A federal lawsuit filed against Mexican fast-food chain Chipotle by its shareholders alleges that company leaders failed in their response to a series of food-borne illness outbreaks that sickened customers across the country. This lawsuit was filed by shareholders who accuse the top company brass of unjust enrichment while making a series of missteps. The company’s two co-CEOs earned $14 million each last year. They and eight other executives are named in the lawsuit, according to The Denver Post.
Although this particular lawsuit focuses on the alleged business failures of the firm and its leaders – not the 500-plus people who were actually sickened in these E. Coli outbreaks – the filing does shed light on the company’s reportedly poor food safety procedures and lacking response once serious problems were exposed. The company’s stock lost nearly half of its value from the time the outbreaks become public in August 2015 (when shares were at $757) to just last week (when shares were at $395). In addition to seeking monetary damages for shareholders, plaintiffs are demanding better internal policies that will ensure the company complies with food safety laws in the future.
The company operates nearly 2,000 restaurants in the U.S. and has more than a dozen abroad. The company last year and into this year was embroiled in a food safety scandal after hundreds of people got sick. One of those cases, referenced in this lawsuit, was a norovirus outbreak in Washington state. The company has never publicly acknowledged that particular outbreak, in which it is alleged a supervisor ordered a sick worker to come in to work – even though she was sick – unless she could find a replacement. The worker spent four hours on the clock, vomiting. This, a state health inspector later noted, was “the smoking gun” in the outbreak that ensued, causing at least 234 people who dined at the restaurant to become sick with acute gastrointestinal illness. Continue reading