9th Circuit: Costco Not Liable for Selling Prawns Caught by Slaves

The US 9th Circuit Court of Appeals has ruled that Costco cannot be held liable for selling prawns that may have been tainted by slave labor.

The three-judge panel said that the plaintiff, consumer Monica Sud, did not rely on the company’s representations about policing human rights abuses in its supply chain.

“Here, the plaintiffs have not pled reliance on Costco’s alleged misrepresentations,” reads the judges’ opinion. “Even if construed as an affirmative misrepresentation claim, the plaintiffs’ complaint was correctly dismissed.”

Courthouse News Service reports:

Lead plaintiff Monica Sud sued Costco in August 2015, claiming the retail giant buys farmed prawns from Thailand and other parts of Southeast Asia knowing they are produced with slave labor on unregistered “ghost ships.”

“It’s disappointing,” said Sud’s attorney Anne Murphy, of Cotchett, Pitre & McCarthy in Burlingame, California. “We hoped that the court would see things differently.”

Along with the reliance issue, the panel ruled that because slave labor wasn’t related to the central functionality of the prawns, the claims were invalid. Additionally, the plaintiffs attempted to tether their claims to a legislative policy.

“Here, the plaintiffs identify the anti-slavery policy of the United Nations Declaration of Human Rights as the relevant legislative policy,” the panel wrote. “But in Hodsdon we held that ‘there is not a close enough nexus’ between the UNDHR and the failure to include disclosures on product labeling.”

Hodsdon v Mars, argued in front of the Ninth Circuit last year, involved similar claims of a company’s duty to disclose the labor practices in their supply chain. The case was similarly dismissed by a U.S. District Court judge and the dismissal was affirmed by a 9th Circuit panel.

In this case, Sud argued that Costco hid material facts from consumers, pointing to the company’s supplier code of conduct on its website, which prohibits human rights abuses.

Two major prawn suppliers, Charoen Pokphand Foods, a Thailand corporation, and C.P. Food Products, a Maryland corporation, were also named as co-defendants in the lawsuit.

U.S. District Court Judge Jeffrey White originally dismissed the case in January 2017, finding that Sud failed to show that she read or relied on Costco’s labor practices before purchasing prawns.

Despite not winning the case, Murphy said, “It is important for consumers to be bringing these types of cases, as it sheds light on the problem of human trafficking and slavery.”