Chipotle Subpoenaed In Criminal Investigation; Sales Plunge
DETROIT (WWJ/AP) - Popular Mexican food chain Chipotle has been served with a federal subpoena as part of a criminal investigation tied to a norovirus outbreak at one of its restaurants.
The subpoena, received last month, requires the fast casual company to produce a broad range of documents tied to a restaurant in Simi Valley, California, where a norovirus outbreak took place this past August, the company said in a regulatory filing Wednesday.
The investigation is being conducted by the U.S. Attorney's Office for the Central District of California in conjunction with the Food and Drug Administration's Office of Criminal Investigations, Chipotle said in a filing with the Securities and Exchange Commission.
Representatives from those offices were not immediately available for comment.
The disclosure comes as Chipotle Mexican Grill Inc. reels from an E. coli outbreak linked to its restaurants in late October and November. That was followed by a separate norovirus outbreak at a restaurant in Boston. The cases received far more national media attention than the norovirus outbreak in California, and the company's sales have plunged.
WWJ Legal Analyst Charlie Langton says that there's a very good chance of this becoming a bigger scandal than it is right now — with multiple lawsuits possible.
"If you eat something at a restaurant and it's not edible, you get sick, yes, you can sue," Langton said. "It's a personal injury case, very common; and they could be subject to your pain and suffering, your lost wages, your medical bills."
"When something like this breaks out on a national level, yeah, something happens," he added. "...It's already gotten the attention of the feds. Criminal, possible...civil, I would think for sure. No doubt in my mind, some heads are gonna roll at Chipotle."
Sales fell 30 percent at established locations in December, Chipotle said Wednesday.
The Denver company said sales for the full fourth quarter were down 14.6 percent at established locations, marking the first decline since the company went public in 2006. It also cut its profit outlook for the period.
Last month, Chipotle said it could no longer reasonably predict sales trends given the food scares. It retracted its sales forecast for 2016.
In its regulatory filing Wednesday, the company said it could not determine or predict the amount of any "fines, penalties or further liabilities" it might face in connection with the federal investigation.
A Chipotle spokesman, Chris Arnold, said in an email the company does not discuss pending litigation, but that it intends to cooperate fully with the investigation.
The emergence of a criminal investigation after a norovirus outbreak is unusual, said Bill Marler, a food safety lawyer representing Chipotle customers who were sickened in Simi Valley.
Outbreaks at restaurants are typically caused by an infected employee.
Marler couldn't think of a reason for a federal investigation, other than employment violations.
To rehabilitate its image, Chipotle has taken out full-page ads apologizing to customers in dozens of newspapers around the country. It also vowed changes to step up food safety at its restaurants, in part by tweaking its cooking methods and increasing testing of meat and produce.
Co-CEO Steve Ells has said the company will likely never know what ingredient was to blame for the E. coli cases.
Chipotle has more than a dozen locations across metro Detroit and about 1,600 nationwide. So far there have been no outbreaks associated with Chipotle restaurants in Michigan.
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