Del Rey Tortilleria Inc. immediately agreed to a consent decree under which it will stop making flour tortillas pending Food and Drug Administration approval of its safety program.
Among other things, Del Rey Tortilleria must hire two FDA-approved safety experts. The company will continue to manufacture tostadas, fried tortilla chips and masa, or corn flour.
The lawsuit also named as defendants Del Rey Tortilleria's president and two general managers.
Outbreaks of gastrointestinal illness in school children in Wisconsin and Massachusetts were associated with the company's flour tortillas, the complaint said.
Inspections by FDA officials found violations ranging from chemicals stored near raw ingredients to plumbing and fixtures not adequately installed, the lawsuit said.
An attorney for Del Rey Tortilleria, Robert Orman, said "the FDA is watching the company and the company is doing everything it should and so we move on."
Federal officials said they were pleased with the consent decree.
"We have every indication at this point that they're going to cooperate with the FDA and comply with the consent decree and so obviously we're pleased," said Donald R. Lorenzen, the assistant U.S. attorney who handled the lawsuit for the government.