Judge Richard Seeborg of the Northern District of California ruled earlier this month in Hodsdon v. Mars, Inc., Case No. 3:15-cv-04450, that neither the FAL, the UCL, nor the CLRA require a company to disclose on its labels that its products may contain ingredients harvested using child or other forced labor.
Plaintiff brought suit against Mars, Inc., the global candy manufacturer, alleging that California law required it to disclose on its labeling that some of its cocoa beans come from Côte d'Ivoire where children and other forced laborers endure deplorable working conditions. Plaintiff alleged that he would not have purchased the products, or would not have paid as much for them, had Mars disclosed this information on its product labels. The court found that, while Plaintiff had standing to sue, the alleged omissions were insufficient to support UCL, FAL, or CLRA violations.
Standing: Alleged Injury Based on Failure to Disclose Forced Labor Sufficient
Mars argued that Plaintiff lacked standing because he didn't claim to have purchased chocolate containing unethically sourced beans, he couldn't trace any chocolate to a particular location of objectionable practices, and he had not sufficiently alleged reliance. The court rejected all three arguments. The court noted that Plaintiff had not argued that he was injured by consuming chocolate tainted by child labor, but that his alleged injury was instead that he was unaware that children and other forced laborers existed in the supply chain. The court found that this disposed of the first two arguments. With respect to reliance, the court found that it was enough that Plaintiff claimed that he had seen the packaging, and that he would not have bought, or would not have paid as much for, the products had he know the truth.
Failure to State a Claim: Mars Had No Duty to Disclose Likelihood of Forced Labor
However, the court dismissed Plaintiff's complaint without leave to amend because he could not allege substantive statutory violations. The court first ruled that the FAL is not violated if a defendant fails to issue a statement at all. Instead, an omissions claim under the FAL requires that the defendant make a statement that omits information vital to the statement's veracity. Next, the court found that Plaintiff's UCL and CLRA claims failed because Mars had no duty to disclose the likelihood that some of its cocoa beans were linked to child or other forced labor. The court found that the duty to disclose under the CLRA was linked only to safety risks and product defects, which were not alleged here. Furthermore, the alleged omissions were not fraudulent under the UCL because they were not likely to deceive a reasonable consumer. Finally, the court rejected Plaintiff's claim under the UCL's "unfair" prong, finding no violation for Mars's failure to disclose information it had no duty to disclose.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© Morrison & Foerster LLP. All rights reserved
