229 F. Supp. 3d 1075
N.D. Cal.2017Background
- Plaintiffs Monica Sud and Cecilia Jacobo brought a putative California class action alleging Costco sold Southeast Asian farmed prawns whose supply chains were tainted by slavery, human trafficking, and illegal labor; CP Defendants were alleged suppliers.
- Plaintiffs sued under the UCL (all prongs), the FAL, and the CLRA; they alleged omissions on product packaging and relied in part on Costco’s website Disclosure and supplier Code of Conduct.
- Plaintiffs purchased prawns sourced from Indonesia and Vietnam; they did not allege purchases of prawns actually produced or marketed by the named CP Defendants.
- The court previously dismissed for lack of Article III standing as to Thailand purchases and allowed amendment; Plaintiffs filed a First Amended Complaint expanding country allegations and adding Jacobo.
- Defendants moved to dismiss; the court granted CP Defendants’ motion for lack of Article III standing and granted Costco’s motion on multiple grounds (no duty to disclose, FAL not covering pure omissions, and failure to plead unlawful/unfair UCL claims).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing as to CP Defendants | Plaintiffs contend they may sue suppliers for class-wide products without alleging each named defendant supplied the specific prawns they bought | CP Defendants argue Plaintiffs did not trace purchases to them and thus lack standing | Court: Plaintiffs lack Article III standing versus CP Defendants because they did not allege purchases traceable to those defendants; dismissal granted |
| Duty to disclose labor-abuse supply-chain information on product packaging | Plaintiffs say Costco’s public statements (Disclosure, Code of Conduct) and omissions impose a duty to disclose supply-chain abuses to consumers | Costco argues no duty to disclose absent product safety, defect, or affirmative misrepresentation; public info undermines exclusivity | Court: No duty to disclose such supply-chain abuses on packaging absent safety/defect or specific affirmative misrepresentation; CLRA and fraudulent UCL claims dismissed |
| Applicability of FAL to omissions | Plaintiffs assert FAL covers misleading omissions and partial statements | Costco argues FAL proscribes making or disseminating false statements and does not reach pure omissions | Court: FAL does not reach pure omissions where no false or affirmative statement was made; FAL claim dismissed |
| UCL unlawful/unfair prongs based on sourcing/sales | Plaintiffs claim Costco’s sourcing/sales violate other laws and render its practices unlawful or unfair under the UCL | Costco contends plaintiffs fail to plead predicate statutory violations and their unfair claim is not tethered to established policy or safety concerns | Court: Plaintiffs failed to plead predicate unlawful violations and did not state an unfair-prong claim; UCL claims dismissed |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. 2016) (standing requires concrete injury traceable to defendant and redressable)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (pleading-stage standing principles)
- In re Tobacco II Cases, 46 Cal.4th 298 (Cal. 2009) (statutory standing under UCL/CLRA requires reliance)
- Wilson v. Hewlett-Packard Co., 668 F.3d 1136 (9th Cir. 2012) (manufacturer’s duty to disclose is limited; omissions actionable mainly for safety/defect issues or to counter affirmative misrepresentations)
- McCoy v. Nestle USA, Inc., 173 F. Supp. 3d 954 (N.D. Cal. 2016) (omission-based claims about supply-chain labor abuses not actionable under CLRA/FAL/UCL where no duty to disclose)
- Hodsdon v. Mars, Inc., 162 F. Supp. 3d 1016 (N.D. Cal. 2016) (similar holding that supply-chain labor abuses do not create duty to disclose on packaging)
- Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir. 2015) (omission-reliance analysis requires awareness and change-in-behavior subelements)