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Outbreaks Made Chipotle Shareholders Sick, Too

MANHATTAN (CN) - Chipotle faces a federal shareholder class action lawsuit after authorities linked the burrito giant to four separate health scares around the country last year.

The fast-food chain announced the first outbreak in August 2015 after 100 employees and customers in one of its California restaurants were infected with the norovirus.

On Sept. 4, 2015, Ventura County health inspectors blamed the outbreak on dirty and inoperative equipment at a Chipotle location in Simi Valley, Calif.

Weeks after that first incident, 64 people fell ill in Minnesota from tomatoes at Chipotle restaurants that had been tainted with salmonella. Additionally, in November 2015 the company closed all its restaurants in the Portland, Ore., and Seattle areas after customers reported 20 cases of E. coli.

The latest health scare occurred just last month when more than 140 Boston College students fell ill from norovirus after eating at a Chipotle.

Though negligence lawsuits over these outbreaks have been piling up for the past five months, the lawsuit lead plaintiff Susie Ong filed Friday marks the first securities case against the Mexican restaurant chain over the illnesses.

Ong says Chipotle's stock has dropped nearly 45 percent since August 2015.

In addition to claiming that Chipotle had inadequate quality controls to prevent four separate outbreaks of salmonella and norovirus, Ong says the company misled investors about the extent of those outbreaks.

Ong's suit also names co-CEOs Steven Ellis and Montgomery Moran as defendants, as well as CFO John Hartung.

Though Chipotle stock was trading at about $745 per share on Aug. 18, 2015, the number fell to roughly $548 on Dec. 9, 2015, according to the 19-page complaint.

Ong says Chipotle did not adequately test its quality-control programs after the initial health scares.

After the Minnesota salmonella outbreak in November, the company issued a press release stating it would sanitize all its restaurants and test all produce and fresh meat. However, the following month the Boston norovirus outbreak occurred.

Enhancements to Chipotle's food-safety programs that it announced on Dec. 4 included partnering with Seattle-based IEH Laboratories and Consulting Group to bolster food safety. As part of the new program, the company initiated end-of-shelf-life testing for ingredients to ensure food quality.

Ong's lawsuit came two days after Chipotle announced that it faces a federal investigation regarding the Simi Valley norovirus outbreak. The company also announced a decline in sales over the last quarter of about 30 percent.

Since its opening in 1993, Chipotle now has nearly 2,000 restaurants under its belt. Its slogan is "putting the food back in fast food."

A spokesman for Chipotle declined to comment, citing a company about ongoing litigation.

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