Human Trafficking Lawsuit Involving Walmart Suppliers to Go Ahead

Human Trafficking Lawsuit Involving Walmart Suppliers to Go Ahead

A California federal court has ruled a lawsuit against a number of U.S. and international companies supplying seafood to Walmart will go to trial.

Originally filed in June 2016, the civil lawsuit was brought forward on behalf of seven Cambodian workers recruited from their homes in rural Cambodia to work at shrimp production factories in Thailand.

Told they would be given stable jobs and good wages, the five men and two women claim they became victims of human trafficking, forced labor and involuntary servitude. Further, the group say the wages promised to them never eventuated, and their passports were withheld from them meaning they couldn’t return home.

The four companies involved in the lawsuit – U.S.-based importers Rubicon Resources and Wales & Co. Universe, along with two Thai seafood companies – filed a motion in mid-August to have the case dismissed on the grounds that the alleged conduct took place outside of the U.S. Last week, that motion was rejected in a move which will likely comprise an important turning point in U.S. and international enforcement of anti-human trafficking legislation.

Prosecutions On the Rise

For many years, human rights organizations have worked to highlight human trafficking that plagues corporate supply chains around the world. Increasingly, governments are also turning their attention toward these activities through the enactment of strong legislation to bring the practice to an end.

To date, this has included the California Transparency in Supply Chains Act (2012) and the UK Modern Slavery Act (2015), which oblige companies to publicly disclose all efforts taken to reduce the risk of human trafficking in their supply chains. For organizations in scope of the U.S. Federal Acquisition Regulation’s Rule to Combat Trafficking in Persons, the obligation extends even further as companies are required to maintain a compliance plan, report violations and ensure that no trafficking-related activities are occurring at any level in their supply chains. Furthermore, companies in violation of the regulation can be penalized for non-compliance.

With the rapid spread of ethical sourcing mandates around the globe, it is likely other similar laws will be enacted in the near future, such as the French Duty of Care Bill, which would make corporate due diligence with regard to possible human rights violations mandatory.

Despite this shift toward more comprehensive and widespread regulation on the matter, enforcement has been somewhat lax with only a few cases brought before the courts so far. Last week’s ruling is significant because it has the potential to fundamentally alter the extent to which U.S. companies can be held accountable for trafficking in their supply chains, regardless of how far upstream it occurs. If successful, this lawsuit could open the litigation floodgates for a variety of claims to be heard by U.S. courts against the supply chains of many U.S. companies that benefit from these illegal practices.

A Lose-Lose Situation

Importantly, even if the plaintiffs are ultimately unsuccessful in this particular case, those involved are unlikely to get away entirely unscathed. While Walmart and the other companies that buy products from these suppliers are not listed as direct defendants in the lawsuit, public image matters.

Increasingly, companies in the U.S. and abroad are being scrutinized not only by lawmakers, but by well-informed consumers for whom firm evidence of corporate social responsibility (CSR) is a major sticking point in their consumption choices. Gone are the days when ‘greenwashing’ and token CSR measures were enough. Through the internet and the media, consumers enjoy on-demand information about exactly where their products come from, about whose human rights may have been compromised in the process, and about the efforts taken (or neglected) by companies to ensure ethical supply chain sourcing.

This widely accessible information is having a clear impact on consumer preferences. According to a 2015 study by Mintel, 56 percent of U.S. consumers reported they have stopped buying brands they perceive as ethically compromised (and one-third do so even when there is no substitute available in the market).

Proactivity Is Paramount

In this way, it is clear the risks of non-compliance with human trafficking regulations are mounting, both in terms of legal penalties and the possible reputational damage that might ensue even in the absence of a prosecution. It is therefore essential companies in the U.S. and abroad take proactive steps to ensure they do not feature in tomorrow’s headlines – or worse, tomorrow’s court proceedings.

Informed by the expert knowledge of human trafficking specialists, open-source tools like the Human Trafficking Risk Template (HTRT) can help companies gather human trafficking-related data in their supply chains, screen for risk and inform further due diligence actions. Armed with this data, companies can take appropriate steps to mitigate instances of human trafficking in their supply chains and protect themselves from risks associated with these illegal activities.

For more information on the HTRT and to download the template, click here.

For more details on human trafficking regulations, how to leverage HTRT data to protect your organization and comply with international laws, contact our regulatory experts at info@assentcompliance.com.

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