First Circuit Affirms No Duty to Disclose Upstream Labor Abuses on Chocolate Packaging
We recently blogged about a District of Massachusetts decision holding that it was not deceptive for Nestlé to omit from product labels the (alleged) existence of child labor in its cocoa supply chains. The First Circuit recently affirmed this decision, along with decisions dismissing identical lawsuits against Mars and The Hershey Company. The First Circuit concluded that the chocolate companies’ failure to disclose this information on product packaging did not constitute a violation of the Massachusetts Consumer Protection Act (MCPA). Tomasella v. Nestle, Nos. 19-1130 – 19-1132 (1st Cir. June 16, 2020).
Despite condemning the exploitation of children in the cocoa bean supply chain, the Court cabined its inquiry to the narrow question of whether the failure to disclose on packaging information about upstream labor abuses constitutes an unfair or deceptive business practice under the MCPA.
The Massachusetts Supreme Judicial Court has not directly addressed whether, and to what extent, an omission tangential to a product’s fitness for use constitutes a deceptive act. Therefore, the First Circuit looked to the FTC’s guidance, noting that the MCPA states it is to be interpreted in accordance with the FTC’s interpretation of the FTC Act. The First Circuit explained that the FTC recognizes omissions give rise to liability as a deceptive act in two limited circumstances: (1) when a seller “tell[s] only half the truth, and  omit[s] the rest,” and (2) when a seller simply remains silent under circumstances giving rise to a misleading impression.
In the First Circuit’s view, Defendants’ silence did not fall into either category. Instead, it constituted a non-actionable “pure omission,” which the FTC has defined as “a subject upon which the seller has simply said nothing, in circumstances that do not give any particular meaning to his silence.” The Court rejected Plaintiff’s contention that Defendants’ failure to correct at the point of sale Plaintiff’s “false, pre-existing conception” that their chocolate products were completely free of the worst forms of child labor creates deception liability. The Court explained that “[d]eclaring Defendants’ packaging omissions to be deceptive would inevitably ‘expand [ ] that concept virtually beyond limits,’ considering the vast universe of ‘erroneous preconceptions’ that individual consumers may have about any given product, as well as ‘[t]he number of facts that may be material to [them].’”
The First Circuit’s decision in Tomasella is not the first to find that advertisers have no affirmative duty to disclose upstream labor abuses in the product’s supply chain. In other putative class actions challenging advertisers’ failure to disclose such practices, courts have likewise declined to hold that such omissions violate consumer protection laws. See, e.g., Hodsdon v. Mars, 891 F.3d 857 (9th Cir. 2018). Watch this space for further developments.