Exhibit 10.1

NICOLA T. HANNA

United States Attorney

BRANDON D. FOX

Assistant United States Attorney

Chief, Criminal Division

JOSEPH O. JOHNS (Cal. Bar No. 144524)

Assistant United States Attorney

Chief, Environmental and Community Safety

Crimes Section

MARK A. WILLIAMS (Cal. Bar No. 239351)

Assistant United States Attorney

Deputy Chief, Environmental and Community

Safety Crimes Section

SONIA W. NATH

Special Assistant United States Attorney

1300 United States Courthouse

312 North Spring Street

Los Angeles, California 90012

Telephone: (213) 894-4536 / (213) 894-3359

E-mail:        joseph.johns@usdoj.gov

mark.a.williams@usdoj.gov

GUSTAV W. EYLER

Director

DANIEL E. ZYTNICK

Trial Attorney

Consumer Protection Branch

U.S. Department of Justice

P.O. Box 386

Washington, DC 20044

Telephone: (202) 598-8337

Email:        daniel.e.zytnick@usdoj.gov

Attorneys for Plaintiff

UNITED STATES OF AMERICA

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

 

UNITED STATES OF AMERICA,

 

Plaintiff,

 

v.

 

CHIPOTLE MEXICAN GRILL, INC.,

 

Defendant.

 

  

Case No. CR 20-

 

DEFERRED PROSECUTION AGREEMENT FOR DEFENDANT CHIPOTLE MEXICAN GRILL, INC.

 

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1.    This constitutes the deferred prosecution agreement between defendant
CHIPOTLE MEXICAN GRILL, INC. (“defendant” or “Chipotle”), the United States
Attorney’s Office for the Central District of California (the “USAO”), and the
United States Department of Justice’s Consumer Protection Branch (“DOJ-CPB”)
(collectively, the “Government”) in the above-captioned case. This agreement is
limited to the United States Department of Justice, including the USAO and
DOJ-CPB, on the one hand, and Chipotle, on the other, and cannot bind any other
federal, state, local, or foreign prosecuting, enforcement, administrative, or
regulatory authorities, except as noted in paragraph 3(d).

DEFENDANT’S OBLIGATIONS

2.    Defendant agrees to:

a)    At the earliest opportunity requested by the Government, agree to the
filing of a two-count information, in the form attached to this agreement as
Exhibit A or a substantially similar form, that charges defendant with
adulterating food and causing food to become adulterated while held for sale
after shipment of one or more of its components in interstate commerce in
violation of the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. §§
331(k) and 333(a)(1).

b)    Pay a total criminal fine of $25,000,000, consisting of one payment of
$10,000,000 no later than June 1, 2020, followed by three payments of $5,000,000
each, no later than every 30 days after the prior payment.

c)    Sign, file, and enter a Stipulation Regarding Request for (1) Continuance
of Trial Date, and (2) Findings of Excludable Time Periods Pursuant to Speedy
Trial Act, in the form attached to this agreement as Exhibit D or a
substantially similar form.

 

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d)    Comply with all terms in this agreement and the Compliance Program
attached hereto as Exhibit C, which is incorporated herein by reference.

e)    Not contest any facts or information agreed to in this agreement and the
Statement of Facts attached hereto as Exhibit B.

f)    Appear for all court appearances, obey all conditions of any bond, and
obey any other ongoing court order in this matter.

g)    Not commit any federal, state, or local crime.

h)    Be truthful at all times with the USAO, DOJ-CPB, the United States Food
and Drug Administration (“FDA”), and the Court.

THE GOVERNMENT’S OBLIGATIONS

3.    The Government agrees to:

a)    Not contest facts agreed to in this agreement and the Statement of Facts
attached hereto as Exhibit B.

b)    Sign, file, and enter a Stipulation Regarding Request for (1) Continuance
of Trial Date, and (2) Findings of Excludable Time Periods Pursuant to Speedy
Trial Act, in the form attached to this agreement as Exhibit D or a
substantially similar form.

c)    If defendant is in full compliance with all of its obligations under this
agreement at the conclusion of the three-year deferred prosecution term, within
15 calendar days of the conclusion of the three-year term, move to dismiss the
two-count information.

d)    Except for civil and criminal tax violations (including conspiracy to
commit such violations chargeable under 18 U.S.C. § 371), not further prosecute
defendant for criminal and/or

 

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civil violations arising out of defendant’s conduct described in the attached
statement of facts. This provision is binding upon Chipotle, the USAO, DOJ-CPB,
and the United States Attorney’s Office for each of the other 93 judicial
districts of the United States. Chipotle understands that this Agreement does
not bind: (i) any state or local prosecuting authorities; (ii) the Tax Division
of the U.S. Department of Justice; and (iii) the Internal Revenue Service of the
U.S. Department of the Treasury. Defendant understands that the USAO, DOJ-CPB,
and any other prosecuting authority are free to criminally prosecute defendant
for any other unlawful past conduct or any unlawful conduct that occurs after
the date of this agreement.

TERM OF AGREEMENT

4.    This agreement is effective upon signature and execution by defendant’s
authorized representative, defendant’s counsel, and Government counsel, and will
remain in effect for a period of three years from the date this agreement is
filed in court (the “three- year term”).

5.    Defendant and the Government understand that the Agreement to defer
prosecution of Chipotle must be approved as to waiver of the requirements of the
Speedy Trial Act by the Court, in accordance with 18 U.S.C. § 3161(h)(2). Should
the Court decline to approve the Agreement to defer prosecution for any reason:
(a) both the Government and Chipotle are released from any obligation imposed
upon them by the Agreement; and (b) the Agreement shall be null and void, except
for the parties’ waiver of the statute of limitations.

 

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CIRCUMSTANCES OF THIS AGREEMENT

6.    The Government enters into this agreement based on the individual facts
and circumstances presented in this case, including:

a)    The nature and seriousness of the offense conduct;

b)    The changes made by defendant to improve food safety at its restaurants
since 2015, including:

i)    Development of new food safety practices designed to address the threat of
norovirus and other pathogens, such as a program that limits the number of team
members involved in preparing food, and the installation of new dish sanitizers;

ii)    Institution of a Food Safety Advisory Council made up of independent food
safety experts to evaluate the company’s procedures and make regular
recommendations to corporate officers;

iii) The ongoing evaluation by the company of additional food safety
enhancements, including its ongoing evaluation of an improved, automated Hazard
Analysis Critical Control Point (HACCP) monitoring systems as well as an
automated wellness check system for employees; and

iv)    Continued, regular, internal and third-party food safety inspections and
audits.

CORPORATE AUTHORIZATION

7.    Defendant represents that it is authorized to enter into this agreement.
On or before the date this agreement is signed, defendant shall provide the
Government and file with the Court a notarized legal document certifying that
defendant is authorized to enter into and comply with all of the provisions of
this agreement.

 

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Such legal document shall designate a company representative who is authorized
to take the actions specified in this agreement, and shall also state that all
legal formalities for such authorizations have been observed.

ORGANIZATIONAL CHANGES AND APPLICABILITY

8.    This agreement shall bind defendant, its successor entities (if any),
parent companies, and any other person or entity that assumes the liabilities
contained herein (“successors-in-interest”). Defendant, or its
successors-in-interest, if applicable, shall provide the Government and the
Court with immediate notice of any name change, business reorganization, sale or
purchase of assets, divestiture of assets, or similar action impacting their
ability to pay the fine or affecting this agreement. No change in name, change
in corporate or individual control, business reorganization, change in
ownership, merger, change of legal status, sale or purchase of assets, or
similar action shall alter defendant’s responsibilities under this agreement.
Defendant shall not engage in any action to seek to avoid the obligations and
conditions set forth in this agreement.

