CKE Says Proposal Preceded GB Foods Suit : Courts: It says it got no response to offer to expand the number of restaurants where Carl’s Jr. was testing the latter’s products.
A day before GB Foods filed a lawsuit against CKE Restaurants Inc., CKE offered to expand the number of Carl’s Jr. restaurants where GB Foods’ Green Burrito products were being tested, CKE’s chairman said Friday.
Chairman William P. Foley II said he made his proposal directly to William M. Theisen, chairman of GB Foods, on Wednesday but did not receive a response. On Thursday, GB Foods filed a $100-million lawsuit against CKE and Foley, alleging breach of contract in the testing of the so-called “dual-concept” restaurants selling both Green Burrito and Carl’s Jr. products.
Theisen said Friday that he would not respond directly to Foley’s assertion and reiterated the lawsuit’s allegations that CKE copied Green Burrito’s formula when it started its Picante Grill menu of Mexican-style food in an experiment at a Carl’s Jr. restaurant in Orange.
“We pioneered and developed our dual concept. We worked in good faith and did not know they were secretly copying it,” Theisen said.
The lawsuit, filed in Los Angeles County Superior Court, alleges that CKE misappropriated trade secrets, breached its contract with GB Foods and fraudulently misrepresented itself in launching the Picante Grill test days after the third dual Carl’s Jr.-Green Burrito restaurant had opened.
Foley said Picante Grill is only one of a number of experiments that the company is trying. He said he also wants to try dual-concept restaurants selling fish and chicken, or one with expanded breakfast offerings.
Foley said he proposed the expansion of the GB Foods experiment from three Carl’s Jr. locations to 10 “because we thought the concept deserved a larger test.”
“I had gone so far, earlier this week, as to talk to Willy Theisen and propose an expansion,” Foley said. “Then he sued us the next day.”
Reversing a two-day slide, GB Foods’ stock rose 75 cents a share to close at $5.75 in Friday’s Nasdaq trading. CKE dropped 50 cents to $6.75.