180 F. Supp. 3d 652
N.D. Cal.2016Background
- Plaintiff Laura Dana brought a putative class action alleging Hershey failed to disclose on chocolate packaging that some cocoa originated from Ivorian farms using slave labor and the worst forms of child labor.
- Dana asserted violations of California's CLRA, UCL (unlawful, unfair, fraudulent prongs), and FAL based on nondisclosure; she alleges she would not have purchased or would have paid less if properly informed.
- Hershey moved to dismiss, arguing (inter alia) no duty to disclose (except for safety or affirmative misrepresentations), lack of standing to challenge supply-chain omissions, the California Supply Chains Act safe-harbor, and First Amendment problems.
- The court heard related authority (including Hodsdon v. Mars and decisions involving Nestlé and others) and treated allegations as true for Rule 12(b)(6) purposes.
- The court found Dana has Article III and statutory standing but dismissed all claims on the merits, holding California law does not impose a duty to disclose the alleged supply-chain labor conditions on product labels and omissions alone do not state an FAL claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Dana: paid premium/wouldn't have purchased absent nondisclosure; that economic injury suffices | Hershey: cannot trace cocoa in specific bars to abusive farms, so no particularized injury | Court: Dana has Article III and statutory standing (Hinojos/Kwikset line) |
| CLRA—duty to disclose | Dana: omission about source/characteristics/standard misleads consumers under CLRA §1770 categories | Hershey: no duty absent safety issue or affirmative misrepresentation; CLRA targets product attributes, not supply-chain labor | Court: duty-to-disclose under CLRA limited; no safety/affirmative misrep alleged → CLRA claim dismissed |
| UCL (unlawful/fraudulent/unfair) | Dana: nondisclosure is unlawful (via CLRA), fraudulent (likely to deceive), and unfair (contravenes public policy against slavery/child labor) | Hershey: unlawful fails if CLRA fails; fraudulent requires duty to disclose; unfair requires tether to legislative policy or substantial consumer injury | Court: unlawful and fraudulent prongs fail (no CLRA/duty); unfair prong fails under both tests (no legislatively declared policy requiring label disclosures; nondisclosure not substantially injurious given information availability) |
| FAL—omission liability | Dana: FAL can reach misleading omissions and superior knowledge supports duty | Hershey: FAL prohibits statements, not pure omissions; liability requires affirmative misstatement or partial misrepresentation | Court: FAL requires a statement; pure omissions claim fails → FAL claim dismissed |
Key Cases Cited
- Doe I v. Nestle USA Inc., 766 F.3d 1013 (9th Cir. 2014) (recognizing Ivorian cocoa supply-chain labor abuses)
- Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013) (economic injury from reliance on product labeling suffices for standing under UCL/FAL)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal. 2011) (consumer reliance on label misrepresentations supports UCL/FAL standing)
- Wilson v. Hewlett-Packard Co., 668 F.3d 1136 (9th Cir. 2012) (absent affirmative misrepresentations, duty to disclose generally limited to product safety/defects)
- Hodsdon v. Mars, Inc., 162 F. Supp. 3d 1016 (N.D. Cal. 2016) (similar dismissal of nondisclosure claims re: chocolate supply chain)
- Cel‑Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (Cal. 1999) (definition of “unfair” in UCL for competitor suits and limits on UCL overreach)
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (U.S. 1985) (compelled commercial disclosures are subject to a lower constitutional standard when factual and uncontroversial)