NATURE OF THE OFFENSE

9.    Defendant understands that for defendant to be guilty of the crimes
charged in the information, that is, adulterating food and causing food to
become adulterated while held for sale after shipment of one or more of its
components in interstate commerce in violation of the FDCA, 21 U.S.C. §§ 331(k)
and 333(a)(1), the following must be true: defendant committed an act with
respect to a food, while the food was held for sale after shipment in interstate
commerce that resulted in such food being adulterated under 21 U.S.C. §
342(a)(4).

 

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PENALTIES

10.    Defendant understands that the statutory maximum sentence that the Court
can impose for each misdemeanor violation of 21 U.S.C. §§ 331(k) and 333(a)(1),
is: five years’ probation; a fine of $200,000 or twice the gross gain or gross
loss resulting from the offense, whichever is greatest; and a mandatory special
assessment of $125. Therefore, defendant understands that the total statutory
maximum sentence that the Court can impose in this matter is: five years’
probation; a fine of $400,000 or twice the gross gain or gross loss resulting
from the offenses, whichever is greatest; and a mandatory special assessment of
$250. The parties stipulate and agree that a fine of $25,000,000 is appropriate
and is no more than twice the gross gain or gross loss resulting from the
offenses.

SUSPENSION, REVOCATION, AND DEBARMENT

11.    Defendant understands that if defendant holds any regulatory licenses or
permits, this agreement may result in the suspension or revocation of those
licenses and/or permits. The Government makes no representation or promise
concerning suspension or debarment of defendant from contracting with the United
States or with any office, agency, or department thereof. Suspension and
debarment of organizations is a discretionary administrative action solely
within the authority of those federal contracting agencies. Defendant
understands that unanticipated collateral consequences such as this will not
serve as grounds to withdraw from this agreement.

 

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FACTUAL BASIS

12.    Defendant and the Government agree to the Statement of Facts attached
hereto as Exhibit B and incorporated herein by this reference, and agree that
the Statement of Facts is sufficient to support misdemeanor convictions for the
charges described in this agreement. The attached Statement of Facts is not
meant to be a complete recitation of all facts relevant to the underlying
criminal conduct or all facts known to the parties that relate to that conduct.

WAIVER OF STATUTE OF LIMITATIONS

13.    Having been fully advised by defendant’s attorney regarding application
of the statute of limitations to the two norovirus offenses to which this
agreement applies, along with the Boston, Massachusetts norovirus offense that
occurred on or about December 2015, the Sterling, Virginia norovirus offense
that occurred on or about July 2017, and the Powell, Ohio Clostridium
perfringens offense that occurred on or about July 2018, defendant hereby
knowingly, voluntarily, and intelligently waives, relinquishes, and gives up:
(a) any right that defendant might have not to be prosecuted for these offenses
because of the expiration of the statute of limitations for the offenses prior
to the filing of the information(s) alleging the offenses; and (b) any defense,
claim, or argument defendant could raise or assert that prosecution of the
offenses is barred by the expiration of the applicable statute of limitations,
pre-indictment delay, or any speedy trial violation.

 

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BREACH OF AGREEMENT

14.    Defendant agrees that if any Chipotle officer or employee at or senior to
the rank Field Leader (or functional equivalent),1 at any time after the
signature of this agreement and execution of all required certifications by
defendant, defendant’s counsel, and Government counsel, knowingly violates or
fails to perform any of defendant’s obligations under this agreement (“a
breach”), the Government may declare this agreement breached. All of defendant’s
obligations are material, a single breach of this agreement is sufficient for
the Government to declare a breach, and defendant shall not be deemed to have
cured a breach without the express agreement of the Government in writing. If
the Government declares this agreement breached, and the Court finds such a
breach to have occurred, then the Government will be relieved of all its
obligations under this agreement.

15.    Following the Court’s finding of a knowing breach of this agreement by
defendant, should the Government choose to pursue any charge or any criminal,
civil, administrative, or regulatory action that was either dismissed or not
filed as a result of this agreement, including, the Simi Valley, California
norovirus offense that occurred on or about August 2015, the Los Angeles,
California norovirus offense that occurred on or about December 2017, the
Boston, Massachusetts norovirus offense that occurred on or about December 2015,
the Sterling, Virginia norovirus offense that

 

1 

For the first 180 days after this agreement is signed and executed, the relevant
rank is Team Director (or functional equivalent) instead of Field Leader (or
functional equivalent).

 

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occurred on or about July 2017, and the Powell, Ohio Clostridium perfringens
offense that occurred on or about July 2018, then:

a)    Defendant agrees that any applicable statute of limitations is tolled
between the date of defendant’s signing of this agreement and the filing
commencing any such action.

b)    Defendant waives and gives up all defenses based on the statute of
limitations, any claim of pre-indictment delay, or any speedy trial claim with
respect to any such action, except to the extent that such defenses existed as
of the date of defendant’s signing this agreement.

c)    Defendant agrees that: (i) any statements made by defendant, under oath,
at any hearing (if such a hearing occurred prior to the breach); (ii) the agreed
to factual basis statement attached to this agreement; and (iii) any evidence
derived from such statements, shall be admissible against defendant in any such
action against defendant, and defendant waives and gives up any claim under the
United States Constitution, any statute, Rule 410 of the Federal Rules of
Evidence, Rule 11(f) of the Federal Rules of Criminal Procedure, or any other
federal rule, that the statements or any evidence derived from the statements
should be suppressed or are inadmissible.

COURT AND PROBATION OFFICE NOT PARTIES

16.    Defendant understands that the Court and the United States Probation
Office are not parties to this agreement.

 

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NO ADDITIONAL AGREEMENTS

17.    Defendant understands that, except as set forth herein, and in the
parties’ tolling agreement, there are no promises, understandings, or agreements
between the Government and defendant or defendant’s attorney, and that no
additional promise, understanding, or agreement may be entered into unless in
writing and signed by all parties or on the record in court.

AGREED AND ACCEPTED

UNITED STATES ATTORNEY’S OFFICE

FOR THE CENTRAL DISTRICT OF CALIFORNIA

NICOLA T. HANNA

United States Attorney

 

/s/ Mark Williams

  

4/20/2020

JOSEPH O. JOHNS

MARK A. WILLIAMS

Assistant United States Attorneys

SONIA W. NATH

Special Assistant United States

Attorney

  

Date

UNITED STATES DEPARTMENT OF JUSTICE

CONSUMER PROTECTION BRANCH

 

GUSTAV W. EYLER

Director

/s/ Daniel Zytnick

  

4/20/2020

DANIEL ZYTNICK

Trial Attorney

  

Date

 

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/s/ Roger Theodoredis

     

4/17/2020

NAME: Roger Theodoredis       Date TITLE: Chief Legal Officer      

Authorized Representative of

Defendant CHIPOTLE MEXICAN GRILL,

INC.

     

/s/ Jack P. DiCanio

     

4/17/2020

JACK P. DiCANIO       Date

Skadden, Arps, Slate, Meagher

& Flom LLP

      Attorney for Defendant       CHIPOTLE MEXICAN GRILL, INC.      

/s/ David Scheper

     

4/17/2020

DAVID SCHEPER       Date Scheper Kim & Harris LLP       Attorney for Defendant
      CHIPOTLE MEXICAN GRILL, INC.      

 

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CERTIFICATION OF DEFENDANT

I have been authorized by defendant CHIPOTLE MEXICAN GRILL, INC. (“defendant”)
to enter into this agreement on behalf of defendant. I have read this agreement
in its entirety. I have had enough time to review and consider this agreement,
and I have carefully and thoroughly discussed every part of it with defendant’s
attorney. I understand the terms of this agreement, and I voluntarily agree to
those terms on behalf of defendant. I have discussed the evidence with
defendant’s attorney, and defendant’s attorney has advised me of defendant’s
rights, of possible pretrial motions that might be filed, of possible defenses
that might be asserted either prior to or at trial, of the sentencing factors
set forth in 18 U.S.C. § 3553(a), of relevant Sentencing Guidelines provisions,
and of the consequences of entering into this agreement. No promises,
inducements, or representations of any kind have been made to me or to defendant
other than those contained in this agreement. No one has threatened or forced me
or defendant in any way to enter into this agreement. I am satisfied with the
representation of defendant’s attorney in this matter.

