Chipotle faces investor lawsuit over non-disclosure of food quality control amid E. Coli outbreak
After a food-borne illness led to the closure of its restaurant chains on several states in the US, Chipotle Mexican Grill is facing investor lawsuit for failing to disclose food quality control.
BBC News reported that investors accused the popular Mexican cuisine restaurant that "Its quality controls were inadequate to safeguard consumer and employee health." This led to the plummet of the company's stock, as stated in the lawsuit. Besides the investment lawsuit, it has already been facing individual lawsuits from people affected by E. Coli.
According to Inquisitr, the investors have collaborated to file a class-action lawsuit against the restaurant chain, claiming that the food safety measures of the company were misleading. The civil lawsuit was filed in the US District Court of the Southern District of New York. Chipotle CEOs, Steve Ells and Monty Moran, were named personal co-defendants in the lawsuit. The investors who banned together include those who bought stocks from the company between February 2015 and January 2016.
UPI wrote that same-store sales for the Mexican restaurant chain plunged 14.6 percent during the fourth quarter last year due to the outbreak. The class-action lawsuit will start after the company announced Wednesday that a subpoena was filed against it for a federal criminal investigation from the US Food and Drug Administration's Office of Criminal Investigation.
The company's controversial E. Coli problem started in August when 64 people in Minnesota were sickened after eating in the restaurant chain. In October and November, the E. Coli outbreak spread to nine states, affecting 53 customers. The numbers kept rising as 140 college students got infected with the norovirus at Boston in December after eating at the restaurant.
The company will allot about $14 million to $16 million to address the problems surrounding the contaminations. Chipotle's stock prices dropped by 45 percent while its sales declined by 30 percent since December because of the issue.