A class action lawsuit has been filed against Chipotle Mexican Grill, accusing the company of providing misleading information to investors. The suit, filed in U.S. District Court by New York-based investor Susie Ong, states the troubled chain restaurant made “materially false and misleading statements” to investors, hid essential information regarding lack of quality controls and lied in public statements following an outbreak of customer illnesses.
The Denver-based company, Chairman M. Steven Ells, President Montgomery F. Moran and CFO John R. Hartung were named as Defendants in the lawsuit. The lawsuit cites an August incident in Simi Valley, Calif. that led to about 100 customers becoming ill from norovirus. It’s alleged:
Health inspectors said that the restaurant in question contained dirty and inoperative equipment, equipment directly linked to the sewer, and other sanitary and health violations.
Chipotle had disclosed on Jan. 13 it had been served with a subpoena as part of a federal criminal investigation. The subpoena was issued as part of an inquiry by the U.S. Food and Drug Administration (FDA) Office of Criminal Investigations. Problems for the company began in August when 64 customers in Minnesota were sickened by salmonella. An E. coli outbreak in October and November spread over nine states, sickening 53 customers. In December, 140 college students were infected with norovirus in Boston after dining at a Chipotle location. The company reported a 14.6 percent decline in sales in the final quarter of 2015, claiming $14 million to $16 million will be allotted to dealing with the contamination issues.