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Mars Ducks Cocoa Farm Slave Labor Lawsuit

SAN FRANCSISCO (CN) - Chocolate giant Mars successfully dodged a class action Wednesday claiming it failed to warn consumers about the use of child and slave labor in its supply chain.

Lead plaintiff Robert Hodsdon sued Mars in September 2015, saying he would not have bought Mars chocolate products had he known they possibly contained cocoa harvested by children and slave laborers in the Ivory Coast.

U.S. District Judge Richard Seeborg on Wednesday dismissed the suit without leave to amend, finding Mars is not required to disclose the details of its supply chain on product labels.

More than 1.1 million children in the Ivory Coast have suffered the "worst forms of child labor" - using dangerous tools, transporting heavy loads and exposure to pesticides - according to a 2015 U.S. Labor Department-sponsored study by Tulane University cited in Hodsdon's complaint.

Mars and other chocolate makers have pledged to put in place a new certification system by 2020 that will eliminate child and slave labor from supply chains. However, Mars made similar promises in 2001 and failed to achieve its goal, according to the ruling.

As of 2013, only 36 percent of Mars cocoa was certified, and recent reports indicate the number of children working on cocoa farms has increased since 2005, the ruling said.

Child and forced labor on West African cocoa farms is "indisputably an international tragedy," Seeborg wrote in his ruling, but that doesn't mean the law requires Mars to reveal the information to consumers when they buy chocolate.

When it comes to California's false advertising law, companies can only be held liable for making a false statement or omitting material information from a statement, the judge said.

"When the defendant has not made any statements at all, a plaintiff cannot assert a claim under the false advertising law," Seeborg wrote in his 16-page ruling.

Turning to Mars' duty to disclose information under the state's Consumer Legal Remedies Act and unfair competition law, Seeborg cited a 2012 Ninth Circuit ruling in Wilson v. Hewlett-Packard which concluded "California courts have generally rejected a board obligation to disclose."

The Wilson ruling held that businesses are only required to reveal information about a product's safety risks and defects, not about information that may have persuaded a consumer to make a different purchasing choice.

Seeborg rejected Hodsdon's arguments that a 2012 Central District of California ruling, Stanwood v. Mary Kay, held that Wilson only applies to product liability cases that involve warranties.

"The definition of material admission has stunning breadth, and could leave manufacturers (chocolate and otherwise) little guidance about what information, if any, it must disclose to avoid Consumer Legal Remedies Act or unfair competition law liability," Seeborg wrote.

He also found that because information about the supply chain is available on the Mars website, its absence from packaging is "not 'substantially injurious to consumers' or necessarily immoral."

Seeborg said a claim for relief under the state's unfair competition law must be tethered to a specific violation of law, and Hodsdon did not allege the failure to disclose violated any public policy.

"Because the false advertising law, unfair competition law and Consumer Legal Remedies Act do not require Mars to disclose on labels that its chocolate products may contain cocoa beans harvested by child and or forced labor, Mars' motion to dismiss the complaint is granted," Seeborg concluded.

The judge dismissed the suit without leave to amend, finding any amendment would be futile.

In a statement, Mars said it is "pleased" with Seeborg's dismissal of the case.

"We share the widely held view that child labor and forced labor are abhorrent, and are rooted in complex economic, political and social issues," the company added. "Our human rights policy and supplier code of conduct make clear that we work with our direct suppliers to help address this problem, and seek to uphold international human rights standards.

"We, along with many governments, nongovernment organizations and other world-renowned organizations, will continue to collaborate in an effort to eliminate the worst forms of child labor and forced labor in the cocoa supply chain. Our business is based on principles that compel us to pursue solutions that are mutually beneficial for everyone in our supply chain."

Hodsdon's attorney, Christopher Pitoun of Hagens Berman, deferred comment to the law firm's media relations director, who did not immediately return a phone call seeking comment.

Chocolate giants Hershey and Nestle still face similar claims in two class actions that were filed in September 2015.

Mars is the largest candy company in the nation, with $18.5 billion in candy revenue in 2014, and Hershey was No. 3, with $7.1 billion, according to candy industry publications. Nestle reported $100 billion in income that year, though it is not clear how much of that comes from candy and chocolate.

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