Abstract. With the effective demise of the Alien Tort Statute (“ATS”), state law is widely expected to play an expanded role in international human rights litigation. Commentators have focused on common-law tort as the presumptive vehicle for such suits. However, this Article argues that state unfair competition statutes offer an underexplored alternative that is vastly superior. Transnational unfair competition actions are more versatile than common-law-tort, less problematic for federal preemption and federalism concerns, and are particularly well-suited to overcome the jurisdictional and procedural hurdles that can hamper other transnational lawsuits. Indeed, unfair competition suits have already successfully targeted supply-chain violations overseas in cases involving both intellectual property infringement and human rights abuses. This Article surveys state unfair competition provisions, categorizes their operative language, and assesses their suitability to support transnational claims. Finally, this Article provides a strategic roadmap to implement supply-chain litigation effectively.
With Washington stymied by partisan politics, the states are stepping up to fill the void. State unfair competition law has an important role to play in this process. In particular, extraterritorial application of state unfair competition statutes could provide an effective tool to combat global supply chain misconduct.
Federal gridlock has left pressing issues unresolved. State governments are increasingly asserting a prominent role framing national policy. States have taken the lead in framing policy responses to a variety of high profile issues including the opioid crisis,1See, e.g., Danny Hakim, William K. Rashbaum & Roni Caryn Rabin, The Giants at the Heart of the Opioid Crisis, N.Y. Times (Apr. 22, 2019), https://perma.cc/6NZ8-9US5; The Opioid Suits Continue: Purdue Pharma Reaches Settlement with 23 States, Occupational Health & Safety (Sept. 16, 2019), https://perma.cc/D4A9-X9UV. gerrymandering,2See, e.g., David A. Lieb & Dan Sewell, States Poised to Take up Fight over Partisan Gerrymandering, Associated Press (June 28, 2019), https://perma.cc/Z8DM-QFAT. campaign finance,3See, e.g., Chayenne Polimedio & Elena Souris, Why Federalism Is Hard, Vox (Feb. 27, 2018, 3:40 PM), https://perma.cc/23FL-JGHF (explaining how states are testing new ideas for financing campaigns, structuring voting systems, setting district boundaries, and expanding participation). gun control,4See generally Soto v. Bushmaster Firearms Int’l, LLC, 139 F. Supp. 3d 560 (D. Conn. 2015) (upholding state unfair competition lawsuit against firearm merchants); Laura Santhanam, How States Have Moved to Make Gun Laws While Congress Is Deadlocked, PBS NewsHour (Aug. 8, 2019, 5:28 PM), https://perma.cc/H265-B55Z. narcotics reform,5See, e.g., Jeremy Berke, Shayanne Gal & Yeji Jesse Lee, Marijuana Legalization Is Sweeping the US. See Every State Where Cannabis Is Legal, Bus. Insider (July 9, 2021, 9:20 AM), https://perma.cc/U26S-947H (describing state legalization of medical and recreational marijuana). climate change,6See, e.g., David Hasemyer, Fossil Fuels on Trial: Where the Major Climate Change Lawsuits Stand Today, Inside Climate News (Jan. 17, 2020), https://perma.cc/N7R4-379U (describing state and local litigation over climate change); Brad Plumer, They Defied Trump on Climate Change. Now, It’s Their Moment of Truth., N.Y. Times (Sept. 11, 2018), https://perma.cc/GM4Z-KUFM. financial abuses,7See, e.g., Stacy Cowley, How a Potential $1 Billion Student Loan Settlement Collapsed After Trump Won, N.Y. Times (Oct. 7, 2018), https://perma.cc/P7XW-MME9; Mark Totten, With CFPB in Limbo, States Take the Reins for Consumer Rights, The Hill (Dec. 18, 2017, 6:20 PM), https://perma.cc/XNC7-54D2. privacy,8See, e.g., Queenie Wong, CCPA: What California’s New Privacy Law Means for Facebook, Twitter Users, CNET (Jan. 3, 2020, 9:20 AM), https://perma.cc/D8QD-J98Z. innovation policy,9See, e.g., Camilla A. Hrdy, Patent Nationally, Innovate Locally, 31 Berkeley Tech. L.J. 1301, 1308–09 (2016); Camilla A. Hrdy, The Reemergence of State Anti-Patent Law, 89 U. Colo. L. Rev. 133, 135–38 (2018); Jennifer Huddleston, What States and Cities Do Right to Promote Innovation, Mercatus Ctr.: The Bridge (Oct. 9, 2018), https://perma.cc/HLK5-KC7R (describing how federal inaction has led “states to . . . experiment with different governance mechanisms for new and disruptive technologies”). college athletics,10See, e.g., Evan Symon, California Law Prevails as NCAA Agrees to Allow Student Athletes to Be Compensated, Cal. Globe (Oct. 30, 2019, 3:55 PM), https://perma.cc/LC7Z-GMJN. automobile emissions,11See, e.g., Lou Cannon, Will More States Follow California on Deal with Automakers?, Prac. Guidance J. (Nov. 4, 2019), https://perma.cc/QVT5-ZXQF. and labor regulation.12See, e.g., Kate Conger & Noam Scheiber, California Bill Makes App-Based Companies Treat Workers as Employees, N.Y. Times (Sept. 11, 2019), https://perma.cc/6BJ3-4RZK (noting “[t]he bill may influence other states [as a] coalition of labor groups is pushing similar legislation” elsewhere); Brett Murphy, California Bill Would Hold Big Box Stores Liable for Abusive Trucking Companies, USA Today (Apr. 10, 2018, 6:18 PM), https://perma.cc/CL5J-Y5HL (detailing California statute holding retail companies responsible for labor violations by trucking companies); State Minimum Wages, Nat’l Conf. of State Legislatures (Apr. 20, 2021), https://perma.cc/N45W-KVS5 (reporting that twenty-one states raised minimum wages in 2020). Perhaps most notoriously, state governors scrambled to respond to the COVID-19 pandemic in the wake of a dysfunctional federal government.13See, e.g., Across the Country, Governors Are Taking the Lead on Coronavirus Response, NPR (Apr. 17, 2020, 4:20 PM), https://perma.cc/V2CC-N9B8. In the process, state governments are decentralizing policy and reviving the “laboratories of democracy” that Justice Brandeis celebrated decades ago as representing the genius of our federal system.14See New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting) (expounding that a “[s]tate may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country”).
