Chipotle Defends Itself Against Chef’s Appeal

ALBANY, N.Y. (CN) — A chef’s attorney appeared to struggle a bit Tuesday as he tried to tell the New York Court of Appeals how much money his client lost from what he called fraudulent inducement from burrito chain Chipotle.

Kyle Connaughton, who was featured in two TV cooking shows and competed on the Food Network’s “Iron Chef,” was hired by Chipotle in 2010 as an at-will employee after he pitched his idea for a ramen restaurant.

To commit to the deal, Connaughton had to bail on two other possible deals with restaurants, according to his attorney Daniel Kaiser.

“In the complaint, there is reference to two other restaurant organizations that he was dealing with at the same time that he was dealing with the Chipotle organization,” Kaiser said. “Then he forewent those discussions in order to take the Chipotle opportunity.”

Connaughton’s new job lasted until he discovered that Chipotle CEO Steve Ells had previously worked with David Chang on a ramen restaurant concept, but that that collaboration fell apart.

Chang went on to create the ramen franchise Momofuku, but Ells continued his plan to create a ramen franchise — without informing Connaughton that he was working on an idea to which Chang already had contributed, according to Connaughton’s complaint.

Connaughton said that when he learned about the previous deal and confronted Ells, he was fired. He sued Chipotle, seeking compensatory and punitive damages for fraud, lost business opportunities, damage to reputation and failure to deliver Chipotle stock he had been promised.

The New York Supreme Court’s Appellate Division dismissed the case, finding that Connaughton had failed to establish that Chipotle’s alleged fraud had caused him any financial loss.

Connaughton appealed to the state’s highest court, the Court of Appeals, saying he’d sacrificed other business opportunities to work for Chipotle, and that he had done so because the deal with Chang was concealed from him.

But the Court of Appeals on Tuesday seemed skeptical that Connaughton could quantify his losses.

“He didn’t know if he would have ever gotten those interests,” Appeals Court Judge Jenny Rivera said. “How do you measure those damages?”

Chipotle attorney Jean-Claude Mazzola applied that argument to Connaughton’s defamation claim.

“If my reputation is damaged, I know it’s damaged,” Mazzola said. “If you look at his complaint, all it says, is ‘would,’ ‘could’ and ‘should.’ There’s no definitives.”

Judge Sheila Abdus-Salaam seemed to agree with Mazzola.

“Loss of business opportunity in itself is not damages,” she said. “People give up opportunities every day.”

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