Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-04453/USCOURTS-cand-3_15-cv-04453-1/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LAURA DANA,

Plaintiff,

v.

THE HERSHEY COMPANY, et al.,

Defendants.

Case No. 15-cv-04453-JCS 

ORDER GRANTING MOTION TO 

DISMISS

Re: Dkt. No. 22

I. INTRODUCTION

―The use of child slave labor in the Ivory Coast is a humanitarian tragedy.‖ Doe I v. Nestle 

USA, Inc., 766 F.3d 1013, 1016 (9th Cir. 2014). The fact that major international corporations 

source ingredients for their products from supply chains involving slavery and the worst forms of 

child labor raises significant ethical questions. The issue before this Court, however, is whether 

California law requires corporations to inform customers of that fact on their product packaging 

and point of sale advertising. Every court to consider the issue has held that it does not. This 

Court agrees.

This is a putative class action in which Plaintiff Laura Dana claims that Defendants The 

Hershey Company and Hershey Chocolate & Confectionary Corporation (collectively, ―Hershey‖)

violated California‘s Unfair Competition Law (―UCL,‖ Cal. Bus. & Prof. Code §§ 17200−17210), 

Consumers Legal Remedies Act (―CLRA,‖ Cal. Civ. Code §§ 1750−1784), and False Advertising 

Law (―FAL,‖ Cal. Bus. & Prof. Code §§ 17500−17509) by failing to disclose on the packaging of 

Hershey‘s chocolate products that some of the cocoa used therein originated at farms in Côte 

d‘Ivoire (also known as the Ivory Coast) that use slave labor and the worst forms of child labor. 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 1 of 24
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Hershey moves to dismiss all claims. The Court held a hearing on March 18, 2016.1 For the 

reasons stated below, Hershey‘s Motion is GRANTED, and this action is dismissed with 

prejudice.2

II. BACKGROUND

A. Allegations of the Complaint3

Côte d‘Ivoire is the world‘s largest producer of cocoa beans, the raw ingredient for 

chocolate, and supplies 40% of global cocoa production and 47% of total imports to the United 

States. Compl. (dkt. 1) ¶¶ 19, 46. Slave labor and the worst forms of child labor are common in 

Ivorian cocoa production, as is well documented by United States government agencies, academic 

studies, nonprofit organizations, investigative journalists, and former laborers. Id. ¶¶ 5−8, 23−25, 

32−42. Children are frequently injured in the course of dangerous work involving machetes, 

chemicals, and heavy loads, and workers (both children and adults) may be beaten, whipped, and 

locked in to prevent escape. Id. ¶¶ 23−25. The Ninth Circuit has also acknowledged the existence 

of such conditions. Id. ¶ 26; Doe I, 766 F.3d at 1016.

Hershey is one of the largest chocolate companies in the United States and sells a number 

of popular chocolate products. Id. ¶ 3. In 2001, members if the United States chocolate industry

including Hershey signed a voluntary protocol, negotiated by Representative Eliot Engel and 

Senator Tom Harkin, to develop standards for certifying chocolate produced without labor abuses. 

Id. ¶ 27. After failing to meet the initial 2005 deadline, the industry extended the self-imposed 

deadline to 2008, then to 2010, and then to 2020. Id. ¶¶ 29−31.

Despite adopting a ―supplier code‖ that prohibits child labor and forced labor, and a 

―Corporate Social Responsibility Report‖ stating that ―Hershey has zero tolerance for the worst 

forms of child labor in its supply chain,‖ Hershey sources much of its chocolate from Côte 

d‘Ivoire through a multi-level supply chain of independent growers, cooperatives, distributors, and 

 

1

The Court also heard argument in McCoy v. Nestle USA, Inc., No. 15-cv-4451, which 

involves different parties but substantially similar claims and arguments. A separate order has

been published concurrently in that case.

2

The parties have consented to the jurisdiction of the undersigned magistrate judge for all 

purposes pursuant to 28 U.S.C. § 636(c).

3 Dana‘s allegations are taken as true in the context of a motion to dismiss.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 2 of 24
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

other intermediaries. Id. ¶¶ 4, 11, 20, 45, 47 51, 52. ―Hershey acknowledges . . . the child and 

slave labor in its Ivorian supply chain,‖4but does not disclose the existence of those labor abuses

on its product labels. Id. ¶¶ 21, 22, 48, 50. 

Dana ―has purchased Hershey Chocolate Products at various retail stores including Target 

and Walmart in Brentwood and Antioch, California from 2011 through 2014.‖ Id. ¶ 13. Citing

studies showing that consumers will pay a premium for ethically produced coffee, clothing, and 

seafood, id. ¶¶ 55−59, Dana alleges that she and other customers ―would not have purchased 

Hershey Chocolate Products or paid as much for them‖ if Hershey had disclosed labor violations 

on the product labels. Id. ¶ 10, see also id. ¶¶ 60, 95, 106.

The Complaint includes three claims, under the UCL, the CLRA, and the FAL, 

respectively. The UCL claim is based on three separate theories arising from Hershey‘s failure to 

disclose labor abuses in its supply chain on the packaging of its chocolate products: (1) the 

omission is ―unlawful,‖ because it violates the CLRA, id. ¶ 74; (2) the omission is ―unfair,‖ 

because the abusive labor practices themselves are immoral and the failure to disclose them 

impairs competition and prevents consumers from making informed decisions, id. ¶ 75; and (3) the 

omission is ―fraudulent‖ because it is likely to deceive a reasonable consumer and the true facts 

would be material to reasonable consumer, id. ¶ 76. The CLRA claim asserts that Hershey‘s 

failure to disclose labor abuses in its supply chain constitutes a misrepresentation of the ―source, 

characteristics, and standard‖ of the products. Id. ¶ 91, see also id. ¶¶ 88−90 (citing Cal. Civ. 

Code § 1770(a)(2), (5), (7)). The FAL claim asserts that Hershey had a duty to disclose the labor 

abuses in its supply chain because it had superior knowledge as compared to customers, and 

because it made ―partial representations and/or misrepresentations to the contrary.‖ Id. ¶ 102. In 

her Opposition, Dana disclaims any theory of an obligation to disclose arising from partial 

misrepresentations. Opp‘n (dkt. 25) at 13 n.58.

 

4 Certain Hershey products, sold under the brand names Bliss, Dagoba, and Scharffen Berger, 

are certified by the Rainforest Alliance (a nongovernmental organization) as using ethically 

produced cocoa and are not at issue in this case. Compl. ¶ 49.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 3 of 24
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

B. Procedural History 

Dana filed this action on September 28, 2015, seeking to represent herself and other 

similarly situated consumers who purchased Hershey chocolate products in the last four years. 

See generally Compl. Dana‘s counsel also represents plaintiffs who filed similar actions against 

two other large chocolate manufacturers, Mars and Nestlé. See Hodsdon v. Mars, Inc., No. 3:15-

cv-04450-RS (N.D. Cal.); McCoy v. Nestlé USA, Inc., No. 3:15-cv-04451 (N.D. Cal.). Defendants 

moved to dismiss in all three cases. Judge Seeborg granted the motion to dismiss in Hodsdon, as 

discussed in detail below. The undersigned heard argument on the motion in McCoy concurrently 

with Hershey‘s motion in the present case.5

C. Parties’ Arguments

Hershey argues that the case must be dismissed for several reasons, starting with the safe 

harbor doctrine, which provides that plaintiffs cannot use California‘s consumer protection laws to 

pursue relief that is foreclosed by other, more specific statutes. Mot. (dkt. 22) at 6−9. According 

to Hershey, the California Transparency in Supply Chains Act of 2010 (the ―Supply Chains Act‖)

bars Dana‘s claims because it regulates disclosures related to labor abuses in supply chains and 

does not require the disclosures Dana seeks. Id. Dana responds that the Supply Chains Act does 

not specifically permit Hershey‘s omissions or bar Dana‘s claims, and that the labor violations 

addressed by that statute (slavery and human trafficking) do not encompass all of the violations at 

issue here (which also include dangerous but non-slave child labor). Opp‘n at 5−10. 

