FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JANE DOE I; JANE DOE II; JOHN 

DOE I; JOHN DOE II individually

and on behalf of Wal-Mart

workers in Shenzhen China; JANE

DOE III; JANE DOE IV, individually

and on behalf of Wal-Mart

workers in Dhaka, Bangladesh;

JANE DOE V; JANE DOE VI; JOHN

DOE III, individually and on behalf

of Wal-Mart workers in Bogor,

Indonesia; JANE DOE VII; JANE

DOE VIII individually and on

behalf of Wal-Mart workers in No. 08-55706 Mastaphia Swaziland; JANE DOE

IX; JANE D.C. No. DOE X; JANE DOE XI;  JOHN DOE IV, individually and on 2:05-cv-07307-AG

behalf of Wal-Mart workers in OPINION

Managua and Sebaco, Nicaragua;

KRISTINE DALL; BRUCE REEVES;

CHRISTINE KAPOSY; SHARLOTTE

VILLACORTA, individually and on

behalf of similarly situated

California workers, c/o 8530

Stanton Avenue, Buena Park, CA

90622,

Plaintiffs-Appellants,

v.

WAL-MART STORES, INC.,

Defendant-Appellee. 

8611
Appeal from the United States District Court

for the Central District of California

Andrew J. Guilford, District Judge, Presiding

Argued and Submitted

May 8, 2009—Pasadena, California

Filed July 10, 2009

Before: Betty B. Fletcher, Raymond C. Fisher, and

Ronald M. Gould, Circuit Judges.

Opinion by Judge Gould

8612 DOE v. WAL-MART
COUNSEL

Terrence P. Collingsworth, Natacha Thys, Conrad & Scherer,

Washington, D.C.; Dan Stormer, Anne Richardson, Lisa

Holder, Hadsell & Stormer, Pasadena, California, for the

plaintiffs-appellants.

James N. Penrod, Thomas M. Peterson, Amy M. Spicer, Morgan, Lewis & Bockius, San Francisco, California, for the

defendant-appellee.

Deborah J. La Fetra, Damien M. Schiff, Pacific Legal Foundation, Sacramento, California, for the amicus Pacific Legal

Foundation.

Daniel J. Popeo, Richard A. Samp, Washington Legal Foundation, Washington, D.C.; Michael A. Carvin, Daniel R.

Volkmuth, Jones Day, Washington, D.C., for the amicus

Washington Legal Foundation and Allied Educational Foundation.

OPINION

GOULD, Circuit Judge:

The appellants were among the plaintiffs in the district

court and are employees of foreign companies that sell goods

to Wal-Mart Stores, Inc. (“Wal-Mart”). They brought claims

against Wal-Mart based on the working conditions in each of

their employers’ factories.1 These claims relied primarily on

a code of conduct included in Wal-Mart’s supply contracts,

specifying basic labor standards that suppliers must meet. The

district court dismissed the complaint for failure to state a

1The complaint also included claims by California plaintiffs, who were

employees of Wal-Mart’s competitors. However, this appeal is brought

only by the foreign plaintiffs. 

DOE v. WAL-MART 8615
claim under Federal Rule of Civil Procedure 12(b)(6). We

have jurisdiction under 28 U.S.C. § 1291, and we affirm.

I

Plaintiffs are employees of Wal-Mart’s foreign suppliers in

countries including China, Bangladesh, Indonesia, Swaziland,

and Nicaragua. Plaintiffs allege the following relevant facts,

which we take as true for purposes of this appeal:

In 1992, Wal-Mart developed a code of conduct for its suppliers, entitled “Standards for Suppliers” (“Standards”). These

Standards were incorporated into its supply contracts with foreign suppliers. The Standards require foreign suppliers to

adhere to local laws and local industry standards regarding

working conditions like pay, hours, forced labor, child labor,

and discrimination. The Standards also include a paragraph

entitled “RIGHT OF INSPECTION”: 

To further assure proper implementation of and compliance with the standards set forth herein, Wal-Mart

or a third party designated by Wal-Mart will undertake affirmative measures, such as on-site inspection

of production facilities, to implement and monitor

said standards. Any supplier which fails or refuses to

comply with these standards or does not allow

inspection of production facilities is subject to

immediate cancellation of any and all outstanding

orders, refuse [sic] or return [sic] any shipment, and

otherwise cease doing business [sic] with Wal-Mart.

