Gubricky on behalf of Chipotle Mexican Grill, Inc. v. Ells
United States District Court for the District of Colorado
255 F. Supp. 3d 1119 (2017)
Shareholder Sean Gubricky brought a derivative action on behalf of Chipotle Mexican Grill, Inc. (Chipotle) (plaintiff) alleging Chipotle’s 10-member board, including co-chief executive officers Steve Ells and Montgomery Moran (defendants) failed to properly oversee Chipotle after a series of food-borne illnesses plagued patrons. After a 2008 outbreak, Chipotle adopted a protocol requiring employees to stay home for five days after illness, but only those employed over a year received paid sick leave. Seven years later, six outbreaks hit Chipotle in five months, beginning with three in August 2015. In the interim Chipotle had a risk-monitoring system, and filings showed awareness that Chipotle’s cooking procedures and fresh ingredients potentially increased the risks of food-borne illness. An August 2015 audit report found Chipotle’s internal audit department (IA) far under budget and admitted only partial compliance with risk-assessment standards, but IA believed the standards required details not necessary or appropriate in Chipotle restaurants, and the risk department had reported no material food-safety events. Gubricky alleged the board remained unaware of one August outbreak until December but alleged nothing about the board’s knowledge of the other two or of what caused the outbreaks. The complaint alleged that only Ells participated in preparing allegedly misleading public statements. Chipotle’s Delaware charter exculpated directors from personal liability. The board moved to dismiss for failure to plead demand futility.
Rule of Law
Holding and Reasoning (Martínez, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 711,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 711,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,600 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.