Shortly before Christmas, a federal judge in the Central District of California, Judge John F. Walter, dismissed a civil lawsuit brought by seven Cambodian nationals seeking compensation for their treatment as workers in two Thai seafood processing plants. Through three separate orders issued on December 21st, Judge Walter dismissed the plaintiffs’ claims against the Thai seafood processing plant S.S. Frozen Food Co., Ltd. (SSF), another Thai seafood processing plant, Phatthana Seafood Co., Ltd. (Phatthana), a Thai company registered to do business in California, Wales & Co. Universe, Ltd. (Wales), and a U.S. company, Rubicon Resources, LLC (Rubicon). Judge Walter determined that there was no evidence that Phatthana had forced the Cambodian plaintiffs to labor against their will. Judge Walter also determined that there was no evidence that any goods produced in SSF’s factory by the Cambodian plaintiffs had been sold to the United States.
In addition to these determinations, however, the Judge also held that even if the Plaintiffs could have demonstrated that they were held in slavery and that the products manufactured by their forced labor had been sold to the United States, the lawsuit would still be dismissed. U.S. courts, the Judge ruled, had no jurisdiction over SSF and Phatthana, as Thai companies, and Wales and Rubicon could not be held responsible for what transpired in SSF’s and Phatthana’s processing plants.
As explained in the Court’s decisions, Rubicon was “formed in 1999 as a joint venture to market and sell seafood to customers in the United States.” The original joint venture agreement creating Rubicon was entered into on July 14, 1999 involving four members: Brian Wynn, Wales, Thailand Fishery Cold Storage Public Co., Ltd. (Thailand Fishery), and P&M Holdings Co. Ltd. (P&M Holdings). The evidence in the cases indicated that Paibool Dussadeevutikul was the majority owner of P&M Holdings, as well as SSF and Phatthana, and that Mr. Dussadeevutikul sometimes referred to the companies he owned as the PTN Group.
Since its formation, the joint venture agreement establishing Rubicon has been amended seven times. On September 9, 2009, Thailand Fishery’s interests in the joint venture were transferred to Andaman Seafood Co., Ltd. (Andaman). On September 12, 2009, Andaman’s interests in the joint venture were transferred to Rubicon, meaning that Mr. Wynn, Wales, and P&M Holdings each had a company interest of 33 and one-third percent stake in Rubicon. This continued to be the case until May 2017, when all interests in Rubicon were sold to High Line Food.
Although P&M Holdings was an equal owner with Wales in Rubicon and shared the same majority owner as SSF and Phatthana, the Court held that neither Rubicon nor Wales could be held responsible for the treatment of labor in the two Thai shrimp processing plants. The Court noted that Mr. Wynn, the sole manager of Rubicon “rarely, if ever, visited Phatthana’s factory in Songkhla, and certainly had no responsibility for the operation of any aspect of Phatthana’s business.” Rubicon’s business relationship with Phatthana, the Court found, was “limited to ordering seafood products from Phatthana’s Songkhla factory” and, at most, the evidence in the lawsuit established “a purchaser-supplier relationship.” In such a relationship, the Court held that it was appropriate for Rubicon to rely upon the oversight and views of outside entities with regard to the treatment of labor within its supply chain:
“With respect to working conditions and worker safety at all of the factories that Rubicon used as a source for its products, Rubicon relied on industry and government audits and certifications as well as customer visits, to ensure that the factories, including Phatthana’s Songkla (sic) factory, operated in compliance with all applicable standards, including those pertaining to worker safety and welfare as well as compliance with labor laws.”
Further, the Court explained that “Wales relied on Rubicon to ensure that those factories did not exploit workers.” Accordingly, Rubicon’s position in the litigation was that it had no independent responsibility for the conditions within its suppliers’ factories.
In January 2012, during the time when the Cambodian workers were working at SSF and Phatthana, Rubicon’s website offered the following description of the company’s operations:
“Rubicon Resources is one of the leading importers and distributors of sustainable seafood in North America. We are dedicated to protecting our oceans by embracing the beliefs of responsible, environmentally friendly fishing practices while delivering the purest, most-delicious seafood and seafood products available.
We are also vertically integrated to our overseas affiliates, so you can rest assured that our products are pure, unadulterated and free from chemicals and additives as well as 100% traceable to their source.”
This description, when matched against Rubicon’s litigation position, raises important questions about what seafood companies mean when they claim to be “vertically integrated.” What the term clearly does not mean is that a seafood marketing company can be held accountable for its supply chain. Here, the facts of the lawsuit indicated that the majority owner of SSF and Phatthana also was the majority owner of one of the three entities that owned Rubicon. Yet, even with those cross-cutting relationships, Rubicon disclaimed any legal responsibility in U.S. courts for anything that might have transpired in its suppliers’ factories.
The Court’s dismissal of the Cambodian workers’ lawsuit should give seafood purchasers pause when touting the benefits of sourcing from supply chains claimed to be vertically integrated. After all, if a marketing company may reasonably rely on the audits or visits of its customers to manage risks in its suppliers’ facilities, it is unclear how the company’s integration benefits the customer.
The Court’s dismissal also highlights the importance of traceability requirements for imported shrimp and seafood brought into the U.S. market. Left to its own devices, seafood importers have been permitted to construct a story that implies extensive control over their supply chain that disappears when problems become apparent. In these circumstances, requirements that an importer document and report their sources of supply is an essential prerequisite for accountability in the market place.
Read Judge Walter’s December 21, 2017 order dismissing claims in Ratha v. Phatthana Seafood against Rubicon and Wales here: http://redwoodserver.com/shrimp/wp-content/uploads/2018/01/Rubicon-Judgment.pdf
Read Judge Walter’s December 21, 2017 order dismissing claims in Ratha v. Phatthana Seafood against Phatthana here: http://redwoodserver.com/shrimp/wp-content/uploads/2018/01/Phatthana-Judgment.pdf
Read Judge Walter’s December 21, 2017 order dismissing claims in Ratha v. Phatthana Seafood against SSF here: http://redwoodserver.com/shrimp/wp-content/uploads/2018/01/SS-Frozen-Judgment.pdf