Ninth Circuit: Walmart Has No Obligation to Foreign Suppliers' Workers

Walmart contracts with a number of companies in foreign countries to supply Walmart with the goods it sells in the U.S. Walmart's contracts with these suppliers include a code of conduct, imposing requirements that the suppliers comply with local workplace laws and standards regarding workplace law issues such as child labor, discrimination, etc. The code also permits Walmart to inspect the suppliers' operations. The suppliers' failure to adhere to the standards, including permitting inspections, could result in cancellation of the contract.

Employees of a number of foreign suppliers sued Walmart, claiming that Walmart was liable under these provisions for their employers' alleged violations of law. They claimed Walmart tells the public it is improving the workers' lives, and that Walmart's inspection program was flawed. They sought damages as third party beneficiaries of the supplier contracts, and on a variety of negligence theories, as well as unjust enrichment.

Upon dismissal of their complaint in district court, the employees appealed to the Ninth Circuit. The Ninth Circuit affirmed. The primary rationale was that the employees had no employment relationship with Walmart merely because of Walmart's right to inspect the workplace. Walmart exercised no day-to-day control over the workers.

The case is Doe v. Walmart and the opinion is here.