State interventions are not limited to the domestic sphere. Increasingly, states—and even local governments—are wading into foreign relations and international policy.15See, e.g., Duncan B. Hollis, Unpacking the Compact Clause, 88 Tex. L. Rev. 741, 744 (2010) (noting that foreign-state agreements “have become remarkably common, with over 340 concluded by forty-one U.S. states since 1955”); Julian G. Ku, Gubernatorial Foreign Policy, 115 Yale L.J. 2380, 2384 (2006) (describing how state governors “often take actions that implicate the foreign relations of the United States as a whole”). Frustration over federal inaction has caused states to overcome their normal deference to Washington in foreign affairs.16The desperate quest by state governments to procure PPE supplies during the pandemic’s early months made cultivating overseas contacts literally a matter of life or death. E.g., Reid Wilson, How New Hampshire Built a Mammoth PPE Supply Chain from China, The Hill (May 11, 2020, 4:23 PM), https://perma.cc/JH4U-CLHR. However, state forays into foreign relations go well beyond government procurement and commerce. See, e.g., Melissa De Witte-Stanford, Should States Have Their Own Foreign Policy?, Futurity (Mar. 27, 2018), https://perma.cc/M6ZP-QTF2 (discussing how California is challenging federal power in foreign affairs, from climate to immigration to human rights). As Washington shrinks from leadership on the global stage,17See, e.g., Peter Marcus Kristensen, After Abdication: America Debates the Future of Global Leadership, 2 Chinese Pol. Sci. Rev. 550, 554 (2017); Austen L. Parrish, Reclaiming International Law from Extraterritoriality, 93 Minn. L. Rev. 815, 818 (2009) (describing how the United States has disengaged from international legal processes). This process reached its apogee under the Trump White House, which scorned global engagement, alienated allies, and actively undermined multilateral institutions. See Peter S. Goodman, The Post-World War II Order Is Under Assault from the Powers that Built It, N.Y. Times (Mar. 26, 2018), https://perma.cc/4WGE-ERWC. While the Biden Presidency has sought to repair foreign relations, the anti-globalist forces that fueled Trump’s rise have hardly disappeared. the states have stepped in to fill the void.18See, e.g., David Freeman Engstrom & Jeremy M. Weinstein, What If California Had a Foreign Policy? The New Frontier of States’ Rights, Wash. Q., Spring 2018, at 27, 28 (describing how California has sought a global role to counter the perceived abdication of leadership under President Trump); Jeremy K. Schrag, A Federal Framework for Regulating the Growing International Presence of the Several States, 48 Washburn L.J. 425, 431 (2009) (describing how state and local governments have “implement[ed]” international treaties that the U.S. has not signed or ratified). In doing so, they are testing the boundaries of foreign relations federalism.19See, e.g., Sharmila L. Murthy, The Constitutionality of State and Local “Norm Sustaining” Actions on Global Climate Change: The Foreign Affairs Federalism Grey Zone, 5 U. Pa. J.L. & Pub. Affs. 35, 49–50 (2020) (discussing the Trump Administration lawsuit challenging California’s “cap-and-trade” emissions agreement with Quebec); Judith Resnik, Foreign as Domestic Affairs: Rethinking Horizontal Federalism and Foreign Affairs Preemption in Light of Translocal Internationalism, 57 Emory L.J. 31, 36–37, 45, (2007) (exploring constitutionality of “translocal” foreign policies).
States may now take the leading role in extraterritorial litigation. The Supreme Court has aggressively pared back the extraterritorial application of federal law in recent years.20E.g., Paul B. Stephan, Private Litigation as a Foreign Relations Problem, 110 Am. J. Int’l L. Unbound 40, 40–41 (2016) (describing rulings cutting back on extraterritorial application of federal securities law, antitrust, RICO, and patent law). Plaintiffs may increasingly bring state-law actions as an alternative.21See, e.g., Katherine Florey, State Law, U.S. Power, Foreign Disputes: Understanding the Extraterritorial Effects of State Law in the Wake of Morrison v. National Australia Bank, 92 B.U. L. Rev. 535, 549 (2012) (describing potential for “unprecedented number of state-law suits with foreign elements”). This prospect has particular resonance in the context of international human rights litigation, a high-profile casualty of the Supreme Court’s campaign against extraterritoriality. Since 1980, the Alien Tort Statute (“ATS”) has served as the lynchpin of international human rights litigation, yielding multimillion dollar verdicts against a parade of corporate miscreants and human-rights abusers.22See generally Beth Stephens, The Curious History of the Alien Tort Statute, 89 Notre Dame L. Rev. 1467, 1484–1538 (2014) (discussing the progression of ATS suits filed in the aftermath of the 1980 Filartiga decision as well as the emerging critiques of such litigation). Yet, the Court has drastically curtailed the ATS’s scope in recent decisions.23See Nestle USA, Inc. v. Doe, 141 S. Ct. 1931, 1936–37 (2021); Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 115–17, 123–25 (2013). With the effective end of ATS litigation at hand,24See Roger P. Alford, The Future of Human Rights Litigation After Kiobel, 89 Notre Dame L. Rev. 1749, 1754 (2014) (proclaiming the end of international human rights litigation under the ATS); Pierre-Hugues Verdier & Paul B. Stephan, International Human Rights and Multinational Corporations: An FCPA Approach, 101 B.U. L. Rev. 1359, 1372–74 (2021) (same). commentators and activists have urgently sought a replacement. State law and state courts are viewed as the most promising alternatives.25See Seth Davis & Christopher A. Whytock, State Remedies for Human Rights, 98 B.U. L. Rev. 397, 400, 400 n.11 (2018) (describing the “turn to state remedies” and summarizing extensive literature).
State-level ventures into the international realm raise special concerns. Foreign policy has historically been regarded as the province of the federal government.26E.g., Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 425 (1964); United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304, 319 (1936). The need for the United States to speak with “one voice” in its dealings with the world outside our borders makes state interventions potentially problematic.27See Donald Earl Childress III, The Alien Tort Statute, Federalism, and the Next Wave of Transnational Litigation, 100 Geo. L.J. 709, 753–54 (2012). Some see state intrusions into foreign relations as presumptively illegitimate, perhaps even unconstitutional.28Davis & Whytock, supra note 25, at 402, 414–16 (summarizing case law and commentary questioning the legitimacy of state-level interventions into foreign relations). For this reason, state action in the international domain is subject to a host of limiting doctrines that police the boundaries of foreign relations federalism.29Schrag, supra note 18, at 432–44 (canvassing limiting doctrines including foreign policy preemption and dormant foreign affairs doctrine). And even where not precluded, state interventions remain problematic in cases where multiple states work at cross-purposes.30The internecine competition to procure PPE from overseas suppliers during the early stages of the COVID-19 pandemic provides an obvious example. See Andrew Soergel, States Competing in ‘Global Jungle’ for PPE, U.S. News & World Rep. (Apr. 7, 2020, 5:24 PM), https://perma.cc/Q2NK-YZDM. However, litigation and regulatory jurisdiction can raise equally vexing conflicts. See Davis & Whytock, supra note 25, at 415–18 (describing dangers of decentralized policy). For this reason, a federal solution to international issues generally represents the preferred default.31See Davis & Whytock, supra note 25, at 415–17.
