensate Don Lee for products it had made, and not ensuring it had operational equipment and personnel to make its products. Beyond Meat filed a countersuit in 2020.

Don Lee’s 2017 lawsuit spawned cases filed by Beyond Meat shareholders who felt the company’s confidence in prevailing in the litigation amounted to false and misleading statements. The cases were consolidated and settled in April. In that settlement, Beyond Meat agreed to pay $515,000 in attorneys’ fees and made changes to its corporate governance. 

A jury trial on the original case was set to begin in California Superior Court this week. According to court records, attorneys told the judge that they came to an outside settlement on Friday, and it formally became part of the case record this week. 

While the terms of the settlement are confidential, settlements often involve some sort of financial payment. Don Lee’s initial lawsuit accused Beyond Meat of breaching its 2014 manufacturing agreement with the company. It asked for financial damages, including $628,689 in what Don Lee claimed were unpaid invoices.

Considering that Beyond Meat has been on a rocky financial road lately, it remains to be seen if any monetary settlement would change the company’s financial or operational status. Beyond Meat has struggled with slowing sales growth and operational losses due to new manufacturing equipment and supply chain disruptions. It announced last week it was laying off about a fifth of its workforce after a 4% reduction in August.

While settlements can often be better for the parties involved than long, drawn-out trials, right now is an inflection point in the plant-based meat space.

Outside of Beyond Meat, other companies are shutting down or instituting layoffs to stay alive as growth, in general, is slow or stagnant. A bruising battle in open court that calls things like manufacturing safety and nutritional quality of plant-based meat into question isn’t beneficial for any company in the segment today.