Next, Hershey argues that it has no duty to disclose labor conditions in its supply chain 

because the information at issue does not relate to product safety, and because Hershey did not 

 

5

Four other cases based on nondisclosure of supply chain labor violations, brought by 

plaintiffs who also share counsel with Dana, have been dismissed for failure to state a claim in the 

Central District of California. Wirth v. Mars Inc., No. SA CV 15-1470-DOC (KESx), 2016 WL 

471234 (C.D. Cal. Feb. 5, 2016); Barber v. Nestle USA, Inc., No. SA CV 15-01364-CJC (AGRx), 

2015 WL 9309553 (C.D. Cal. Dec. 9, 2015); De Rosa v. Tri-Union Seafoods, LLC, No. CV 15-

7540-CJC (AGRx), 2016 WL 524059 (C.D. Cal. Jan. 15, 2016) (summarily dismissing for the 

reasons stated in Barber); Hughes v. Big Heart Pet Brands, No. CV 15-8007-CJC (AGRx), 2016 

WL 524057 (C.D. Cal. Jan. 15, 2016) (same). Those cases, all of which concern seafood (or pet 

food that includes seafood products) rather than chocolate, were decided at least in part based on 

the safe harbor doctrine, which Hodsdon, McCoy, and this Order decline to reach. The four 

Central District cases are presently pending on appeal before the Ninth Circuit. 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 4 of 24
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

have exclusive knowledge, actively conceal the information, make misleading partial 

representations, or have a fiduciary relationship with Dana. Mot. at 9−17. Dana contends that the 

limitation of the duty to disclose to safety issues only applies in post-warranty product defect 

cases, which this is not, and that a duty arises from Hershey‘s superior (albeit not actually 

exclusive) knowledge of labor abuses in its supply chain. Opp‘n at 11−15. She ―does not here

contend that Hershey‘s partial disclosures give rise to its duty to disclose.‖ Id. at 13 n.58. 

Turning to Dana‘s specific claims, Hershey argues that Dana cannot proceed on a UCL 

claim for ―unlawful‖ conduct because her CLRA claim is deficient, nor for ―fraudulent‖ conduct 

because such a claim does not encompass omissions absent a duty to disclose. Mot. at 17−18. 

Dana responds that her CLRA claim is sufficient to support an ―unlawful conduct‖ UCL claim, 

and the ―fraudulent conduct‖ claim should survive because she contends that Hershey did have a 

duty to disclose. Opp‘n at 17−18. As for ―unfair‖ conduct, Hershey contends that Dana cannot 

succeed under any of the tests that courts have used, because she has not identified a legislative 

policy against Hershey‘s non-disclosure, the non-disclosure at issue is not inherently immoral or 

oppressive, and there is no substantial injury to consumers. Mot. at 18−21. Dana argues that the 

labor abuses in Hershey‘s supply chain contravene legislatively declared policies in the form of 

United Nations prohibitions of forced labor and the worst forms of child labor that the United 

States has ratified, and that those abuses are immoral and unethical. Opp‘n at 18−19. She also 

contends that the harm of deceiving consumers outweighs the cost to Hershey of changings its 

product labeling. Id. at 19−20. Hershey notes in reply that the United Nations sources that Dana 

cites relate only to labor practices, not product labeling. Reply (dkt. 30) at 10.

Hershey argues that Dana‘s CLRA claim fails because Hershey had no duty to disclose, 

and also because the omissions regarding labor abuses do not relate to the specific provisions of 

the statute Dana cites, which govern representations regarding attributes including the ―source,‖ 

―characteristics,‖ and ―standard‖ of goods. Mot. at 21−22. Dana contends that ―Hershey‘s failure 

to disclose that its supply chain is not child and slave free is likely to deceive a reasonable 

consumer regarding the chocolate‘s source (from plantations using child and slave labor) and 

characteristics/standard (produced by child and slave labor).‖ Opp‘n at 20. Hershey responds that 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 5 of 24
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

the provisions at issue are intended ―to target misrepresentations regarding the identity of the 

seller, . . . a product‘s physical features or capabilities, . . . or its inherent level of quality or 

performance,‖ not the labor standards used to produce the product. Reply at 12.

Hershey does not address Dana‘s FAL claim separately in detail, but contends in a footnote 

that the FAL only governs affirmative misrepresentations, not omissions. Mot. at 17 n.18. Dana 

disputes that proposition and argues that some cases have allowed FAL claims to proceed based 

on omissions. Opp‘n at 17.

According to Hershey, Dana lacks both Article III and statutory standing to bring any of 

her claims because she cannot trace the cocoa used in the specific chocolate products she bought 

back to a specific plantation, and thus cannot know whether the products she bought were 

produced with slave or child labor. Mot. at 22−23. Hershey contends that without that 

knowledge, whether the products Dana bought were misrepresented (even under Dana‘s theory of 

misrepresentation by omission) is uncertain, and if they were not, Dana has not suffered any 

cognizable injury. Id. Dana responds that her injury and standing arise from misrepresentation of 

the supply chain for the chocolate, and if Hershey had better disclosed the labor abuses in the 

supply chain, she would not have bought the products regardless of whether she knew the origin of 

the cocoa in a specific item. Opp‘n at 22. Dana relies on case law holding that a consumer who 

purchased or paid more for a product based on misrepresentations has both constitutional and 

statutory standing to bring claims under California‘s consumer protection laws. Opp‘n at 21−22 

(citing Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013); Kwikset Corp. v. Superior Court, 

51 Cal. 4th 310, 330 (2011)).

Finally, Hershey argues that requiring the labeling Dana seeks would compel speech in 

violation of the First Amendment. Mot. at 23−25. Dana contends that laws against misleading 

advertising are constitutional, and that a mere rational basis is required to support laws compelling 

affirmative factual product labeling to avoid misleading consumers. Opp‘n at 23−25 (citing, e.g., 

Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985)). Hershey responds that Dana 

has not alleged any misleading affirmative representations that require labeling to redress

consumer confusion, and that the disclosure Dana seeks is not ― ̳purely factual and 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 6 of 24
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

uncontroversial.‘‖ Reply at 14−15 (quoting Zauderer, 471 U.S. at 651).

D. Hodsdon v. Mars, Inc.

In Hodsdon, Judge Seeborg granted a motion by chocolate manufacturer Mars, Inc. to 

dismiss claims very similar those in the case at hand. Hodsdon v. Mars, Inc., __ F. Supp. 3d __, 

No. 15-CV-04450-RS, 2016 WL 627383 (N.D. Cal. Feb. 17, 2016). As a preliminary matter, the 

court held that the plaintiff had standing because: (1) ―California law permits litigants to pursue 

claims under the UCL, CLRA, and FAL if they show . . . that  ̳the consumer paid more than he or 

she actually valued the product‘‖; (2) the plaintiff adequately alleged that the use of forced labor in 

the supply chain caused him to devalue the product even if he could not prove that forced labor 

was used to produce the specific chocolate products that he purchased; and (3) the plaintiff 

adequately alleged that he saw the product labels before he purchased the products. Id. at *3

(quoting Hinojos, 718 F.3d at 1104). Turning to the merits, however, the court held that the 

plaintiff failed to state a claim under California law.

