SAN FRANCISCO (Legal Newsline) – Plaintiffs’ attorneys in California have identified a new way to raise complaints against businesses - alleging that violations of 2010 California Transparency Supply Chains Act, which was originally intended to prevent human trafficking, fall under other class action-friendly laws, a defense attorney says.
The Act, passed in 2010, was written to require large companies in California with more than $100 million to disclose on their websites what measures, if any, they are taking to monitor their suppliers and hold them accountable.
Joshua Foust, an associate at Mintz Levin, said "creative" plaintiffs attorneys are using the law.
“[They] have in essence invented a private right of action by attacking allegedly deficient disclosures under other California statutes more amenable to class actions,” Foust said.
For example, Foust points to California’s Unfair Competition Law (UCL) and False Advertising Law (FAL), which allow private plaintiffs to sue companies based on unlawful behavior or misleading advertisements.
“According to this new wave of complaints, inadequate disclosures under the Transparency in Supply Chains Act are both misleading and unlawful under the UCL,” Foust said.
Essentially, plaintiffs are arguing that by failing to disclose their alleged use of slave labor, companies are both misleading their consumers under the FAL and breaking the Transparency in Supply Act, which is a basis for suit under the UCL.
These class actions have largely targeted food companies and pet food manufacturers. According to Foust, all companies conducting large business in California are “just as vulnerable” to face similar suits.
“We expect to see companies in other consumer product industries, like apparel companies, targeted next, especially if these early test suits survive the motion to dismiss stage," Foust said.
The Act resembles Prop 65 regulations in that it requires companies to disclose information, specifically the verifications, audits, and certifications of their suppliers, and their internal accountability and training programs. The Act is meant to provide information regarding human rights to consumers, and let the market adjust according to consumer approval or disapproval.
Unlike Prop 65 regulations, the Act does not give private individuals the right to sue for damages for inadequate disclosures, Foust said.
“The authority to bring enforcement proceedings is given exclusively to the California Attorney General’s Office, and to date, it has declined to do so,” Foust said.