McDonald’s Sues Former C.E.O. Steve Easterbrook

A lawyer for Mr. Easterbrook didn’t respond to requests for comment on Monday.

McDonald’s lawsuit also raises new questions, however, about how diligent it was in looking into Mr. Easterbrook’s conduct before dismissing him with a generous compensation package. It acknowledges, for instance, that the initial review did not include a thorough search of the executive’s email account.

“One would think that it would be internal investigation 101 to look at all electronic records right away,” said Brandon L. Garrett, a professor who specializes in corporate criminal law at Duke University School of Law. “The concern, if an investigation doesn’t look at emails, is that it was a halfhearted investigation.”

Until last fall, Mr. Easterbrook, a native of Watford, England, was regarded as something of a savior at McDonald’s. He had worked at the company for nearly two decades before taking its helm in March 2015. The fast-food chain was in a financial slump. Mr. Easterbrook streamlined its businesses, introduced technological innovations like touch-screen ordering and delighted customers by offering all-day breakfasts. The company’s shares roughly doubled during his tenure.

But in October 2019, a McDonald’s employee notified the company that she was engaged in an inappropriate relationship with Mr. Easterbrook, according to a person familiar with the company’s investigation. The employee told the company that she was worried that she would end up getting punished for the monthlong consensual relationship, which consisted of sexually explicit text messages, photographs and at least one FaceTime call with him, but was not physical.

Outside lawyers for McDonald’s interviewed Mr. Easterbrook, who confirmed the employee’s account. He assured the investigators that he had never engaged in a sexual relationship with an employee.

The lawyers examined Mr. Easterbrook’s company-issued iPhone 10 and his iCloud account, but did not find evidence of additional misconduct, according to the person familiar with the investigation. They did not review his electronic communications that were stored on McDonald’s computer servers.

The board of directors decided to fire him. The question that the directors considered was whether he would be fired “for cause” — in other words, for an offense such as dishonesty or committing a crime. It was a crucial determination. If Mr. Easterbrook was fired for cause, he would have to relinquish previously awarded compensation, including stock options that he was not yet eligible to cash in.