Costco Wins Dismissal of Lawsuit Involving Slave Labor-Harvested Thai Shrimp

January 26, 2017 by Joel Rosenblatt

Costco Wholesale Corp. won dismissal of a lawsuit claiming it didn’t disclose to customers that it was selling farmed shrimp from Thailand fed a diet of cheap fish caught at sea with unpaid, forced labor.

A San Francisco federal judge threw out the case Tuesday, finding that the consumers who filed it failed to allege the company had a duty to disclose the information about labor abuses in its supply chain.

The customers argued Costco sells prawns farmed from Thailand, Indonesia, Vietnam and Malaysia, and that the source of their fishmeal depends on slavery, human trafficking, and other labor abuses.

U.S. District Judge Jeffrey White, who had previously dismissed the case and then allowed it to be refiled, said in his ruling that the consumers lacked the ability to sue — or standing — because they didn’t specifically trace the prawns they purchased to the companies that were Costco’s suppliers.

The case was brought on behalf of all California consumers of Costco shrimp products under a 2010 state law that sought to expose slavery in the supply chains of U.S. companies. The plaintiffs wanted a court order requiring Costco to change its practices and also sought compensation for purchases of the shrimp products.

The case is Sud v. Costco Wholesale Corp., 15-cv-03783, U.S. District Court, Northern District of California (San Francisco).