New York’s top court on Tuesday unanimously rejected a lawsuit filed by celebrity chef Kyle Connaughton, who claimed Chipotle Mexican Grill Inc. tried to dupe him into a plan to steal another chef’s concept for a ramen restaurant chain.
The Court of Appeals, in a 5-0 decision, said Connaughton, a British TV chef and former Chipotle employee, failed to state a sufficient legal cause of action against the Mexican restaurant, didn’t show any out-of-pocket losses and didn’t demonstrate any “recoverable harm.” In doing so, the top court upheld two lower court rulings.
“We affirm because plaintiff failed to adequately plead compensable damages,” Judge Jenny Rivera wrote for the court.
Connaughton said he began working on a concept for a ramen restaurant chain, which Chipotle CEO Steven Ells agreed to purchase. A lease was signed in 2012 for a flagship restaurant in Manhattan.
Less than a month later, Connaughton learned that Ells already had signed an agreement with Momofuku chef David Chang to develop a similar restaurant, according to court documents.
Connaughton said other Chipotle executives told him Chang would sue when the Mexican restaurant chain opened a ramen restaurant run by Connaughton.
The deal with Chang fell apart when financial terms couldn’t be reached, the Court of Appeals said.
Ells told Connaughton to continue working on the restaurant concept, according to Connaughton’s suit. Connaughton refused and was fired, and sued the company for “fraudulent inducement.”
He said continuing with the proposed chain would have subjected him personally to any lawsuit brought by Chang. Connaughton said he lost the value of his Chipotle equity. He also cited “lost business opportunities in connection with his ramen concept.”
But the court noted that state law generally requires plaintiffs to show actual losses and that they cannot be compensated for “what they might have gained.” Lost opportunities aren’t “recoverable” damages, the court said.
Further, Connaughton didn’t show that he was “unemployable as a result of his association with Chipotle.”
Connaughton’s attorney said he was disappointed that court focused “exclusively” on the issue of tangible damages and not whether fraud occurred.
“The court didn’t make any decision as to whether fraud actually occured,” said Daniel Kaiser, who argued for Connaughton at the Court of Appeals in March. “He walked away from other opportunities based on the reliances of information by Chipotle. . . . But courts tend to be very conservative on these types of claims and I think that conservatism was expressed in this decision.”
Chipotle spokesman Chris Arnold countered: “From the outset, we maintained that we had done nothing wrong, and we are pleased to have this matter behind us. Ultimately, we believe the court reached the right conclusion.”