DENVER – Shareholders filed a class action lawsuit against Chipotle, claiming the company deceived them with misleading information that the company had fixed its problems with food safety and now stocks are sinking.
This week, Chipotle closed a restaurant in Virginia after customers became ill from eating at the store. An inspection through the Virginia Health Department confirmed one customer had norovirus after eating at Chipotle.
Then in Dallas, customers said mice dropped from the ceiling while they were eating. One customer took cell phone video, documenting two mice on the floor and another climbing the wall.
Chipotle’s stock finished Thursday down more than 5 percent. And in the last five days, stocks are down more than 10 percent.
In the lawsuit, shareholders said Chipotle lead customers and the investing public to believe that it fixed it’s problems with food safety following the 2015 outbreaks of norovirus and e.coli at about a dozen restaurants. The lawsuit said based on assurances from the company, people continued to buy and sell Chipotle stocks.
Stockholders say this week’s news out of Dallas and Virginia proves food safety issues continue to exist at Chipotle and the company hid that information from the public to keep stock prices high. As a result, shareholders said they bought stocks at inflated prices. Had they known the truth, the stockholder said they would not have invested in Chipotle. Now stocks are going down and stockholders are suing Chipotle for their losses.
Metro State University Professor Nicolas Cachanosky said while it will be difficult for Chipotle to bounce back, it will.
“It might take a long time. It depends on what Chipotle does fast,” said Cachanosky. “I don’t know what they are going to go but I wouldn’t be surprised if you see changes in the high management of the company.”
“Things like this happen, the problem with Chipotle is that it happened to them twice and that’s what they need to change,” said Cachanosky.
A Chipotle spokesperson sent FOX31 a response to the lawsuit.
“As a matter of policy, we don’t discuss details surrounding pending legal actions, though I would note that a lawsuit is simply allegation and is proof of nothing,” said Chris Arnold .