Costco Wins Dismissal of Slave-Farmed Frozen Prawns Class Action Lawsuit

A San Francisco federal judge has dismissed a proposed class action lawsuit claiming that Costco Wholesale Corp. knowingly sold frozen prawns which were farmed in Thailand by slave labor.

U.S. District Judge Jeffrey S. White ruled that the plaintiffs failed to establish that the members’ warehouse club had a legal duty to inform shoppers that forced labor could be involved as part of its frozen prawns (also known as shrimp) supply chain.

The case against Costco was filed by club member Monica Sud, a California resident, as a proposed class action lawsuit in August 2015.

Exporter C.P. Food Products Inc. and its parent company, Thailand’s Charoen Pokphand Foods PCL. were also named as defendants.

The customers argued Costco sells frozen prawns farmed from Thailand, Indonesia, Vietnam and Malaysia, and that the source of their fishmeal depends on slavery, human trafficking, and other labor abuses. Sud added that she had personally purchased the affected product without knowing how the prawns were farmed or sourced.

Costco stated on its website that it has a “supplier Code of Conduct which prohibits human rights abuses in our supply chain,” blatantly misleading consumers, according to the lawsuit.

The lawsuit was brought under a California state business law that prohibits unfair competition through misleading advertising.

The complaint followed investigations published by The Guardian newspaper into the prawn supply chain. The Guardian found Charoen Pokphand Foods was buying fishmeal to feed to its farmed prawns from some suppliers that owned or operated fishing boats staffed by slave labor.

Judge White, who had previously dismissed the case and then allowed it to be refiled, said in his ruling that the consumers lacked standing to bring the complaint because they didn’t specifically trace the frozen prawns they purchased to the companies that were Costco’s suppliers.

In his 18-page ruling, Judge White wrote that the complaint also fails to allege that plaintiffs even took into account Costco’s anti-human trafficking and slavery disclosure before purchasing the frozen prawns.

“Therefore, to the extent their claims are based allegations that the disclosure is misleading, either because it contains affirmative misrepresentations or because it omits information, Plaintiffs fail to allege facts to show reliance,” the judge wrote. “They also fail to allege facts to show they were aware of the Code, such that they could premise an omissions claim on it.”

This time, Judge White dismissed the proposed class action lawsuit against Costco with prejudice, meaning that it cannot be brought again. The judge also tossed claims against Charoen Pokphand Foods PCL and C.P. Food Products Inc. for lack of standing.

Sud is represented by Niall P. Mccarthy, Anne Marie Murphy and Shauna R. Madison of Cotchett Pitre & Mccarthy LLP, Derek Howard of the Howard Law Firm, and Daniel J. Mulligan of Jenkins Mulligan & Gabriel LLP.

The Costco Shrimp Class Action Lawsuit is Monica Sud, et al. v. Costco Wholesale Corp., et al., Case No. 4:15-cv-03783, in the U.S. District Court for the Northern District of California.