 

/s/ Roger Theodoredis

   

4/17/2020

NAME: Roger Theodoredis

   

Date

TITLE: Chief Legal Officer

   

Authorized Representative of

   

Defendant

   

CHIPOTLE MEXICAN GRILL, INC.

   

 

 

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CERTIFICATION OF COUNSEL

I am defendant CHIPOTLE MEXICAN GRILL, INC.’s attorney. I have carefully and
thoroughly discussed every part of this agreement with the authorized
representative of my client. Further, I have fully advised my client and its
authorized representative of its rights, of possible motions that might be
filed, of possible defenses that might be asserted either prior to or at trial,
of the sentencing factors set forth in 18 U.S.C. § 3553(a), of relevant
Sentencing Guidelines provisions, and of the consequences of entering into this
agreement. To my knowledge: no promises, inducements, or representations of any
kind have been made to my client other than those contained in this agreement;
no one has threatened or forced my client in any way to enter into this
agreement; my client’s decision to enter into this agreement is an informed and
voluntary one; and the factual basis set forth in this agreement is sufficient
to support convictions to the charges specified in this agreement.

 

/s/ Jack DiCanio

     

4/17/2020

JACK P. DiCANIO       Date Skadden, Arps, Slate, Meagher       & Flom LLP      
Attorney for Defendant       CHIPOTLE MEXICAN GRILL, INC.      

 

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CERTIFICATION OF COUNSEL

I am defendant CHIPOTLE MEXICAN GRILL, INC.’s attorney. I have carefully and
thoroughly discussed every part of this agreement with the authorized
representative of my client. Further, I have fully advised my client and its
authorized representative of its rights, of possible motions that might be
filed, of possible defenses that might be asserted either prior to or at trial,
of the sentencing factors set forth in 18 U.S.C. § 3553(a), of relevant
Sentencing Guidelines provisions, and of the consequences of entering into this
agreement. To my knowledge: no promises, inducements, or representations of any
kind have been made to my client other than those contained in this agreement;
no one has threatened or forced my client in any way to enter into this
agreement; my client’s decision to enter into this agreement is an informed and
voluntary one; and the factual basis set forth in this agreement is sufficient
to support convictions to the charges specified in this agreement.

 

/s/ David Scheper

   

4/17/2020

DAVID SCHEPER

   

Date

Scheper Kim & Harris LLP

   

Attorney for Defendant

   

CHIPOTLE MEXICAN GRILL, INC.

   

 

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Exhibit A

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

 

UNITED STATES OF AMERICA,

 

Plaintiff,

 

v.

 

CHIPOTLE MEXICAN GRILL, INC.

 

Defendant.

  

CR No. 20-

 

I N F O R M A T I O N

 

[21 U.S.C. §§ 331(k), 333(a)(1):

Adulterating and Causing the

Adulteration of Food While Held

for Sale After Shipment in

Interstate Commerce]

The United States Attorney charges:

COUNT ONE

[21 U.S.C. §§ 331(k), 333(a)(1)]

On or about August 18, 2015, through August 24, 2015, in Simi Valley,
California, within the Central District of California, and elsewhere, defendant
CHIPOTLE MEXICAN GRILL, INC. (“CHIPOTLE”) did adulterate food, and cause food to
become adulterated, within the meaning of the Federal Food, Drug, and Cosmetic
Act, 21 U.S.C. §§ 321(f), 342(a)(4), while such food was held for sale after
shipment in interstate commerce.    Specifically, defendant CHIPOTLE held food
that was adulterated because it was prepared, packed, and held under insanitary
conditions whereby it may have been contaminated with filth, and whereby it may
have been rendered injurious to health, while such food was held for sale after
shipment of one or more of its components in interstate commerce.

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COUNT TWO

[21 U.S.C. §§ 331(k), 333(a)(1)]

On or about December 13, 2017, through December 18, 2017, in Los Angeles County,
within the Central District of California, and elsewhere, defendant CHIPOTLE did
adulterate food, and cause food to become adulterated, within the meaning of the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 321(f), 342(a)(4), while such
food was held for sale after shipment in interstate commerce.    Specifically,
defendant CHIPOTLE held food that was adulterated because it was prepared,
packed, and held under insanitary conditions whereby it may have been
contaminated with filth, and whereby it may have been rendered injurious to
health, while such food was held for sale after shipment of one or more of its
components in interstate commerce.

 

GUSTAV W. EYLER

Director

Consumer Protection Branch

  

NICOLA T. HANNA

United States Attorney

 

DANIEL ZYTNICK

Trial Attorney

Consumer Protection Branch

U.S. Department of Justice

  

 

 

BRANDON D. FOX

Assistant United States Attorney

Chief, Criminal Division

 

JOSEPH O. JOHNS

Assistant United States Attorney

Chief, Environmental and Community

Safety Crimes Section

 

MARK A. WILLIAMS

Assistant United States Attorney

Deputy Chief, Environmental and

Community Safety Crimes Section

 

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EXHIBIT B

Statement of Facts

The following Statement of Facts is incorporated by reference as part of the
Deferred Prosecution Agreement (this “Agreement”) between the United States
Attorney’s Office for the Central District of California and the United States
Department of Justice’s Consumer Protection Branch (collectively, “the
Government”) and Chipotle Mexican Grill, Inc. (“Chipotle”). Chipotle hereby
agrees and stipulates that the following information is true and accurate.
Chipotle admits, accepts, and acknowledges that it is responsible for the acts
of its employees as set forth below. From in or about August 2015 to in or about
July 2018, in the Central District of California and elsewhere, Chipotle
violated 21 U.S.C. § 331(k) by doing and causing to be done acts that caused
articles of food to become adulterated within the meaning of 21 U.S.C. §
342(a)(4), while such articles were held for sale after shipment of one or more
of their components in interstate commerce. Should the Government pursue the
prosecution that is deferred by this Agreement, Chipotle agrees that it will
neither contest the admissibility of, nor contradict, this Statement of Facts.

 

I.

BACKGROUND: RAPID GROWTH AND PROFITABILITY

1.    Chipotle is a Delaware corporation based in Newport Beach, California, in
the Central District of California. From 1993 through 2018, Chipotle was based
in Colorado.

 

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2.    The first Chipotle opened its doors on July 13, 1993.1 The second and
third opened in 1995 and 1996.2 Subsequent growth was much faster, in large part
due to McDonald’s investment in Chipotle in 1998. By the end of 2008, Chipotle
owned over 800 restaurants.3 By September 30, 2015, Chipotle had 1,895
restaurants in the United States.4 That number includes 150 new restaurants
opened in the first nine months of 2015,5 an average of almost four per week.

