Chipotle Class Action Wants Grill to Cash Out Gift Cards

A class action lawsuit has accused restaurant chain Chipotle Mexican Grill Inc. of violating California law by refusing to exchange cash for store gift cards with $10 or less remaining on them. In a recent court filing, the proposed Class seeks a permanent injunction from the court, which would force Chipotle restaurants to comply with the California statute.

In the original complaint filed in July of 2015, plaintiff Betty Perez claimed that she had a gift card to Chipotle with less than $10 in credit on it, and “lawfully requested cash back [for the card], and was refused.” In addition, the class action lawsuit asserted that a “private investigator visited five additional separate Chipotle California restaurant locations, asked for cash back, and was refused all five times.”

This is not the first time Chipotle has been sued for not following the California gift card exchange law. The class action lawsuit states that Chipotle was sued in Superior Court in Los Angeles, Calif. in October of 2011. Chipotle later settled that lawsuit, “on terms ostensibly designed to ensure Chipotle’s future compliance with [that California statute],” according to the class action.

In her recent motion filed in March of this year, Perez claims that after her Chipotle gift card class action lawsuit was filed, she again went to a Chipotle store to return the gift card for money, and the store again refused the transaction. The class action alleges that Chipotle has made $9.3 million from gift card “breakage,” an industry term meaning gift cards that are not redeemed, and the motion theorizes that Chipotle does not want to give up that revenue stream. “Apparently, in the absence of Court intervention, Chipotle will continue to simply break the law, as it has for more than seven years since the passage of the [California gift card law],” the class action complaint argues.

The Chipotle gift card class action lawsuit contends that it has met the elements to justify the court issuing a permanent injunction against the Defendant restaurant chain. First, Perez asserts that she has proven Chipotle violated the gift card statute.  Second, she claims that Chipotle cannot refute that evidence, and cannot raise “a triable issue of material fact.”

Perez’s motion asks the court to enter an order that “Defendant Chipotle Mexican Grill, Inc., and its parents, subsidiaries, and other related entities and affiliates, are hereby enjoined from refusing any lawful request to redeem for cash any gift card sold in the State of California on or after July 10, 2011, having a balance of less than ten dollars ($10.00).” In addition, the class action argues that the court should order Chipotle to inform all employees and new hires of the court’s order and publish the order in county newspapers across the state of California.

The plaintiff is represented by Gary D. Garcia of the Law Office of Gary D. Garcia, and Melvin B. Pearlston and Robert B. Hancock of the Pacific Justice Center.

The Chipotle California Gift Card Class Action Lawsuit is Betty Perez v. Chipotle Mexican Grill Inc., Case No. RG15777445, in the Superior Court of the State of California for the County of Alameda.