Costco Sued Over Claims Shrimp Harvested With Slave Labor

August 19, 2015
Bloomberg

Costco Wholesale Corp. was sued for selling farmed shrimp from Thailand, where slave labor and human trafficking in the fishing industry are widespread, and allegedly misleading U.S. consumers about it.

A California woman filed what may be the first lawsuit for such liability tied to the Thai fishing industry Wednesday in San Francisco federal court. She cited state laws that bar companies from making false claims about illegal conduct in their supply chain, including human rights violations.

Issaquah, Washington-based Costco’s purchases of Thailand’s farmed prawns, which are fed a diet of cheap fish caught at sea with unpaid, forced labor, helps prop up an industry whose practices are ignored by local authorities, according to the complaint filed Wednesday morning.

“Human suffering cannot be ignored to enhance a company’s economic bottom line,” plaintiffs’ lawyer Niall McCarthy, of Cotchett, Pitre & McCarthy LLP, said in a statement. “California consumers are unknowingly supporting slave labor.”

Costco spokesman Bob Nelson didn’t immediately return a call seeking comment on the lawsuit. Costco fell more than 1 percent to $144.09 at 12:32 p.m. in Nasdaq trading.

Third Biggest

Thailand is the world’s third-biggest exporter of seafood, with annual sales of about $7.3 billion a year, according to the complaint. The industry, which extends into international waters around Indonesia, employs more than 650,000 people, mostly migrants who enter Thailand looking for work or who are taken there against their will, the lawyer contends.

The plaintiff in the case, Monica Sud, cited news reports, documentaries and reports by London-based Environmental Justice Foundation, according to the complaint. As a purchaser of shrimp from Costco, she seeks class action status on behalf of similar California consumers

The rights group listed abuses at sea including torture, chaining of workers and killings of those who seek to escape the illegal fishing vessels, known as ghost ships. Costco and its distributors aren’t accused of engaging in such practices.

Costco’s reputation for stocking high-quality products at bulk rates has helped it outperform retail rivals such as Wal-Mart Stores Inc. and Target Corp. in recent years. Its comparable-store sales jumped 6 percent in its most recently reported quarter, and its profit topped analysts’ estimates.

Prawn Distributor

The lawsuit also names as a defendant the U.S. distributor of the prawns, Columbia, Maryland-based CP Food Products Inc., and the company’s Thailand-based parent company, Charoen Pokphand Foods Public Company Ltd., a “global conglomerate.’”

Costco’s relationship with CP Foods contradicts its public statements about slavery in the company’s supply chain, according to the complaint.

“Costco publicly represents that it does not tolerate human trafficking and slavery in its supply chain, yet it continues to purchase the tainted farmed prawns from defendant CP Foods,” according to the complaint. “Any representation by Costco that slavery in the supply chain is not allowed is simply false.”

The situation may be a result of overfishing around Thailand, and the thin profit margins on farmed fish, the lawyers contend. Fishing companies that must go farther out to sea to catch cheap fish can no longer make a profit if they pay workers.

Class Action

The lawsuit seeks to represent all California consumers of Costco shrimp products.

“Plaintiff and other California consumers care about the origin of the products they purchase and the conditions under which the products are farmed, harvested or manufactured,” according to the complaint... (To read the entire article, please click HERE)