Hershey Co. (HSY:US) should turn over child- labor records for cocoa farms in Ghana and the Ivory Coast as part of an investor suit and to help define U.S. corporations’ legal obligations abroad, two law professors told the judge in a lawsuit over the company’s practices.
A prospective “friend of the court” brief filed today in Delaware Chancery Court is aimed at establishing accountability in state corporate law, wrote Harvard Law School’s Nancy Gertner, a former federal judge, and Boston College’s Kent Greenfield, a corporate-governance scholar.
The case “is a perfect example of both the need for companies to be mindful of their legal and ethical responsibilities in a global economy,” and a need for the court “to continue its efforts to delineate the responsibilities of Delaware corporations to respect the rule of law wherever and through whatever vehicle they do business,” they wrote.
The Louisiana Municipal Police Employees’ Retirement System sued last year seeking books and records and claiming Hershey put its reputation at risk by relying on cocoa farms in the west African countries. Hershey acknowledged there is “rampant” child labor in both countries, according to the complaint.
Activists have long pushed companies to fight child labor in the cocoa industry. Common children’s tasks on cocoa farms are filling plastic bags for nurseries, breaking up pods and moving plants, according to the Fair Labor Association.
Carrying heavy loads is one of the worst forms of child labor, and using machetes and knives to break pods is hazardous, said the association, a workers’ advocacy group, citing non- government organizations in Ivory Coast. About 89 percent of Ivory Coast children were involved in growing cocoa, according to a 2008 government survey.
“With evidence of the realities of chocolate production in Western Africa, coupled with the dominant role of the Hershey corporation in that market, the shareholders have certainly presented sufficient information to satisfy the requirement of showing a proper purpose” for inspecting records and a “credible basis to believe that mismanagement or wrongdoing has occurred,” according to the brief.
“The Hershey Company has a long history of supporting children” and “we are committed to responsible sourcing and have been supporting cocoa-growing communities for more than 50 years,” said Jeff Beckman, a Hershey spokesman, in an e-mailed statement.
He said Hershey is “a substantial contributor in addressing the social and economic issues in cocoa-growing communities.”
“The Delaware court matter will be addressed through the appropriate legal processes,” he said.
The company has said it is working with the U.S. Labor Department and the United Nations’ International Labor Organization on the issues.
Once records are produced, the professors concluded, the case will “provide an excellent juridical vehicle for the Court of Chancery to clarify the obligations of Delaware corporations acting globally.”
Delaware courts are “the nation’s most important judicial monitor of multinational companies,” balancing legality with fairness in an increasingly global milieu of which Chancellor Leo Strine has been taking increased notice, Gertner and Greenfield wrote.
The case is Louisiana Municipal Police Employees’ Retirement System v. Hershey Co., CA7996, Delaware Chancery Court (Wilmington).
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