No Good Deed Goes Unpunished: Published Statements on Your Company’s Corporate Social Responsibility Program

March 16, 2017
SmithAmundsen Commercial Litigation Alert

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Has your company developed a corporate social responsibility program that you highlight on marketing materials? If so, you must choose your words carefully. Corporate social responsibility is a broad concept replete with varied and complex topics.  Sustainability, free trade, free range – while most of us can agree on the general definition of such terms, precisely when the line is crossed may not be so crystal clear, and exactly what a company can realistically promise will vary depending on the circumstances.  

Recently, a California court dismissed a putative class action lawsuit filed against a major retailer  alleging unfair competition, false advertising and a violation of California’s Consumer Legal Remedies Act because the retailer sold prawns from Thailand - a “supply chain that depends upon documented slavery, human trafficking and other illegal labor abuses” - arguing it  had an affirmative duty to disclose the possibility of slave labor in its product supply chain since it published a Supplier Code of Conduct, which prohibits human rights abuses in its supply chain and a corporate disclosure regarding human trafficking and anti-slavery on its website. 

Although the court dismissed the lawsuit, the court’s repeated reliance on the fact that these particular plaintiffs never actually read the retailer’s published code of conduct and corporate disclosure statement should cause any company that publishes similar declarations to take notice. Would the case have been so easily resolved if the plaintiffs simply pled that they read and relied on the retailer’s statements when deciding to purchase the product? Maybe not, and the court’s opinion essentially laid out the framework for future bites at the apple.

This case highlights an increased risk that companies face as consumers continuously educate themselves on social issues prior to making their purchases. Companies should make sure that any published statements are an accurate reflection of its efforts to operate responsibly, and any aspirational statements are presented in a manner that places them in the appropriate context.