Chipotle sued for allegedly misleading investors about food safety

Posted at 5:03 PM, Jan 08, 2016
and last updated 2016-01-08 17:10:46-05

NEW YORK — Chipotle Mexican Grill was sued on Friday for allegedly misleading investors about its food safety controls, according to Reuters.

Chipotle failed to disclose that its “quality controls were inadequate to safeguard consumer and employee health,” according to a civil lawsuit Reuters obtained, filed in U.S. District Court for the Southern District of New York.

In recent months, more than 50 E. coli cases have been linked to Chipotle restaurants across the U.S., including in New York. The chain temporarily closed more than 40 restaurants after the outbreaks were reported, but it wasn’t enough to prevent people to stop eating at restaurants.

Because of the outbreaks, the company’s stocks have dramatically dropped, according to the lawsuit.

Chipotle declined to comment to Reuters regarding the lawsuit.

The burrito chain has been slammed with bad news since October.

Its shares dropped 35 percent since the end of October, when the first E. coli cases were first reported. This week, they were at their lowest level in ore than two years, Reuters reported.

On Wednesday, Chipotle was hit with a Federal Grand Jury Subpoena for a norovirus outbreak in California that happened last August.

Chipotle founder Steve Ells publicly apologized for the E. coli outbreak in December and vowed the change the restaurant’s preparation and cooking methods.

“It’s a really tough time, I’m sorry for the people who got sick,” Ells said on “The Today Show.”

Ells said Chipotle “will be the safest restaurant to eat at” after it implements its new food safety practices.