That said, states do have legitimate interests that extend beyond our national borders.32Id. at 415–19 (canvassing precedent and commentary supporting states’ role in foreign affairs); see also Michael J. Glennon & Robert D. Sloane, Foreign Affairs Federalism: The Myth of National Exclusivity 1–31 (2016). Where the federal government is unwilling to address pressing global issues, state interventions may be the only alternative. In this regard, the prospect of states grasping the mantle of the erstwhile ATS litigation, while a second-best solution, may be a case where second-best is better than nothing.33See Davis & Whytock, supra note 25, at 424–44 (arguing states have a duty to remedy transnational injustice in the absence of viable alternatives). Moreover, where the states lead, the federal government sometimes follows.34Cf. id. at 423 (arguing “state law can play an ‘affirmative role’ in prompting the [federal government] to consider the national interest in a human rights dispute”). Brandeis’s “laboratories of democracy” provides a time-tested model to incubate novel policy solutions that can later be adopted as national policy.35Indeed, there is a long tradition of unfair competition innovations migrating from state to federal law. See, e.g., Stephen Y. Chow, The Defend Trade Secrets Act of 2016 and its Coexistence with Massachusetts Law, Boston Bar J., Winter 2017, at 25, 25–26, 28 (describing how the federal Defend Trade Secrets Act built on existing state trade secret jurisprudence); Mark P. McKenna, The Normative Foundations of Trademark Law, 82 Notre Dame L. Rev. 1839, 1861–63, 1896–1904 (2007) (describing how trademark actions arose out of state unfair competition law and only later were given a federal law basis); David Millon, The First Antitrust Statute, 29 Washburn L.J. 141, 141 (1990) (noting how state antitrust statutes predated federal law).
States have already signaled their interest in regulating overseas human rights abuses and supply chain misconduct. Massachusetts legislators introduced a bill to extend the statute of limitations for human-rights-abuse survivors to sue under Massachusetts law.36E.g., Michelle Harrison, This Small Change in the Law Will Be Huge for Human Rights, EarthRights Int’l (Mar. 19, 2015), https://perma.cc/T8DZ-PEFU. California passed a broad mandate requiring disclosure of supply chain violations and corporate efforts to remedy them.37E.g., Adam S. Chilton & Galit A. Sarfaty, The Limitations of Supply Chain Disclosure Regimes, 53 Stan. J. Int’l L. 1, 14–20 (2017); Daniel H. Aiken, Carol F. Trevey & Brendan P. McHugh, What Retailers Need to Know About the California Transparency in Supply Chains Act, Faegre Drinker Biddle & Reath LLP (Feb. 27, 2017), https://perma.cc/2S3F-T4FF. Moreover, foundational state precedents already exist that pave the way for an expanded state role in extraterritorial litigation in these domains.38See infra Section III.A.
An important question, however, remains unanswered: what state law should supply the vehicle for transnational redress as an ATS-surrogate? Proponents of state litigation have generally treated state law as a monolithic bloc.39Cf. Davis & Whytock, supra note 25, at 400–02 (referring generally to state tort law and state remedies for human rights violations). In doing so, they have overlooked significant material differences between state legal regimes. They have also failed to differentiate between different sources of state law. In particular, one should distinguish between two alternative bases: (1) common-law tort; and (2) state unfair competition statutes.
Most commentators to date have focused on common-law-tort actions either by default or because they deem it the “most likely” candidate to replace the ATS.40Alford, supra note 24, at 1751. This Article presents a different view, arguing that state unfair competition law offers an overlooked alternative that has important advantages over common-law-tort actions. Transnational unfair competition actions are more versatile, less problematic for federal preemption and federalism concerns, and uniquely suited to overcome the jurisdictional and procedural hurdles that hamper transnational lawsuits.41See infra Section I.C. More than just an ATS replacement, unfair competition law can target a broader array of extraterritorial misconduct, including such high-profile enforcement priorities as foreign intellectual property theft.42See infra Section I.D.
That said, not all state unfair competition statutes are created equal. This Article undertakes a comprehensive 50-state survey of state unfair competition statutes. It examines the provisions of these statutes in detail, categorizes their operative language, explores their limitations, and assesses their suitability to support transnational supply chain litigation. Finally, this Article provides a strategic roadmap to implement supply chain litigation.43See infra Parts II, III.
The argument and analysis proceed as follows: Part I contrasts alternative state law bases for transnational supply chain suits. It explains how unfair competition law offers clear advantages over common-law-tort actions. Part II traces the origins of unfair competition law, surveys the varying prohibitions that state unfair competition statutes contain, and examines their distinctive language and structure. Part III explores how such statutory language can be harnessed in a transnational supply chain action. It reviews existing precedent supporting such actions, outlines specific rationales tailored to different statutory provisions, and describes other statutory and jurisprudential limitations that such supply chain claims could implicate. Part III concludes by categorizing state unfair competition statutes nationwide based on their suitability for supply chain litigation and concludes with a strategic roadmap to implement such litigation.
I. State Law Ventures Abroad
A. The Lost Promise of the ATS
To its proponents, the ATS offered “by far, the most effective means of accomplishing long-term progress” in human rights.44See Charles W. Brower II, Note, Calling All NGOs: A Discussion of the Continuing Vitality of the Alien Tort Statute as a Tool in the Fight for International Human Rights in the Wake of Sosa v. Alvarez-Machain, 26 Whittier L. Rev. 929, 949 (2005). A hitherto obscure 1789 jurisdictional statute, the ATS45The Alien Tort Statute confers federal jurisdiction over claims brought “by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” 28 U.S.C. § 1350. was pressed into service in the landmark 1980 Filartiga v. Peña-Irala46630 F.2d 876 (2d Cir. 1980). decision as a vehicle for transnational litigation. Since then, almost 200 lawsuits have been filed under the ATS, targeting a wide manner of overseas misconduct, including human rights, labor, and environmental violations.47See Jonathan C. Drimmer & Sarah R. Lamoree, Think Globally, Sue Locally: Trends and Out-of-Court Tactics in Transnational Tort Actions, 29 Berkeley J. Int’l L. 456, 461–62 (2011); Stephens, supra note 22, at 1513–18. The ATS offered an unprecedented mechanism to empower victims to directly enforce international law.48See Stephens, supra note 22, at 1484–90. Human rights advocates welcomed the new era of accountability that the ATS augured.49See Harold Hongju Koh, Transnational Public Law Litigation, 100 Yale L.J. 2347, 2366 (1991) (calling Filartiga the “Brown v. Board of Education” of international human rights).
