“In the absence of any affirmative misrepresentations by the manufacturer, we hold that the manufacturers do not have a duty to disclose the labor practices in question, even though they are reprehensible, because they are not physical defects that affect the central function of the chocolate products,” U.S. Circuit Judge A. William Tashima wrote for the unanimous three-judge panel.
Most of the world’s cocoa bean supply comes from the Ivory Coast, which, according to the International Labor Organization, uses the “the worst forms of child labor” in cocoa bean production. Like many other chocolate manufacturers, Mars sources at least some of its beans from the Ivory Coast, where children labor on cocoa farms using machetes and chemicals to harvest the raw ingredient for chocolate.
Some of the children used in the operations were sold by their parents, and others are victims of kidnapping.
But the labor practices used to make chocolate are not a physical product defect for which California law requires disclosure, Tashima wrote.
“A computer chip that corrupts the hard drive, or a laptop screen that goes dark, render those products incapable of use by any consumer; some consumers of chocolate are not concerned about the labor practices used to manufacture the product. Thus, plaintiff fails to establish that Mars has a duty to disclose the issues in its supply chain,” Tashima wrote, citing Rutledge v. Hewlett-Packard Co., a case that specifies the critical element of a duty to disclose: that the product’s hidden defect must relate to its central function.
A lack of disclosure about the labor practices involved in Mars’ chocolate supply chain “is not a physical defect at all, much less one related to the chocolate’s function as chocolate,” he added.
California consumer Robert Hodson 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. Mars does not disclose the potentiality of child slave labor in its supply chain, but its website makes known its efforts to combat such abuses in compliance with the 2010 California Transparency in Supply Chains Act.
U.S. District Judge Richard Seeborg dismissed the case in 2016, relying on a 2012 Ninth Circuit ruling in Wilson v. Hewlett-Packard that says 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 also found that because supply chain information is available on the Mars website, its absence from packaging is “not ‘substantially injurious to consumers’ or necessarily immoral.”
Tashima said the Ninth Circuit panel found no reason to deviate from Wilson here. Although other recent California cases like Rutledge “do cast doubt on whether Wilson’s safety-hazard requirement applies in all circumstances,” he said, Hodson still hasn’t shown Mars has a duty to disclose under those cases.
Tashima was joined by Circuit Judges William A. Fletcher and Marsha S. Berzon.
In a statement sent to Courthouse News, a Mars representative said, "Mars is pleased with the Ninth Circuit’s decision affirming the district court’s dismissal of the Hodsdon case. We have never condoned the use of forced labor – or any human rights abuses – in our supply chain and continue to combat this disturbing and complex problem working with international organizations, governments and NGOs. But Mars believes that consumer class action litigation does not aid the concerted efforts to eradicate these practices because it offers no solution to the underlying human rights issues."
Attorneys for Hodson did not respond to emails seeking comment Monday.
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