Continue to Site

    Lawsuit Claiming Chipotle Hid Food-Safety Outbreaks Dismissed

  • The lawsuit was attempting to resurrect a previously dismissed case.

    flickr: Mike Mozart
    Chipotle won a dismissal in a investor lawsuit on Thursday.

    Back in early November, Chipotle shareholders tried to revive a lawsuit that claimed the fast-casual chain knew about E. coli outbreaks dating back to 2014, well before its food-safety crisis reached public conscious. The lawsuit, outlined in a letter from attorney David Rosenfeld to U.S. Judge Katherine Polk Failla, said that Freedom of Information Act requests to the Centers for Disease Control and Prevention showed an E. coli outbreak involving 12 people in late 2014. Eight of which were Chipotle customers. It was originally filed the previous year and dismissed in March. But Rosenfeld felt the new information could resurrect the lawsuit.

    That didn’t turn out to be the case. Chipotle won the dismissal of the investor lawsuit Thursday (March 22). Polk Failla, in New York City, said that while those outbreaks were concerning, the lawsuit didn’t support its claim that Chipotle defrauded investors.

    According to Reuters, Polk Failla wrote she was "as concerned as the parties about foodborne illness outbreaks," but that "not all adverse events are the product of corporate misfeasance or nonfeasance."

    The lawsuit can’t be filed again since Failla dismissed it with prejudice. She also dismissed the earlier version in March.

    In the 2016 lawsuit, investors argued that Chipotle failed to disclose changes in its food handling practices in statements made to investors in 2015 and early 2016. Investors also said Chipotle didn’t share how it planned to deal with the 14-state E. coli, salmonella, and norovirus outbreaks, which made headlines when 42 locations in the Pacific Northwest briefly shut down in 2015, and dropped Chipotle’s stock price 47 percent in about five months. The chain hit an August 2016 peak above $758. On Thursday, Chipotle was trading for $338.42.

    Polk Failla said the new lawsuit didn’t pinpoint any specific instances where Chipotle or its executives knowingly made statements or failed to disclose information to investors on these claims.

    Read More