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Problem with Palm Oil (Or, Next Wave of Supply Chain Class Actions?)

In previous post (here), we discussed a litigation trend that began in September of this year: putative class action lawsuits against U.S. retailers based on alleged unethical practices in their supply chains.  The first lawsuits asserted the presence of trafficked labor in the Thai and Indonesian shrimp and fishing industries, with complaints filed against Costco, Proctor & Gamble, Nestle, and other.  A later round of lawsuits alleged child labor at African cocoa plantations, with complaints filed against major U.S. chocolate producers.  Other lawsuits involved alleged unethical animal care practices by Whole Foods suppliers and general allegations of poor labor practices in supply chains supplying to mega-retailer Wal-Mart.  All of these lawsuits allege that the defendants’ practices differ from what they represent to consumers or shareholders.

Now, the media has identified a new likely target: companies whose supply chains include palm oil.

Palm oil is a nearly ubiquitous vegetable oil made from palm trees found in numerous food and cosmetic products.  Palm oil typically comes from plantations in Africa and Southeast Asia, and generally passes through many supply chain steps before making its way into products that we find on our grocery and drug store shelves.  Indonesia is the largest producer of palm oil today, with Malaysia a close second.  Nigeria, Thailand, and Colombia are also major palm oil producers.

The problems with palm oil, according to some activists, are multifarious.  First, palm oil is charged with deforestation, as palm oil producers allegedly clear large swaths of natural forest to make room for their crop.  Another issue is “land grabbing,” the allegation that palm oil producers displace indigenous communities.  A third issue is alleged child labor in the harvesting of palm oil.  Although users of palm oil have initiated a number of initiatives designed to reduce the unsavory practices associated with palm oil, such as the Roundtable on Sustainable Palm Oil, not everyone is satisfied.

Palm oil supply chain practices have been a feature of recent media articles, some of which urge greater action.  On November 9, 2015, SupplyChainBrain featured an article entitled, “From Minerals to Palm Oil: Another Supply-Chain ‘Conflict,’” which discusses the criticisms against palm oil, the difficulty in combating these issues, and possible solutions.  On November 17, 2015, the Wall Street Journal reported that various groups were “pressing the [food] industry over issues such as antibiotics and palm oil” (subscription required).  However, industry and activist groups addressing palm oil issues generally acknowledge that changes have come slowly.

Thus, the important lesson for U.S. companies whose products include palm oil is to monitor public statements about your supply chain practices.  Also, there are many initiatives you can join to work on finding solutions.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

Sarah K. Rathke, Squire Patton Boggs, Manufacturing Litigation
Partner

Sarah Rathke is a trial lawyer specializing in manufacturing litigation, particularly complex supply chain disputes. She has argued and tried cases on behalf of manufacturers in forums throughout the US. Her clients include foreign, domestic, and multinational manufacturing entities. Her skills include a deep understanding of the process of bringing highly engineered products to market and conveying that understanding to judges and juries.

Sarah has litigated supply chain disputes involving automotive, aerospace, medical, construction and office...

216 479 8379
Dynda A. Thomas, SquirePattonBoggs, Mergers and Acquisitions Lawyer
Partner

Dynda Thomas has extensive experience in the areas of mergers and acquisitions and project finance. She has had principal responsibility for numerous mergers, acquisitions and dispositions for public and private companies in a wide range of sell-side and buy-side auctions and negotiated transactions.

As leader of the Squire Patton Boggs’ conflict minerals team, Dynda focuses on relevant industries’ best practices in working with clients’ legal, procurement and compliance groups. She advises on developing and reviewing procurement policies, training executives and relevant client teams, planning communications with customers and suppliers, and proposing data gathering and retention policies. Dynda and her team work with companies in a wide variety of industries, including aerospace, automotive, consumer products, electronics and mining.

216 479 8583
Simon Garbett, Litigation Attorney, Squire Patton Boggs Law FIrm
Partner

Simon is a partner working out of our Birmingham and London offices and is head of the litigation team in Birmingham. Simon’s practice is global in scope and includes both public and private sector clients. Areas of key focus are cross-border disputes, manufacturing, supply chain and product liability issues (particularly in the aerospace, automotive and industrial products sectors), as well as a broad range of financial services litigation, including for banks, brokers, insurers and pensions clients. Simon is a qualified Solicitor Advocate.

+44 121 222 3390
Mitchell R. Berger, Squire Patton Boggs, Global Supply Chain Lawyer, Congressional Agencies Attorney
Partner

Mitch Berger has been litigating high-value commercial and enforcement disputes for more than 35 years throughout the United States, for plaintiffs and defendants, against private parties and government entities. He has tried numerous cases to judgment before judges and juries, and has argued in most federal and several state appellate courts.

He also represents targets and witnesses before committees of the US Congress, federal enforcement agencies and grand juries. He regularly counsels US and overseas financial institutions, multinational...

202 457 5601