With respect to the FAL claim, the court reconciled cases holding that omissions were not 

actionable with others that allowed FAL claims based on omissions to proceed, ultimately 

determining that omissions accompanying misleading incomplete statements are actionable, but 

omissions with no corresponding statements are not. Id. at *4. Compare Norcia v. Samsung 

Telecomms. Am., LLC, No. 14-CV-00582-JD, 2015 WL 4967247, at *8 (N.D. Cal. Aug. 20, 2015) 

(―There can be no FAL claim where there is no  ̳statement‘ at all.‖), and Stanwood v. Mary Kay, 

Inc., 941 F. Supp. 2d 1212, 1222 (C.D. Cal. 2012) (same), with In re Sony Gaming Networks & 

Customer Data Sec. Breach Litig., 996 F. Supp. 2d 942, 991 (S.D. Cal. 2014) (denying motion to 

dismiss where defendant claimed to have taken steps to secure information but failed to disclose 

security deficiencies), and Tait v. BSH Home Appliances Corp., No. SACV 10-00711 DOC

(ANx), 2011 WL 3941387, at *2 (C.D. Cal. Aug. 31, 2011) (denying a motion to dismiss where 

the defendant marketed a washing machine as ―sanitary‖ but failed to disclose its tendency to 

accumulate mold). Because the plaintiff in Hodsdon ―asserted the former type of claim, i.e., that 

Mars violated the FAL by failing to issue any statement at all,‖ the court dismissed the claim. 

Hodsdon, 2016 WL 627383, at *4.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 7 of 24
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Next, the court turned to the plaintiff‘s CLRA claim and his claim under the ―unlawful‖ 

prong of the UCL, which was based on the purported CLRA violation. Id. at *5−6. Noting the 

Ninth Circuit‘s holding that ―California courts have generally rejected a broad obligation to 

disclose,‖ the court looked to whether Mars had any such obligation. Id. at *5. The court held 

that despite one case to the contrary, ―the overwhelming majority of courts to consider the issue‖ 

have held that omissions are only actionable under the CLRA if they relate to product safety or 

defects. Id. at *5−6. Because the omissions at issue related instead to ―admittedly horrific labor 

practices‖ in the supply chain, the court dismissed the plaintiff‘s CLRA claim and the ―unlawful 

conduct‖ aspect of the UCL claim that derived from it. Id. at *6.

The plaintiff also brought UCL claims based on the ―fraudulent‖ and ―unfair‖ prongs of the 

statute. The court followed two California appellate decisions holding that omissions cannot 

satisfy the ―fraudulent‖ prong unless there was a duty to disclose, and therefore dismissed that 

claim. Id. at *6 (citing Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1557 

(2007); Daugherty v. Am. Honda Co., 144 Cal. App. 4th 824, 838 (2006)). As for the ―unfair‖ 

prong, the court held that the plaintiff‘s complaint did not satisfy any of the tests used by 

California courts to assess such claims: (1) unlike the underlying labor conditions themselves, the 

lack of disclosure could not be said to be ― ̳immoral, unethical, oppressive, unscrupulous or 

substantially injurious to consumers,‘‖ because the harm was merely the purchase of a chocolate 

bar and the information that was absent from the packaging was readily available elsewhere; and 

(2) again unlike the underlying labor conditions, the harm from lack of disclosure was not tied to 

any established public policy expressed in ― ̳specific constitutional, statutory, or regulatory 

provisions.‘‖ Id. at *7 (quoting S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal. App. 

4th 861, 887 (1999); McVicar v. Goodman Glob., Inc., 1 F. Supp. 3d 1044, 1054 (C.D. Cal. 

2014)). The court therefore dismissed the UCL claim in its entirety.

Because the plaintiff failed to state a claim for the reasons summarized above, the court did 

not reach Mars‘s argument that the Supply Chains Act creates a safe harbor, but expressed doubt 

that any such harbor is as broad as Mars contended. Id. at *8−9. The court found that amendment 

would be futile and denied leave to amend. Id. at *9. Hodsdon‘s appeal of Judge Seeborg‘s 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 8 of 24
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

decision is currently pending before the Ninth Circuit.

III. ANALYSIS

A. Legal Standard

A complaint may be dismissed for failure to state a claim on which relief can be granted 

under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ―The purpose of a motion to dismiss 

under Rule 12(b)(6) is to test the legal sufficiency of the complaint.‖ N. Star Int’l v. Ariz. Corp.

Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). Generally, a plaintiff‘s burden at the pleading stage 

is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that ―[a] pleading 

which sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim 

showing that the pleader is entitled to relief.‖ Fed. R. Civ. P. 8(a).

In ruling on a motion to dismiss under Rule 12(b)(6), the court analyzes the complaint and 

takes ―all allegations of material fact as true and construe[s] them in the light most favorable to the 

non-moving party.‖ Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 

Dismissal may be based on a lack of a cognizable legal theory or on the absence of facts that 

would support a valid theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 

1990). A complaint must ―contain either direct or inferential allegations respecting all the material 

elements necessary to sustain recovery under some viable legal theory.‖ Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 562 (2007) (citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 

1106 (7th Cir. 1984)). ―A pleading that offers  ̳labels and conclusions‘ or  ̳a formulaic recitation 

of the elements of a cause of action will not do.‘‖ Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 

(quoting Twombly, 550 U.S. at 555). ―Nor does a complaint suffice if it tenders  ̳naked 

assertion[s]‘ devoid of  ̳further factual enhancement.‘‖ Id. (quoting Twombly, 550 U.S. at 557). 

Rather, the claim must be ― ̳plausible on its face,‘‖ meaning that the plaintiff must plead sufficient 

factual allegations to ―allow[] the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.‖ Id. (quoting Twombly, 550 U.S. at 570).

Rule 9(b) of the Federal Rules of Civil Procedure sets a heightened pleading standard for 

claims based on fraud. ―In alleging fraud or mistake, a party must state with particularity the 

circumstances constituting fraud or mistake.‖ Fed. R. Civ. P. 9(b). The Ninth Circuit has held 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 9 of 24
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

that in order to meet this standard, a ―complaint must specify such facts as the times, dates, places, 

benefits received, and other details of the alleged fraudulent activity.‖ Neubronner v. Milken, 6 

F.3d 666, 672 (9th Cir. 1993); see also McMaster v. United States, 731 F.3d 881, 897 (9th Cir. 

2013). The heightened standard does not apply to ―[m]alice, intent, knowledge, and other 

conditions of a person‘s mind.‖ Fed. R. Civ. P. 9(b).

Hershey also moves to dismiss under Rule 12(b)(1), apparently on the basis that the Court 

lacks jurisdiction because Dana lacks Article III standing. See Mot. at ECF p. 2 (Notice of Motion 

identifying Rule 12(b)(1) as a basis for dismissal); id. at 22−23 (arguing that Dana lacks standing). 

Where, as here, a jurisdictional challenge is based on the allegations of a plaintiff‘s complaint 

rather than on extrinsic evidence, courts ―assume [the plaintiff‘s] allegations to be true and draw 

all reasonable inferences in his favor.‖ Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). 

―[T]he inquiry is therefore much like a Rule 12(b)(6) analysis.‖ Animal Legal Def. Fund v. HVFG 

LLC, 939 F. Supp. 2d 992, 997 (N.D. Cal. 2013).

B. Standing

Hershey argues that Dana lacks Article III and statutory standing to pursue these claims 

because she does not and cannot allege that the specific products she purchased were made from 

cocoa produced with the labor abuses at issue in this case—slave labor or the worst forms of child 

labor—and therefore fails to allege an actual, particularized injury. Mot. at 22−23; Reply at 

12−14. The parties agree that Hershey currently cannot trace the cocoa used in a particular 

Hershey chocolate product to a specific plantation, and there is thus no way to know what labor 

practices were used in its production. See Compl. ¶ 10; Mot. at 22; Reply at 13. Dana argues that 

she has standing because she would have either not purchased or paid less for Hershey‘s products 

if she had known that the supply chain involved the labor abuses at issue, regardless of where the 

cocoa in a particular chocolate bar originated. Opp‘n at 22. Judge Seeborg held that the plaintiff 

in Hodsdon had standing under similar circumstances, and the Court agrees that Dana has standing 

here. See Hodsdon, 2016 WL 627383, at *3.

The issue of Article III standing is straightforward. ―[W]hen, as here,  ̳Plaintiffs contend 

that class members paid more for [a product] than they otherwise would have paid, or bought it 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 10 of 24
11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

when they otherwise would not have done so‘ they have suffered an Article III injury in fact.‖ 

Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1104 (9th Cir. 2013) (quoting Mazza v. Am. Honda 

Motor Co., 666 F.3d 581, 595 (9th Cir. 2012)) (second alteration in original).

Dana also has standing under the California statutes at issue. The UCL and FAL require 

that private plaintiffs ―ha[ve] suffered injury in fact and ha[ve] lost money or property as a result 

of the unfair competition‖ or false advertising. Hinojos, 718 F.3d at 1103 (quoting Cal. Bus. & 

Prof. Code § 17204 (UCL); citing id. § 17535 (FAL)) (alterations in original).

6

 In Hinojos, the 

Ninth Circuit examined the California Supreme Court‘s decision in Kwikset Corp. v. Superior 

Court, which held that a ― ̳consumer who relies on a product label and challenges a 

misrepresentation contained therein can satisfy the standing requirement of [the UCL and the 

FAL] by alleging . . . that he or she would not have bought the product but for the 

misrepresentation,‘‖ and that ―such allegations are sufficient to establish economic injury within 

the meaning of [those statutes].‖ Id. at 1105 (quoting Kwikset, 51 Cal. 4th 310, 330 (2011)) 

(ellipsis in original). 

In both Kwikset, where the defendant marketed locks as ―Made in U.S.A.‖ despite some 

foreign components and assembly work, and Hinojos, where the defendant allegedly advertised its 

normal prices as ―reduced,‖ plaintiffs who relied on those representation had standing to sue under 

the UCL and FAL. Id. at 1107; Kwikset, 51 Cal. 4th at 330. Those courts also listed a number of 

other scenarios where a plaintiff‘s reliance on false advertising could give rise to standing: ―meat 

falsely labeled as kosher or halal, wine labeled with the wrong region or year, blood diamonds 

mislabeled as conflict-free, and goods falsely suggesting they were produced by union labor.‖ 

Hinojos, 718 F.3d at 1105 (citing Kwikset, 51 Cal. 4th at 328−29). Dana‘s claim that she would 

have paid less for (or declined to purchase) Hershey‘s products but for Hershey‘s 

misrepresentations of the labor practices in its supply chain fits well within these examples.

The Ninth Circuit‘s decision in Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009), does 

 

6

The CLRA allows a consumer who has suffered ―any damage‖ to sue, and ―any plaintiff who 

has standing under the UCL‘s and FAL‘s  ̳lost money or property‘ requirement will, a fortiori, 

have suffered  ̳any damage‘ for purposes of establishing CLRA standing.‖ Hinojos, 718 F.3d at 

1107−08.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 11 of 24
12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

not deprive Dana of standing. See Mot. at 22; Reply at 13 (citing Birdsong for the argument that 

Dana lacks standing unless the specific product she purchased was produced by slave labor or 

child labor). In that case, the plaintiffs alleged that Apple violated the UCL by selling iPods that 

were capable of producing dangerous volume levels and thus causing hearing loss. Id. at 957. 

The Ninth Circuit affirmed the district court‘s holding that the plaintiffs failed to show a 

particularized and actual injury sufficient for standing under the UCL—despite the plaintiffs‘ 

argument that the risk of hearing loss diminished the value of the iPods—in part because ―the 

alleged loss in value . . . rests on a hypothetical risk of hearing loss to other consumers who may 

or may not choose to use their iPods in a risky manner,‖ and the plaintiffs did ―not claim that they, 

or anyone else, have suffered or [were] substantially certain to suffer hearing loss from using an 

iPod.‖ Id. at 959−62. Here, in contrast, Dana alleges that the value of the chocolate products was 

diminished because consumers did not wish to support a supply chain that included severe labor 

abuses. The alleged damage was therefore done by the purchase itself, not by any contingency 

that might happen after the purchase.7

Hershey argues, essentially, that a UCL claim based on misrepresentation of labor 

practices can only succeed where a plaintiff is certain that the objectionable practice was used to 

produce the specific item that the plaintiff purchased. See Reply at 12−13. Stepping back from 

the fact pattern of this case, that argument would dictate that even if Hershey had—

hypothetically—concealed Ivorian labor conditions from its customers, falsely labeled all of its 

chocolate as certified to be free of child labor, and run a fraudulent national ad campaign touting 

its child-labor-free chocolate, a customer who relied on that false promotion would lack standing 

 

7 Hershey also cites a number of district court cases finding that plaintiff purchasers did not 

have standing merely because products were defective as to other purchasers. Mot. at 23 & n.21 

(citing In re McNeil Consumer Healthcare, Mktg. & Sales Practices Litig., No. MDL 2190, 2011 

WL 2802854 (E.D. Pa. July 15, 2011); Meaunrit v. The Pinnacle Foods Grp., LLC, No. C 09-

04555 CW, 2010 WL 1838715 (N.D. Cal. May 5, 2010); Myers-Armstrong v. Actavis Totowa, 

LLC, No. C 08-04741 WHA, 2009 WL 1082026, (N.D. Cal. Apr. 22, 2009), aff’d, 382 F. App‘x 

545 (9th Cir. 2010); Whitson v. Bumbo, No. C 07-05597 MHP, 2009 WL 1515597 (N.D. Cal. Apr. 

16, 2009)). To the extent those cases are consistent with the more recent Ninth Circuit decisions 

in Hinojos and Mazza, all of them—like Birdsong—involved at most an unrealized risk of future 

harm, and are not analogous to the case at hand where Dana alleges that failure to disclose ethical 

practices in the supply chain affected her willingness to purchase and pay for the products.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 12 of 24
13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

to sue for fraudulent business practices and false advertising so long as some fraction of Hershey‘s 

cocoa met those descriptions and the customer was unable to tell what labor conditions produced 

the cocoa in the actual product he or she purchased. Such a result would undermine the holding of 

Hinojos and Kwikset.

8

The difference between that hypothetical scenario and Dana‘s allegation of 

mere omission is critical to the outcome of the present motion, as discussed in the sections below, 

but it is a difference relevant to the merits of the claims, not to standing. 

― ̳For a significant segment of the buying public, labor practices do matter in making 

consumer choices.‘‖ Kwikset, 51 Cal. 4th at 329 (quoting Kasky v. Nike, Inc., 27 Cal. 4th 939, 969

(2002)). It is plausible that a consumer would place less value on a product produced from a 

supply chain involving severe labor abuses. Dana alleges that she purchased products or paid a 

higher price for them because she was deceived regarding the labor practices in the supply chain. 

That actual, particularized injury is sufficient to establish standing.

C. CLRA Claim

The CLRA prohibits certain enumerated ―unfair methods of competition and unfair or 

deceptive acts or practices undertaken by any person in a transaction intended to result or which 

results in the sale or lease of goods or services to any consumer.‖ Cal. Civ. Code § 1770(a). Dana 

argues that Hershey‘s failure to disclose labor abuses on its packaging violates subsection (a)(2) 

by ―[m]isrepresenting the source‖ of the chocolate, subsection (a)(5) by ―[r]epresenting that goods 

. . . have . . . characteristics . . . which they do not have,‖ and subsection (a)(7) by ―[r]epresenting 

that goods . . . are of a particular standard.‖ Id. § 1770(a)(2), (5), (7); see Compl. ¶¶ 88−91; Opp‘n 

at 20. In her Opposition, Dana makes clear that these theories are based on ―Hershey‘s omission 

 

8

Similarly, to use some of the examples given in those cases, it would be a bizarre result if 

sellers advertising food as halal or kosher, diamonds as conflict-free, or products as union-made 

could knowingly mix compliant and non-compliant products with impunity so long as there was 

no way for a buyer to trace the specific item he or she purchased back to the source. The Eighth 

Circuit has nevertheless adopted that rule. See Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 

1030−31 (8th Cir. 2014) (holding that customers lacked Article III standing to bring a claim based 

on allegedly false advertising of a product as using 100% kosher beef, where the plaintiffs could 

not show that the specific products they purchased contained non-kosher beef). This Court 

respectfully disagrees with that result. In this Court‘s view, if a customer has paid a premium for 

an assurance that a product meets certain standards, and the assurance turns out to be meaningless, 

the premium that the customer has paid is an actual, personal, particularized injury that is 

cognizable under Article III. See Hinojos, 718 F.3d at 1104.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 13 of 24
14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

of known child and slave labor in its supply chain,‖ and that she ―does not here contend that 

Hershey‘s partial misrepresentations give rise to its duty to disclose.‖ Opp‘n at 13 n.58.

―[A]lthough a claim may be stated under the CLRA in terms constituting fraudulent 

omissions, to be actionable the omission must be contrary to a representation actually made by the 

defendant, or an omission of a fact the defendant was obliged to disclose.‖ Daugherty v. Am. 

Honda Motor Co., 144 Cal. App. 4th 824, 835 (2006). ―California courts have generally rejected 

a broad obligation to disclose . . . .‖ Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th 

Cir. 2012). In Wilson, the Ninth Circuit held that, absent affirmative misrepresentations, an 

obligation to disclose under California law extends only to matters of product safety. Id. at 

1141−43 (examining Daugherty, 144 Cal. App. 4th at 836, and subsequent decisions); see also 

Oestreicher v. Alienware Corp., 322 F. App‘x 489, 493 (9th Cir. 2009) (unpublished and nonprecedential) (―A manufacturer‘s duty [of disclosure] to consumers is limited to its warranty 

obligations absent either an affirmative misrepresentation or a safety issue.‖).

At least one district court decision has limited Wilson to cases where a product was 

covered by a warranty that expired before the defect became apparent. Stanwood v. Mary Kay, 

Inc., 941 F. Supp. 2d 1212, 1221 (C.D. Cal. 2012). Central to the Central District‘s holding was 

its determination that ―[t]he Ninth Circuit acknowledged that its requirement of a safety issue does 

not necessarily apply outside the products defect context where warranty protections are not 

available,‖ and that Wilson ―list[ed] cases where a safety issue was not required to trigger a duty to 

disclose.‖ Id. (citing Wilson, 668 F.3d at 1142). The Court respectfully disagrees with 

Stanwood‘s reading of Wilson. The cases listed at the page cited in Wilson by Stanwood do not 

support Stanwood‘s holding: four cases explicitly based the materiality of an omission at least in 

part on whether it related to safety,

9

and the Ninth Circuit characterized the remaining two10 as 

 

9 O’Shea v. Epson Am., Inc., No. CV 09–8063 PSG (CWx), 2011 WL 3299936, at *7–9 

(C.D.Cal. July 29, 2011); Smith v. Ford Motor Co., 749 F. Supp. 2d 980, 987 (N.D. Cal. 2010) 

(―[F]or the omission to be material, the failure must pose  ̳safety concerns‘ . . . .‖), aff’d, 462 F. 

App‘x 660 (9th Cir. 2011); In re Sony Grand Wega KDF–E A10/A20 Series Rear Projection 

HDTV Television Litig., 758 F. Supp. 2d 1077, 1095 (S.D. Cal. 2010); Oestreicher v. Alienware 

Corp., 544 F. Supp. 2d 964, 971 (N.D. Cal. 2008), aff'd, 322 F. App‘x 489 (9th Cir. 2009); Falk v. 

Gen. Motors Corp., 496 F. Supp. 2d 1088, 1096 n.*. (N.D. Cal. 2007) (―Moreover, plaintiffs 

successfully allege that the potential for failed speedometers constitutes a safety hazard.‖).

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 14 of 24
15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

having ―arguably concerned safety issues.‖ Wilson, 668 F.3d at 1142 & n.2. Accordingly, the 

Court does not agree that Wilson is limited to cases where a warranty once existed but has since 

expired. There are cases holding that a manufacturer has a greater duty to disclose defects that 

arise during a product‘s express warranty period. E.g., Collins v. eMachines, Inc., 202 Cal. App. 

4th 249, 257−58 (2011); see also Wilson, 668 F.3d at 1142 n.1 (discussing Tietsworth v. Sears, 

Roebuck & Co., 720 F. Supp. 2d 1123 (N.D. Cal. 2010)). But there is no allegation that Hershey 

made any warranty of its chocolate products that would be relevant in this case.11

The Court agrees with Judge Seeborg‘s conclusion that the weight of authority limits a 

duty to disclose under the CLRA to issues of product safety, unless disclosure is necessary to 

counter an affirmative misrepresentation. See Hodsdon, 2016 WL 627383, at *6 (declining to 

follow Stanwood in light of ―overwhelming authority to the contrary,‖ and collecting cases). The 

Court also concludes that a plain reading of Wilson governs this case, and this ―Court is not free to

deviate from the Ninth Circuit‘s construction of California law in Wilson absent a subsequent

interpretation from California‘s courts that the interpretation was incorrect.‖ Rasmussen v. Apple, 

Inc., 27 F. Supp. 3d 1027, 1036 (N.D. Cal. 2014) (following Wilson despite concluding that its 

basis in California law is ―subject to reasonable debate‖) (citing Kona Enters., Inc. v. Estate of 

Bishop, 229 F.3d 887, 884 n.7 (9th Cir. 2000)). Further, the Court agrees with Judge Seeborg and 

Hershey that some bright-line limitation on a manufacturer‘s duty to disclose is sound policy, 

given the difficulty of anticipating exactly what information some customers might find material 

to their purchasing decisions and wish to see on product labels. See Hodsdon, 2016 WL 627383, 

at *6 (―[Stanwood‘s and Dana‘s] definition of a material omission has stunning breadth, and could 

leave manufacturers (chocolate or otherwise) little guidance about what information, if any, it 

must disclose to avoid CLRA or UCL liability.‖); Mot. at 12−13 (discussing examples of 

 

10 Cirulli v. Hyundai Motor Co., No. SACV 08-0854 AG (MLGx), 2009 WL 5788762 

(C.D.Cal. June 12, 2009); Bristow v. Lycoming Engines, No. CIV. S-06-1947 LKK GGH, 2007 

WL 1106098 (E.D.Cal. Apr. 10, 2007).

11 Wilson also acknowledges cases recognizing a broader duty of disclosure in the sale of 

services, rather than products. Wilson, 668 F.3d at 1143 (citing, e.g., In re Mediscan Research, 

Ltd., 940 F.2d 558 (9th Cir. 1991)). The chocolate products at issue in the present case are 

products, not services.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 15 of 24
16

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

consumers making purchasing decisions based on ―businesses‘ positions on social issues; their 

support for or opposition to legislation; their political donations; their environmental record; their 

employment practices; and their ties to certain nations or regimes‖ (footnotes omitted)). There are 

countless issues that may be legitimately important to many customers, and the courts are not 

suited to determine which should occupy the limited surface area of a chocolate wrapper.

A duty to disclose under California law does not extend to all ―information [that] may 

persuade a consumer to make different purchasing decisions.‖ Hodsdon, 2016 WL 627383, at *6 

(citing Wirth, 2016 WL 471234, at *5−6). Because Dana does not allege any omission of known 

dangers to the safety of customers, there is no duty to disclose applicable to this case, and Dana‘s 

CLRA claim is therefore DISMISSED. A contrary result would create ―a broad obligation to 

disclose,‖ which ―California courts have generally rejected.‖ Wilson, 668 F.3d at 1141. 

Even if that were not so, the parties agree Dana would still need to show one of the 

following to support a duty to disclose: (1) a fiduciary relationship between Hershey and Dana; 

(2) that Hershey had ―exclusive knowledge of material facts not known or reasonably accessible 

to‖ its customers; (3) that Hershey actively concealed a material fact; or (4) that Hershey had made 

misleading partial representations. Opp‘n at 12 (quoting Doe v. SuccessfulMatch.com, 70 F. Supp. 

3d 1066, 1076 (N.D. Cal. 2014)); Mot. at 9−10. Dana relies solely on the ―exclusive knowledge‖ 

test. Opp‘n at 13−15. But even if ―courts do not apply  ̳exclusivity‘ with . . . rigidity,‖ see 

Johnson v. Harley-Davidson Motor Co. Grp., 285 F.R.D. 573, 583 (E.D. Cal. 2012), it is difficult 

to see how any definition of ―exclusive knowledge‖ could include a case where, by Dana‘s own 

allegations: ―Hershey acknowledges as it must, the child and slave labor in its Ivorian supply 

chain‖ in its Corporate Social Responsibility Report, Compl. ¶ 21; the industry acknowledged the 

issue in the Harkin-Engel Protocol in 2001—more than ten years before the statute of limitations 

period for Dana‘s CLRA claim—and has repeatedly admitted its failure to even develop a 

comprehensive certification system in the years since, id. ¶¶ 27−31; and in 2006 the United States 

Department of Labor commissioned Tulane University to publish reports detailing labor abuses in 

the chocolate industry supply chain, id. ¶¶ 32−36; among other public disclosures detailed in the 

Complaint. 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 16 of 24
17

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Further, even if Dana could adequately plead that Hershey had a duty to disclose the labor 

abuses in its supply chain on its product labels, it is far from clear that such information falls 

within the categories of representations governed by the CLRA. Dana invokes provisions barring 

misrepresentation of the ―source,‖ ―characteristics,‖ and ―standard‖ of a product. Opp‘n at 20 

(citing Cal. Civ. Code § 1770(a)(2), (5), (7)). While the CLRA provides that it ―shall be liberally 

construed and applied to promote its underlying purposes‖ of consumer protection, Cal. Civ. Code 

§ 1760, it does not explicitly discuss representations regarding labor practices, see id. § 1770(a),

and Dana cites no authority holding that any of the enumerated categories she relies on are so 

broad as to encompass labor abuses. Because the Court holds that Hershey did not have a duty to 

disclose labor abuses in its supply chain on its product labels, the Court declines to resolve 

whether misrepresentations regarding labor practices can fall within the scope of the CLRA.

D. UCL Claim

California‘s UCL prohibits unfair competition, defined as ―any unlawful, unfair, or 

fraudulent business act or practice.‖ Cal. Bus. & Prof. Code § 17200. Dana brings her claim 

under each of these prongs, and Hershey argues that each must be dismissed. 

The ―unlawful‖ prong of Dana‘s Complaint is based solely on Hershey‘s purported 

violation of the CLRA. Compl. ¶ 74. As discussed above, the Court holds that Dana fails to state 

a CLRA claim. Hershey‘s Motion is therefore GRANTED as to this prong of Dana‘s UCL claim.

The ―fraudulent‖ prong fails for similar reasons. As Judge Seeborg noted in Hodsdon, 

California courts have held that ― ̳[a]bsent a duty to disclose, the failure to do so does not support 

a claim under the fraudulent prong of the UCL.‘‖ Hodsdon, 2016 WL 627383, at *6 (quoting 

Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1557 (2007)); see also Daugherty, 

144 Cal. App. 4th at 838 (―We cannot agree that a failure to disclose a fact one has no affirmative 

duty to disclose is  ̳likely to deceive‘ anyone within the meaning of the UCL.‖). Because, as 

discussed above, the Court holds that Hershey had no affirmative duty to disclose severe labor 

abuses in its supply chain on its product labels, Hershey‘s Motion is GRANTED as to the 

―fraudulent‖ prong of Dana‘s UCL claim.

That leaves the ―unfair‖ prong, the test for which remains somewhat unsettled in the 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 17 of 24
18

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

California courts. Courts previously held a practice to be ― ̳unfair‘ . . . when it offends an 

established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or 

substantially injurious to consumers.‖ S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal. 

App. 4th 861, 886−87 (1999) (citation and internal quotation marks omitted). ―This test involves 

balancing the harm to the consumer against the utility of the defendant‘s practice.‖ Lozano v. 

AT & T Wireless Servs., Inc., 504 F.3d 718, 735 (9th Cir. 2007) (citing S. Bay, 72 Cal. App. 4th at 

886). The California Supreme Court, however, found that the South Bay test was ―too amorphous 

and provide[d] too little guidance to courts and businesses‖ in a UCL case between competitors, 

and held instead that:

When a plaintiff who claims to have suffered injury from a direct 

competitor‘s ―unfair‖ act or practice invokes section 17200, the 

word ―unfair‖ in that section means conduct that threatens an 

incipient violation of an antitrust law, or violates the policy or spirit 

of one of those laws because its effects are comparable to or the 

same as a violation of the law, or otherwise significantly threatens or 

harms competition. 

Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 185, 187. The Cel-Tech court 

explicitly declined to decide what test applied to actions brought by consumers, as opposed to by 

competitors. Id. at 197 n.12.

