173 F. Supp. 3d 954
N.D. Cal.2016Background
- Plaintiff Elaine McCoy (putative class rep) purchased Nestlé chocolate in California and alleges Nestlé failed to disclose on product packaging that some cocoa originates from Côte d’Ivoire farms using slave labor and the worst forms of child labor.
- Complaint asserts violations of California’s Unfair Competition Law (UCL), Consumer Legal Remedies Act (CLRA), and False Advertising Law (FAL), based on omissions (not affirmative misrepresentations).
- McCoy pleads she would not have purchased or would have paid less for Nestlé products if the alleged omissions had been disclosed.
- Nestlé moved to dismiss on multiple grounds: no duty to disclose (safety-limited duty), lack of standing/reliance, FAL covers statements not pure omissions, Rule 9(b) heightened pleading, Supply Chains Act safe harbor, First Amendment, and equitable abstention.
- District courts considering similar suits (notably Hodsdon v. Mars) largely dismissed claims; this court adopts similar reasoning and dismissed McCoy’s claims with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III & statutory standing | McCoy paid more/relied on labeling and would have paid less or not purchased if facts disclosed | Lack of traceability to prove the specific bars purchased used cocoa from abusive plantations => no particularized injury | McCoy has standing: alleging overpayment/reliance is a concrete economic injury under Hinojos/Kwikset |
| CLRA (omission-based misrepresentation of source/characteristics/standard) | Failure to disclose supply-chain labor abuses misrepresents source/characteristics/standard | California law limits disclosure duty absent safety issue or affirmative misrepresentation; no duty here | Dismissed: no duty to disclose non-safety supply-chain information under existing Ninth Circuit authority (Wilson) |
| UCL (unlawful/fraudulent/unfair prongs) | Omissions are unlawful/fraudulent/unfair because they prevent informed consumer choice and contravene public policy against slavery/child labor | No underlying statutory requirement to disclose on product labels; fraudulent prong requires a duty to disclose; unfair prong not tied to legislatively declared policy and harm not substantial | Dismissed: unlawful and fraudulent prongs fail (no CLRA duty); unfair prong fails under both Cel‑Tech tethering and South Bay balancing analyses |
| FAL (Cal. Bus. & Prof. Code §17500) | Omission of material facts about supply chain is misleading advertising | FAL prohibits making or disseminating false statements; pure omissions without an affirmative statement are not covered | Dismissed: FAL claims premised on pure omissions fail because statute targets affirmative statements or dissemination of misleading statements |
Key Cases Cited
- Doe I v. Nestle USA, Inc., 766 F.3d 1013 (9th Cir. 2014) (acknowledging documented child and forced labor in Ivorian cocoa supply chains)
- Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013) (purchaser who paid more because of misrepresentation has Article III and statutory standing under UCL/FAL)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal. 2011) (consumer reliance on product labeling can establish standing and economic injury)
- Wilson v. Hewlett‑Packard Co., 668 F.3d 1136 (9th Cir. 2012) (absent affirmative misrepresentation, duty to disclose under California law is generally limited to safety-related matters)
- Cel‑Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (Cal. 1999) (UCL ‘‘unfair’’ prong for competitors must be tethered to antitrust policy; courts must be cautious in defining unfairness)
- Hodsdon v. Mars, Inc., 162 F.Supp.3d 1016 (N.D. Cal. 2016) (district court dismissing materially similar omissions claims against a chocolate maker)
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (U.S. 1985) (standard for compelled commercial disclosures when narrowly tailored and factual)