Author:Barna, Andrew G.

TABLE OF CONTENTS INTRODUCTION 1451 I. LEGISLATIVE DEVELOPMENTS TO FIGHT FORCED 1456 LABOR IN CORPORATE SUPPLY CHAINS A. Direct Regulations Between Governments and Corporate 1457 Actors B. Targeting the Consumer Through Indirect 1458 Regulation II. WHY SUPPLY-CHAIN DISCLOSURE LAWS FAIL AS 1460 CONSUMER ACTIVIST TOOLS A. The California Transparency in Supply Chains 1460 Act of 2010 B. UK Modern Slavery Act 2015 1464 C. The Oft-Proposed U.S. Business Supply Chain 1466 Transparency on Trafficking and Slavery Act D. 2017: The French "Corporate Duty of Vigilance" 1469 Law, the Dutch Child Labour Due Diligence Bill, and Other International Developments III. NEW CONSUMER ACTIVISM: STRATEGIC CONSUMER 1471 LITIGATION TO HOLD CORPORATIONS ACCOUNTABLE FOR SUPPLY-CHAIN RISKS A. Alleging Standing Properly 1473 B. Seemingly Insurmountable Hurdles on the Merits 1476 1. Material Misrepresentations and Omissions 1477 2. Application of the "Safe Harbor" Doctrine 1481 IV. How CONTINUED APPLICATION OF CONSUMER PROTECTION 1483 LAW MIGHT YIELD REDRESS TO CONSUMERS IN THE FUTURE CONCLUSION 1491 INTRODUCTION

On September 28, 2015, a consumer sued a chocolate company. (1) In her complaint, Ms. Elaine McCoy alleged that Nestle USA deceived her by failing to disclose slavery in its chocolate candy supply chain. (2) Nestle USA produces some of its most popular products--"Nestle Crunch, 100 Grand, Baby Ruth, Butterfingers, Nestle Toll House, Nestle Hot Cocoa Mix, [and] Nestle Milk Chocolate"-using cocoa beans from Cote d'Ivoire. (3) Those beans are grown by farming cooperatives in which the Fair Labor Association discovered evidence of forced and child labor. (4) Ms. McCoy claimed that Nestle's continued sourcing from those cooperatives, without disclosing the evidence of slavery to consumers, was a material omission in violation of California consumer protection law. (5)

Ms. McCoy's case was dismissed for failure to state a claim. (6) But Judge Joseph Spero of the Northern District of California acknowledged a troubling reality for socially conscious chocolate lovers: "Nestle currently cannot trace the cocoa used in a particular Nestle chocolate product to a specific plantation, and there is thus no way to know what labor practices were used in its production." (7) Nestle USA (8) signed a 2001 international pact to end "the worst forms of child labor" and forced labor in cocoa production. (9) However, like many global enterprises, Nestle USA has struggled to achieve supply-chain awareness, (10) a prerequisite for eliminating slavery from its supply chain. (11)

The International Labour Organization estimates that 24.9 million people globally are trapped in the forced labor economy, (12) which generates an estimated $150 billion in illegal profits per year. (13) Additionally, the U.S. Department of Labor lists 139 goods from 75 countries it believes are produced by child and forced labor. (14) Today's multinational corporations encounter forced labor--nearly always inadvertently--as they contract and subcontract production abroad to cut costs. (15) This problem transcends the chocolate industry. (16) Even Patagonia, a socially conscious apparel company and corporate leader in fighting forced labor, (17) discovered evidence of trafficking and exploitation at most of the Taiwanese mills producing raw materials for its clothing. (18)

Nongovernmental organizations (NGOs), investors, and consumers have called for increased supply-chain accountability from corporations. (19) International leaders, including former President Barack Obama (20) and British Prime Minister Theresa May, (21) have answered the call. Consequently, public outcry against forced labor in supply chains has changed, and will continue to change, multinational corporations' legal responsibilities. (22)

Many of these efforts, albeit noble, are inadequate to solve the tremendous problem of corporate supply-chain abuses. (23) In 2015, consumers tried a new tactic for holding corporations accountable: consumer activist litigation. (24) Eight groups of California consumers sued multinational corporations, including Costco, (25) Hershey, (26) Nestle USA, (27) and Mars, (28) for not disclosing human rights abuses within their supply chains. (29) This Note refers to these cases as the "Early Eight." The courts dismissed each of the Early Eight, although six are currently on appeal with the Ninth Circuit. (30)

This Note focuses on the role of consumers in holding corporations accountable for human rights abuses within their supply chains. The launch point for this Note is the following question: Does a socially conscious consumer (here, one that abhors slavery) that unknowingly purchases a good produced with slavery feel a cognizable "harm" such that they should have a cause of action against the producing corporation? The Early Eight attempt to answer that question in the affirmative. (31) This Note argues that it depends.