At the same time, the ATS suits provoked intense controversy and mounting criticism from conservative commentators.50See Stephens, supra note 22, at 1521–22, 1536–39. In response, the Supreme Court intervened to effectively hamstring the ATS.51Id. The Court’s ATS decisions revealed the justices’ deep concerns over extraterritoriality, particularly where private lawsuits could embroil the U.S. in sensitive foreign policy disputes without regard for the country’s broader foreign policy interests.52See Stephan, supra note 20, at 40–43.
B. Distinguishing Between State Law Models
As noted, commentators have begun to actively consider alternatives to the ATS. State law options have emerged as by far the leading candidates.53Childress, supra note 27, at 739–41; Davis & Whytock, supra note 25, at 411–12; Stephens, supra note 22, at 1469–70, 1541. International law scholars have debated the legitimacy of extraterritorial state litigation and explored at length the international, constitutional, and jurisprudential constraints within which such suits would operate.54See Davis & Whytock, supra note 25, at 412–74 (discussing in detail the various interests that support state-based redress of human rights violations). The U.C. Irvine Law Review devoted an entire symposium issue to these questions. See Symposium, After Kiobel—International Human Rights Litigation in State Courts and Under State Law, 3 U.C. Irvine L. Rev. 1 (2013). Less attention, however, has been devoted to distinguishing between state law options. In particular, very few scholars have explored the difference between actions based on state unfair competition law versus common law tort. Indeed, state unfair competition law remains generally underexamined.55See Sean A. Pager & Eric Priest, Redeeming Globalization Through Unfair Competition Law, 41 Cardozo L. Rev. 2435, 2474–75 (2020). Perhaps for this reason, common law torts have emerged as the presumptive ATS-replacement.56Alford, supra note 24, at 1749–50 (describing common-law tort actions as “[t]he most important alternative”). Yet, unfair competition law offers significant advantages that commentators have overlooked. The next two sections elaborate on these contrasting models and highlight the tradeoffs between them.
1. The Common-Law-Torts Model
The common-law-torts model entails refashioning violations of international law into equivalent claims under tort law. For example, torture would be recast as assault, slavery becomes false imprisonment, and so on.57Id. at 1750. Foreign victims of such abuses would file tort actions in the U.S. based either on the forum-state law, applied extraterritorially, or as transitory torts brought under the foreign law applicable where the violations occurred.58See id. at 1762–64. Technically, the latter option may entail applying civil law equivalents of common law torts. For simplicity, however, this Article elides such distinctions; it will refer to these possibilities collectively as encompassed within the common-law-tort model. However, not all international violations translate readily into tort actions. For example, child labor violations or illegal fishing practices might not be actionable due to the lack of a cognizable injury.59Standing requirements could also impede environmental claims where direct victims are hard to identify. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 565–66, 573–74 (1992) (noting that a plaintiff that “seek[s] relief that no more directly and tangibly benefits him than it does the public at large” does not have standing). Still, many erstwhile ATS claims could be translated in this manner.
2. The Unfair Competition Model
Unfair competition law protects competitors and consumers from unfair business practices. Such claims would be based on follow-on harms that supply chain violations engender. For example, if a foreign producer achieves cost savings from the use of forced labor to gain an unfair price advantage, U.S. competitors could sue for unfair competition.60See infra notes 217–231 and accompanying text. Such claims would typically be brought by parties affected in the forum state where the end products are sold rather than by foreign victims of the overseas misconduct. For those who saw the principal value of ATS claims as giving human rights victims their day in court, such a substitution may seem unappealing.61Stephens, supra note 22, at 1489–90 (describing the symbolic significance of letting survivors present their claims and have their voices heard). While victim testimony might still play a role, the focus would lie elsewhere, and victims would lose agency over the conduct of the case.
The unfair competition model is also significantly limited in that it requires commercial conduct affecting the forum state. Typically, this means that end products manufactured unlawfully overseas are exported to the forum state. Such exports must then cause a cognizable injury to competitors or consumers in the end market.62See infra notes 208–231 and accompanying text.
Any international violation that results in such injuries would, in principle, be actionable. The unfair competition model therefore avoids the “translation” problem that limits the common-law-torts model and potentially encompasses a much broader range of illegal conduct. However, the need to show commercial injury within the forum-state market imposes a different constraint: purely extraterritorial abuses would remain beyond reach.
C. Highlighting Unfair Competition’s Advantages
The two limitations to the unfair competition model identified above—a lack of direct action by foreign victims and a requirement of domestic injury—viewed from a different perspective can be recast as strengths. Avoiding the “translation” problem of the common-law-tort model has jurisprudential advantages worth elaborating.
1. Competitors as Plaintiffs
Substituting competitors for victims as the plaintiff has several advantages. It potentially enlists a set of well-resourced protagonists with access to sophisticated counsel who are commercially motivated to vigorously challenge abuses by overseas competitors.63See Pager & Priest, supra note 55, at 2460. By contrast, foreign victims often lack such resources and may be afraid to file actions against powerful local interests for fear of reprisals.64Id. at 2454. Admittedly, non-governmental organizations (“NGOs”) often file claims on victims’ behalf, but they too frequently operate under severe capacity constraints. Id. at 2460. Reducing the need for foreign-victim involvement may therefore lead to more effective litigation. If, at the end of the day, such actions hold the overseas manufacturer accountable for the underlying violations, then arguably the bottom line remains a successful outcome.65There is, in fact, a longstanding tradition in unfair competition law of deputizing competitors to vindicate the interest of third-party victims. For example, false advertising claims operate under this principle. See 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 2:33 (4th ed. 2009).
2. Requiring Domestic Conduct & Injury
Similarly, limiting extraterritorial claims to violations that result in sales in, and injury to, the forum-state market offers doctrinal and strategic advantages. First, such forum contacts make obtaining personal jurisdiction over defendants a much easier proposition. The Supreme Court’s pull-back on extraterritorial lawsuits has included a significant tightening of personal jurisdiction doctrine.66Pager & Priest, supra note 55, at 2453, 2484–85. As a result, claims for purely extraterritorial violations will often struggle to overcome such hurdles. Second, even where personal jurisdiction can be obtained, U.S. courts may dismiss purely extraterritorial actions under forum non-conveniens doctrine.67E.g., Davis & Whytock, supra note 25, at 435. Common-law-tort actions filed by foreign plaintiffs based solely on overseas conduct that inflicts injuries to foreign parties on foreign soil present attractive candidates for such dismissals.68See id. (noting that “[t]he use of Florida courts to police activities even in the remotest parts of the globe is not a purpose for which [Florida’s] judiciary was created” (quoting Kinney Sys., Inc. v. Cont’l Ins. Co., 674 So. 2d 86, 93 (Fla. 1996))). By contrast, a case brought by local plaintiffs that centers on commercial conduct and injuries in the forum state will be far better positioned to withstand such challenges.
Tying foreign violations to in-state conduct and injuries also helps overcome other objections to extraterritorial claims. Such objections function at multiple levels: state, federal, and international. First, some states may balk at applying state law to purely overseas conduct or otherwise providing a forum to remedy foreign claims, although state doctrines on extraterritorial jurisdiction remain poorly developed compared to federal law.69Florey, supra note 21, at 551–53. Some states restrict remedies to intrastate subjects,70See Davis & Whytock, supra note 25, at 426 n.164. and one might expect others to adopt limiting doctrines if faced with a flood of extraterritorial common law claims.71Cf. Florey, supra note 21, at 549 (noting concerns that state courts could become “a ‘Shangri-La’ for litigation” (quoting Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 270 (2010))). Unfair competition claims tied to demonstrable state injuries, however, would be less likely to provoke such objections.72See discussion infra Section I.C.4.
Moreover, even if states allow extraterritorial claims, federal law imposes its own set of constraints. Constitutional due process generally constrains the application of substantive state law beyond state borders.73Florey, supra note 21, at 553. A cluster of foreign relations federalism doctrines impose further limits on state actions that impinge on foreign relations and commerce.74See Schrag, supra note 18, at 433–40. In particular, the foreign affairs preemption and dormant foreign commerce doctrines both prevent states from impinging on the federal government’s prerogative to conduct a unitary approach to foreign relations.75See Am. Ins. Ass’n v. Garamendi, 539 U.S. 396, 413, 418–20 (2003); Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372–74, 381–82 (2000); Japan Line, Ltd. v. Cnty. of Los Angeles, 441 U.S. 434, 450–51 (1979).
While application of these doctrines remains murky, in two respects, their application clearly favors the unfair competition model over common-law-tort actions. First, in resolving potential foreign affairs conflicts, the Supreme Court “consider[s] the strength of the state interest, judged by standards of traditional practice” before it applies federal preemption.76Garamendi, 539 U.S. at 420. State unfair competition actions aimed at regulating the integrity of the state’s own internal market count as a valid, traditionally recognized state interest.77Cf. id. at 425–26. By contrast, the Court has held that state action to redress foreign human rights violations with little connection to the forum state does not merit the same degree of solicitude.78Id. at 426 (characterizing California’s interest in Holocaust reparations as “weak”).
Second, both doctrines aim to prevent states from needlessly provoking conflicts with foreign sovereigns.79See id. at 423–26; Japan Line, 441 U.S. at 450–51. Extraterritorial assertions of state jurisdiction over conduct and parties located entirely on foreign soil are likely to provoke foreign resentment and potentially even retaliation.80Verdier & Stephan, supra note 24, 1375–76. The ATS cases amply illustrate such concerns, with foreign governments filing amicus briefs to protest “legal imperialism.”81E.g., Brief for the Governments of the Commonwealth of Australia, the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland as Amici Curiae in Support of the Petitioner, Sosa v. Alvarez-Machain, 542 U.S. 692 (2004); see also Stephan, supra note 20, at 41; cf. Brief for the Republic of France as Amicus Curiae in Support of Respondents at 12, Morris v. Nat’l Austl. Bank Ltd., 561 U.S. 247 (2010) (arguing that, in the context of the Exchange Act, federal courts “must assume” Congress would not impose American laws “in an act of legal imperialism, through legislative fiat” (quoting F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 169 (2004))). Concern over international conflicts were a prime factor animating the Supreme Court’s decisions reigning in ATS litigation.82See Stephan, supra note 20, at 40. Common-law-tort actions would raise similar objections.83See Davis & Whytock, supra note 25, at 416–17.
By contrast, unfair competition actions deflect such extraterritoriality objections because they regulate sales taking place on U.S. soil and aim to redress harms realized in U.S. markets. Not only is the focus of the action therefore “domesticated,” but the remedy, too, remains limited solely to redressing injuries to domestic competitors or consumers.84See Pager & Priest, supra note 55, at 2460. This focus on domestic conduct and effects has significance beyond geopolitical optics. International law frowns on free-floating assertions of extraterritorial jurisdiction.85See Restatement (Fourth) of Foreign Relations Law of the United States § 407 note 5 (Am. L. Inst. 2018) (noting that some foreign states pass blocking statutes to prevent extraterritorial jurisdiction in “certain spheres, such as economic regulation”). However, regulating territorial conduct and effects is explicitly permitted.86See generally id. § 407 note 2 (requiring a “genuine connection” between the subject matter and the regulating state). Accordingly, transnational unfair competition claims rest on a more solid footing from an international legitimacy standpoint compared to common-law-tort claims.87Such jurisdictional constraints apply only to prescriptive jurisdiction, which extraterritorial application of state tort law entails. Adjudicating transitory tort claims arising under foreign law in state court does implicate such constraints. See generally id. § 422 notes 1, 3, 6 (discussing personal jurisdiction in the context of international law, foreign parties, and foreign nonparties).
Ensuring that extraterritorial suits are tied to in-state commerce and effects also has more subtle, long-term advantages from a policy standpoint. Commentators have worried that purely extraterritorial suits, bounded only by the limits of personal jurisdiction, will unfairly penalize U.S.-based corporations.88Alan O. Sykes, Corporate Liability for Extraterritorial Torts Under the Alien Tort Statute and Beyond: An Economic Analysis, 100 Geo. L.J. 2161, 2193–96 (2012). Over time, this may encourage corporate restructuring or offshoring to minimize exposure to U.S. law.89Id. at 2196–97 (arguing that ATS liability has discriminatory effects that will lead to economically inefficient restructuring). However, the unfair competition model assuages such concerns by providing a jurisdictional hook to regulate foreign firms that access U.S. markets, even if they are not based here.
3. Avoiding “Translational” Problems
Further jurisprudential and policy benefits arise from the fact that unfair competition actions avoid the need to translate violations of international law into common-law-tort equivalents. Both courts and commentators have expressed concerns that converting international human rights claims into state tort actions trivializes them.90E.g., Davis & Whytock, supra note 25, at 412 n.82 (“[L]ooking to domestic tort law to provide the cause of action mutes the grave international law aspect of the tort, reducing it to no more (or less) than a garden-variety municipal tort.” (quoting Xuncax v. Gramajo, 886 F. Supp. 162, 183 (D. Mass. 1995)). Important nuances may get lost in translation. Making such forced conversions “sacrifices normativity at the altar of practicality, and in doing so undermines” the development of international law as a coherent body of jurisprudence.91Nathan J. Miller, Human Rights Abuses as Tort Harms: Losses in Translation, 46 Seton Hall L. Rev. 505, 514–15 (2016). There are also practical disadvantages to substituting common-law-tort claims for international law violations. Corporations may take the latter more seriously due to the public relations fallout of being labelled, for example, a human rights abuser.92Childress, supra note 27, at 725. State tort claims do not impart the same stigma.
Filing such claims under unfair competition law avoids these drawbacks. Although the action focuses on domestic competitive harm, the underlying “unfairness” inheres in the international violation overseas. Such violations must therefore be proven on their own terms as a threshold requirement to redress the downstream injury.93See infra notes 254–262 and accompanying text. Accordingly, although the international norm is enforced indirectly, unfair competition actions still contribute to the development of international jurisprudence.
4. Political Sustainability
In addition to making sense from a strategic and jurisprudential standpoint, unfair competition actions also embody astute politics. By targeting unfair practices by foreign competitors, such lawsuits respond to a core grievance that has animated domestic anti-globalist sentiment, namely that foreign companies “cheat” through unfair trade practices.94See Pager & Priest, supra note 55, at 2449–50. Unfair competition actions hold such foreign scofflaws accountable. Unfair competition actions thus appeal to nativist sentiment on behalf of a politically powerful and sympathetic constituency: the U.S. manufacturing sector.95Recall that Trump’s 2016 election was clinched by appealing to Midwestern voters mourning shuttered factory towns whose jobs had migrated overseas. Trump promised to reverse this trend by targeting “cheating” foreigners. Yet, his erratic trade wars failed to deliver the promised relief. Unfair competition actions offer a more effective, targeted tool to provide redress and level the global playing field. See Sean A. Pager & Michael Sant’Ambrogio, Trading Up: Is Section 337 the New ATS?, Iowa. L. Rev. (forthcoming) (manuscript at 48–49). As such, they justify their burden on judicial resources in the name of principled protectionism: protecting U.S. jobs and U.S. factories. Combining a normatively appealing rationale with astute politics would make such litigation sustainable for the long haul. By contrast, the common-law-tort model would open U.S. courts to the world’s problems, remedying foreign injuries in distant lands solely in the name of global justice—a tough sell in an “America First” era. As such, transnational tort claims would encounter the same skepticism over “liberal do-gooders” and international activism that doomed the ATS.
D. Beyond ATS Claims
Commentators have looked to state law to replace claims formerly brought under the ATS. However, the versatility of the unfair competition model means a much broader set of international violations could be targeted than the wildest-eyed ATS proponent ever dreamed of.96ATS claims were based on international law, which generally required state action. By contrast, unfair competition claims are purely private law, which avoid such hurdles. See id. (manuscript at 40). As noted, any unlawful practice that leads to competitive injuries in a forum-state market could potentially give rise to a claim. This includes many types of purely commercial injuries that common-law-tort actions cannot reach.
High on the list of promising candidates for enforcement via unfair competition law is the theft of intellectual property (“IP”). The U.S. is a leading exporter of IP. Combatting foreign infringement of American IP rights perennially ranks among the top U.S. commercial foreign policy priorities.97See Press Release, Off. of the U.S. Trade Representative, USTR Releases Annual Special 301 Report on Intellectual Property Protection and Review of Notorious Markets for Counterfeiting and Piracy (Apr. 29, 2020), https://perma.cc/53MU-DGUX. The Trump Administration’s trade war against China was ostensibly waged to force Beijing to stop “stealing” IP from U.S. companies.98See Press Release, Off. of the U.S. Trade Representative, President Trump Announces Strong Actions to Address China’s Unfair Trade (Mar. 22, 2018), https://perma.cc/4PRA-S95J. Notably, Trump’s chosen tool to retaliate against Chinese IP theft was to invoke section 301 sanctions, which are explicitly designed to combat “unfair trade practices,” making the link to unfair competition law unmistakable. Id. A bipartisan chorus today condemns foreign hackers siphoning U.S. trade secrets and calls for tough action to punish IP scofflaws.99See, e.g., Kyle Jahner, Sanctions for Trade Secret Thieves Part of Senate-Passed Bill, BL (June 9, 2021, 11:07 AM), https://perma.cc/353Q-AL8S.
Intellectual property law in the U.S. is primarily a federal domain. Yet, federal IP law is territorially bounded. Indeed, such limits have tightened in recent years under the Supreme Court’s campaign against extraterritoriality.100See Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 453–55 (2007). Accordingly, federal IP law offers little purchase against overseas infringement.
Enter unfair competition law. By recharacterizing infringement by foreign manufacturers as an unfair trade practice whose costs savings confer an undeserved competitive edge in U.S. markets, IP theft can be sanctioned under state unfair competition law. This theory represents more than conjecture. Unfair competition suits against infringing foreign manufacturers have been brought in nine states, yielding successful outcomes in all but one.101Pager & Priest, supra note 55, at 2467–69 (noting judgment and settlement amounts ranging from $10,000 to $10 million). Moreover, three states have enacted specialized statutes that focus specifically on IP theft in recognition of the problem’s importance and of unfair competition’s potential to combat it.102Id. at 2468–69.
Potential extraterritorial applications of state unfair competition law go well beyond IP; they could embrace a wide range of commercial or financial improprieties. Indeed, unfair competition statutes were intentionally drafted to be open-ended as the next Part elaborates. As such, they can readily fill the gaps left by the Supreme Court’s ongoing retrenchment of federal extraterritorial law. That said, not all state unfair competition statutes are equally amenable to overseas enforcement. Part II provides an overview of the main differences between them.
II. The Origins of Federal and State Unfair Competition Law
Unfair competition at common law had a narrow scope, limited largely to passing off one company’s goods as another’s103See Neil W. Averitt, The Meaning of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act, 21 B.C. L. Rev. 227, 235 (1980). and misappropriation of trade secrets.104Sharon K. Sandeen, The Evolution of Trade Secret Law and Why Courts Commit Error when They Do Not Follow the Uniform Trade Secrets Act, 33 Hamline L. Rev. 493, 494–501 (2010) (discussing the evolution of trade secret law within unfair competition law). Congress sought to expand protections for businesses, and later consumers, through federal unfair competition law. States followed by enacting their own unfair competition statutes.105These statutes are referred to differently throughout the states. Some statutes focus more on consumer protection than harm to business competition and are referred to as consumer protection statutes. However, we will refer to these statutes collectively as “unfair competition statutes. Many of these state statutes are modeled on the Federal Trade Commission (“FTC”) Act and contain similar prohibitions, but others differ significantly.106See Henry N. Butler & Joshua D. Wright, Are State Consumer Protection Acts Really Little-FTC Acts?, 63 Fla. L. Rev. 163, 168–73 (2011). Ultimately, all 50 states, plus D.C., have passed statutes that prohibit some form of deceptive or unfair business practices. These statutes focus on protecting consumers, business competitors, or both.
A. Section 5 of the Federal Trade Commission Act
Congress enacted the FTC Act in 1914 to expand the scope of unfair competition beyond its common law meaning.107See Federal Trade Commission Act of 1914, ch. 311, 38 Stat. 717 (1914) (codified at 15 U.S.C. §§ 41–51); James A. Carney, Section 5 of the Federal Trade Commission Act—Unfairness to Consumers, 1972 Wis. L. Rev. 1071, 1072. The FTC Act was also meant to remedy problems with the Sherman Antitrust Act, which Congress believed the Supreme Court interpreted too narrowly, leading to underenforcement.108FTC v. R. F. Keppel & Bro., 291 U.S. 304, 310 (1934); see also Averitt, supra note 103, at 230–34. To create a statute that would be broad and flexible enough to encompass all forms of unfair competition, Congress deliberately employed the novel phrase “unfair methods of competition.”10915 U.S.C. § 45. The phrase was meant to signal to the courts that the Act covered more than just common law unfair competition.110Keppel, 291 U.S. at 311–12, 312 n.2; Averitt, supra note 103, at 234–36 (“A number of Senators observed that the phrase ‘unfair competition’ already had a recognized and limited meaning at common law. . . . [T]he Senate intended Section 5 to have a general reach unconstrained by previous common law interpretations . . . .”). Congress drafted the phrase to be very broad and delegated to the FTC and courts the authority to determine what constituted unfair methods of competition.111See Keppel, 291 U.S. at 311–12, 312 n.2. Congress chose this open-ended definition because it feared that describing specific acts would be under-inclusive.112See S. Rep. No. 63-597, at 13 (1914) (“The Committee gave careful consideration to the question as to whether it would attempt to define the many and variable unfair practices which prevail in commerce and to forbid their continuance or whether it would, by a general declaration condemning unfair practices, leave it to the commission to determine what practices were unfair. It concluded that . . . there were too many unfair practices to define, and after writing 20 of them into the law it would be quite possible to invent others.”); H.R. Rep. No. 63-1142, at 19 (1914) (Conf. Rep.).
The U.S. Supreme Court has rejected attempts to interpret “unfair methods of competition” narrowly. In 1920, the Court held in FTC v. Gratz113253 U.S. 421 (1920). that unfair methods of competition were limited to those activities that were previously regarded as immoral or against public policy due to their tendency to “hinder competition or create monopoly.”114Id. at 427–28. Yet, subsequent Supreme Court decisions rejected even this fairly capacious formulation of section 5’s scope, holding that Gratz had improperly limited the definition of unfair methods of competition to predefined categories when Congress intended the FTC Act to be open-ended.115E.g., FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 241–43 (1972); FTC v. Brown Shoe Co., 384 U.S. 316, 320–21 (1966). In 1972, the Court reaffirmed an open-ended definition of unfair methods of competition in FTC v. Sperry & Hutchinson.116See 405 U.S. 233, 242–44 (1972). The Sperry & Hutchinson Court recognized that Congress never intended the phrase to apply only to “fixed and unyielding categories,”117Id. at 243 (quoting FTC v. R. F. Keppel & Bro., 291 U.S. 304, 310 (1934)). but listed three factors that are important to a finding of unfairness:
(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).118Id. at 243–44, 244 n.5 (quoting Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking, 29 Fed. Reg. 8324, 8355 (July 2, 1964)).
The Court emphasized that these factors should be weighed equitably and that not all factors had to be present to find a method of competition unfair.119Id. at 244, 244 n.5.
The Sperry & Hutchinson Court cited approvingly its 1934 FTC v. R. F. Keppel & Bro.120291 U.S. 304 (1934). decision as “[t]he leading case” that “sets the standard . . . today,”121Sperry & Hutchinson, 405 U.S. at 242. providing flexibility to apply section 5’s unfair competition ban without regard to “fixed and unyielding categories.”122Id. at 243 (quoting Keppel, 291 U.S. at 310). The Court in Keppel held that
a trader may not, by pursuing a dishonest practice, force his competitors to choose between its adoption or the loss of their trade. A method of competition which casts upon one’s competitors the burden of the loss of business unless they will descend to a practice which they are under a powerful moral compulsion not to adopt, even though it is not criminal . . . involve[s] the kind of unfairness at which the statute was aimed.123Keppel, 291 U.S. at 312–13.
The Sperry & Hutchinson Court explained that the FTC acted correctly to enjoin Keppel & Bro. from operating a de facto gambling scheme aimed at “induc[ing] children to buy . . . concededly inferior candy in the hope of by luck hitting on bonus packs containing extra candy and prizes.”124Sperry & Hutchinson, 405 U.S. 242–43. Even though such marketing practices were not specifically prohibited, the Court sustained the FTC’s conclusion that the practice was “unfair,” because “the competitive method is shown to exploit consumers, children, who are unable to protect themselves.”125Keppel, 291 U.S. at 313; accord Sperry & Hutchinson, 405 U.S. at 243. Engaging in such immoral exploitation gave Keppel & Bro. an undeserved advantage over more scrupulous competitors.126Keppel, 291 U.S. at 312–14; accord Sperry & Hutchinson, 405 U.S. at 242–43.
