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Chipotle sued for misleading investors over food safety

Posted On: Jan. 8, 2016 12:00 AM CST

Chipotle sued for misleading investors over food safety

(Reuters) — Chipotle Mexican Grill Inc., under scrutiny for months over outbreaks of foodborne illness linked to its restaurants across several U.S. states, was sued on Friday for allegedly misleading investors about its food safety controls.

The burrito chain failed to disclose that its "quality controls were inadequate to safeguard consumer and employee health," according to a civil lawsuit filed in U.S. District Court for the Southern District of New York.

As a result, the company's stock price has been battered by the outbreaks of foodborne illnesses linked to its stores, the lawsuit said.

Chipotle declined to comment.

The lawsuit seeks damages on behalf of investors who acquired Chipotle shares from February 2015 to January 2016.

It adds another headache for the restaurant chain, whose sales have slumped since an E. coli outbreak sickened more than 50 people in nine states in October and November

Shares this week fell to their lowest level in more than two years. They are down 35% since the end of October.

In a filing on Wednesday, Chipotle said same-restaurant sales for December were down 30%. The company also said it had been served with a subpoena in a federal criminal probe linked to norovirus cases in California last year.

The case is Susie Ong v. Chipotle et al., U.S. District Court, Southern District of New York, No. 16-00141.