Beyond Meat Wins Latest Round in Ongoing Don Lee Farms Legal Battle

The latest development in the long legal battle between Beyond Meat and its former co-manufacturer Don Lee Farms has seen the plant-based food company secure a small victory in a dispute over what it counts as its trade secrets.

In a ruling on August 27, Los Angeles Superior Court Judge Holly J. Fujie granted Beyond Meat’s motion of summary adjudication, filed on June 11, to dismiss Don Lee’s counts of misappropriation of trade secrets and unfair competition under the California Business & Professions Code.

The ongoing legal dispute began in 2017 when Don Lee, a California-based fresh and frozen food producer founded in 1982, filed a lawsuit against Beyond Meat after the burger brand ended its co-manufacturing relationship. Beyond Meat cited the discovery of “dangerous pathogens” at Don Lee’s Mansfield, Texas facility as the reason for the split, and transferred production to other manufacturers. Don Lee served as the sole co-manufacturer of Beyond Meat’s portfolio, including the Beyond Burger, from 2014 to 2017, and the termination came with another two years on its production contract.

In its lawsuit, Don Lee claimed Beyond Meat “misappropriated their trade secrets by sharing them with a subsequent co-manufacturer,” while also stating that it was responsible for developing technology used by Beyond Meat to produce products like the Beyond Burger, which then comprised 70% of the company’s total sales. Don Lee subsequently amended the suit, adding claims of fraud, negligence, breach of contract, money owed and unfair competition, among several others.

To support its motion of summary adjudication filed in June, Beyond Meat presented evidence to the court that all nine of the brand’s products involved in the lawsuit were developed and manufactured by the brand before Don Lee’s involvement, and any trade secrets have no independent economic value outside of their since-ended contract. The company argued that Don Lee only made “slight alterations to the manufacturing procedures” and Beyond Meat “maintained final authority over the implementation of all procedures.”

The judge last month ruled that the evidence supplied by Beyond Meat demonstrated that there is “no triable issue” in relation to Don Lee’s misappropriation claims, and said that Don Lee was unable to provide evidence of the independent economic value of these trade secrets. Based on the same facts, the judge also threw out the unfair competition count.

“The Court’s ruling puts an end to the fictional narrative Don Lee Farms has attempted to use throughout this case that Beyond Meat misappropriated Don Lee Farms’ trade secrets to manufacture the Beyond Burger and other products,” Beyond Meat said in a statement.

However, Beyond Meat wasn’t fully victorious in this ruling, as the judge denied the company’s motion to dismiss counts of fraud and negligent misrepresentation, and these counts, among several others, will proceed to the trial that is set for May 16, 2022. These fraud counts refer to Don Lee’s claims that it raised “significant concerns” during its co-packer partnership that Beyond Meat’s facility was utilizing “inadequate food safety protocols” and that the company had provided unsafe materials to Don Lee. A subsequent fraud claim against members of Beyond Meat’s senior management team, also alleged they “deliberately altered and excluded” information from the facility’s food safety report, which had been sent to Don Lee.

The judge ultimately ruled that “there exist triable issues of fact as to the fraudulent intent of Beyond Meat and that Plaintiff has incurred damages,” ultimately allowing these counts to continue to trial.

Beyond Meat said in a press release it plans to “vigorously defend” against Don Lee’s remaining claims of breach of contract and fraud. It also said it will pursue its own ongoing legal action against Don Lee, claiming the company used its trade secrets to create “copycat products” such as its own bleeds-like-meat plant-based burger, called the Better Than Beef Burger.

Launched in September 2019, the burger was sold in Costco and H-E-B stores along with other national retailers. At the time, Don Lee said in a release that it also planned to offer the product as a private label item and to other food brands. Beyond Meat is seeking millions of dollars in damages from Don Lee and its owners, Donald, Daniel and Brandon Goodman.

When reached for comment, Don Lee declined to disclose whether it is still producing the Better Than Beef Burger specifically, but confirmed it continues to manufacture plant-based burgers and the Better Than Beef Burger is listed on the company’s website. Costco subsequently also picked up Beyond Meat, now selling a family-sized pack of Beyond Meat burgers.

“We make branded and private label plant-based burgers for national and multinational food brands,” Don Lee spokesperson Danny Goodman said. “We’ve been an innovator and direct manufacturer of plant-based items since 2005. We’re a leading national manufacturer of these items and continue to expand our product lines.”

While Beyond Meat secured some wins this time around, Don Lee has also notched notable victories in the case. The court ruled in January 2020 that Beyond Meat is liable for over $600,000 in unpaid invoices after a judge ruled that Don Lee “proved the probable validity of its claim” that Beyond Meat breached its manufacturing contract with Don Lee.

As it looks ahead to next year’s trial, Don Lee is also seeking evidence from Beyond Meat co-founder and CEO Ethan Brown’s text messages. On August 20, Don Lee announced it had filed a motion to appoint a forensic examiner to assess allegedly deleted text messages relevant to the case belonging to Beyond Meat co-founder and CEO Ethan Brown. Don Lee claimed Brown had “outright ignored” an order to provide the text messages to the court.