Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Mars had no duty to disclose supply chain labor practices on product labels, (Feb 18, 2016)

By Linda O’Brien, J.D., LL.M.

Candy manufacturer Mars, Inc., had no duty to disclose on its product labels or in advertising that there was a probability that child or forced labor practices arose in the supply chain for its chocolate products, the federal district court in San Francisco has ruled. Thus, consumers’ false advertising and consumer protection claims against Mars were dismissed (Hodsdon v. Mars, Inc., February 17, 2016, Seeborg, R.).

Mars, Inc. markets and distributes chocolate products in the United States and abroad. Some of the cocoa beans used to make Mars’ chocolate come from the Ivory Coast, where U.S. and international organizations have identified abuses of children and forced labor in the harvesting of cocoa on cocoa farms. In 2001, Mars and other chocolate manufacturers signed an agreement to develop certification procedures to eradicate child labor on cocoa farms but have been unable to establish such a system.

In September 2015, consumer Robert Hodsdon filed suit against Mars, alleging violations of California’s Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), and False Advertising Law (FAL). Hodsdon claimed that no information about Ivory Coast farms’ labor practices in Mars’ supply chain appears on the labels or in advertisements for most Mars chocolate products; Mars was obligated to include such information; and he would not have purchased or paid as much for Mars chocolate products had the labels included information about the labor practices of Mars’ cocoa suppliers. Mars moved for dismissal.

The court found that the UCL, CLRA, and FAL do not require the disclosure of the labor practices of a manufacturer’s suppliers. First, the FAL applies only to affirmative misrepresentations and not to omissions. In this case, the defendant did not make any statements at all and the plaintiff could only state a claim if the defendant actually made a statement but omitted information that undercut the truth of that statement. Second, there was no duty to disclose information about child or forced labor in the manufacturer’s supply chain under the CLRA and UCL since that information did not present any safety issues for consumers. Third, the plaintiff failed to show that Mars’ failure to disclose information that it was not obligated to disclose would mislead a reasonable consumer or constituted an unfair business practice under the UCL.

Finally, in dismissing the complaint without leave to amend, the court determined that amendment would be futile.

The case is No. 3:15-cv-04450-RS.

Attorneys: Christopher Robert Pitoun (Hagens Berman Sobol Shapiro LLP) for Robert Hodsdon. Stephen David Raber (Williams & Connolly LLP) for Mars, Inc. and Mars Chocolate North America LLC.

Companies: Mars, Inc.; Mars Chocolate North America LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews