Shareholders of popular restaurant chain Chipolte Mexican Grill here in Arizona might be interested to know that one shareholder recently filed a lawsuit against the company with the hope of the suit becoming a class action case. The business litigation was filed on behalf of people who purchased shares in the company from Feb. 2015 through Jan. The suit alleges that Chipolte misled shareholders regarding its food safety controls.
During the time period cited in the complaint, Chipolte has been plagued with reports of customers contracting food borne illnesses. The problems seem to have begun with an outbreak of the norovirus (a gastrointestinal illness that is highly contagious) in California in Aug. 2015. A federal criminal investigation is being conducted regarding this incident.
During October and November of last year, approximately 50 people were stricken with E. Coli -- presumably after eating at several restaurant chains across nine states. In Dec. 2015, around 141 Boston College students exhibited symptoms consistent with norovirus. Most of them claimed to have eaten at a Chipolte restaurant outside the campus.
As a result, the company's stock seems to be in a free fall, which was the impetus for the lawsuit. The shareholder who filed it alleges that he and others have already lost a significant amount of money for which he believes the company should compensate its shareholders. In the meantime, the company is in jeopardy.
No response from the company was available. As would be the case with any Arizona company in a similar position, Chipolte will need to determine how it will respond not only to this business litigation but also to federal inquiries. No company facing issues such as these should attempt to deal with them without the benefit of legal counsel.
Source: The Huffington Post, "Chipotle Sued For Misleading Investors Over Food Safety", Alexander C. Kaufman, Jan. 8, 2016