Chipotle shareholders are sickened by the company’s failure to prevent food borne illness outbreaks in franchised restaurants, with more than 500 customers suffering from various illnesses as a result of poor hygienic standards.
On Monday, August 8th, a class action lawsuit was filed in U.S. District Court in Denver accusing Chipotle executives, its board of directors and managers of unjust enrichment. The suit seeks compensation from Chipotle co-CEOs Steve Ells and Montgomery Moran, who each earned almost $14 million in 2015. In addition to compensation, the lawsuit seeks changes to internal procedures at Chipotle and corporate-governance reforms to protect shareholders.
The lawsuit makes reference to a number of instances in which Chipotle inexplicably dropped the ball in taking adequate precautions against food borne illness:
- In August 2015, a supervisor in the Hazell Dell, Washington location ordered an employee who called in sick to come to work or find a replacement. The employee went to work for four hours while vomiting. A norovirus outbreak soon followed. A state health inspector was quoted as calling this, “one of the proverbial smoking guns for this outbreak.”
- Also in August 2015, Chipotle failed to advise California health advisors about two employees who suffered “acute gastrointestinal illness” during a food borne illness outbreak in Simi Valley. More than 234 people who dined at the restaurant were thereafter sickened by another norovirus outbreak.
- In August and September 2015, a salmonella outbreak found in tomatoes sickened 64 people who dined in 22 Chipotle restaurants in Minnesota.
- 53 people in nine states across the country were sickened by an E. coli outbreak that began last October. The company did not bother to recognize the outbreak until November 3 when it closed 43 restaurants in Oregon and Washington. The company also posted signs on the stores saying the closures were due to equipment or supply issues.
- On December 4, Chipotle publicized that it had instituted a program to eliminate or mitigate risks of food borne illness to near zero. A mere four days later, a norovirus outbreaks sickened 141 Boston College students who ate at a nearby restaurant in Cleveland Circle. Health inspectors cited the restaurant for health hazards including keeping chicken and steak below required temperatures.
The class action alleges that Chipotle issued false and misleading statements about the company’s food-safety procedures, including its “Food with Integrity” slogan. It further alleges that the company failed to implement and enforce effective internal controls to enforce food and customer safety.
At the end of 2015, according to the lawsuit, the company operated 1,971 restaurants in the United States, 11 in Canada, seven in England, four in France and one in Germany.
Harford, P.C., represents a number of claimants sickened by food borne illness. If you have any questions or concerns, please call us today at (212) 390-8983.
We are here to help.