3.    For the calendar years from 2011 to 2015, Chipotle’s revenue nearly
doubled, from $2.27 billion for 2011 to $4.50 billion for 2015. Net income more
than doubled during the same time frame, from $214.95 million in 2011 to
$475.60 million in 2015.6

4.    In 2014, a restaurant trade publication ranked Chipotle 15th in sales
among other “fast-food” operations.7

5.    Also in 2014, Forbes published an article praising Chipotle as “the leader
in the fast casual segment” and comparing the company’s “double digit revenue
growth” to McDonald’s and Burger King’s “2% and -4% annual growth.”8 The Motley
Fool published an article in 2014, stating that the company has “already bested
the competition” and has “all the right pieces in place for continued growth.”9

 

 

1 

https://money.cnn.com/2010/10/06/smallbusiness/chipotle_started.fortune/index.htm

2 

https://www.cnbc.com/2017/11/29/how-steve-ells-built-chipotle-mexican-grill-
into-a-burrito-empire.html

3 

https://www.sec.gov/Archives/edgar/data/1058090/000119312509033199/d10k.htm

4 

https://www.sec.gov/Archives/edgar/data/1058090/000105809015000044/cmg-20150930x10q.htm

5 

https://www.sec.gov/Archives/edgar/data/1058090/000105809015000044/cmg-20150930x10q.htm

6 

https://www.sec.gov/Archives/edgar/data/1058090/000105809016000058/cmg-20151231x10k.htm

7 

https://www.qsrmagazine.com/reports/qsr50-2014-top-50-chart

8 

https://www.forbes.com/sites/greatspeculations/2014/12/30/2014-year-in-review-
chipotle-mexican-grill/#647f564552f3

9 

https://www.fool.com/investing/general/2014/10/17/why-chipotle-mexican-grill-
stock-looks-like-a-grea.aspx

 

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6.    As of December 31, 2018, Chipotle owned 2,452 restaurants in the United
States bearing the Chipotle name and selling fast casual Mexican food, and
employed 73,000 employees, including about 5,100 salaried employees and about
67,900 hourly employees.

7.    A typical Chipotle restaurant is staffed with a general manager (sometimes
called a “Restaurateur”), one to three hourly service managers, one to three
hourly kitchen managers and an average of 22 full and part-time crew members.10
Chipotle restaurants generally have two shifts per day. Employees are
cross-trained so that they can each work a variety of stations within the
restaurant with a focus on “on the job” training for the various positions. Most
of Chipotle’s restaurants also employ an apprentice manager.11

8.    According to Chipotle’s earnings reports, labor costs comprised
22.0 percent of yearly revenues for 2014. By 2017, labor costs had risen to
26.9 percent of yearly revenues. 12

9.    Since going public in 2006, Chipotle has acknowledged in its annual
disclosures to the Securities and Exchange Commission (“SEC”) that foodborne
illness outbreaks are a risk associated with operating its restaurants.
Chipotle’s 2014 and 2015 annual reports

 

 

10 

https://www.sec.gov/Archives/edgar/data/1058090/000105809019000007/cmg-20181231x10k.htm

11 

https://www.sec.gov/Archives/edgar/data/1058090/000105809019000007/cmg-20181231x10k.htm

12 

https://table.skift.com/2018/02/14/the-trouble-with-chipotle-is-labor-and-food-
costs/

 

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state that it “may be at a higher risk for food-borne illness outbreaks than
some competitors due to our use of fresh produce and meats rather than frozen,
and our reliance on employees cooking with traditional methods rather than
automation.” 13

 

II.

FAST-CASUAL FOOD SERVICE, WITH KNOWN FOOD SAFETY RISKS

10.    Chipotle sought to revolutionize the food industry by “demonstrat[ing]
that food served fast doesn’t have to be a ‘fast- food’ experience,” and the
company looked “to fine-dining restaurants for inspiration.” Chipotle touted its
use of “high- quality raw ingredients, classic cooking methods and a distinctive
interior design,” which it described as “features that are more frequently found
in the world of fine dining.”14 Chipotle also marketed itself using the term
“food with integrity,” a phrase that the company uses to describe its dedication
to, among other things, naturally-raised meat, sustainably grown produce, and
“great preparation” by “skilled crews us[ing] classic cooking techniques.”15

11.    Chipotle strives to use locally sourced ingredients wherever possible in
its restaurants; however, at least some of the components of its food held for
sale in its restaurants were shipped in interstate commerce.

12.    From approximately 2015 to 2018, Chipotle faced at least five food safety
incidents at various restaurants around the country, which stemmed primarily
from store-level employees’ failure

 

 

13 

https://www.sec.gov/Archives/edgar/data/1058090/000119312514035451/d629534d10k.htm

14

https://www.sec.gov/Archives/edgar/data/1058090/000104746906003640/a2168474z10-
k.htm

15 

https://www.chipotle.com/food-with-integrity

 

4

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to follow Chipotle’s food safety policies and procedures, including the policy
requiring the exclusion of restaurant employees who were sick or recently had
been sick, as well as a failure by restaurant employees to hold food at
appropriate temperatures to prevent and control for the growth of foodborne
pathogens.    These failures contributed to norovirus outbreaks in late 2015 and
2017 at four Chipotle restaurants as well as one outbreak of foodborne illness
related to Clostridium perfringens in July 2018. Collectively, more than 1,100
people reported becoming ill in connection with these incidents.

 

III.

FOODBORNE ILLNESSES

13.    Based on estimates from the United States Centers for Disease Control and
Prevention on the incidence of foodborne disease, publicly available data on
wages, peer-reviewed synthesis of data on medical costs, and economic, medical,
and epidemiological literature, the Economic Research Service of the United
States Department of Agriculture has estimated that the costs of major foodborne
illnesses in the United States total over $15.6 billion annually,16 with
$2.2 billion attributable to norovirus outbreaks and $342 million attributable
to Clostridium perfringens outbreaks.17 Norovirus is the leading cause of
illness and outbreaks from contaminated food in the United States.18

 

 

16 

https://www.foodsafetynews.com/2014/10/foodborne-illnesses-cost-usa-15-6-
billion-annually/

17 

https://www.ers.usda.gov/data-products/cost-estimates-of-foodborne-illnesses/

18

https://www.cdc.gov/norovirus/about/transmission.html

 

5

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A.    NOROVIRUS

14.    Norovirus is a “highly infective pathogen[] that can easily be
transmitted by food workers and cause severe illness.”19 Norovirus outbreaks are
commonly reported in healthcare facilities (including hospitals and long-term
care facilities), schools and child care facilities and on cruise ships as well
as in restaurants and other catered events.20 The CDC states that food handlers
with norovirus can easily cause an outbreak:

If you work with food when you have norovirus illness, you can spread the virus
to others. You can easily contaminate food and drinks that you touch with bare
hands. People who consume the food or drinks can get norovirus and become sick.
This can cause an outbreak.

 

…

Most of these outbreaks occur in the food service settings like restaurants.
Infected food workers are frequently the source of the outbreaks, often by
touching ready-to-eat foods, such as raw fruits and vegetables, with their bare
hands before serving them.21

15.    The Food and Drug Administration has recommended that, to prevent the
spread of norovirus at retail food establishments, “[m]anagement should explain
to food employees the importance of reporting specific symptoms and any
diagnoses or exposures to foodborne illness,” including vomiting, diarrhea, and
any norovirus diagnosis.22

 

 

19

www.fda.gov/food/guidanceregulation/retailfoodprotection/industryandregulatoryassistanceandtrainingresources/ucm113827.htm

20 

https://www.cdc.gov/norovirus/trends-outbreaks/outbreaks.html

21 

www.cdc.gov/norovirus/food-handlers/work-with-food.html

 

6

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16.    The most common symptoms of norovirus are: diarrhea, vomiting, nausea,
and stomach pain.23 Norovirus also causes acute gastroenteritis, which is an
inflammation of the stomach or intestines.24

17.    A person usually develops symptoms 12 to 48 hours after being exposed to
norovirus. People with norovirus illness can feel extremely ill, and vomit or
have diarrhea many times a day. This can lead to dehydration, especially in
young children, older adults, and people with other illnesses. Most people with
norovirus illness get better within 1 to 3 days.25

 

  B.

