Friday, September 24, 2021

Mars and Quaker dodge chocolate/child slavery claims, but Starbucks doesn't

Myers v. Starbucks Corp., 2021 WL 1921120, No. 5:20-cv-00335-JWH-SHKx (C.D. Cal. May 5, 2021)

Myers sued Mars, Quaker Oats, and Starbucks under the CLRA and UCL, alleging claims related to use of child slaves to produce cocoa. Child slavery, which allegedly produces most of the cocoa Americans consume, is horrific both for the enslaved children and for the environment, promoting deforestation in the Ivory Coast. Consumers would prefer “chocolate that destroys neither the rainforest nor the lives of millions of children,” but the supply chain makes detecting malfeasance difficult: “small farms sell to intermediaries, who mix together beans from many farmers to sell to grinders or traders and then to manufacturers.” Although chocolate is often untraceable, some companies have traced their cocoa from bean to chocolate bar and have eliminated child slavery from their supply chains. “However, the World Cocoa Foundation has conceded that it cannot eradicate child labor in cocoa production by 2025.”

All defendants advertise their cocoa as humanely produced. The back of Mars Dove Dark Chocolate products say: “[w]e buy cocoa from Rainforest Alliance Certified™ farms, traceable from the farms into our factory,” and Mars used the seal of Rainforest Alliance Certification, “a third-party certifier which holds itself out as the benchmark for the sustainable production of cocoa,” on packaging. However, “Mars can, at best, trace only 24% of its cocoa back to farms,” because the ethically sourced beans were allegedly intermingled with slave-produced beans at its factories.

Quaker Oats advertised that its Chocolate Chip Chewy Bars “support sustainably sourced cocoa through [the non-profit entity] Cocoa Horizons.” But the bars were allegedly not sustainably sourced, and only 26% of the farms from which Cocoa Horizons sources its cocoa had programs to prevent child labor.

Starbucks labels its Hot Cocoa Mix as “made with ethically sourced cocoa” and administers an internal certification program known as “COCOA.” Starbucks was allegedly “fully aware that the farms it sources its cocoa from use child and slave labor.”

The court granted the motion to dismiss as to Mars and Quaker, but not Starbucks.

Mars: The use of the Rainforest Alliance seal didn’t amount to a specific affirmative misrepresentation. Myers alleged that only 24% of the chocolate was traceable, and alleged that Mars intermingles its beans for Dove Dark Chocolate specifically and can’t trace its sources. But the court parsed the Mars statement like it was looking for perjury: Mars said that it buys traceable beans, not that it only buys traceable beans. That was true, and so it wasn’t an affirmative misrepresentation. Likewise, Mars only claimed that it bought traceable beans, not that the product on which it advertised its purchases of traceable beans contained those beans. This reasoning seems indifferent to the idea of “misleadingness” rather than falsity. But the court thought that Myers didn’t allege “facts sufficient to show that a reasonable consumer would read Mars’ packaging to mean the opposite of what it says.” [The opposite?]

Quaker: Likewise, because Quaker Oats advertised “support” for sustainably sourced cocoa, not any specific result, the label was not misleading.

Starbucks: Previously, the court dismissed an earlier version of the complaint because Myers had not pleaded facts sufficient to allege that the COCOA program was “a sham.” Also, alleged environmental misconduct didn’t matter, because “ ‘ethically sourced’ is generally understood to refer to labor practices.” (This court is not very interested in finding out what reasonable consumers actually might think.)

Myers revised her argument: because “no company, including Starbucks,” can claim slave-free chocolate, a reasonable consumer would be misled by chocolate advertised as “ethically sourced.”

This, the court accepted for purposes of the motion, though it was still skeptical. Myers successfully alleged that “child slavery is endemic to the chocolate trade; that it is difficult or impossible to produce chocolate without labor from child slaves; that a reasonable consumer is sensitive to these concerns and would consider ethically made chocolate and reliance on child slavery mutually exclusive; and that Starbucks claims that its hot chocolate is made from ethically sourced cocoa.”

Her desire to buy chocolate again also gave her standing for injunctive relief.

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