Specifically, this Note argues that consumers should use existing legal mechanisms to hold corporations accountable for supply-chain practices. In arguing this, this Note neither attempts to solve the complex problem of slavery in corporate supply chains nor suggests this approach presents the proper incentives for corporations to remedy abuses. (32) Rather, it asserts that consumers should seek legal action after experiencing a cognizable harm, which has not yet occurred. (33)

Future consumer claims may plausibly fare better than the Early Eight. (34) For support, this Note draws on recent consumer protection application in the data privacy context. (35) Additionally, two changes in the supply-chain disclosure context--one actual and one assumed--will likely also play a role. (36) First, the UK Modern Slavery Act of 2015 increased the number of companies required to disclose supply-chain practices and policies, (37) so more disclosures will enter the marketplace. Second, this Note assumes that consumers will continue to increase the demand for ethically sourced products. (38) As companies respond to increased consumer demand, they will compete on supply-chain disclosures, (39) and it is possible that some will misrepresent their practices. Companies misrepresent their data-privacy efforts with some frequency, (40) and a similar phenomenon could occur in the supply-chain context. When a material misrepresentation occurs, consumers or the Federal Trade Commission (FTC) will then have seasonable grounds for consumer redress. (41)

This Note contains four parts. Part I introduces the supply-chain regulatory schemes with which today's corporations must comply. Part II analyzes the most popular regulatory framework--mandatory supply-chain disclosure--and argues its inefficacy in enabling consumers to hold corporations accountable. Part III evaluates the Early Eight and the pitfalls of private consumer protection litigation applied in this context. Finally, Part IV argues that, in the future, corporations may misrepresent their supply-chain practices, creating a cognizable consumer harm and enabling consumer redress. A brief conclusion follows.


    The United States abolished slavery in 1865, (42) yet Americans seemingly remained ignorant of human rights abuses in corporate supply chains until the 1990s. (43) That changed with two events. In the early 1990s, reports revealed that Nike sold shoes made in Indonesian sweatshops. (44) And in 1992, Dateline NBC reported that Wal-Mart sold goods from Bangladeshi factories employing child labor. (45) These incidents sparked a broader public conversation on corporate supply-chain practices, including protests on college campuses and industry engagement. (46) Even with increased modern awareness to the problem in the 1990s, legislatures waited until 2010 to begin combatting human rights abuses in supply chains. (47)

    Legislative efforts have taken different approaches to incentivize supply-chain accountability. Some employed direct regulation between the government and corporate actors, described in Part LA. Others prescribed indirect regulation, by strengthening private rights of action against corporations or creating corporate supply-chain disclosure regimes, discussed in Part LB.

    1. Direct Regulations Between Governments and Corporate Actors

      In direct or "command-and-control" regulation, governments adopt paternalistic "legal rules backed by [civil or criminal] sanctions." (48) In the supply-chain context, for example, the U.S. Congress could use its Commerce Clause or taxing powers to prohibit, regulate, or tax products in interstate commerce tainted with slave labor. (49)

      In the United States, there have been two major direct regulatory developments in the last five years. First, Congress enacted a federal contracting compliance regime, which penalizes federal contractors and subcontractors found to have "engage[d] in" forced labor. (50) Second, Congress closed an eighty-five-year-old customs loophole, bolstering the U.S. Customs and Border Protection's ability to ban imported products tainted with forced labor. (51)

      In South America, the Brazilian government implemented an aggressive antislavery scheme in 2004. (52) The regime was called "Lista Suja," or "Dirty List," (List) whereby the Brazilian government "name[d] and shame [d]" companies with forced labor in their supply chains. (53) Membership on the List affected companies in several ways. First, the Brazilian government excluded all List members from bidding on public contracts. (54) Equally important, several banks and private parties signed a pact agreeing to end dealings with List members. (55) As a result, the List promoted public-private partnership to fight modern-day slavery. (56) Brazil maintained the List for about ten years. (57) In 2014, however, Brazil suspended the List after two companies building stadiums for the 2014 World Cup landed on it, and Brazil reinstated the...

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