CLOSTRIDIUM PERFRINGENS

18.    Clostridium perfringens (C. perfringens) is a spore- forming
gram-positive bacterium that is found in many environmental sources as well as
in the intestines of humans and animals. C. perfringens is commonly found on raw
meat and poultry. It prefers to grow in conditions with very little or no
oxygen, and, under ideal conditions, can multiply very rapidly. Some strains of
C. perfringens produce a toxin in the intestine that causes illness.26 According
to the CDC, “it is one of the most common types of foodborne illness in the
United States. The CDC estimates it causes nearly 1 million cases of foodborne
illness each year.”27

 

 

22 

www.fda.gov/food/guidanceregulation/retailfoodprotection/industryandregulatoryassistanceandtrainingresources/ucm113827.htm

23 

https://www.cdc.gov/norovirus/about/symptoms.html

24 

https://www.cdc.gov/norovirus/about/symptoms.html

25 

Id.

26

https://www.cdc.gov/foodsafety/diseases/clostridium-perfringens.html

27

Id.

 

7

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19.    Beef, poultry, gravies, and dried or pre-cooked foods are common sources
of C. perfringens infections. C. perfringens infection often occurs when foods
are prepared in large quantities and kept warm for a long time before serving.28

20.    People infected with C. perfringens develop diarrhea and abdominal cramps
within 6 to 24 hours (typically 8 to 12 hours). The illness usually begins
suddenly and lasts for less than 24 hours. People infected with C. perfringens
usually do not have fever or vomiting. The illness is not passed from one person
to another.29

21.    Everyone is susceptible to food poisoning from C. perfringens. The very
young and elderly are most at risk of C. perfringens infection and can
experience more severe symptoms that may last for 1 to 2 weeks. Complications,
including dehydration, may occur in severe cases.30

 

IV.

CHIPOTLE’S APPROACH TO FOOD SAFETY

22.    As of 2015, Chipotle had five main corporate departments responsible for
food safety, all of which remain in place today: Restaurant Operations; Safety
Security & Risk (“SSR”); Supply Chain; Training; and Food Safety & Quality
Assurance (“FSQA”). Chipotle’s employee handbook and training materials state
that ensuring food safety was a “top priority” of the company and was part of
every employee’s job and responsibility.31

23.    Although not required by the FDA for restaurants, Chipotle took the
initiative to adopt a Hazard Analysis and

 

 

28 

Id.

29

https://www.cdc.gov/foodsafety/diseases/clostridium-perfringens.html

30 

Id.

31 

(2014 Chipotle Employee Handbook, at 13-16.)

 

8

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Critical Control Point (“HACCP”) plan, which is a food safety management system
focused on preventing food safety problems by identifying critical control
points (“CCPs”) in the restaurant. According to the FDA, a CCP is defined as a
“step at which control can be applied and is essential to prevent or eliminate a
food safety hazard or reduce it to an acceptable level.”32 Some examples of CCPs
identified by Chipotle include: carefully monitoring and regulating hot and cold
holding temperatures; wellness and personal hygiene checks; walk-in and reach-in
cooler temperatures; grill temperatures; grilled meat temperatures; and the
process of cooling cooked foods.

24.    Chipotle also retained an outside company, EcoLab, to conduct audits of
its restaurants at periodic intervals. Those audits reviewed food temperature
controls, sanitizer levels, and water levels. However, the EcoLab audits did not
look at training records; it was Chipotle management’s responsibility to review
and verify employee training.

25.    SSR was one of Chipotle’s headquarters-based units that included a
customer incident team, which was responsible for tracking reports of both
customer incidents (including illnesses) and employee illnesses. After learning
about illnesses, SSR would sometimes contact individual Chipotle restaurants to
determine if there were any additional reports of customer or employee illness.
SSR was a first-responder team that sometimes learned of employee illnesses from
store management or after following up on reports of consumer illnesses; these
reports sometimes were viewed skeptically

 

 

32 

https://www.fda.gov/food/hazard-analysis-critical-control-point-haccp/haccp-
principles-application-guidelines#defs

 

9

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by the company. As one former SSR Customer Incident Analysist stated, Chipotle
“never honored a foodborne illness claim when there was only one customer
complaint of foodborne illness.”

26.    The Norwalk Prevention Protocols (“NPPs”) are a comprehensive set of
protocols designed specifically for Chipotle to help combat norovirus. The NPPs
include the implementation of employee symptom surveys to ensure the exclusion
of sick employees, sanitizing the restaurant using bleach solution, increased
handwashing protocols and restrictions on sharing employees and food transfers.
These protocols are put into place when reports of illness occur in a restaurant
or when a high risk of norovirus is suspected within the community in which the
restaurant is located.

27.    In compliance with Chipotle’s policies and procedures, Chipotle
restaurants did not implement the NPPs until after SSR was notified of potential
illnesses and SSR instructed the restaurant to implement them. Once SSR was
notified and began investigating complaints of customer illnesses at the
restaurants located in Simi Valley, California; Boston, Massachusetts; Sterling,
Virginia; Los Angeles, California, and Powell, Ohio, it took action in
implementing the NPPs. As set out herein, store-level employees’ failure to
follow Chipotle’s food safety protocols, including the sick exclusion policy,
and the failure to timely notify SSR, contributed to the size of foodborne
illness outbreaks stemming from those restaurants.

 

V.

CHIPOTLE RESTAURANTS FAILED TO FOLLOW THE COMPANY’S ESTABLISHED PROTOCOLS TO
PREVENT SICK EMPLOYEES FROM WORKING

28.    In 2008, more than 400 people were sickened by norovirus at a Chipotle
restaurant in Ohio. In response to that incident, Chipotle worked to develop the
company-wide NPPs, which are not mandated by the FDA.

 

10

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29.    Minor changes to the NPPs were made between 2008 and 2017. The October
2014 version mandated that the NPPs must be implemented “immediately” in any
restaurant:

(1) When two or more unrelated customers report” getting sick “within 12 to 48
hours after eating at Chipotle and the customer’s symptoms are vomiting or a
combination of” diarrhea, nausea, fever, or stomach cramps;

(2) “When a restaurant level employee becomes ill with vomiting or a combination
of” diarrhea, nausea, fever, or stomach cramps; or

(3) “When a crew member or customer vomits in the restaurant.”

When any of these three situations occurred, the manager in charge was to
“immediately call” a regional Field Leader and SSR. The NPPs also stated that
managers must “immediately call” the SSR and Field Leader in the event of
“multiple ill employees or multiple customer complaints.”

30.    The October 2014 NPPs further required the manager to “immediately
complete [an] attached Employee Symptom Survey with every employee, and continue
to do so for five days.” The NPPs required mandatory exclusion for sick
employees: “If any employee answers ‘Yes’ to vomiting or a combination of the
following: diarrhea, nausea, fever, or stomach cramps, that employee must be
excluded from Chipotle, working or visiting, for 5 complete days from the date
that employee last had symptoms.”The NPPs required “any and all ‘Yes’ answers”
to be reported to the Field Leader and

 

11

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SSR. The October 2014 NPPs also required managers to watch for sick employees:
“Managers must be on the lookout for employees who are or may be sick but have
not reported being sick.”

31.    When implemented, the NPPs dictated an enhanced cleaning protocol for the
affected restaurant. The October 2014 NPPs specified that the cleaning protocols
must be “followed for 5 days.”

32.    Chipotle also had an employee illness policy, which required employees
suffering from a list of symptoms, including vomiting, to “immediately report it
to the manager in charge [●]” The employee illness policy stated that, “[i]f you
are ill and you vomit, you must immediately report this to the manager in
charge, and you may be excluded from working at Chipotle for a period of five
days from the date you last became ill.”

