Costco Consumer Class Action

About the Lawsuit

The lawsuit alleges that Costco marketed its memberships and Kirkland Signature products by emphasizing ethical sourcing, supply-chain transparency, supplier oversight, and efforts to prohibit child and forced labor. According to the complaint, Costco’s promotional materials promise membership purchasers that Costco prohibits child and forced labor by its suppliers, and enforces standards requiring supply chain transparency. In addition, Costco tells members that it “control[s] every element” of Kirkland Signature items’ production, and that all items have fully traceable supply chains.

The plaintiffs allege that these representations were misleading because Costco’s actual sourcing systems allegedly do not provide the level of traceability, oversight, supplier visibility, or control that Costco describes to consumers. The lawsuit also alleges that Costco continued selling products connected to supply chains with documented child-labor or forced-labor concerns while continuing to market itself as a leader in responsible sourcing.

The lawsuit seeks to represent Oregon Costco members and asserts claims under Oregon’s Unlawful Trade Practices Act, as well as a claim for unjust enrichment.

What does the complaint allege about Costco’s ethical-sourcing representations?

The complaint alleges that Costco sells items, including Kirkland Signature items, obtained from opaque supply chains, in violation of its claim to understand the origins of its products. Because the products cannot be traced to their origins, the allegation is that Costco cannot enforce its labor standards.

An example product described in the complaint is cashews. The complaint alleges Costco sources its cashews from over a million small farmers across Africa and Asia. The complaint alleges that the nuts are sold and resold by middlemen, and that commingling makes tracing the nuts to the farm that produced them impossible. This is apparent from the fact that Kirkland Signature cashews list 14 countries of origin.

The plaintiffs allege that selling items obtained through opaque supply chains such as this is a violation of Costco’s pledge to have “direct insight in the entire supply chain” of Kirkland Signature products.

Second, the complaint alleges that Costco knew of reported child labor or forced labor concerns involving certain products or supply chains. The complaint cites the following sources in support of that allegation:

• Costco’s suppliers for its Kirkland Signature products admit in disclosures that certain products, like cashews, have problems with child labor in the supply chain.
• Independent investigations, such as those produced by the Corporate Accountability Lab, have uncovered abusive labor practices in suppliers that the complaint alleges are linked to Kirkland Signature items. One example in the complaint is farmed shrimp from India.
• Items sold under other brands at Costco, such as chocolate products sold by Nestle and Mars are also linked to problems with child labor in the supply chain by corporate disclosures or third-party reporting.
• Other products, such as coconut products from the Philippines and coffee from Columbia, have been linked to child labor by the United States Department of Labor. Costco sells many of these products without any independent certification that they are responsibly sourced.

Larkins Vacura Kayser LLP represents investors, consumers, businesses, and governments in complex civil litigation, including class actions, securities litigation, business disputes, antitrust matters, consumer protection matters, and other high-stakes litigation throughout Oregon and the Pacific Northwest. The firm is recognized as a Tier 1 Best Law Firm by U.S. News & World Report and is ranked by Chambers for general commercial litigation in Oregon.