Chipotle Investors Class Action Lawsuit Filed Over Food Poisoning Outbreaks

Following a series of food poisoning outbreaks linked to Chipotle restaurants in several stats, an investor class action lawsuit was filed against the chain, indicating that the company lied about its food safety measures, artificially inflating the stock’s value. 

The complaint was filed by shareholder Susie Ong in the U.S. District Court for the Southern District of New York on January 8, seeking class action status on behalf of other investors.

According to the Chipotle lawsuit, following the food poisoning outbreaks, which have occurred regularly since August 2015, Mexican food chain’s stock price fell from more than $745 per share in August, to $548 per share by December 2015. As of last week, it was down to $433 per share.

As a result of concerns about Chipotle’s food safety, the company saw a 14.6% drop in sales in the last quarter of 2015.

“Throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies,” the lawsuit states. “Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) Chipotle’s quality controls were not in compliance with applicable consumer and workplace safety regulations; (ii) Chipotle’s quality controls were inadequate to safeguard consumer and employee health; and (iii) as a result of the foregoing, Chipotle’s public statements were materially false and misleading at all relevant times.”

The lawsuit points out that investigations have revealed dirty and unsanitary conditions at Chipotle restaurants, which the company has maintained are held to high cleanliness standards.

“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the lawsuit states.

The case was filed only days after Chipotle officials announced they had been issued a federal grand jury subpoena regarding a criminal investigation into a norovirus outbreak that sickened at least 100 customers who ate at a Simi Valley, California, restaurant in August 2015.

That outbreak was preceded by a salmonella food poisoning outbreak that sickened 64 customers in Minnesota that same month. It was then followed by an E. coli outbreak in October and November, which sickened at least 53 people in nine states; another outbreak that sickened 140 patrons of a Boston restaurant, and reports of five other norovirus illnesses scattered across three states, all of whom also were traced back to Chipotle eateries.

The CDC estimates that roughly 48 million Americans are sickened by foodborne illnesses each year, causing around 130,000 hospitalizations and 3,000 deaths. Foodborne illnesses, E. coli and norovirus in particular, are easily transmitted by consuming, touching, drinking, or by some sort of physical transfer of the bacteria.

A number of Chipotle food poisoning lawsuits have also been filed against the nationwide chain by some consumers who fell ill.