Chipotle hit with federal subpoena over California norovirus outbreak
(Reuters) -- Chipotle Mexican Grill Inc, under scrutiny for months over outbreaks of foodborne illness across several U.S. states, said on Wednesday it was served with a subpoena in a federal criminal probe linked to a norovirus case in California last year.
Shares of the burrito chain fell more than 5 percent to $424.95, their lowest in more than two years, as the Denver-based company grapples with a wave of norovirus and E. coli outbreaks that have sickened customers and battered sales.
The company in a filing also projected a 14.6 percent plunge in fourth-quarter same-store sales, compared with a previously estimated 8-11 percent drop, which would be the first such decline in the company's history.
BROAD RANGE OF DOCUMENTS
Chipotle said the subpoena was served in December. It requires the company to produce a broad range of documents related to the August norovirus incident at its restaurant in Simi Valley, California, which sickened more than 200 people, including 18 workers.
In September, two California residents sued Chipotle for damages in U.S. court after they said they became sick from eating at the Simi Valley location.
Alyssa McDonald vomited repeatedly, developed "explosive diarrhea," and suffered chest pains after eating at restaurant, according to court documents. Another customer said she had to go to a hospital emergency room for days.
The Ventura County Health Department found her stool tested positive for norovirus, the lawsuit said.
See more of the Chipotle virus outbreak in the gallery below:
Ventura County health official Doug Beach said his office was interviewed by the FDA and U.S. Attorney's office in the fall. Authorities, he said, focused their lines of enquiry squarely on Chipotle.
A federal investigation into a one-restaurant outbreak is surprising since there wasn't a clear interstate element, said Bill Marler, a Seattle-based lawyer who is representing customers saying they were sickened in Simi Valley.
The FDA declined to comment specifically on the investigation. The U.S. Attorney's office declined to comment, as did Chipotle spokesman Chris Arnold.
Chipotle said same-store sales were trending down 16 percent at the onset of December but fell 34 percent after the Brighton incident and the subsequent national media attention it garnered.
Overall same-restaurant sales for December were down 30 percent, the company said.
Any more incremental bad news, particularly if there is an unfavorable decision from the grand jury, could trigger consideration among shareholders of a management change, Maxim Group analyst Stephen Anderson said.
The company, which also announced a $300 million share buyback, said it will fully cooperate with the probe.
The company's shares have fallen nearly 30 percent since Oct. 31, when the first E. coli outbreak was reported.
Watch more coverage: