F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

R O B E R T H O D S D O N , on behalf of himself and all others similarly situated, Plaintiff-Appellant,

v.

M A R S , I N C ., a Delaware corporation; M A R S C H O C O L A T E N O R T H A M E R

I C A L L C, a Delaware
company , D efendants-Appellees. No. 16-15444

D.C. No. 3:15-cv-04450 RS

OPI NI ON

A ppeal from the United States District Court for the Northern District of California Richard Seeborg , District J udg e, Presiding

Arg u ed and Submitted December 7, 2017

Pasadena, California

F iled J une 4, 2018

B e fore: A. W allace Tashima, W illiam A. F letcher, and Marsha S. B erz on, Circuit J udg es.

Opinion by

J u dg e TashimaH O D S D O N V

. M A R S , I N C

. 2

SUMMARY *

Calif ornia Law

The panel affirmed the district c o urt’s dismissal o f
p l a i n tiff’s consumer protection claims in a putative c lass action a lleg ing that Mars, I nc., a chocolate manufacturer, h ad

a duty to disclose on its labels the labor practices that may have tainted its supply chain.

Concerning plaintiff’s duty to disclos e claims, the panel held that California consumer protection laws d id not oblig ate Mars, I nc. to label its g oods as possibly being produced b y child or slave labor. The panel further held that in the absence of any affirmative misrepresentations b y the manufacturer, the manufacturer did not have a duty to disclose the labor practices in question, even thoug h they

were reprehensible, b ecause they were not phy s i c al defects that affected the central function o f the chocolate p roducts. The panel concluded that, absent a duty to disclose, plaintiff’s Consumers L eg al Remedies Act, Unfai r C ompetition L aw, and F alse Advertising L a

w claims were foreclosed.

The p a nel held that plai n t i f

f ’s claims failed under the unfair prong of the Unfair Competition L aw under e ither the Cel-Tech test, Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.
, 973 P.2d 527, 540 (Cal. 1999), o r t h e South Bay test, outlined in S. B a

y Chevrolet v

. Gen. Motors Acceptance Corp ., 85 Cal. Rptr. 2d 301, 316 (Ct. App. 1999).

* T h is su m m ary co n stitu

tes n o p art o f th e o pin io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.H O D S D O N V

. M A R S , I N C

. 3

COUNSEL

Steve W

. B erman ( arg ued), Hag ens B erman Sobol Shapiro L L P, Seattle, W ashing ton; E l a ine T. B y sz ewski, H ag ens B erman Sobol Shapiro L L P, Pasadena, California; for Plaintiff-Appellant.

Stephe n D. Raber (arg

u ed), Richmond T. Moore, and J oelle Perry J ustus, W illiams & Connolly L L P, W ashing ton, D.C., for Defendants-Appellees.

Tina Charoenpong

, Deputy Attorney General; Michele V a n Gelderen, Supervising D eputy Attorney General; Nicklas A

. Akers, Senior Ass i s t a nt A ttorney General; Office of the Attorney General, L os A ng eles, California; for Amicus Curiae State of California.

OP INION

TASHI MA, Circuit J udg e:

I n this action, the putative class p laintiff alle g es that Calif ornia consumer protection laws require certain food manufacturers to d i s c l o se, on their products’ labels, that the products’ s u p p ly chain may involve child or slave labor. Reg re t t a bly

, d espite some efforts to eradicate the practices, child labor and s l a v e labor are modern-day scourg es, a nd

m a nufacturers that source materials from around the wor l d
may benefit from that illicit labor. This issue has g ained
p u b l ic attention in r ecent y ears such that many consumers

now c onsider in their purchasing decisions the labor practices behind household products. I n fact, some manufacturers have decided to market their product s a s free of unsavory laborH O D S D O N V

. M A R S , I N C

. 4

practices, and some leg islatures have a ttempted to furthe r educate the public about modern-day slavery

.
Nonetheless, the California c onsumer protection laws do
not oblig ate the d efendants-ap pellees to label their g oods a s p o s s i b l y being produced by c h ild or slave labor. I n the absence of any affirmative misrepresentations b y the manufacturer, we hold that the manufacturers do no t h a ve a du t y to disclose the labor practices in question, even thoug h they are reprehensible, because they are not phy sical defects that affect the central function of the chocolate products.

One of the key issues in this case is the conti n u ed viability of W

ilson v. Hewlett-Pa c k

a r d Co.
, 668 F .3d 1136 (9th Cir. 2012). Defendant s -a ppellees rely on W ilson to arg ue that plaintiff-appellant has not alleg ed that defendantsappellees had a duty to disclose because W ilson stands f

or the premise that plaintiffs in pure omission cases must p lead that the undiscl o s ed information created a safety haz ard. Plaintiff-appellant acknowledg es the ho lding in W ilson

, but
urg es us to deviate from that precedent, arg uing that intervening California Courts of Appeal cases re n d e r our interpretation of California law incorrect. I t is true that recent

s t a t e -court c ases have cast doubt on the breadth of th i s Circuit’s pr e cedent about the duty to disclose, but the facts before us today do not compel us to r e e x amine that p recedent in this case. This is so because, even apply ing the tests from the intervening California cas e s , P laintiff c annot state a claim. W e therefore affirm the district c ourt’s o r der o f dismissal.H O D S D O N V

. M A R S , I N C

. 5

I. F ACTUAL AND P ROCEDURAL BACK G ROUND

Plaintiff-appell a nt Robert H odsdon (“Plaintiff”) is a California citiz en who purchased defendants-appell ee s’ (tog ether, “Mars”) chocolate products at retail store s a nd viewed the labeling

. H odsdon al l ege s he would not have boug ht the c hocolate or would not have paid as much for it if the ma n u facturer had disclosed, on the label itself, the

ex istence of child and slave labor in its supply chain.

The I vory Coast (or Côte d’I vo i r e ) is the world’s larg e st producer of cocoa beans, the raw ing redient fo r c hocolate. L ike most chocolate m anufacturers, Mars sources at least

some cocoa b e ans from th e I vory Coast. Some cocoa beans from the I vory Coast are produced using wha t t h e I nternational L abor O rg aniz ation (“ I L O ”) calls “the worst forms of child labour.” The B ureau of I n t e rnational L abor Affairs o f the U.S. D epartment of L abor descr i b e s the situation in the I vory

Coast as follows:

[ C] hildren

. . . are working u nder conditions of forced labor on I voirian coc o a f arms

. . . . Some children a r e sold by their parents to traffickers, some a

re k idnapped, and others mig rate willing ly but fall victim to traffickers who sell them to recruiters or farmers, where they end up in conditions o f bonded la b o r

. . . . Some children a

r e forced to perform dang erous tasks . . . .

Mars recog niz es that its supply chains may be infected b y the worst forms of child l a b o r , b ut d oes not disclose this on its product labeling

. However, in co m pliance with the California Transparency in Supply Chains Act of 2010H O D S D O N V

. M A R S , I N C

. 6

(“Supply Chains Act”), Mars does disclose on its website its efforts to combat slavery and labor abuses i n i t s s upply chain. 1

P l a i n t i f f b r o u g h t this action under California’s Cons u m e r s L eg al Remedies Act (“CL RA”), Unfair Competition L aw (“UCL ”), and F alse A dverti s i n g L aw (“F AL ”), a lleg ing that Mars has a d uty to disclose on its labels the labor practices that may taint its supply chain. Plaintiff’s CL RA claim is that Mars misrepresented the source, characteristics, and standard of the chocolate products by omitting information about labor
pr a c t i c e s o n its label. See Cal. Civ. Code § 1770(a)(2), (5), (7). As to the UCL
, Plaintiff claims that Mars’ conduct came within the UCL ’s prohibi tion on “any unlawful, unfair o r f raudulent business act or practice” by : (1) violatin g t h e “unlawful” prong based on its violation of the CL RA; (2) violating the “fraudulent” p rong because it omitted information about the forced labor at the point of s a l e ; a nd ( 3 ) v iolating the “unfair” p rong because the omission contravened leg islative policy ag ainst child an d s l a ve labor,

1 T h e Su p p ly Ch ain s A ct, Cal. Civ

. Co d e § 1 7 1 4 .4 3, w as en acted in 2 0 1 0 . T h e Calif

o rn ia A tto rn ey

Gen eral later d escrib ed th e req u i rem en ts

o f th e A ct:

T h i s A ct req u ires larg e retailers an d m an u f actu r e r s d o in g b u sin ess i n Ca lif o rn ia to d isclo se o n th eir

w eb sites th eir “ ef

f o rts to er a d i cate slav ery an d h u m an traf f i ck in g f ro m [th eir] d i rect su

pp ly ch ain f

o r tan g ib le
g o o d s o f f ered f o r sale.”

. . . Co m

p an i es su b j ect to th e A ct m u st p o s t d is c l o s u res o n th eir In tern et w eb sites related t o f

iv e sp ecif

ic areas: v e r i f

icatio n , au d its, certif icatio n , in t ern al acco u n t ab ility , an d train in g

.

K A MA L A D. H A RRI S , C A L

. D E P ’ T OF J UST I CE , T HE C A L I F ORNI A T RA NSPA RE NCY I N S UPPL

Y C H A I NS A C T : A R E S OURCE G UI DE , i (2 0 1 5 ).H O D S D O N V

. M A R S , I N C

. 7

or because Mars’ “participation in a s u p p l y chain involving [ slave labor] is immoral, unethical, oppressive, unscrupulous and injurious to consumers.” See Cal. B us. & P r o f

. C o d e § 17200. F inally

, Plai n t i f f’ s F AL claim also is based on M a r s’ alleg ed failure to disclose its labor p ractices on i t s label. See id. § 17500.

The district court dismisse d the complaint for failure to state a claim. F ed. R. Civ. P. 12(b)(6). Plaintiff has timely appealed.

II. JURISDICTION AND STANDARD OF REVIEW

The distr i ct court had jurisdiction under 28 U .S.C. § 1332(a). We have jurisdiction under 28 U.S.C. § 1291, a nd

re v i e w d e novo the district court’s d ismissal for failure to state a claim. See Hinojos v. Kohl’s Corp.
, 718 F. 3 d 1098, 1103 (9th Cir. 2013).

III. ANALYSIS

A. Duty to Disclose

Plaintiff d o es not a lleg e any affirmative misstatement a nd relies solely on an omission theory of consumer fraud. Omissions may be the basis of claims under California

consumer protections laws, but “to be actionable the omission
must be contrary to a representation actually m a d e b y the defendant, or an omission o f a fact the defendant was obliged
to disclose .” D a u g herty v. Am. Honda Motor Co.
, 51 Cal. Rptr. 3d 118, 126 (Ct. App. 2006) (emphasis added).

Mars arg ues that to establish a duty to disclose, u nder the Ninth Circuit’s inte rpretation of California law, Plaintiff mustH O D S D O N V

. M A R S , I N C

. 8

alway s alleg e that t h e u ndisclosed information “caused an unreasonable safety haz ard.” W ilson

, 668 F .3d at 1143. Plainti ff urg e s us to rule that W ilson is no long e r g ood law after more recent California C o u rts of Appeal opinions, a nd
to apply the tests for duty to disclose f rom those cases. W hile the recent California cases d o cast d oubt on whether W ilson ’s safety -haz a

rd r equirement applies in all circumstan ces, we have no occasion i n this case to consider whether the later
st a t e- c ourt cases have effectively overruled W ilson

. This is
true because even apply ing Plaintiff’s p roposed tests, derived from his reading of the mor e r e ce n t California decisions, he

c a nnot state a claim. Specifically

, Plaintiff has n o t sufficiently alleg ed that the defect in question—the ex istence of c hild lab o r in the supply chain—affects the c entral functio n a lity of the chocolate products. Therefore, without either rely

ing on or overruling W

ilson , we hold that Plaintiff has not established that Mars had a duty to disclose the labor practices on its labels.

The primary California cases on which Plaintiff relies a re Collins v. eMachines, I

nc. , 1 34 Cal. Rptr. 3d 588 (Ct. App. 2011), and R utledge v. Hewlett-Packard Co.
, 1 90 Cal. Rptr. 3d 411 ( Ct. App. 2015). Plaintiff has not sufficiently alleg ed that Mars has a duty to disclose under these cases.

I n Collins

, t h e p l aintiffs were a putative class o f

consumers that p urchased eMachine computers. 134 C a l

. Rptr. 3d at 5 91. The plaintiffs complained that a floppy disk controller defect, which manifested itself during the warranty period, caused critical data c orruption of the hard drive. Id.
at 591–92. Citing the four-prong test from LiMandri v

. Judkins

, 60 Cal. Rptr. 2 d 539 (Ct. App. 1997), the plaintiffs asserted that eMachines h a d a d uty to disclose the defect. Collins , 134 Cal. Rptr. 3d at 593. The court ex plained:H O D S D O N V

. M A R S , I N C

. 9

A failure to d i s close a fact can constitute

a c t i o n a b l e f

r a u d o r d e c e i t i n f o u r circumstances: (1) when the defendant is the plaintiff’s f

iduc i a r y ; (2) when the defendant has e x clusive knowledg e of material facts not known or r easonably a ccessible to the plaintiff; (3) w hen the defendant actively conceals a material fact from the plaintiff; a nd (4) when the defendant ma k e s partial representations that a

r e misleading because

som e other material fact has not been disclosed.

Id. (citing LiMandri

, 60 Cal. Rptr. 2d at 543). The plaintiffs in Collins arg ued that eMachines h a d a duty to disclose based on either prong

(2) or (3). Id. at 593.

The court h eld that the plaintiffs had stated a CL RA claim under prong (2). Id. at 594. T h e fac t o f the defect was material b e ca u se a “reasonable consumer would deem it important in determining how to act in t h e t r ansaction at issue,” id. a t 593 (internal quotation and alterations omitted), and “ac c o r d i n g to the complaint, e Machines knew of this defect while p laint i f

fs d id not, and, g iven the nature o f the defect, it w a s difficult to d iscover.” 2 Id. at 594 (alteration omitted)

. F urther, Collins emph a siz ed that the failure to disclose the defect at issue supported a CL RA claim because the defect “was central to the f u n ction of a computer as a computer.” Id. at 5 95. I n so holding

, Colli n s d i sting u ished Daugherty

—on which W

ilson is b ased—by noting th a t the

2 T h e co u

rt also d eterm in ed th at plain tif f s’ co m p l ain t alleg ed th at eMach in es activ ely co n cealed th e d ef ect. Co llin s , 1 3 4 Cal. Rp tr. 3 d at 5 9 4

.H O D S D O N V

. M A R S , I N C

. 10

d e f ect in the case before it, unlike the d efect in Daugher t y , resulted in d a m a g e to the computers d uring the warranty period. S

ee id. at 595. Collins

, therefore, stands for the premise that a manufacturer has a duty to disclose only phy sical defe c ts—not the means by which a product is produced—that relate to a product’s central function and arise during the warranty

period.

The second case that Plaintiff r elies upon is R u tledge

, a n o ther case involving computers. The plaintiffs th e r e alleg ed that Hewlett Packard ( “ H P”) actively c oncealed a nd did not disclose that its laptops contained defective inverters that would cause the screens to d i m and darken during the warranty period. Rutledge

, 190 Cal. Rptr. 3 d a t 4 1 8. The plaintiffs further alleg ed that HP made misrepresentations in its press r eleases, that the plaintiffs relied on these statements,

a n d t hat the laptop screen is c e ntral to the function of t h e laptop. See id. at 420–422. On summary judg ment, the court held that there was a triable issue abo u t whether HP had a duty to disclose the inverter defect. Id. at 422.

Th e court’s reasoning in R utledge

, however, is far from clear. F irst, the c ourt did n ot apply the LiMandri factors, a s Collins did, to d etermine w hether def e n d a n ts had an oblig ation to disclose. F urther, the section of the opinion on the duty to disclose ultimately concludes that there is “a triable i s s u e of f

act as to the nature of HP’s [ affirmative] representations, and w hether that triggered a duty to d isclose the d efect.” Id. at 422 ( emphasis added). The opinion is thus somewhat inconclusive on whe t her there was a duty to disclose independent of HP’s affirmative representations about its product. F ina l l y , Rutledge seems to cite favorably the holding in Collins th a t manufacturers have a duty toH O D S D O N V

. M A R S , I N C

. 11

disclose a defect when it affects the c entral functionality of a product. See id. at 421.

Rutledge

, therefore, could be read as a case that stands for
any of the following propositions: (1) there is a du t y to disclose in lig h t of affirmative representations; (2) there is a duty to disclose defects that g o to the central function of the product; or (3) there is a duty to d isclose defects that g o to the central function of the product and which a rise d u r i n g the warranty period. Plaintiff cannot state a claim under a n y o f these interpretations.

W h ile Collins a

nd Rutledge are somewhat vag ue about the test for d etermining whether a defendant h as a duty to disclose, they sanc t i o n a UCL omission claim when: the plaintiff alle ges that the omission was material; second, the plaintiff must plead that the de fe c t was central to the product’s function; and third, the plaintiff must a lleg e one o f the four LiMandri factors. See Collins

, 134 Cal. Rptr

. 3 d at 593–95. Plaintiff arg ues that Mars h ad a duty to d isclose because information a

bout labor practices is m a terial to

c o n s u m e r s a n d

— r ely ing on t h e s e c o n d p r o n g o f LiM a n d ri —because Mars had “superior knowledg e ” about labor issues in its supply chain. Plaintiff, however, omits a

c r u c ial element that Collins and Rutledge emphasiz e —that the d efect must relate to the c e n t ral functionality of the product. 3

3 P l ain tif f also cites Ru b e n s t e i n v. Ga p, In c ., 2 2 2 Cal. Rp tr. 3d 3 9 7 (Ct. A p p

. 2 0 17 ). T h e p lain tif

f s in Ru ben stein alleg ed th at Gap v io lated th e

co n su m er p r o t e c tio n law s “ b ased o n G ap ’ s alleg ed m isrep resen tatio n in

u sin g t h e Gap an d B an an a Rep u

b lic bran d n am es f

o r [f acto ry sto re] item s th at h ad n ev er b een so ld in trad itio n al Gap an d B an an a Rep u b li c sto res

an d /o r w ere o f lesser q u ality

, an d also on Gap ’ s f ailu re to d isclo s e th ese f acts to co n su

m ers. Id

. at 4 0 1 . T h e co u rt rej ected th e p lain tif f s’ claim s,H O D S D O N V

. M A R S , I N C

. 12

F irst, we assume without deciding that the ex istence o f slave or child labor in a product’s supply chain is material to

consumers.

Second, however, Plaintiff fails to alleg e that the

ex istence of slave or c h i l d l a bor in the supply chain affects the product’s ce n t ral function. I n Collins and Rutledge

, the plaintiffs were required to plead that the alleg edly concealed physical defect was central to the product’s function. 4 Here,

reaso n i n g th at th e p lain tif f s d id n o t “ alleg e f

acts sh o w i n g th at th e sales h isto ry o f f

acto ry sto re item s is m aterial to reaso n ab le co n su m ers.” It f u rth er h eld th at “ an y

q u ality issu es w ith

f acto ry sto re m erch an d ise w ere

n o t in Gap ’ s ex clu siv e k

n o w led g e.” Id

. at 4 0 5.

A d ditio n ally

, af

ter o ral arg u m en t in th is case, th e Calif o rn ia Co u rt of A p peal, F if th D i s trict, d ecid ed Gu tierrez v. Ca rMa x Au to S u p ersto res Ca l.

, 2 28 C al. R

p tr. 3 d 6 9 9 (Ct. A

p p

. 20 1 8 ). In Gu tierrez
, th e d ef en d an t

car d ealer d id n o t d isclo s e th at th e car th at th e p l a i n t i ff p u rch ased w as

su b j ect to a saf

ety recall relatin g to th e car’ s b rak in g an d lig h tin g sy stem s. T h e co u rt h eld th at th e o m itted in f o rm atio n w as m aterial b ecau s e it related
to saf ety co n cern s—w

h ich w o u ld b e im

p o rtan t to th e reaso n ab le

co n su m er. Id

. at 7 0 5

. Fu

rth er, th e co u rt co n clu d ed th at th e car d ealer h ad

a d u t y to d isclo se th e recall b ecau se “ CarMax m ad e p a rtia l
rep resen t a tio n s ab o u

t th e v eh icle’ s b rak in g an d lig h tin g sy s tem s an d th ose rep resen tatio n s w ere lik ely to m islead f o r w an t o f co m

m u n icatio n o f th e f acts ab o u t th e recall.” Id

. at 7 2 2

– 2 3

. A s Gu tierrez is a p artial

m isrep resen tatio n case, it d o es n o t af f ect th e o u tco m e o f t h is p u rely

o m issio n s

- b ased case.

4 Neith er Ru b en stein n o r Gu tierrez m en t io n s th e “ cen t ral f u n ctio n al i t y ” test, b u t th eir f acts are co n sisten t w ith req u irin g th at th e alleg ed d ef

ect b e p h y sical an d im

p o rtan t t o th e p ro d u ct’ s f u n c t i o n

. In Gu tierrez
, th e alleg ed o m issio n related to a p h y sical d ef ect th at created a saf ety h azard

. 2 2 8 Cal. Rp tr. 3 d at 7 2 3

. I n R u b e n stein
, th e co u rt

c o n clu ded th at th ere w ere n o “ f acts sh ow in g th at th e s ales h is t o r y o f f acto ry sto re item s is m aterial to reaso n ab l e co n su m ers.” 2 2 2 Cal. Rp tr. 3 d at 4 0 5.H O D S D O N V

. M A R S , I N C

. 13

the alleg ed lack of disclosure about the ex istence of slave labor in the supply chain is not a phy sical defect at a ll, much l e s s one related to the chocolate’s function as chocola t e. Plaintiff contends that h e h as “no practical use” for the products tainted by slav e o r child labor, but the c entral functionality o f the product is n o t b a sed on subjective preferences about a p r o duct. A computer chip that corrupts the hard drive, or a laptop screen that g oes dark, renders those products incapable of use by any consumer; some consumers of chocolate are not concerned about the labor practices used
to manufacture the product. Thus, Plaintiff fails to establish that Mars has a duty to disclose the issues in its supply c hain. 5

Nonetheless, e ven t houg h we apply the more recent California Courts of Appeal d e c isions, doing so does not de p r i v e W

ilson o f all vitality

. The recent California cases show that W

ilson ’s safety haz ard p leading requirement is not necessary in all omission cases, but that the requirement may remain applicable in some circumstance s

. I n o ther words, Collins and Rutledge are not necessarily irreconcilable with W ilson because, where the challeng ed omission does not

concern a c entral f

unctional def

ec t , the plaintiff may still have to plead a safety h az ard to establish that the defendant

5 T h e p arties also d isp u te w h e t h e r P lain tif

f su f f icien tly p lead ed th at Mars h ad k

n ow led g e th at P lain tif

f d id n o t ab o u t th e ex i sten ce of ch ild or slav e l ab o r in th e su

pp ly ch ain

. Plain tif

f arg u es th at Mars n eed o n l y h av e

“ s u p erio r” k n o w led g e o v er th e co n su m er to satisf y th e Lima n dri p ro n g , w h ereas Mars co n ten d s th at th e test is “ ex clu s iv e” k n o w led g e. W h i le w e

n eed n o t reach th e issu e h ere, Mars ap p ears to h av e th e b etter read i n g o f Calif o rn ia law

.H O D S D O N V

. M A R S , I N C

. 14

h a d a duty to disclose. 6 F or ex ample, even thoug h we o f f e r

no binding o pinion on the issue, W ilson may still apply where the defect in question does not g o to the central f unctionality of t h e product, but still creates a safety haz ard. F or this

r eason, we are not convinced that the California Supr e m e Court would rule that a p l a i ntiff need never plead a safety haz a rd. See Muniz v. United Parcel Serv., Inc.
, 738 F .3d 214, 219 (9th Cir. 2013) (“Decisions of the six [ California] district appellate courts are persuasive but do not bind each other or

us. W e should nevertheless f ollow a published in t e r m ediate
state c o u r t d ecision reg arding California law unless we a re convinced that the California Supreme Court w ould reject it.”) ( citations omitted). B u t see In re W atts , 298 F .3d 1077, 1084–86 ( 9 th Cir. 2002) (O’Scannlain, J
., concurring ) (questioning this Circuit’s practice of revisiting panel decisions b ased on subsequent state interm e d i a te appellate opinions, especially where state a ppellate courts have independent d istricts that do not follow one another’s precedent).

Therefore, we hold that in this pure omissions c a se concerning no phy sical product defect relating to the c entral function of the chocolate a nd no safety defect, Plaintiff has
not sufficiently pleaded that Mars h ad a duty to disclose on its labels the l abor issues in its supply c hain. 7 A bsent a duty to

6 Fo r ex am

p l e, ev en th ou g h w e of

f er n o b in d in g o p in io n o n th e i ssu e, W ilso n m ay still ap p ly w

h ere th e d ef

ect in q u estio n d o es n o t g o to th e

cen tral f u n ctio n ality

o f th e p ro d u ct b u t still creates a saf ety h azard

.

7 P lain tif f h as an o u tstan d in g m o tio n to certif y th e f o llo w in g q u estio n to th e Calif

o rn i a Su prem e Co u rt: “ Mu st a p u

re o m issio n

- b ased co n su

m er d ecep t io n claim u n d er th e UCL
, FA L
, an d CL RA in v o lv e a saf ety co n cern to b e actio n ab le? ” B ecau se P lain tif f can n o t estab lish t

h at Mars h ad a d u ty to d isclo se, ev en if h e is n o t req u ired to p lead a s af ety h azard

, th e an sw erH O D S D O N V

. M A R S , I N C

. 15

disclose, Plainti f

f ’ s CL RA, UCL a

n d F AL claims a

re foreclosed.

B. CLRA

Plaintiff alleg es three separate violations of the CL RA, namely that Mars’ failure to d isclose on its labels information about s l ave or child labor: (1) “ [m] isrepresent[ ed] the source” of the products; (2) “[ r] e present[ ed] that [ the] g oods

. . . have

. . . characteristics

. . . w hich they do not have”; a nd (3) “[ r] epresent[ ed] that g o od s

. . . are of a particular standard.” Cal. Civ. Code § 1770(a)(2), (5), (7).

Ag ain, “ althoug h a claim may be stated under the CL RA in terms constituting fraudulent omissions, to be actionable the omission must b e contrary to a represe n tation actually made by the defendant, or an omission of a fact the defendant

was oblig e d to disclose.” Daugherty

, 51 Cal. Rptr. 3d at 126. As discussed above, Mars was not o b lig ed to disclose issues about its supply chain. Therefore, Mars d i d n o t violate the CL RA.

C. UCL

The UCL prohibits “ any u nlawful, unfair or fraudulent business act or pract i c e

. ” Cal. B us. & Prof. Code § 17200. “B ecause B usiness & Professions Code § 17200 is w ritten in the d isjunctive, it e stablishes three varieties o f unfair

to P lain tif f ’ s q u estio n is n o t o u tco m e- d eterm in ativ e. S ee Cal. R. o f Co u rt 8 .5 4 8 (a)(1 ) (“ T h e [Calif

o rn ia] S u pr e m e Co u rt m ay d ecid e a q u estio n of Calif o rn ia l aw if

. . . [t]h e d ecisio n co u ld d eterm in e t h e o u t co m e o f a

m atter p en d in g in th e req u estin g co u rt.”). We th eref o re d en y th e m o tio n to certif y th e q u estio n

.H O D S D O N V

. M A R S , I N C

. 16

competition–acts or practices w hich are unlawful, o r unfair,

or fraudulent.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.
, 973 P.2d 527, 540 (Cal. 1999). Plaintiff claims t h at Mars is liable under all three of the varieties.

1. Unlaw f

ul P rong

Plaintiff links his unlawful prong claim to Mars’ alleg ed violation of the CL RA. As discussed above, Mars did not violate the CL RA; thus, it did not violate the unlawful prong of the UCL

.

2. F raudulent P rong

“[ A] failure to disclose a fact one h as no affirmative duty
to disclose is [ not] ‘likely to deceive’ a n y o n e within the meaning of the UCL .” Daugherty

, 51 C a l

. R p tr. 3d at 128;

see also Berryman v. Merit P rop. M gmt., Inc.
, 6 2 Cal. Rptr. 3d 177, 188 (Ct. App. 2007) (“Absent a duty to disclose, the failure to do so does not support a c laim under the fraudulent
prong of the UCL .”). Plaintiff d oes n o t state a claim under this prong

.

3. Unf air P r ong

Unlike the other two UCL prong s, the lack of a duty t o disclose does not necessarily dispose o f claim s u n d er the unfair prong

. “The UCL does not define the term ‘unfair.’ I n fact, the proper definition of ‘unfai r’ conduct ag ainst

consumers ‘is currently in f l ux ’ a mong California courts.” D avis v. HSBC B ank Nev., N.A.
, 691 F .3d 1152, 1 1 6 9 ( 9 t h Cir. 2 012) (quoting Lozano v. AT& T W ireless Servs., Inc.
, 504 F .3d 718, 735 (9th Cir. 2007)). “B efore Cel-Tech

, courts held that ‘unfair’ conduct occurs when that p ractice ‘ offendsH O D S D O N V

. M A R S , I N C

. 17

an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious
to c onsumers.’ ” Id. (citing S. Bay Chevrolet v

. Gen. Motors Acceptance Corp.
, 85 Cal. Rptr. 2 d 301, 316 (Ct. App. 1999)) (“ South Bay test”). The California Supreme Court, in CelTech

, established a di f

fe r ent, more concrete, definition o f unfair:

“[ U] nfair” means “conduct that threatens an incipient viola tion o f an antitrust law, o r violates the p o l i c y or spirit o f one o f those laws because its effects are c omparab l e t o o r the same a s a violation of the law, o r otherwise sig nificantly threat ens or harms competition.” I t further requir e d that “any finding o f unfairness to c ompetitors under

s e c t i o n 1 7 2 0 0 b e t e t h er e d t o s o m e leg islatively declared policy or proof of some actual or threatened impact on competition.”

Davis
, 691 F .3d at 1169–70 (quoting Cel- T e c h

, 973 P.2d at 543–44) (emphasis added). The Cel-Tech test did n ot a pply
to actions by c onsumers, but “some c o u rts in California have

ex tended the Cel-Tech definition to consumer actions, while others have appli e d t h e [ South B ay test] .” Id

. at 1 170; see also Cel-Tech , 973 P.2d at 544 n.12. The parties here a rg ue under both the Cel-Tech and South Bay tests.

F irst, under t h e Cel-Tech test, Plaintiff contends that his claims are “teth e r e d ” to the United Nations’ Universal Declaration o f Human Rig hts and the I L O’s Convention 182 (“W orst F orm s of Child L abour Convention”)—the f ormer forbidding slavery and the latter for bidding the worst f

orms of child labor. Plaintiff’s theory is that these internationalH O D S D O N V

. M A R S , I N C

. 18

declarations demo nstrate the “leg islatively d eclared policy ”
ag ainst c hild and slave labor. To determine whether something is sufficiently “tethered” to a leg islative p olicy for the purposes of the u n fair prong , Cal i fo r nia courts require a close nex us between the challeng ed act and the leg isl a t i ve policy

. See Cel-Tech

, 973 P.2d at 544 (holding that for an act t o be “unfair,” it must “threaten[ ]” a violation of l a w o r “violate[ ] the policy o r spirit of o ne of those laws because its effects a re c o m p a r a b l e to or the same as a violation of the law”).

Fo r ex ample, in Gregory v. Albertson’s, Inc.
, 128 Ca l

. Rptr. 2d 389 (Ct. App. 2002), the p l a i n t i ffs alleg ed that the defendants violated the u n f a i r p rong of the UCL when the defendant g rocery store chain closed one location, but h eld the lease and kept the property e mpty to prevent a competitor from moving in. I

d. at 395. Pla i n t i ffs tried to tether defendants ’ ac tions to a p olicy a g ainst urban blig ht. See id. (“[ B ] y k eeping off the market the chief re t ail store in the

s h o p p ing center, the [ defendants] have put in motion a process of deterioration a ffecting the e n tire shopping center that w ill inevitably produce the kind of blig ht that Health a nd S af ety Code section 33035 condemns

. . . .”). The co u r t rejected plaintiffs’ arg ument that defendants’ decision to hold
onto one lease was sufficiently tethered to the policy ag ainst community blig ht in § 33035. Id

. at 395–96. I nstead, the
court r easoned that § 33035 was part of a broader Community Redevelopment L aw, which estab l i s h e d p rocedures for public participation in the redevelopment of blig hted areas, but did
not “call[ ] f

or a private remedy affec t ing a sing le parcel o fH O D S D O N V

. M A R S , I N C

. 19

property under the u n fair competition law.” Id. a t 395. 8 I n other words, the c halleng ed action was too far removed from the leg islative policy

, as stated in the Commun i ty Redevelopment L aw, to b e the tether for a claim under the unfair prong

. I

d. ; see also Scripps Clinic v. Superior Court
, 1 3 4 C a l. Rptr. 2d 101, 117 (Ct. App. 2003) (holding that plaintiffs did n o t state a claim under the unfair prong where defendant medical c enter’s practice of not continuing to treat patients w ho sued the c enter did not affect pla i n t i ffs’ constitutional rig ht to redress in court).

