Legal Considerations in Responsible Investment

Ninth Circuit Holds No Duty to Disclose Unfair Labor Practices under California Consumer Protection Law

On June 4, 2018, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a class action alleging that Mars, Inc. had a duty under California consumer protection laws to label goods as possibly being produced using slave or child labor. Hodson v. Mars, No. 16-15444 (9th Cir.).

The Court held that defendants had no affirmative duty to disclose information if it did not relate either to a safety hazard or to the central function of the product at issue.  The Court further held such failure to label goods too far removed from the general policy against child and slave labor implicated in international declarations on human rights to constitute a violation of the spirit of those declarations.  While the labor practices themselves were “clearly immoral,” held the Court, it was “doubtful” that failure to disclose the information on product labels was itself immoral.  This decision suggests that California’s robust consumer protection laws are unlikely to provide a successful mechanism for holding U.S. companies responsible for including disclosures about supply-chain forced or child labor on product labels.

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