In the years since Cel-Tech, some courts have continued to use the South Bay test for cases 

brought by consumers, while others have followed Cel-Tech‘s lead and ―require[d] that the 

unfairness be tied to a  ̳legislatively declared‘ policy,‖ Lozanoa v. AT & T Wireless Servs., Inc., 

504 F.3d 718, 736 (9th Cir. 2007), or in other words, ― ̳that the UCL claim be tethered to specific 

constitutional, statutory, or regulatory provisions,‘‖ Hodsdon, 2016 WL 627383, at *7 (quoting 

McVicar v. Goodman Global, Inc., 1 F. Supp. 3d 1044, 1054 (C.D. Cal. 2014)). ―Absent guidance 

from the California courts about the proper definition of an  ̳unfair‘ business practice, federal 

courts have applied both tests.‖ Id. (citing Lozano, 504 F.3d at 736).

The ―legislative policies‖ on which Dana relies are the United Nations‘ International Labor 

Convention No. 182 and the United Nations‘ Universal Declaration of Human Rights—the former 

forbidding the worst forms of child labor, the latter forbidding slavery, and both having been 

ratified by the United States. Opp‘n at 18−19. The crux of Dana‘s claim, however, is not that 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 18 of 24
19

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Hershey utilized slave labor or the worst forms of child labor, but rather that Hershey does not 

disclose the existence of those labor abuses in its supply chain on the packaging of its products. 

Dana has not identified any legislatively declared policy requiring such disclosure,

12 nor does she 

cite any authority for the proposition that where some of a manufacturer‘s suppliers contravene a 

legislatively established policy, it is ―unfair‖ within the meaning of the UCL for the manufacturer 

to fail to disclose those violations on its product packaging. The Court declines to make that leap.

At the hearing, Dana‘s counsel suggested for the first time that Dana could amend her 

UCL claim to tether the ―unfair‖ prong to the Department of Labor‘s listing of goods produced 

with child labor and forced labor, see 22 U.S.C. § 7112(b), and to California‘s Supply Chains Act, 

which is discussed in more detail below in the context of Hershey‘s safe harbor doctrine argument, 

see Cal. Civ. Code § 1714.43. Although both statutes call for certain disclosures related to labor 

conditions, neither expresses any policy of disclosure on product labels. Amending Dana‘s 

Complaint to reference those statutes would not remedy the defects of her UCL claim.

Turning to the South Bay balancing test, the distinction between the underlying labor 

practices and the failure to disclose once again undermines Dana‘s claim. The slave labor and 

child labor alleged in the Complaint would certainly qualify as ―immoral, unethical, oppressive,

[and] unscrupulous.‖ See S. Bay, 72 Cal. App. 4th at 887. But can the same be said about the 

failure to disclose Hershey‘s suppliers‘ labor abuses on Hershey‘s product packaging? 

Considering this issue in Hodsdon, Judge Seeborg held as follows:

The harm at issue here is that Hodsdon may not have purchased 

Mars‘s chocolate products at all, or would have paid less for them, 

had he been aware of the prospect for child labor in Mars‘s supply 

chain. Such information is, in fact, readily available to consumers on 

Mars‘s website. Given that Hodsdon, like any other consumer, has 

access to information about the source of Mars‘s cocoa beans, the 

absence of such information on the packaging is not ―substantially 

injurious to consumers‖ or necessarily immoral. Granting that the 

labor practices at issue are immoral, there remains an important 

distinction between them and the actual harm for which Hodsdon 

 

12 While Dana does not argue in the context of the ―unfair‖ prong that either the CLRA or the 

FAL constitutes such a policy, her arguments that those statutes compel the disclosure she seeks 

could perhaps be transposed to this claim. For the reasons discussed above and below in the 

context of Dana‘s CLRA and FAL claims, the Court holds that neither statute represents a policy 

requiring the disclosure of labor abuses in a supply chain on product labels. 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 19 of 24
20

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

seeks to recover, namely his purchase of Mars‘s chocolate products 

absent any disclosure. Mars‘s failure to disclose information it had 

no duty to disclose in the first place is not substantially injurious, 

immoral, or unethical, and Hodsdon‘s UCL claim may therefore not 

advance.

Hodsdon, 2016 WL 627383, at *7. This Court agrees. Because Dana has not adequately alleged a 

violation of either test for the ―unfair‖ prong, or a violation of the ―unlawful‖ or ―fraudulent‖ 

prongs, her UCL claim is DISMISSED.

E. FAL Claim

The FAL makes it unlawful for any person ―to make or disseminate or cause to be made or 

disseminated before the public . . . any statement . . . which is untrue or misleading, and which is 

known, or which by the exercise of reasonable care should be known, to be untrue or misleading.‖ 

Cal. Bus. & Prof. Code § 17500. The plain language of the statute—which prohibits making, 

disseminating, or causing the dissemination of false or misleading statements—does not 

encompass omissions. Several cases have therefore held that ―[t]here can be no FAL claim where 

there is no  ̳statement‘ at all‖—or in other words that an omission, even of material facts, does not 

violate the FAL. Norcia v. Samsung Telecomms. Am., LLC, No. 14-CV-00582-JD, 2015 WL 

4967247, at *8 (N.D. Cal. Aug. 20, 2015); see also Hodsdon, 2016 WL 627383, at *4; Stanwood, 

941 F. Supp. 2d at 1222.

Dana cites four federal district court cases and two California appellate cases that 

purportedly held to the contrary, allowing FAL claims to proceed based on omissions. Opp‘n at 

17 nn.89 & 91. One of those cases actually dismissed the plaintiff‘s FAL claim to the extent that 

it was based on affirmative misrepresentations, and did not address the FAL claim at all in its

discussion of the plaintiff‘s fraudulent omission theory. Elias v. Hewlett-Packard Co., 950 F. 

Supp. 2d 1123, 1135−36, 1140 (N.D. Cal. 2013) (discussing only the CLRA, UCL, and common 

law in the context of fraudulent omissions, and granting leave to amend only as to those claims). 

Both of the California cases were based on claims that print, television, and/or telephone 

advertising campaigns—which inherently consist of affirmative statements—were misleading for 

failure to disclose fees associated with financial products or limitations on the use of coupons. 

People v. JTH Tax, Inc., 212 Cal. App. 4th 1219, 1224 (2013) (―The lawsuit claimed there were 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 20 of 24
21

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

misleading or deceptive statements in print and television advertising . . . .‖); People v. Toomey, 

157 Cal. App. 3d 1, 17 (1984) (―We encounter little difficulty concluding that Holiday‘s telephone 

solicitations and newspaper advertisements were likely to deceive consumers.‖). Two of the other

cases, which Judge Seeborg considered in Hodsdon, both also involved some degree of affirmative 

misrepresentation. See Hodsdon, 2016 WL 627383, at *4. In one, the defendant allegedly 

―misrepresented that it would take  ̳reasonable steps‘ to secure Plaintiffs‘ Personal Information

[stored on or transmitted via the defendant‘s network], and that [it] use[d] industry-standard 

encryption to prevent unauthorized access to sensitive financial information,‖ but failed to disclose 

that its safeguards were inadequate and network intrusions occurred. In re Sony Gaming Networks 

& Customer Data Sec. Breach Litig., 996 F. Supp. 2d 942, 990−91 (S.D. Cal. 2014) (quoting the 

plaintiffs‘ complaint; final alteration in original). In the other case, the defendants advertised their 

washing machines as ―Xxtra Sanitary‖ and ―high efficiency,‖ but allegedly concealed that the 

machines developed mold and were not efficient. Tait v. BSH Home Appliances Corp., No. 