Thus, each supplier must acknowledge that its failure to comply with the Standards could result in cancellation of orders

and termination of its business relationship with Wal-Mart. 

Wal-Mart represents to the public that it improves the lives

of its suppliers’ employees and that it does not condone any

violation of the Standards. However, Plaintiffs allege that

8616 DOE v. WAL-MART
Wal-Mart does not adequately monitor its suppliers and that

Wal-Mart knows its suppliers often violate the Standards.

Specifically, Plaintiffs claim that in 2004, only eight percent

of audits were unannounced, and that workers are often

coached on how to respond to auditors. Additionally, Plaintiffs allege that Wal-Mart’s inspectors were pressured to produce positive reports of factories that were not in compliance

with the Standards. Finally, Plaintiffs allege that the short

deadlines and low prices in Wal-Mart’s supply contracts force

suppliers to violate the Standards in order to satisfy the terms

of the contracts.

Plaintiffs filed a class action lawsuit in California Superior

Court in 2005 and Wal-Mart removed the case to federal court

based on diversity of citizenship. Plaintiffs then filed an

amended complaint in federal court, which is the complaint

relevant here. Wal-Mart filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a

claim. The district court granted the motion in a written order,

and judgment was entered on March 27, 2008.2 Plaintiffs

timely appealed.

2The district court granted Wal-Mart’s motion to dismiss on April 2,

2007, but granted Plaintiffs 21 days’ leave to amend. Instead of amending,

Plaintiffs appealed; however, because no final judgment had been issued

the parties stipulated to dismiss that appeal. The parties returned to district

court and executed a stipulation stating that the April 2, 2007 order granting Wal-Mart’s motion to dismiss was a final judgment. Wal-Mart now

summarily contends that we might be without jurisdiction because the

stipulation executed in the district court did not expressly reserve Plaintiffs’ right to appeal. However, we conclude that we have jurisdiction

because it is readily apparent that Plaintiffs did not give their “actual consent” to the entry of judgment on the merits against them; rather, they executed the stipulation so that they would have a final judgment to appeal.

See Tapper v. Comm’r of Internal Revenue, 766 F.2d 401, 403 (9th Cir.

1985) (stating that we have jurisdiction when a stipulation is entered without a party’s “actual consent” to judgment against that party). 

DOE v. WAL-MART 8617
II

We review a dismissal under Rule 12(b)(6) de novo. Witt

v. Dep’t of the Air Force, 527 F.3d 806, 810 (9th Cir. 2008).

We take a plaintiff’s allegations in the complaint as true, but

we are “not required to indulge unwarranted inferences.”

Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049,

1064 (9th Cir. 2008).

III

Plaintiffs present four distinct legal theories, all of which

aim to establish that the Standards and California common

law provide substantive obligations that can be enforced by

the foreign workers against Wal-Mart: (1) Plaintiffs are thirdparty beneficiaries of the Standards contained in Wal-Mart’s

supply contracts;3 (2) Wal-Mart is Plaintiffs’ joint employer;

(3) Wal-Mart negligently breached a duty to monitor the suppliers and protect Plaintiffs from the suppliers’ working conditions; (4) Wal-Mart was unjustly enriched by Plaintiffs’

mistreatment. Applying California law, we address each claim

in turn.

A

[1] We first address Plaintiffs’ third-party beneficiary theory. The common law in California and elsewhere establishes

that, as recited in the applicable Restatement (Second) of

Contracts: “A promise in a contract creates a duty in the

promisor to any intended beneficiary to perform the promise,

and the intended beneficiary may enforce the duty.” Restatement (Second) of Contracts § 304 (1981). However, the

3The parties disputed before the district court whether California or

Arkansas law applies to Plaintiffs’ third-party beneficiary contract claim.

However, we need not now address that issue because the parties agree

that both states apply the Restatement (Second)’s approach to third-party

beneficiaries. 

8618 DOE v. WAL-MART
Restatement also explains that a beneficiary is only “an

intended beneficiary if recognition of a right to performance

in the beneficiary is appropriate to effectuate the intention of

the parties . . . .” Restatement (Second) of Contracts § 302(1).

Contract interpretation is a question of law that we review de

novo. See Milenbach v. Comm’r of Internal Revenue, 318

F.3d 924, 930 (9th Cir. 2003).

Plaintiffs argue that Wal-Mart promised the suppliers that

it would monitor the suppliers’ compliance with the Standards, and that Plaintiffs are third-party beneficiaries of that

promise to monitor. Plaintiffs rely on this language in the

Standards: “Wal-Mart will undertake affirmative measures,

such as on-site inspection of production facilities, to implement and monitor said standards.” We agree with the district

court that this language does not create a duty on the part of

Wal-Mart to monitor the suppliers, and does not provide

Plaintiffs a right of action against Wal-Mart as third-party

beneficiaries. 

[2] The language and structure of the agreement show that

Wal-Mart reserved the right to inspect the suppliers, but did

not adopt a duty to inspect them. The language on which

Plaintiffs rely is found in a paragraph entitled “Right of

Inspection,” contained in a two-page section entitled “Standards for Suppliers.” And after stating Wal-Mart’s intention

to enforce the Standards through monitoring, the paragraph

elaborates the potential consequences of a supplier’s failure to

comply with the Standards—Wal-Mart may cancel orders and

cease doing business with that supplier—but contains no comparable adverse consequences for Wal-Mart if Wal-Mart does

not monitor that supplier. Because, as we view the supply

contracts, Wal-Mart made no promise to monitor the suppliers, no such promise flows to Plaintiffs as third-party beneficiaries. See Marina Tenants Ass’n v. Deauville Marina Dev.

Co., 226 Cal. Rptr. 321, 327 (Cal. Ct. App. 1986) (“A third

party beneficiary cannot assert greater rights than those of the

promisee under the contract.”).

DOE v. WAL-MART 8619
[3] Plaintiffs alternatively argue that they are third-party

beneficiaries of the suppliers’ promises to maintain certain

working conditions, and that Plaintiffs may therefore sue

Wal-Mart. This theory fails because Wal-Mart was the promisee vis-a-vis the suppliers’ promises to follow the Standards,

and Plaintiffs have not plausibly alleged a contractual duty on

the part of Wal-Mart that would extend to Plaintiffs. See Martinez v. Socoma Cos., 521 P.2d 841, 844-45 (Cal. 1974) (holding a “donee” third-party beneficiary may recover only

against the party that undertook a promise under the contract

for the benefit of the beneficiary).4

[4] Plaintiffs’ allegations are insufficient to support the

conclusion that Wal-Mart and the suppliers intended for

Plaintiffs to have a right of performance against Wal-Mart

under the supply contracts. See Restatement (Second) of Contracts § 302(1). We therefore conclude that Plaintiffs have not

stated a claim against Wal-Mart as third-party beneficiaries of

any contractual duty owed by Wal-Mart, and we affirm the

district court’s dismissal of the third-party beneficiary contract claim.

B

We next address Plaintiffs’ theory that Wal-Mart was

Plaintiffs’ joint employer, such that they can “sue Wal-Mart

directly for any breach of contract or violation of labor laws.”

We conclude, to the contrary, that Wal-Mart cannot be considered Plaintiffs’ employer on the facts alleged.

4The Restatement does suggest that a promisee may be liable to a thirdparty beneficiary when “the performance of the promise will satisfy an

obligation of the promisee to pay money to the beneficiary.” Restatement

(Second) of Contracts § 302(1)(a). The third-party creditor in such a case

is commonly known as a “creditor beneficiary.” Restatement (Second) of

Contracts § 302, cmt. d. However, Plaintiffs have alleged no prior obligation by Wal-Mart that could support finding a contractual duty owed to

Plaintiffs by Wal-Mart, and so the suppliers’ employees cannot be considered to be creditor beneficiaries. 

8620 DOE v. WAL-MART
[5] The key factor to consider in analyzing whether an

entity is an employer is “the right to control and direct the

activities of the person rendering service, or the manner and

method in which the work is performed.” Serv. Employees

Int’l Union v. County of L.A., 275 Cal. Rptr. 508, 513 (Cal.

Ct. App. 1990) (internal quotations and citation omitted). “A

finding of the right to control employment requires . . . a comprehensive and immediate level of ‘day-to-day’ authority over

employment decisions.” Vernon v. State, 10 Cal. Rptr. 3d 121,

132 (Cal. Ct. App. 2004).

