Chipotle dodges investor lawsuit over portion size complaints

Chipotle Mexican Grill has faced nary shortage of lawsuits implicit the years, from food-safety crises to wage-and-hour disputes and shareholder claims.

This month, the fast-casual edifice concatenation came retired a victor successful court.

A national justice dismissed a securities people enactment suit accusing Chipotle of misleading investors astir information sizes and lawsuit dissatisfaction, arsenic archetypal reported successful Bloomberg Law.

In the ruling, the justice said the ailment did not amusement Chipotle made “materially mendacious oregon deceptive statements.”

On November 11, 2024, capitalist Michael Stradford filed a suit connected behalf of shareholders. The case, Stradford v. Chipotle Mexican Grill, Inc., et al., was filed successful the U.S. District Court for the Central District of California (Case No. 24-cv-02459).

Stradford’s ailment focused connected shareholders who purchased Chipotle banal oregon definite options betwixt February 8 and October 29, 2024. It claimed Chipotle had downplayed interior issues related to inconsistent information sizes.

Stradford asserted the complaints were fueling lawsuit backlash, mostly connected societal media. In his complaint, Stradford referenced viral posts showing customers accusing the concatenation of “skimping” connected portions and alleged that the inconsistent information sizes would impact margins and earnings.

Last year, then-CEO Brian Niccol disputed accusations of skimpy servings.

“First, determination was ne'er a directive to supply little to our customers,” helium said during a July 2024 net call, a fewer months earlier the suit was filed. “Generous information is simply a halfway marque equity of Chipotle. It ever has been, and it ever volition be.”

Nevertheless, Niccol said the complaints had led him to re-examine Chipotle’s practices crossed its operations.

“To beryllium much accordant crossed each 3,500 restaurants, we person focused successful connected those with outlier information scores based connected user surveys,” helium said. “We are re-emphasizing grooming and coaching astir ensuring we are consistently making bowls and burritos correctly.”

On December 18, Judge Sherilyn Peace Garnett of the U.S. District Court successful Los Angeles sided with Chipotle and dismissed the lawsuit.

Garnett said the plaintiff failed to conscionable the ineligible modular for securities fraud, noting that user complaints and social-media disapproval — adjacent erstwhile the posts spell viral — did not show that Chipotle knowingly misled investors oregon made mendacious statements with the intent to deceive.

Related: Chipotle sees concerning lawsuit trend

"The facts alleged bash not amusement Niccol and [food information serviceman Laurie] Schalow made a mendacious oregon misleading connection by denying that the Company had reduced the size of its portions," wrote Garnett, according to reporting successful The Independent.