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Jun 22, 2018

Consumer Pressure Mounting: Is Your Company At Risk of Forced Labor in Your Supply Chain?

Consumer concerns about the use of forced labor are rapidly growing, putting legal pressure on large corporations such as Costco, to reduce the use of forced labor in their supply chain.  This could be ground breaking, and with many corporations now publishing human rights and anti-human trafficking policies in compliance with the California Supply Chain Transparency Act, it is crucial to take notice of this potential new cause of action, upon which relief could be granted. 

Recently, the Ninth Circuit recently dismissed a class action against Mars Inc., where plaintiffs alleged that Mars had a duty to disclose the possible use of forced labor in the supply chain of its cocoa.  The court held that since Mars had no public human rights or anti-human trafficking policy, it was not in violation of disclosure laws which would require the corporation to disclose the use of forced labor.

However, this case could have broader effects. In 2015, plaintiffs filed a class action suit against Costco for false advertising, alleging the retailer knowingly sold prawns farmed in connected with forced labor, in violation of the whole sale giant’s public anti-human rights abuses policy.  In 2017, the U.S. District Court dismissed the case, stating that the consumers failed to prove they relied on Costco’s anti-human rights abuses policy before purchasing the prawns, and that they only became aware of the possible use of forced labor after their purchase. However, following the Mars decision, plaintiffs from the Costco suit are now asking the Ninth Circuit to allow them to amend their initial claim.  They argue that the Mars decision could possibly allow for them incorporate the changing precedence and now contend that Costco had a duty to disclose the known use of forced labor in the farming of the prawns, which contradicted its public anti-human rights abuses policy. 

Regardless of how the Court will fall on the plaintiffs’ request to amend their claim in the Costco suit, this further demonstrates the escalating concern about the use of forced labor in global supply chains.  Another large name brand, Coca Cola, has fallen to the pressure of reducing forced labor from their supply chain, after several media scandals and reports highlighted the human rights abuses connected to the brand.  Coca Cola is now working with the U.S. Department of State to increase transparency and traceability of its supply chain through the innovative use of blockchain technology.

The question for corporations is no longer why it should have a sustainable and forced labor free supply chain, but how to achieve this goal.  The consumer market is becoming increasingly more socially aware, and taking human rights abuses seriously.  Companies now must better equip themselves with the tools necessary to uncover forced labor and eliminate it from the supply chain.  If you would like to find out if your company is at risk for the use of forced labor in your supply chain, and how to remedy it, please contact us immediately. 

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