It seems the new year is not starting out too well for Chipotle Mexican Grill. The popular restaurant chain is now the subject of another lawsuit filed by its own investors.
The lawsuit was filed three days ago by Susie Ong and has named Chipotle Mexican Grill Chairman and Co-Chief Executive Officer Steve Ells, Co-Chief Executive Officer Montgomery Moran and Chief Financial Officer John Hartung as co-defendants. According to the lawsuit, the Chipotle management had made some “materially false and misleading statements” with regard to the company’s policies on operations, compliance and business. Specifically, the lawsuit alleges that the defendants have failed to disclose that the restaurant chain’s quality controls were “inadequate” and not compliant of consumer and workplace safety regulations. Because of this, the lawsuit believes that the public statements made by Chipotle have not been accurate.
The health and issues in Chipotle began last August 18, 2015 when as much as 100 customers and employees from a Chipotle restaurant in Simi Valley, California had fallen ill. The following month, the Ventura County Environmental Health Division had said these reported illnesses were the result of a norovirus outbreak. Moreover, an inspection of the said restaurant by the health investors also revealed some dirty and inoperative equipment as well as equipment that is directly linked to the sewer. The Chipotle stock fell by 3.6 percent when the news broke out.
Around the same time, as much as 64 people have also reportedly fallen ill after dining at various Chipotle locations in Minnesota. On September 17, 2015, the Minnesota Department of Health had said that these illnesses were salmonella, and that they were linked to tomatoes that have been supplied to 22 Chipotle locations. These affected restaurants had changed tomato suppliers, but the lawsuit alleges that they had never disclosed this information.
Meanwhile, last December, as much as 140 students from Boston College had fallen ill after dining in a Chipotle restaurant in Brighton, Massachusetts. Days later, health officials had confirmed that the said students got infected with norovirus.
In a recent SEC filing, Chipotle also admitted that it had received a subpoena from the U.S. District Court for the Central District of California as an official investigation has been launched into the outbreaks that happened in its restaurants last year in cooperation with the U.S. Food and Drug Administration’s Office of Criminal Investigations. To this, Chipotle said they “intend to fully cooperate in the investigation.”