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Chipotle’s Food Safety Lawsuit Dismissed

A judge says there’s insufficient evidence the burrito chain lied to shareholders

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Chipotle Becomes First Non-GMO US Restaurant Chain Joe Raedle/Getty Images

Finally, a victory for Chipotle: A lawsuit claiming the company deceived shareholders about food safety has been dismissed, Reuters reports. The civil suit, filed in January 2016 in the U.S. District Court of Southern New York, claimed the burrito chain lied or exaggerated about how seriously it actually took food safety relative to how seriously it told investors and the public it took food safety.

The suit alleged that the chain’s 2015 series of food-borne illness outbreaks were at least partially caused by the company’s decision to, in late 2014, shift the process of prepping produce from central commissary kitchens to individual locations. The suit also claimed that “Chipotle sought to shift the blame for these food-borne illnesses to other entities, including one of its own suppliers, even when such conclusions were not supported by the available scientific evidence.”

The judge, siding with Chipotle, ruled there was not enough evidence to prove Chipotle had misled shareholders about the risk of potential outbreaks or the seriousness of its food safety problems.

The suit also accused Chipotle executives, including CEO Steve Ells, of suspiciously selling off millions of dollars worth of stock a few months prior to the food safety outbreaks, suggesting that perhaps they knew something was coming that would cause the restaurant’s stock price to plummet. The judge also rejected those claims.

Reached for comment, Chipotle says it does not discuss pending litigation.

Chipotle has had its fair share of courtroom battles lately: Last year, it settled out of court with 100 customers who were sickened by E. coli or norovirus over the course of its food safety disaster that began in fall 2015. It was also ordered to pay $600,000 in a gender discrimination lawsuit, and more recently, sued for $2 billion for allegedly using a customer’s photo without permission.

The burrito chain recently revealed to investors that its profits plummeted by 95 percent in 2016 compared to the year prior, a sinkhole it’s been attempting to climb out of with pumped-up advertising campaigns, new menu items, and more focus on mobile ordering. Check out the judge’s 47-page opinion on the shareholder lawsuit, below:

Chipotle Lawsuit Over Food Safety, Outbreaks Is Dismissed [Reuters]
Chipotle Sued Again, This Time for Misleading Investors [E]
Tracking Chipotle’s Food Safety Disaster [E]

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