SAN FRANCISCO (CN) – A federal judge on Friday considered whether Nestle and Hershey’s supposed dependence on child slave labor should be disclosed on their products’ wrappers.
Two federal consumer class actions filed in September 2015 claim the chocolate companies “turn a blind eye” to human rights abuses by cocoa suppliers in West Africa while falsely portraying themselves as socially and ethically responsible.
Mars was the target of another similar class action, but the company ducked the lawsuit in February.
At Friday’s hearing, plaintiffs’ attorney Kevin Green told U.S. Magistrate Judge Joseph Spero that “duty arises from materiality, and in this case materiality arises from Nestle and Hershey’s superior knowledge” – a point that drew a rapid response from Spero.
“It’s not my recollection that everyone has a duty when they’re selling something to disclose everything material about it,” Spero said. “You think that any time a seller has superior knowledge, they must, if it’s arguably material, put it on the packaging? It sweeps rather broadly, don’t you think?”
Spero added that “there are any number of things that are material to consumers. I don’t know how you’re going to fit that on a chocolate bar.”
In response, Green said, “We already see disclosures on products of the ingredients. This is a disclosure related to the process by which it is made.”
But Spero told Green that what he was talking about was “untethered.”
“It could be any number of things,” Spero said. “It could be that consumers could be interested that the manufacturer of this particular product pays less than $15 an hour, or that the manufacturer has exported a number of jobs to China.”
Maintaining that such disclosures would cover “important issues,” Spero said, “I’m just wondering how a manufacturer draws a line. I’m not understanding how you can, because the process by which they manufacture it is everything they do.”
Green said that “we’re dealing with very severe conditions on the Ivory Coast,” where “something like 70 percent of the children who work on those cocoa farms are between the ages of five and eleven.”
Spero said, “The situation described in your papers is terrible. There’s no dispute about that. The question is whether to put it on the point-of-sale packaging.”
Arguing for Hershey, Jonah Knobler said that by the plaintiffs’ theory, “anytime something was material, there would be liability,” which he said was “the opposite of what the common-law rule has been for centuries.”
“If the plaintiff is challenging the corporate practices of defendants’ upstream suppliers, then the manufacturer is liable and there’s no defense,” Knobler said. “That seems to get it backwards to me.”
Knobler added, “I think I’m a reasonable person. I would not buy a product from people who openly discriminate against people of color, gays, lesbians, women.
“I don’t expect that to be on the wrappers of their chicken sandwiches when I go to buy them,” Knobler said, presumably referring to the fast food chain Chick-Fil-A.
He also said that the plaintiffs take the view “that as long as the manufacturer has superior knowledge about the product, that’s enough.”
“But that’s no rule at all, because the manufacturer always has superior knowledge about its product,” Knobler said.
He also pointed out that Nestle and Hershey’s alleged practices are “openly disclosed” on their company websites and corporate reports.
In his rebuttal, Green contended that if that information is not on the wrapper, “people won’t see it.”
Spero said he would issue an order in the next couple of weeks.
Green is with Hagens Berman in San Diego.
Knobler is with Patterson Belknap in New York.
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