33.    Since at least 2007, Chipotle has had a formal written sick exclusion
policy, requiring that any employee symptomatic with vomiting be excluded from
the restaurant. The Company’s policy on this issue was explained in more detail
in a December 2013 internal newsletter:

Any employee who is vomiting must be sent home immediately, if they’re in the
restaurant. They must also be off for at least 5 full days — regardless of any
doctors’ notes or if they say they feel better. No exemptions! Employees can be
contagious, even after their symptoms have subsided. Maintaining the ‘5-Days
Policy’ is a very important part not only of keeping our food safe for our
customers, but to prevent other employees from becoming ill.

 

12

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34.    On July 1, 2015, before the norovirus incidents at issue here, Chipotle
adopted a paid sick leave policy, pursuant to which employees would accrue three
days, or 24 hours, per year of annual paid sick leave. Less than a year later,
on March 28, 2016, Chipotle altered this policy to eliminate the accrual
requirement so that employees received 24 hours of paid sick leave on their
first day of employment.

35.    Despite the requirement that store managers contact SSR in certain
situations, there were occasions when customer incident analysts at SSR would
not find out about restaurant employee illnesses until the analysts contacted
the restaurant because of a customer illness report, which then led to delayed
implementation of the NPPs. For example, in May 2014, a consumer illness report
prompted an SSR customer incident analyst to contact a Chipotle restaurant in El
Segundo, California, whose kitchen manager informed the customer incident
analyst that an employee was “vomiting at work and was sent home yesterday.” The
customer incident analyst directed the restaurant to begin the NPPs. According
to the protocols, the restaurant should have contacted SSR and begun the NPPs
the previous day because of the employee vomiting at work. The next month, an
SSR customer incident analyst directed a Chipotle restaurant in Maryland to
begin the NPPs after learning that a restaurant employee “vomited at the
restaurant” five days earlier. Thus, the restaurant had failed to follow company
policy to timely report the illness to SSR and to implement the NPPs despite an
employee vomiting in the restaurant. While the NPPs were ongoing, the customer
incident analyst directed the restaurant to continue following the protocols for
five more days after being informed that

 

13

--------------------------------------------------------------------------------

a crew member was “vomiting this morning and worked today,” which also violated
company policy. Similarly, in December 2014, after receiving a consumer illness
report regarding a Chipotle restaurant in Boynton Beach, Florida, an SSR
customer incident analyst learned from a restaurant employee that “multiple crew
members have been sick and that a crew member vomited in the restaurant on”
December 26, 2014. The customer incident analyst directed the restaurant to
immediately begin the NPPs, three days after the employee vomited in the
restaurant. The restaurant failed to follow company policy by not timely
notifying SSR about the employee vomiting in the restaurant and immediately
implementing the NPPs. These three incidents in Chipotle restaurants across the
country (California, Maryland, and Florida) demonstrate that some store-level
Chipotle employees were not following the company’s policies and illness
reporting requirements, which contributed to the norovirus outbreaks at issue.

36.    Similar failures and violations of the NPPs occurred in 2014 and 2015. In
the three months from May to July of 2015, the NPPs were implemented three
times. Each of those implementations involved a consumer reporting an illness,
which prompted an SSR customer incident analyst to contact a Chipotle restaurant
only to subsequently learn that an employee had returned to work the day after
vomiting. In each of those instances, SSR learned about the employee illnesses
only because of later consumer illness reports.

37.    In August 2015, over the course of at least seven days, approximately 234
consumers and employees of a Chipotle restaurant in Simi Valley, California, in
the Central District of California, reported becoming ill. On August 19, 2015,
an employee of that

 

14

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restaurant was sent home because he vomited. Although Chipotle’s policies
required the restaurant to report such illnesses to SSR and implement the NPPs,
the restaurant did not do so. Two days later, following multiple consumer
illness reports, a customer incident analyst and a regional manager spoke with
the restaurant’s apprentice manager and learned that another employee reported
having a contagious illness the previous day. The customer incident analyst
directed the restaurant to implement the NPPs. As part of the NPPs, employees
completed symptoms surveys, and at least four employees reporting having
symptoms potentially related to norovirus earlier in the week. Some of the staff
cleaning the restaurant as part of the NPPs were also sick, with symptoms
potentially related to norovirus. Additionally, on or about September 7, 2015,
after implementation of the NPPs, a general manager came to work at the Simi
Valley store while sick. At least one Chipotle employee notified Chipotle
headquarters of this incident in writing, but never received a response.

38.    In December 2015, over the course of at least nine days, approximately
141 people reported illness related to a norovirus incident at a Chipotle
restaurant in Boston, Massachusetts. This outbreak is likely the result of an
ill apprentice manager working in the restaurant. On December 3, the apprentice
manager informed a regional Chipotle manager that he vomited in the restaurant.

Although this incident should have triggered the NPPs, no one reported the
illness to SSR or implemented the NPPs. Instead, the regional manager instructed
the apprentice manager to stay until closing, a clear violation of Chipotle’s
food safety policies. The apprentice manager did not work the following day, but
returned on

 

15

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December 5 and helped package a catering order for a Boston College basketball
team, whose members were among the consumers sickened by the outbreak.

39.    In July 2017, over the course of at least four days, at least 135 people
reported illness related to a norovirus incident at a Chipotle restaurant in
Sterling, Virginia. The restaurant’s general manager allowed the kitchen manager
to work while sick, aggravating the Sterling norovirus outbreak. The county
health department found in 2015 that “[e]mployees or applicants are not aware of
the reporting procedures concerning information about their health and
activities if they are suspected of causing, or being exposed to a confirmed
disease outbreak caused by Salmonella, Shigella, E. coli O157:H7, Hepatitis A
virus or norovirus.” The county health department found a similar violation in
2013: “Employees or applicants are not aware of the reporting procedures
concerning information about their health and activities as they relate to
diseases that are transmissible through food, including ... norovirus.”33

40.    In December 2017, over the course of six days, at least 28 people,
including at least 11 Chipotle employees, reported illness related to a
norovirus incident at the Chipotle restaurant on West Pico Boulevard in Los
Angeles, California, in the Central District of California. The employees
exhibited symptoms of diarrhea, weakness, vomiting, and body aches.

41.    The sick employees at the West Pico Boulevard Chipotle restaurant
reported serving as food handlers in the restaurant.

 

 

33

www.healthspace.com/Clients/VDH/Loudoun/Web.nsf/formFacility.xsp?id=81436EC5EB1CD4
5C8825703E00417E86

 

16

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Several sick employees were sent home and told not to work; however, at least
one employee who was sick during the December outbreak was not excluded for the
appropriate number of days, in violation of the NPPs. She was sent home from
work on Tuesday, December 12, 2017, returned to work on Thursday, December 14,
2017, and worked all day, before the end of the exclusion period required by the
NPPs. On Friday, December 15, 2017, she reported for work and was again sent
home for being sick.

 

VI.

A CHIPOTLE RESTAURANT FAILED TO HOLD FOOD AT APPROPRIATE TEMPERATURES

42.    In July 2018, over the course of at least eight days, approximately 647
people who dined at a Chipotle restaurant in Powell, Ohio reported illness
related to Clostridium perfringens, a pathogen that grows rapidly when food is
not held at appropriate temperatures. The local health department determined
that the restaurant had critical violations of the local food regulations,
including those specific to time and temperature controls for lettuce and beans.

 

VII.

CHIPOTLE SIGNIFICANTLY ENHANCED ITS FOOD SAFETY POLICIES AND PROCEDURES IN THE
WAKE OF THE FOOD SAFETY INCIDENTS AT ISSUE HERE

43.    In the wake of the incidents discussed above, Chipotle took numerous
steps to improve its food safety policies and procedures. As part of its
continuous process of safety improvements, Chipotle enhanced its paid sick leave
policy to automatically grant all employees 3 days of paid sick leave per year;
established a Food Safety Advisory Council, composed of experts in the food
safety industry, who meet quarterly to review company-wide food safety issues
and report directly to Chipotle’s board; made sweeping leadership changes,
including hiring a new

 

17

--------------------------------------------------------------------------------

CEO and a new General Counsel, both of whom have extensive experience in food
safety issues; adopted new training and audit procedures; and made significant
changes to its food preparation techniques, including preparing more of its
meats and produce in off-site commissaries.

