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Marler Blog Providing Commentary on Food Poisoning Outbreaks & Litigation

Outback Steakhouse closes on acquisition of Chi-Chi’s restaurants

As the Associated Press reported today, Outback Steakhouse Inc. this week closed on its $42.5 million deal for the rights to 76 restaurants in the Chi-Chi’s chain, which was beleaguered by bankruptcy and a hepatitis outbreak.

Chi-Chi’s was left reeling by a hepatitis A outbreak last fall that sickened 660 people who ate at a Pennsylvania restaurant. The outbreak, traced to green onions, killed four. More that 300 victims filed claims seeking damages from the company.

Chi-Chi’s filed for Chapter 11 bankruptcy protection a few weeks before the outbreak, due to unrelated cash-flow problems.

Plaintiffs’ attorney William Marler said Outback’s successful bid for the rights to the Chi-Chi’s restaurants would not affect pending cases.

Marler, of Seattle, said about 150 of approximately 325 claims have been settled, with $7 million paid out so far. He said plenty remains in an existing insurance pool to pay off future claims.

“It would be very unlikely that this insurance money is not enough,” said Marler, who represents about a third of claimants.

Health officials traced the hepatitis outbreak to Mexican-grown green onions that Chi-Chi’s used in salsa and as a garnish on dishes at its Beaver Valley Mall restaurant near Pittsburgh.