SACV 10-00711 DOC (ANx), 2011 WL 3941387, at *1−3 (C.D. Cal. Aug. 31, 2011). That leaves 

only a decision by the Southern District of California, which held without analysis that the FAL‘s 

prohibition of untrue or misleading statements also ―requires a duty to disclose‖ in at least certain 

circumstances. Cortina v. Goya Foods, Inc., 94 F. Supp. 3d 1174, 1192 (S.D. Cal. 2015) (holding 

that the plaintiffs plausibly stated a claim under the FAL where the defendant failed to disclose a 

―potentially dangerous substance‖ in the beverages it sold). 

Although neither Sony nor Tait cited the alleged misrepresentations as the reason for 

allowing the plaintiffs‘ omissions claims to proceed, the Court agrees with Judge Seeborg‘s 

conclusion that the outcome in both cases is consistent with a requirement that there be at least 

some affirmative misrepresentation to support a claim under the FAL. See Hodsdon, 2016 WL 

627383, at *4. As for Cortina, and also to the extent that any of the other cases discussed above 

are not consistent with that rule, the Court respectfully disagrees with their interpretation of the 

FAL‘s statutory language. Because Dana bases her claims on pure omissions, Opp‘n at 13 n.58,

she fails to allege that Hershey ―ma[d]e or disseminate[d] or cause[d] to be made or disseminated‖ 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 21 of 24
22

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

any false or misleading statement, and thus fails to state a claim under the FAL.13

F. Additional Defenses

In light of the holdings above that each of Dana‘s claims must be dismissed, the Court 

need not reach the parties‘ arguments regarding Hershey‘s two additional defenses: that the 

California legislature has created a ―safe harbor‖ against Dana‘s claims by enacting the Supply 

Chains Act, see Mot. at 6−9; and that the relief Dana seeks would compel Hershey‘s speech in 

violation of the First Amendment, id. at 23−25. Although this Order need not and does not 

resolve either of those issues, the Court briefly addresses the safe harbor argument. 

―[T]he reach of the UCL is broad, but it is not without limit and may not be used to invade 

 ̳safe harbors‘ provided by other statutes.‖ Loeffler v. Target Corp., 58 Cal. 4th 1081, 1125 (2014) 

(citing Cel-Tech, 20 Cal. 4th at 182). ―If the Legislature has permitted certain conduct or 

considered a situation and concluded no action should lie, courts may not override that 

determination.‖ Id. The California Supreme Court has described the scope of the doctrine as 

follows:

A plaintiff may thus not ―plead around‖ an ―absolute bar to relief‖ 

simply ―by recasting the cause of action as one for unfair 

competition.‖ (Manufacturers Life Ins. Co. v. Superior Court (1995) 

10 Cal. 4th 257, 283, 41 Cal. Rptr. 2d 220, 895 P.2d 56.) The rule 

does not, however, prohibit an action under the unfair competition 

law merely because some other statute on the subject does not, itself, 

provide for the action or prohibit the challenged conduct. To 

forestall an action under the unfair competition law, another 

provision must actually ―bar‖ the action or clearly permit the 

conduct.

Cel-Tech, 20 Cal. 4th at 182−83; see also Loeffer, 58 Cal. 4th at 1125 (emphasizing the 

requirement that another statute ―clearly permit‖ the challenged conduct).

The Supply Chains Act requires certain large corporations to disclose on their websites 

their ―efforts to eradicate slavery and human trafficking from [their] direct supply chain[s] for 

tangible goods offered for sale.‖ Cal. Civ. Code § 1714.43(a)(1). The statute does not ―actually 

 ̳bar‘‖ any action. See Cel-Tech, 20 Cal. 4th at 183. Nor does it ―clearly permit‖ any conduct 

 

13 Moreover, even if the FAL allowed claims based on omissions, Dana has not established 

any duty to disclose the information at issue, as discussed above in the context of her CLRA 

claim. 

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 22 of 24
23

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

except disclosure of efforts to eradicate slavery and human trafficking. See id.; Loeffer, 58 Cal. 

4th at 1125. There are also discrepancies between the subject matter of the Supply Chains Act and 

the disclosure Dana seeks in this case. As Judge Seeborg noted in Hodsdon, the statute ―concerns 

slavery and human trafficking, not [other forms of abusive] child labor,‖ and ―the legislative 

history is silent about whether the legislature contemplated disclosure on labels.‖ Hodsdon, 2016 

WL 627383, at *9. Moreover, there is a difference between, on one hand, advertising the steps a 

company has taken to reduce slavery in its supply chain (as the statute requires), and on the other, 

disclosing that such slavery persists (as Dana seeks here). That the legislature mandated the 

former in certain instances does not necessarily indicate a conclusion that the latter could never be 

required under existing consumer protection laws.

The Ninth Circuit very recently addressed the safe harbor doctrine in Ebner v. Fresh, Inc., 

a case alleging deception where a cosmetic product label disclosed the net weight of the product 

contained in a tube but failed to disclose that ―only 75% of that product is reasonably accessible.‖ 

Ebner, __ F.3d __, No. 13-56644, Slip Op. at 8, 2016 WL 1056088, at *3 (9th Cir. Mar. 17, 2016). 

The panel held that the disclosure of the actual net weight fell within the safe harbor because 

―[b]oth federal and California law affirmatively require cosmetic manufacturers to include an 

accurate statement of the net weight of included cosmetic product.‖ Id. The plaintiff also brought 

an omission claim, however, arguing that failure to explain how much of the product was 

accessible rendered the accurate weight disclosure ―deceptive and misleading.‖ Id. The panel 

held that ―[u]nlike a claim seeking to alter the net weight declaration itself, this [omission] claim 

does not fall within the safe harbor because there is no law expressly permitting the omission of 

supplemental statements.‖ Id. Similarly, here, Hershey has not identified any law ―expressly 

permitting the omission of‖ disclosures on product labels regarding slave labor and the worst 

forms of child labor in a product‘s supply chain. See id.

The Court recognizes that recent district court decisions have held that the Supply Chains 

Act creates a safe harbor against claims based on non-disclosure of labor abuses in a supply chain. 

Wirth, 2016 WL 471234, at *6−9; Barber, 2015 WL 9309553, at *2−5; De Rosa, 2016 WL 

524059 (summarily dismissing for the reasons stated in Barber); Hughes, 2016 WL 524057

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 23 of 24
24

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

(same).

14

 Because this Court holds for the reasons stated above that California‘s consumer 

protection laws do not create any obligation to make the disclosures Dana seeks, the question of 

whether the Supply Chains Act would shield against such a duty is ultimately moot, and the Court 

need not and does not resolve whether Wirth and Barber are correct or applicable to the case at 

hand. The Court nevertheless echoes Judge Seeborg‘s skepticism that the safe harbor doctrine is 

as broad as Hershey contends.

IV. CONCLUSION

For the reasons stated above, Dana‘s claims under the CLRA, the UCL, and the FAL fail to 

state a claim on which relief may be granted, and are therefore DISMISSED. Dana has made clear

that she does not intend to pursue a claim based on affirmative misrepresentations. See Opp‘n at 

13 n.58. The Court therefore finds that leave to amend would be futile, and dismisses this action 

with prejudice.

IT IS SO ORDERED.

Dated: March 29, 2016

______________________________________

JOSEPH C. SPERO

Chief Magistrate Judge

 

14 Appeals of all of these cases are currently pending before the Ninth Circuit.

Case 3:15-cv-04453-JCS Document 37 Filed 03/29/16 Page 24 of 24