44.    On January 12, 2016, just a few months into Chipotle’s campaign to
enhance food safety, Chipotle’s Investor Relations Manager represented that “the
initial estimate on the cost of all food safety changes is $80-100 million.”

 

VIII.

SOME CHIPOTLE EMPLOYEES REPORTED STRESSFUL WORKING CONDITIONS AND INADEQUATE
STAFFING AND TRAINING OPPORTUNITIES

45.    Some former employees reported that they did not receive sufficient
training at the beginning of their employment and were not adequately prepared
when they started working at the company’s restaurants. Chipotle relied heavily
on “on the job” or “shoulder-to-shoulder” training on food safety policies and
procedures. Chipotle supplemented this training with “Chip Talk Notes,” commonly
referred to as “Food Safety Notes” by former employees. These notes were
developed to reinforce certain food safety policies and procedures at the store
level, and every employee was required to sign a form verifying that he or she
reviewed and understood the Food Safety Notes. Some former employees indicated
that they did not have sufficient time to review the Food Safety Notes. Chipotle
also requires, as part of its training, that employees watch training videos.
Some former employees stated that Chipotle did not give them adequate
opportunity to view these training videos.

 

18

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46.    During the period from 2015 to 2018, store-level Chipotle employees felt
that they could not stay at home when they were sick. Chipotle had a staffing
model for each restaurant that was based on sales volume and safety
considerations. Pursuant to this staffing model, each restaurant was required to
have a set baseline of employees, regardless of the sales volume, in order to
safely and efficiently operate. The staffing model further provided for each
restaurant to add additional staffing on an incremental basis as sales volume
increased to ensure that each restaurant could comply with Chipotle’s food
safety policies and procedures. Based on this staffing model, restaurant
managers would hire employees and set a roster of team members, who consisted of
entry level crew members and lower-level management who were responsible for
food storage, food handling, and food safety at each restaurant.

47.    Despite Chipotle’s staffing model, some former Chipotle employees
reported feeling stress and pressure because they felt overworked and
short-staffed, particularly during peak hours. For example, one former employee
noted that when there were supposed to be eight employees on a shift, there were
often only three to seven employees. Additionally, some Chipotle employees
reported that they were responsible for finding their own coverage for their
shifts if they became ill. Due to the pressure of not wanting to let their
teammates down, or of finding their own coverage, these employees reported
feeling pressure to work while sick, even though this was against Chipotle’s
sick exclusion policies. For example, one former employee who worked for
Chipotle for over four years stated that it was “somewhat

 

19

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difficult” to find a replacement employee and that “very frequently,” either the
manager covered the sick employee’s position, or the shift worked short-handed.

48.    Many Chipotle employees were teenagers and young adults, who were often
expected to quickly learn and perform key food safety and food preparation
tasks. Chipotle employees were often expected to learn these tasks through “on
the job” training from current Chipotle team members and management. As Chipotle
has acknowledged in its SEC reports, Chipotle “may be at a higher risk for
food-borne illness outbreaks than some competitors due to [its] use of fresh
produce and meats rather than frozen, and [its] reliance on employees cooking
with traditional methods rather than automation.” Training of Chipotle’s
employees is critical to ensuring food safety and food handling tasks,
particularly because so much of the responsibility for these tasks is placed on
entry-level employees who prepare fresh food for consumers under a fast-paced,
high-pressure environment.

49.    Some Chipotle employees described working at Chipotle as a tough job that
had high pressure. One former employee at the Simi Valley restaurant noted that
“the turnover rate was insane.” The turnover for Chipotle as a whole ranged from
121.7% in December 2014 to 151% in December 2017. In 2016, when Chipotle had a
turnover rate of 131%, other fast casual restaurants had a 122% turnover rate,
whereas other quick service restaurants had a 152% turnover rate. Experienced
employees noted that the high turnover rate made their jobs even more difficult.

 

20

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EXHIBIT C

Compliance Program

Chipotle Mexican Grill, Inc. (“Chipotle”), hereby agrees to the following
conditions of the deferred prosecution agreement:

1.    Chipotle shall, in consultation with its Food Safety Council, develop,
maintain, and implement a comprehensive compliance program to ensure that it
complies with all applicable federal and state food safety laws, including, but
not limited to, the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et
seq. (“FDCA”).

The compliance program shall be implemented for at least three years from the
date of this agreement.

2.    Chipotle shall, in consultation with its Food Safety Council, which it
established in 2017, and any other independent contractor or consultant it may
choose to retain, within six months of the date of this Agreement:

a)    Review in detail all records in Chipotle’s possession, including, but not
limited to, documents from its Safety, Security & Risk department (“SSR”),
training records, emails, notes, and any other materials maintained by the
restaurants for the outbreaks that occurred in Simi Valley, California; Boston,
Massachusetts; Sterling, Virginia; Powell, Ohio; and Los Angeles, California,
from 2015 through 2018;

b)    Conduct a root cause analysis of the failures that led to these five
outbreaks;

c)    Evaluate whether Chipotle’s current approach to compliance with state and
federal food safety laws and regulations is appropriate given the nature of
Chipotle’s fresh, non-frozen

 

1

--------------------------------------------------------------------------------

ingredients, including a review of Chipotle’s Hazard Analysis Critical Control
Point (“HACCP”) plans and Critical Control Points (“CCPs”) for each step in its
preparation process for each of the five restaurants mentioned in Paragraph 2(a)
to determine whether the HACCP plans are adequate;

d)    Review the implementation of Chipotle’s HACCP plans at the five
restaurants outlined in Paragraph 2(a) and whether such process is effective,
and how it can be improved;

e)    Review Chipotle’s approach to food safety audits, including an analysis of
such audits for the five restaurants that were the source of the outbreaks
described in Paragraph 2(a) and a determination whether such audits are
adequately ensuring that Chipotle’s restaurants comply with all federal and
state food safety laws perpetually, not only at the time of the audits;

f)    Review the staffing model employed at the five restaurants discussed in
Paragraph 2(a) to determine how to accommodate appropriate staffing in a high
turn-over retail environment and an appropriate revised staffing plan to address
food safety concerns identified in Paragraph 2(b) above;

g)    Review existing training policies and procedures for all hourly staff and
propose enhancements to ensure hourly staff in a high turn-over retail
environment have sufficient time to review the training materials and to ensure
that any food safety audits include a review of employee training and knowledge
of key food safety concepts and proper food handling practices;

h)    Identify any additional steps that Chipotle or its employees can take to
mitigate the issues that led to the outbreaks identified in Paragraph 2(a); and

 

2

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i)    Document all such analysis, findings, and recommendations in a
comprehensive report (the “Food Safety Plan”) that shall be shared with the U.S.
Attorney’s Office for the Central District of California and the Consumer
Protection Branch of the Civil Division of the U.S. Department of Justice
(collectively, “DOJ”), and the U.S. Food and Drug Administration (“FDA”) upon
request.

3.    After the initial analysis and report outlined in Paragraph 2 is
completed, Chipotle shall engage in a similar analysis and documented Food
Safety Plan for all Chipotle restaurants on an annual basis. The Food Safety
Plans shall be available to the DOJ and FDA upon request.

4.    In addition to providing the Food Safety Plan to the DOJ and FDA upon
request, Chipotle and its employees will respond to any inquiries by the DOJ and
FDA pertaining to any foodborne illness outbreaks at any Chipotle restaurants
within fifteen (15) business days, including, but not limited to, providing any
documentation developed by Chipotle, its Food Safety Council, or any independent
contractor Chipotle may hire to assist in completing the Food Safety Plan to the
DOJ and FDA upon request.

