First Circuit Affirms Dismissal of Class Action Against Nestlé, Mars, and Hershey for Non-Disclosure of Potential Child and Slave Labor Issues

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In Tomasella v. Nestlé, a politically charged case involving three of the United States' most prominent chocolate manufacturers, the First Circuit recently affirmed dismissal of a putative class action against Nestlé USA Inc., Mars, Inc., and the Hershey Company. The plaintiff in that case, Danell Tomasella, alleged that the chocolate manufacturers violated the Massachusetts Consumer Protection Act that prohibits unfair or deceptive trade practices (Chapter 93A) by failing to disclose on their packaging that child and slave labor abuses likely exist in their cocoa bean supply chains. The plaintiff also alleged that the chocolate manufacturers were unjustly enriched by such omissions.

Noting that "[t]he exploitation of children in the supply chain from which U.S. confectionary corporations continue to source the cocoa beans that they turn into chocolate is a humanitarian tragedy," the First Circuit nevertheless found that Tomasella failed to allege an unfair or deceptive act under Chapter 93A and that she was not entitled to a remedy for unjust enrichment.

In analyzing the Chapter 93A claims, the Court emphasized that "we must separate the undisputed immorality of the alleged underlying conduct, which we do not take lightly, from the challenged nondisclosures."

Liability for unfair or deceptive acts and practices under Chapter 93A can arise from affirmative misrepresentations, half truths, or non-disclosures. The Court explained that omissions or non-disclosures can constitute unfair or deceptive acts or practices "in two limited circumstances: (1) to tell only half the truth, and to omit the rest...; and (2) to simply remain silent, if the seller does so under circumstances that constitute an implied but false representation (e.g., where a misleading impression arises from the physical appearance of the product, or from the circumstances of a specific transaction, or based on ordinary consumer expectations as to the irreducible minimum performance standards of a particular class of good)." "Pure omissions" on the other hand - which the Court defined as "merely staying silent about a subject in circumstances that do not give any particular meaning to the silence" - do not give rise to liability under Chapter 93A.

Applying that law to the facts of the case, the Court found the non-disclosures constitute non-actionable pure omissions because the non-disclosures were neither half-truths nor did they create a misleading impression about the labor conditions in the cocoa supply chain. In addition, the Court found no substantial injury to Tomasella or the putative class members because "Defendants have repeatedly made information about the prevalence of the worst forms of child labor in their supply chains publicly available through their websites and other media."

The Court also dismissed Tomasella's unjust enrichment claims, holding that because she had an adequate remedy at law (under Chapter 93A), she was not entitled to the equitable relief of unjust enrichment notwithstanding that her Chapter 93A claims were not viable. The Court explained that "it is the availability of a remedy at law, not the viability of that remedy, that prohibits a claim for unjust enrichment."

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