Costco Seas Victory in Court on Case about False Prawn Advertisement

Deborah Kick

Retail giant Costco is known for selling appliances and home furnishings, selling products in bulk, and their commitment to employees and “outstanding business ethics.”[1] However, their method of harvesting prawns (shrimp) has come under attack in the past year and half by a class action suit claiming that the prawns are harvested using slave-labor.[2] This class action proved to be unsuccessful.[3]

The class action suit commenced on August 19, 2015, in a federal court in California, with the allegation that Costco “knowingly sold shrimp farmed in Thailand with slave labor, and failed to notify customers about the allegedly illegal practices.”[4] Included as a defendant in the lawsuit is the Thai company that consumers allege “rel[ied] on slave labor.”[5] The other issues in the complaint, according to the representative plaintiff Monica Sud, are not only the manner in which the prawns are harvested, but also that they “come from…human trafficking and other allegedly illegal labor abuses…the feed meal for farmed prawns is the product of pirate fishing….”[6]

The case was heard twice in the Northern District of California, with each case, in part, involving Costco and the other defendants filling a motion to dismiss.[7] In the first case, the defendants (referred to as “CP defendants”) moved to dismiss on various grounds, “for lack of Article III standing.”[8] The court granted the Article III motion to dismiss.[9] However, the court also granted Ms. Sud’s “leave to file an amended complaint.”[10] In the second case, the court granted the CP defendant’s motion to dismiss the entire claim because the plaintiffs failed to show that they relied on a statement Costco made about their shrimps not being slave-farmed.[11]

I believe this case, in terms of legal claims brought forward, to be a fair result. It is standard knowledge that to bring a successful claim, in civil or criminal law, you need to prove all the elements required of that claim. As the lawyers for the class action failed to do so, it was reasonable for the court to ultimately dismiss the claim. As for the social and political conflicts of this case, I do admit I have some bias. I am a big fan of Costco. I am a fan of their products, but I also appreciate that they treat their employees well.[12] Of course, no company, especially one as large as Costco, will ever be without some labor controversy. This is not to say Costco should not be scrutinized for these harvesting practices.[13] For the plaintiffs of the suit, I would suggest exercising their First Amendment rights as opposed to a lawsuit. After all, this worked for with the cage-free chicken eggs Costco now sells.[14]

[1] About Us, COSTCO, https://www.costco.com/about.html (last visited Jan. 30, 2017).

[2] Erik Larson, Costco Sued Over Claims Shrimp Harvested with Slave Labor, BLOOMBERG (Aug. 19, 2015, 11:57 AM EDT) https://www.bloomberg.com/news/articles/2015-08-19/costco-sued-over-claims-shrimp-is-harvested-with-slave-labor.

[3] Nicholas Iovino, Costco Ducks Suit Over Slave-Harvested Prawns, COURTHOUSE NEWS SERVICE (Jan. 25, 2017), http://courthousenews.com/costco-ducks-suit-over-slave-harvested-prawns/.

[4] Kurt Orzeck, Costco Sells Shrimp Farmed By Thai Slaves, Suit Says, LAW360 (Aug. 19, 2015, 5:42PM EDT), https://www.law360.com/articles/692892/costco-sells-shrimp-farmed-by-thai-slaves-suit-claims.

[5] Id.

[6] Id.

[7] See generally Sud v. Costco Wholesale Corp., No. 15-cv-03783-JSW, 2016 U.S. Dist. LEXIS 5524 (N.D. Cal. Jan. 15, 2016) and Sud v. Costco Wholesale Corp., No. 15-cv-03783-JSW, 2017 U.S. Dist. LEXIS 9943 (N.D. Cal. Jan. 24, 2017) (both cases involve Costco and the other defendants attempting to dismiss the claim of the suit).

[8] Sud v. Costco Wholesale Corp., No. 15-cv-03783-JSW, 2016 U.S. Dist. LEXIS 5524 (N.D. Cal. Jan. 15, 2016).

[9] Id. Specifically, the motion was about standing. “[T]o demonstrate she has standing, Sud alleges that she “has purchased and paid for farmed prawns at Costco, which were imported from Thailand…Costco, in turn, puts forth evidence that while Sud was a card-holding Costco member, she did not purchase any farmed prawns.” Id.

[10] Id. The leave was granted so Ms. Sud can “amend her complaint to cure that deficiency” about standing.

[11] Sud v. Costco Wholesale Corp., No. 15-cv-03783-JSW, 2017 U.S. Dist. LEXIS 9943 (N.D. Cal. Jan. 24, 2017) (stating that “given Plaintiffs’…reliance was based on product packaging, rather than on any of Costco’s statements in other contexts….).

[12] See Brian Sozzi, Why Costco Won’t Have Any Problems Handling California’s New $15 Minimum Wage, THESTREET (Mar. 29, 2016, 2:02PM EDT), https://www.thestreet.com/story/13510704/1/why-costco-won-t-have-any-problems-handling-california-s-new-15-minimum-wage.html; see also Kevin Short, 11 Reasons To Love Costco That Have Nothing To Do With Shopping, HUFFINGTON POST BUSINESS, (Nov. 19, 2013, 11:32AM ET), http://www.huffingtonpost.com/2013/11/19/reasons-love-costco_n_4275774.html.

[13] See Margie Mason, Robin McDowell, Esther Htusan, & Martha Mendoza, Shrimp sold by global supermarkets is peeled by slave labourers, THE GUARDIAN (Dec. 14, 2015 13:16 EST), https://www.theguardian.com/global-development/2015/dec/14/shrimp-sold-by-global-supermarkets-is-peeled-by-slave-labourers-in-thailand (the article gives a description in the daily life of the farmers mentioned in the case, and international efforts to curtail the use of such labor).

[14] See Deena Shanker, After months of pressure, Costco commits to a cage-free egg supply, QUARTZ (Dec. 28, 2015), https://qz.com/582427/after-months-of-pressure-costco-commits-to-a-cage-free-egg-supply/; see generally Kim LaCapria, You Gotta Fake a Few Eggs, SNOPES (Apr. 20, 2016), http://www.snopes.com/costco-lying-about-cage-free-eggs/ (even after Costco made the public announcement they were switching to cage-free eggs, there were rumors that this was not followed through by the company; these rumors are “mostly false.”).

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