Where there’s a deep-pocketed restaurant company with an issue, chances are someone is pursuing a lawsuit because of the alleged injury to unwitting parties. Often those damaged parties don’t even know they'd been offended until a law firm publicly calls for would-be plaintiffs to join the quest for money.
Lately there have been enough of those lawsuits to confuse even the most attentive court-watcher. Here’s a rundown of which restaurant companies are being sued and the legal questions underlying the suits.
1. Is Starbucks too stingy with lattes, too free with ice?
A judge ruled on Friday that customers could proceed with a lawsuit seeking damages from the coffee chain for allegedly shortchanging them on lattes. The suit accuses Starbucks of systematically providing less than a full cup of the beverage to save on milk. The plaintiffs, who want to parlay their suit into a class action, say that the chain only delivers 75% of what it promises in advertising and in-store materials to deliver, leaving a quarter-inch space in the cups that should be filled with steamed milk.
A second lawsuit accuses the chain of including too much ice in its chilled drink and thereby delivering less than the 12, 16 or 20 ounces that are promised for its three sizes of containers.
Starbucks has said it believes both actions are without merit.
2. Did Chipotle’s executives con fellow shareholders?
A lawsuit filed in April by shareholders of the burrito chain alleges that management used a “corrupt stock incentive plan” and an ambitious stock buyback plan to manipulate the stock price to their advantage. Among the shenanigans, according to the plaintiffs, was selling shares before the rest of the investment community knew of the chain’s food safety crises during the fourth quarter of 2015.
Chipotle has said it will not respond to pending litigation.
3. Did Ruby Tuesday sandbag financial info?
Reminding Ruby Tuesday shareholders of the chance to sue the beleaguered company has become virtually a weekly event for law firms looking to represent embittered investors. The firm of Levi & Korsinsky gave its nudge at the end of May. Rosen Law Firm aired a reminder 10 days later, and Rigrodsky & Long issued a notice a few days after that.
All of the firms reminded shareholders who purchased their stock between July 24, 2015, and April 7, 2016, that they have until June 28 to join a class action against the casual chain. Ruby is accused of misleading investors about the brand’s financial predicament, and what various gauges indicated about near-term sales trends.
4. Did Wendy’s mismanage customers’ credit card info?
The law firm Faruqi & Faruqi issued a notice this week that it is looking into alleged misconduct and possible breach of fiduciary responsibilities by Wendy’s management in regard to the theft of customer information from the chain’s computer systems. Such announcements are often issued by law firms looking for potential co-plaintiffs in suits that could be certified as class actions.
The heads-up on what the firm calls an investigation follows Wendy’s announcement on June 9 that the breach of its POS system may be more widespread than was originally estimated. Earlier, the chain had indicated that about 300 stores may have had data swiped by hackers.
Faruqi & Faruqi noted in their alert that two possible class actions were already being pursued.
5. Did Krispy Kreme cave too quickly?
The ink might have been still drying on Krispy Kreme’s agreement to be acquired for $1.3 billion when a shareholder filed a suit to block the deal, arguing that the franchisor hadn’t negotiated with sufficient vigor. Barbara Grazjl asked a court to halt the deal until Krispy headed back to the negotiating table for more money.
The $21-per-share purchase offer from JAB, a German conglomerate that also owns Einstein Bros. and Peets Coffee, came one business day after Krispy shares were trading for under $17.
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