Last year ex-Chipotle employee chef Kyle Connaughton sued Chipotle and its CEO Steve Ells over an alleged scheme to rip off concepts from David Chang's Momofuku empire. As the court records show, on January 28 New York State Supreme Court judge Shirley Werner Kornreich dismissed the case, and as of yesterday the transcript of the court proceedings is now a matter of public record. Said the judge: "I don't see the damages. I believe everything is speculative."
Here's a little refresher on the lawsuit: It alleges that Connaughton was purposefully lied to by Ells concerning some consulting David Chang and Momofuku had done on a Chipotle-style ramen chain, before pulling out in 2008. Connaughton claims he only discovered Chang's prior involvement sometime in October 2012, and sometime after that discovery was fired. He was seeking damages and promised equity in Chipotle.
As the transcript below shows, the judge summarized the suit and its claims before listening to the defense attorney explain Chipotle's and Ells' point of view. The attorney argued that because Connaughton was "an employee at-will, he simply cannot sustain an action for fraudelent inducement claim." (The fraudulent inducement being that Connaughton didn't know about the Momofuku ramen ideas when he entered into business with Chipotle.) Furthermore, the defense argues that Connaughton failed to demonstrate that Chipotle had a duty to even disclose that information.
The defense also suggests that Connaughton has sustained no "pecuniary damages" or financial damages because of Chipotle. On the subject of Connaughton's stocks, the attorney says: "But that's talking out of both sides of the mouth, your Honor. On the one hand he is saying, I should get the benefit of the warranty and bargain. But on the other hand, I never should have been in that bargain because they never disclosed everything to me." The defense concluded their argument with the idea that all of Connaughton's damages were tied to the loss of his job, and that the rest of his financial claims were speculative (a possible lawsuit from Momofuku, money from other jobs he could have had instead of working with Chipotle).
Connaughton's attorney then addressed the bench, and it was sort of a rout. The judge shoots down point after point, agreeing with the defense that Connaughton's damages from missed business opportunities are speculative and that his employment with Chipotle was not based on fraudulence by omission.
Of the case, the judge said "it creates a mini-trial of issues that are not here," most of which relate to the alleged theft of David Chang's ramen concept. After announcing that the motion to dismiss, the judge said: "But most important to me is, also, I don't see the damages. I believe everything is speculative." Go, read the transcript:
· Transcript of Proceedings [Supreme Court of the State of NY]
· Here's the Chipotle Ramen Concept Lawsuit, in Full [-E-]
· All Chipotle Coverage on Eater [-E-]