An investor has filed a lawsuit against the Beyond Meat company, which makes plant-based imitation beef, pork and poultry products, for allegedly minimizing a dispute with a former food processor.
The complaint requests class action status, which would allow other stockholders to join in the litigation and seek compensation for a drop in Beyond Meat’s share prices.
According to the complaint, Beyond Meat didn’t fully disclose its legal vulnerabilities in an earlier lawsuit filed by Don Lee Farms, a former manufacturing partner that accused the company of stealing trade secrets.
Don Lee Farms also made other allegations, such as claiming that Beyond Meat had supplied its food processing facility with ingredients contaminated with plastic, cardboard, a metal nozzle and an unidentified white powder.
The former processor also claimed that Beyond Meat had falsified a food safety audit and that it breached a contract by shifting its business to another manufacturer.
In a cross-complaint, Beyond Meat and its new manufacturing partner denied these claims and accused Don Lee Farms of violating its contract by contaminating products with “salmonella and other foreign objects.”
While the legal conflict began about two years before Beyond Meat began selling its shares to the public in 2019, the new stockholders’ lawsuit alleges the food company made “generic disclaimers” about the litigation that didn’t fully reveal its “actual known risks.”
According to the complaint, the truth began to emerge after Don Lee Farms issued a press release in late January that touted a couple recent preliminary legal rulings that worked in the former manufacturing partner’s favor.
The press release caused Beyond Meat’s “artificially inflated” stock price to tumble $4.63, or 3.71%, to $120.12 by the next day, the complaint said. The company’s stock has recently traded below $120 per share.
The investor lawsuit argues that Beyond Meat has made materially false and misleading statements in violation of federal securities laws and seeks compensation for damages in an unspecified amount.
A spokesperson for Beyond Meat did not respond to requests for comment.
According to Beyond Meat’s financial filings, the company raised more than $250 million last year with its initiation public offering of stock. The company acknowledges that Don Lee Farms may claim ownership in a portion of Beyond Meat’s intellectual property and the firm’s value.
In its most recent financial disclosure, the company reported revenues of nearly $200 million during the first nine months of 2019, up from about $56 million at the same point the previous year. The company lost nearly $12 million during the first three quarters of 2019, down from more than $22 million the previous year.