[6] Here, Plaintiffs’ allegations do not support the conclusion that Wal-Mart is Plaintiffs’ employer. Plaintiffs’ general

statement that Wal-Mart exercised control over their day-today employment is a conclusion, not a factual allegation

stated with any specificity. We need not accept Plaintiffs’

unwarranted conclusion in reviewing a motion to dismiss. See

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (stating

that “a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions,

and a formulaic recitation of the elements of a cause of action

will not do”) (internal quotation marks and alterations omitted); Ashcroft v. Iqbal, 129 S. Ct. 1937, 1953 (2009) (holding

that the pleading requirements stated in Twombly apply in all

civil cases); Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir.

2004) (stating that “conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss”). Plaintiffs allege specifically that Wal-Mart contracted

with suppliers regarding deadlines, quality of products, materials used, prices, and other common buyer-seller contract

terms. Such supply contract terms do not constitute an “immediate level of ‘day-to-day’ ” control over a supplier’s employees so as to create an employment relationship between a

purchaser and a supplier’s employees. Vernon, 10 Cal. Rptr.

3d at 132. 

Plaintiffs also allege that Wal-Mart exercised control over

their employment through Wal-Mart’s promise to monitor the

DOE v. WAL-MART 8621
suppliers and Wal-Mart’s system for monitoring. However,

we have already concluded that Wal-Mart undertook no duty

to monitor the suppliers and the monitoring and inspections

by Wal-Mart were performed to determine whether suppliers

were meeting their contractual obligations, not to direct the

daily work activity of the suppliers’ employees.

[7] Plaintiffs have provided no persuasive support for finding a common law employment relationship between a purchaser and its suppliers’ employees on the facts of this case.5

 We conclude that the joint employer theory should here be

rejected, and we hold that Wal-Mart is not Plaintiffs’

employer.

C

We next address Plaintiffs’ negligence claims, which Plaintiffs bring under four distinct theories: third-party beneficiary

negligence, negligent retention of control, negligent undertaking, and common law negligence. Whichever theory is

invoked, however, we conclude that Wal-Mart did not owe

Plaintiffs a common-law duty to monitor Wal-Mart’s suppliers or to prevent the alleged intentional mistreatment of Plaintiffs by the suppliers. Without such a duty, Plaintiffs’

negligence theories do not state a claim. See Paz v. State, 994

P.2d 975, 980-81 (Cal. 2000) (“The threshold element of a

5The cases cited by Plaintiffs regarding employment relationships are

inapposite. Some of Plaintiffs’ authorities rely on specific statutory and

regulatory schemes, like the Fair Labor Standards Act (“FLSA”), 29

U.S.C. §§ 201-219, that use a definition of “employer” inapplicable to this

context. See, e.g., Bureerong v. Uvawas, 922 F. Supp. 1450, 1467 (C.D.

Cal. 1996) (applying the FLSA’s definition of “employer,” which covers

entities “who might not qualify as [employers] under a strict application

of traditional agency law principles”). Other cases cited by Plaintiffs

involved significantly more control by the defendant over employment

decisions than existed in this case. See, e.g., Loomis Cabinet Co. v.

OSHRC, 20 F.3d 938, 942 (9th Cir. 1994) (where the alleged employer

“owned the workshop and all the equipment” and “participated to a great

extent in . . . hiring and firing”). 

8622 DOE v. WAL-MART
cause of action for negligence is the existence of a duty . . .

.”). 

[8] Plaintiffs’ “third-party beneficiary” negligence theory

relies on the assumption that Wal-Mart owes Plaintiffs a duty

under Wal-Mart’s supply contracts. Because we have already

determined that no legal obligation flows from Wal-Mart to

Plaintiffs under Wal-Mart’s supply contracts, Plaintiffs do not

state a claim for third-party beneficiary negligence.

[9] In order to state a claim for “negligent retention of control and supervision,” Plaintiffs must allege facts that, if

proven, would show that Wal-Mart exercised significant control over Plaintiffs and that “exercise of retained control affirmatively contributed to the employee’s injuries.” Hooker v.

Dep’t of Transp., 38 P.3d 1081, 1083 (Cal. 2002) (emphasis

in original). We have already determined that Wal-Mart is not

Plaintiffs’ employer because Wal-Mart exercised minimal or

no control over the day-to-day work of Plaintiffs in the suppliers’ foreign factories. Accordingly, we hold that Wal-Mart did

not owe Plaintiffs a special duty to protect Plaintiffs from the

suppliers’ alleged intentional misconduct.

[10] Plaintiffs’ “negligent undertaking” theory relies on the

assumption that Wal-Mart undertook to protect Plaintiffs, and

therefore Wal-Mart had to exercise reasonable care in monitoring the suppliers. See Delgado v. Trax Bar & Grill, 113

P.3d 1159, 1175 (Cal. 2005) (stating that one who “undertakes to provide protective services to another” must exercise

a duty of care). This theory fails because, as we have already

concluded, Wal-Mart did not undertake any obligation to protect Plaintiffs. “[T]he scope of any duty assumed depends

upon the nature of the undertaking,” id., and here Wal-Mart

merely reserved the right to cancel its supply contracts if

inspections revealed contractual breaches by the suppliers.

Any inspections actually performed by Wal-Mart were therefore gratuitous, and do not independently impose a duty on

Wal-Mart to protect Plaintiffs. Id.

DOE v. WAL-MART 8623
[11] Plaintiffs’ “common law negligence” claim provides

no additional ground for finding a duty on the part of WalMart. Wal-Mart had no duty to monitor the suppliers or to

protect Plaintiffs from the intentional acts the suppliers allegedly committed. Thus, Plaintiffs’ theories sounding in negligence do not state a claim. See Paz, 994 P.2d at 980-81.

D

[12] We turn finally to Plaintiffs’ claim of unjust enrichment. Plaintiffs allege that Wal-Mart was unjustly enriched at

Plaintiffs’ expense by profiting from relationships with suppliers that Wal-Mart knew were engaged in substandard labor

practices. Unjust enrichment is commonly understood as a

theory upon which the remedy of restitution may be granted.

See 1 GEORGE E. PALMER, LAW OF RESTITUTION § 1.1 (1st ed.

1978 & Supp. 2009); Restatement of Restitution § 1 (1937)

(“A person who has been unjustly enriched at the expense of

another is required to make restitution to the other.”). California’s approach to unjust enrichment is consistent with this

general understanding: “The fact that one person benefits

another is not, by itself, sufficient to require restitution. The

person receiving the benefit is required to make restitution

only if the circumstances are such that, as between the two

individuals, it is unjust for the person to retain it.” First

Nationwide Sav. v. Perry, 15 Cal. Rptr. 2d 173, 176 (Cal. Ct.

App. 1992) (emphasis in original).

[13] The lack of any prior relationship between Plaintiffs

and Wal-Mart precludes the application of an unjust enrichment theory here. See Smith v. Pac. Props. & Dev. Corp., 358

F.3d 1097, 1106 (9th Cir. 2004) (noting that a party generally

may not seek to disgorge another’s profits unless “a prior relationship between the parties subject to and benefitting from

disgorgement originally resulted in unjust enrichment”).

Plaintiffs essentially seek to disgorge profits allegedly earned

by Wal-Mart at Plaintiffs’ expense; however, we have already

determined that Wal-Mart is not Plaintiffs’ employer, and we

8624 DOE v. WAL-MART
see no other plausible basis upon which the employee of a

manufacturer, without more, may obtain restitution from one

who purchases goods from that manufacturer. That is, the

connection between Plaintiffs and Wal-Mart here is simply

too attenuated to support an unjust enrichment claim. See,

e.g., Sperry v. Crompton Corp., 863 N.E.2d 1012, 1018 (N.Y.

2007) (holding that “the connection between the purchaser of

tires and the producers of chemicals used in the rubbermaking process is simply too attenuated to support” the purchaser’s claim of unjust enrichment).

IV

In sum, we conclude that Plaintiffs have not stated a claim

against Wal-Mart.6 Wal-Mart had no legal duty under the

Standards or common law negligence principles to monitor its

suppliers or to protect Plaintiffs from the suppliers’ alleged

substandard labor practices. Wal-Mart is not Plaintiffs’

employer, and the relationship between Wal-Mart and Plaintiffs is too attenuated to support restitution under an unjust

enrichment theory.

AFFIRMED.

6Because we have determined that Plaintiffs did not state a claim under

state law, we need not address Wal-Mart’s additional contentions that

United States domestic law does not apply and that foreign affairs preemption bars application of state law. 

DOE v. WAL-MART 8625