As the plaintiffs in Gregory p o inted to a g eneral p olicy
ag ainst urban b lig ht, so too, Plaintiff here hig hlig hts a g eneral policy ag ainst c hild or slave labor. However, like in Gregory
, there is not a close e n o u gh nex u s between the policy at issue—here a policy ag a inst certain labor practices— and the challeng ed a ction—here not placing disclosures on consumer labels. J u st a s leaving one building empty may eventually lead to blig ht, so too not labeling chocolate b a r s may indirectly e x acerbate slave labor in the supply chain; however, the labeling of products is too far removed from the U.N. and I L O policies to serve as the basis for a UCL c laim. As such, the U.N. Convention and the W orst F orms of Child L abour Convention do not provide a tether h e r e

. F urther, requiring Mars to p lace labels on its products could a rg u ably imping e on the Supply Chains Act, which addresses disclosure of labor a

b uses, but does not require labels on the products themselves. Plaintif f c a nnot state an unfairness
prong claim under the Cel-Tech test.

8 Greg ory also rej ected p lain tif f s’ teth erin g claim

b ecau se “ it w ou ld im p in g e on a sep arate state p o l icy f av o rin g f reed o m o f co n trac t b y th e p arties t o co m

m er c i a l r e a l p ro p erty l eases.” 1 2 8 Cal. Rp tr. 2 d at 3 9 5 (q u o tatio n

m ark s o m itted ).H O D S D O N V

. M A R S , I N C

. 20

Plaint i f

f’s claims also fail under the South Bay test. Mars’ f ailure to disclose information it had no duty to disclose in the first place is n o t substantially injurious, immoral, or u nethical. See Bardin v. DaimlerChrysler Corp.
, 3 9 Cal. Rptr. 3d 634, 6 43–44 (Ct. App. 2006) (holding t h at the use of less ex pensive tubular steel ex haust manifolds did
not violate p ublic policy because the d e f e ndant made no representation about the c omposition of the manifolds and the plaintiffs did not alleg e a safety concern or a violation of the warranty ). Plaintiff’s alleg ation that Mars’ participation in a supply c hain in v olving slave labor is “immoral” does not suffice here, because Plaintiff is challen gi n g the failure to d i s c l o se. W hile the labor practices themselves are clearly immoral, it is doubtful that failing to d isclose on the label that

a product may be tainted by such labor practices is itself immoral, especially when there is no specific duty to d isclose this information and the information is otherwis e disclosed under the Supply Chains Act. F urther, the failure to d isclose is n ot substantially injurious because, a s mentioned above, information about slave and c hild labor is public knowledg e , accessible on Mars’ w ebsite—pursuant to the Supply Chains Act. Therefore, under either test for the unfair prong o f the UCL , Plaintiff’s claims fail.

D. F AL

“California’ s F alse A dvertising L aw makes it unlawful fo r a ny person to ‘induce the public to enter into any oblig ation’ based on a statement that is ‘untrue or misleading

, and w hich is known, or which b y t he ex ercise of reasonable care should be known, to be untrue or misleading .’ ” Davis
, 691 F .3d at 1161 (quoting Cal. B us. & Prof. Code § 17500). W h e t h er an a dvertisement is misleading is determined b y asking whether a reasonable consumer would likely beH O D S D O N V

. M A R S , I N C

. 21

deceived. See id. at 1162. Plaintiff’s FA L c laims fail because “a f

a i l ure to disclose a fact o ne has no affirmative duty to disclose is [ n o t] ‘likely to deceiv e ’ a n y one.” Daugherty , 51 Cal. Rptr. 3d at 128. 9

IV. CONCLUSION

F or the foreg oing reasons, w e affirm the judg ment of the district c o u r t dismissing Plaintiff Hodsdon’s CL RA, U CL
, and F AL claims with prejudice.

AF F IRMED.

9 B ecau se w e h o ld th at P lain tif f h as n o t p l ead ed a claim u n d er th e CL RA , UCL , o r FA L
, w e n eed n o t, an d d o n o t, reach an y o f Mars’ o th er arg u m en ts in

su pp o rt o f af f i rm an ce.