Demands For On-Label Disclosure Of Possible Supply-Chain Abuses Fail In Ninth Circuit | RetailTechPodcast

Demands For On-Label Disclosure Of Possible Supply-Chain Abuses Fail In Ninth Circuit

Instead of complaining that consumers had been misled by a food label's use of a term such as "Natural," these suits claimed harm from a company's failure to disclose possible human-rights abuses in its supply chain. Under the California Transparency in Supply Chain Act of 2010, companies such as Mars and Nestlé already acknowledge these abuses occur in countries from which they import ingredients and disclose their efforts to combat forced child labor. The Ninth Circuit panel-Judges Tashima, Fletcher, and Berzon-began its march through the class-action plaintiffs' appeals on June 4, 2018, with a published opinion in Hodson v. Mars, Inc. The panel's initial task was to determine whether, under California state-law precedents, Mars had a duty to disclose, on its product label, the risk of supply-chain human rights abuses. Mars directed the court to a 2012 Ninth Circuit ruling that required all plaintiffs alleging failure to disclose to establish that the information omission "Caused an unreasonable safety hazard." Hodson countered that post-2012 California state-court decisions set out a different test in failure-to-disclose consumer-fraud cases. The court explained that the state court decisions required that the omission be material to consumers and involve information that goes to the central function of the product. The court's duty-to-disclose determination also doomed Hodson's claims under the UCL that Mars's omission was "Unlawful" and "Fraudulent." That left only Hodson's claim that the omission was "Unfair," the definition of which, the court stated, "Is currently in flux among California courts." As it declined to do with the duty-to-disclose test, the Ninth Circuit did not clarify the test for "Unfair." Rather, it reasoned that "It is doubtful" that Mars's failure to print a "Possibly includes ingredients harvested by forced child labor" disclaimer on its product is itself "Immoral". The Hodson panel disagreed, and also noted that the only California law relevant to the case-the Transparency in Supply Chain Act-fails to require labeling. Read more