5.    Chipotle shall not distribute any food, as defined in 21 U.S.C. § 321(f),
that fails to comply with the FDCA.

6.    All terms of this agreement are apart from, and in addition to, any
existing authorities of the government or obligations of Chipotle under state
and federal law.

7.    Chipotle’s Vice President of Food Safety, or another executive officer
designated by Chipotle, shall certify to the DOJ that Chipotle is in compliance
with Paragraphs 2 and 3 of this agreement on an annual basis.

 

3

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Exhibit D

NICOLA T. HANNA

United States Attorney

BRANDON D. FOX

Assistant United States Attorney

Chief, Criminal Division

JOSEPH O. JOHNS (Cal. Bar No. 144524)

Assistant United States Attorney

Chief, Environmental and Community Safety

Crimes Section

MARK A. WILLIAMS (Cal. Bar No. 239351)

Assistant United States Attorney

Deputy Chief, Environmental and Community

Safety Crimes Section

SONIA W. NATH

Special Assistant United States Attorney

1300 United States Courthouse

312 North Spring Street

Los Angeles, California 90012

Telephone: (213) 894-4536 / (213) 894-3359

E-mail:        joseph.johns@usdoj.gov

mark.a.williams@usdoj.gov

GUSTAV W. EYLER

Director

DANIEL E. ZYTNICK

Trial Attorney

Consumer Protection Branch

U.S. Department of Justice

P.O. Box 386

Washington, DC 20044

Telephone: (202) 598-8337

Email:    daniel.e.zytnick@usdoj.gov

Attorneys for Plaintiff

UNITED STATES OF AMERICA

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

 

UNITED STATES OF AMERICA,

 

Plaintiff,

 

v.

 

CHIPOTLE MEXICAN GRILL, INC.,

 

Defendant.

 

  

Case No.

 

STIPULATION REGARDING REQUEST FOR

(1) CONTINUANCE OF TRIAL DATE AND

(2) FINDINGS OF EXCLUDABLE TIME

PERIODS PURSUANT TO SPEEDY TRIAL

ACT; [proposed] ORDER

     

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Plaintiff United States of America, by and through its counsel of record, the
United States Attorney’s Office for the Central District of California and the
United States Department of Justice’s Consumer Protection Branch (collectively,
the “Government”), and defendant CHIPOTLE MEXICAN GRILL, INC. (“CHIPOTLE”), both
individually and by and through its counsel of record, Jack P. DiCanio and David
C. Scheper, hereby stipulate as follows:

1.    The Information and Deferred Prosecution Agreement in this case were filed
on                 . The Speedy Trial Act, 18 U.S.C. § 3161, originally required
that the trial commence on or before                 .

2.    By this stipulation, CHIPOTLE moves to continue the trial date to
                . This is the first request for a continuance of the trial date.

3.    CHIPOTLE requests the continuance based upon the following facts, which
the parties believe demonstrate good cause to support the appropriate findings
under the Speedy Trial Act:

a.    CHIPOTLE is charged with adulterating food and causing food to become
adulterated while held for sale after shipment of one or more of its components
in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act
(“FDCA”) Title 21, United States Code, Sections 331(k) and 333(a)(1).

b.    CHIPOTLE has entered into a Deferred Prosecution Agreement with the
Government, which was filed on                 .

c.    In light of the foregoing, the parties represent that additional time is
necessary for CHIPOTLE to demonstrate its compliance with the provisions of the
Deferred Prosecution Agreement during the term of the agreement.

 

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d.    CHIPOTLE believes that failure to grant the continuance would be likely to
make a continuation of the proceeding impossible or result in a miscarriage of
justice.

e.    The Government does not object to the continuance.

f.    The requested continuance is not based on congestion of the Court’s
calendar, lack of diligent preparation on the part of the attorneys for the
Government or the defense, or failure on the part of the attorneys for the
Government to obtain available witnesses.

4.    For purposes of computing the date under the Speedy Trial Act by which
CHIPOTLE’s trial must commence, the parties agree that the time period of
                 to                 , inclusive, should be excluded pursuant to
18 U.S.C. §§ 3161(h)(7)(A), (h)(7)(B)(i), and (h)(7)(B)(iv) because the delay
results from a continuance granted by the Court at CHIPOTLE’s request, without
government objection, on the basis of the Court’s finding that: (i) the ends of
justice served by the continuance outweigh the best interest of the public and
CHIPOTLE in a speedy trial; and (ii) failure to grant the continuance would be
likely to make a continuance of the proceeding impossible, or result in a
miscarriage of justice.

5.    In addition, the parties agree that the time period of                  to
                , inclusive, should be excluded pursuant to 18 U.S.C. §
3161(h)(2) because the delay constitutes a period during which prosecution is
deferred by the attorneys for the Government pursuant to a written agreement
with CHIPOTLE, with the approval of the Court, for the purpose of allowing
CHIPOTLE to demonstrate its good conduct.

 

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6.    Nothing in this stipulation shall preclude a finding that other provisions
of the Speedy Trial Act dictate that additional time periods be excluded from
the period within which trial must commence. Moreover, the same provisions
and/or other provisions of the Speedy Trial Act may in the future authorize the
exclusion of additional time periods from the period within which trial must
commence.

IT IS SO STIPULATED.

 

Dated: April     , 2020

  

Respectfully submitted,

 

NICOLA T. HANNA

  

United States Attorney

  

Central District of California

  

 

  

JOSEPH O. JOHNS

MARK A. WILLIAMS

  

Assistant United States Attorneys

  

SONIA W. NATH

  

Special Assistant United States

  

Attorney

  

Attorneys for Plaintiff

  

UNITED STATES OF AMERICA

Dated: April     , 2020

  

Respectfully submitted,

  

GUSTAV W. EYLER

Director

  

Consumer Protection Branch

  

U.S. Department of Justice

  

 

  

DANIEL E. ZYTNICK

Trial Attorney

  

 

Attorney for Plaintiff

  

UNITED STATES OF AMERICA

 

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I am CHIPOTLE MEXICAN GRILL’s attorney. I have carefully discussed every part of
this stipulation and the continuance of the trial date with my client. I have
fully informed my client of its Speedy Trial rights. To my knowledge, my client
understands those rights and agrees to waive them. I believe that my client’s
decision to give up the right to be brought to trial earlier than is an informed
and voluntary one.

 

 

    

 

JACK P. DICANIO

Attorney for Defendant

CHIPOTLE MEXICAN GRILL, INC.

    

Date

I am CHIPOTLE MEXICAN GRILL’s attorney. I have carefully discussed every part of
this stipulation and the continuance of the trial date with my client. I have
fully informed my client of its Speedy Trial rights. To my knowledge, my client
understands those rights and agrees to waive them. I believe that my client’s
decision to give up the right to be brought to trial earlier than is an informed
and voluntary one.

 

 

    

 

DAVID C. SCHEPER

Attorney for Defendant

CHIPOTLE MEXICAN GRILL, INC.

    

Date

 

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I have been authorized by defendant CHIPOTLE MEXICAN GRILL, INC. (“CHIPOTLE”) to
enter into this stipulation. I have read this stipulation and have carefully
discussed it with CHIPOTLE’s attorney. I understand CHIPOTLE’s Speedy Trial
rights. On behalf of CHIPOTLE, I voluntarily agree to the continuance of the
trial date, and give up CHIPOTLE’s right to be brought to trial earlier than
    .

 

 

    

 

NAME:      Date TITLE:      Authorized Representative of      Defendant     
CHIPOTLE MEXICAN GRILL, INC.     

 

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