Despite the apparent victory for FTC authority to wield unfair competition law as a flexible tool to advance commercial morality, the decades since Sperry & Hutchinson have seen the FTC back away from using section 5 to regulate methods of competition. Three reasons explain this retrenchment: (1) lower courts have been leery of what they view as an ad hoc morality standard exemplified by Keppel;127See infra notes 130–131 and accompanying text. (2) the FTC has shifted its emphasis to consumer protection;128Pager & Priest, supra note 55, at 2474; see infra note 141 and accompanying text. and (3) expanded authority under federal antitrust statutes has reduced the FTC’s need to invoke section 5 as a backstop.129William E. Kovacic & Marc Winerman, Competition Policy and the Application of Section 5 of the Federal Trade Commission Act, 76 Antitrust L.J. 929, 938–39 (2010); see also Pager & Priest, supra note 55, at 2471 (noting that the cases that FTC brings under section 5 are typically “centered on claims that [fall] within the ambit of federal antitrust law”). These first two developments require elaboration.
First, while Keppel and Sperry & Hutchinson remain the Supreme Court’s last word on the meaning of unfair methods of competition, lowers courts have expressed discomfort with the uncertainty created by applying section 5’s open-ended standard in a case-by-case manner.130See, e.g., E.I. du Pont de Nemours & Co. v. FTC, 729 F.2d 128, 138–39 (2d Cir. 1984) (“[T]he Commission owes a duty to define the conditions under which conduct . . . would be [deemed] unfair so that businesses will have an inkling as to what they can lawfully do rather than be left in a state of complete unpredictability.”); Off. Airline Guides, Inc. v. FTC, 630 F.2d 920, 925–27 (2d Cir. 1980); Boise Cascade Corp. v. FTC, 637 F.2d 573, 577 (9th Cir. 1980); Nat’l Petroleum Refiners Ass’n v. FTC, 482 F.2d 672, 690 (D.C. Cir. 1973) (criticizing the FTC’s “case-by-case purely adjudicatory method of elaborating the Section 5 standard . . . [as] produc[ing] considerable uncertainty” and “spawn[ing endless] litigation”); Kovacic & Winerman, supra note 129, at 941–42. Such concerns increasingly led courts to strike down FTC section 5 enforcement actions as “ad hoc” rulemaking leading to “arbitrary or capricious” results.131Pager & Priest, supra note 55, at 2476 (quoting du Pont, 729 F.2d at 138). After repeated defeats,132See supra note 130 (listing cases). the FTC appears to have thrown in the towel.
Yet, as explained below, such concerns over “ad hoc” standards do not apply to use of unfair competition in the transnational supply chain contexts discussed in this Article.133See discussion infra Section III.B.1. Because the supply chain misconduct that would be targeted contravenes clearly established global norms, imposing liability on this basis would not arise out of the blue.134It is worth noting that the Keppel Court did not apply an entirely ad hoc morality standard either. Rather, it found the candy companies’ marketing scheme to be unfair because those practices had long been regarded by common law and criminal statutes as immoral. See FTC v. R. F. Keppel & Bro., 291 U.S. 304, 313 (1934). The companies who would be targeted know full well that forced labor, human trafficking, illegal fishing, and toxic-waste dumping are unlawful. Accordingly, they can hardly complain of being unfairly blindsided when they are held accountable.135See infra Sections III.A, III.B.
Second, in 1938, Congress expanded the FTC Act to protect against harm to consumers. Section 5’s prohibition on “unfair methods of competition” had previously been understood to address only harm to business competition, and the Supreme Court had held this language was inapplicable to consumer harm.136FTC v. Raladam Co., 283 U.S. 643, 646, 648–49 (1931). Congress overturned this by enacting the Wheeler-Lea Act, which added new language to section 5 prohibiting “unfair or deceptive acts and practices.”137See Wheeler-Lea Act, ch. 49, 52 Stat. 111 (1938) (codified at 15 U.S.C. § 41, 44–45, 52–58); accord 15 U.S.C. § 45(a)(1); Averitt, supra note 103, at 292–93. The Wheeler-Lea Act made clear that Congress used the words “unfair or deceptive acts or practices” to address business practices that cause harm to consumers.138FTC v. Colgate-Palmolive Co., 380 U.S. 374, 384 (1965).
As activists pushed for greater consumer protections in the post-war years, the FTC has focused almost all of its enforcement power on protecting consumers from unfair and deceptive business practices.139See Carney supra note 107, at 1071. While the FTC still has power to protect businesses from unfair competition, it has not effectively used that power in decades.140See Kovacic & Winerman, supra note 129, at 932–35. In practice, the FTC has emphasized a consumer-protection oriented reading of the statute and developed specific standards to guide its application in the consumer context that has replaced the Sperry & Hutchinson standard.141Fed. Trade Comm’n, FTC Policy Statement on Unfairness, (Dec. 17, 1980) [hereinafter FTC Policy Statement on Unfairness], https://perma.cc/2X7L-QHP4. Congress codified the FTC’s new policy on unfair acts and practices in 1994 with an amendment to the FTC Act, which prevents the FTC from declaring an act or practice unfair unless it is “likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.” 15 U.S.C. § 45(n). However, the Sperry & Hutchinson standard remains the FTC’s governing rule for business competition cases.
While in theory the FTC could use section 5 to combat supply chain misconduct, its aversion to taking on business competition cases and recent emphasis on consumer protection makes it an unlikely candidate to do so. Indeed, the FTC has already rebuffed explicit entreaties from multiple sources who sought to enlist the FTC to this cause.142See Pager & Priest, supra note 55, at 2469–70 (describing formal letters and public calls by political and policy leaders urging the FTC to use its section 5 unfair competition authority to combat illegal software use by overseas manufacturers). Accordingly, while federal law might, in principle, offer the preferred vehicle to tackle foreign violations, the FTC cannot be relied on to enforce it.143An alternative would be to look to the International Trade Commission (“ITC”) to use its section 337 authority to enforce unfair competition provisions in federal trade law. See Pager & Sant’Ambrogio, supra note 95 (exploring such possibilities). However, the ITC has taken a narrow view of unfair competition under section 337 to date and imposed onerous standing requirements that impede its utility. See id. (manuscript at 45–48). Instead, where federal enforcement falls short, it is time for state law to step up.
B. State Unfair Competition Law
In the 1960s, advocates, academics, and government officials pressed for states to pass laws that would better protect consumers and regulate businesses.144See Mark E. Budnitz, The Development of Consumer Protection Law, the Institutionalization of Consumerism, and Future Prospects and Perils, 26 Ga. St. U. L. Rev. 1147, 1157–58 (2010). People believed that businesses had too much power in the marketplace and needed to be reined in.145Butler & Wright, supra note 106, at 164, 168–69. As a result, many states began enacting unfair competition statutes.146Id. at 164–68.
Many of these statutes were modeled on the FTC Act and intended to regulate both business competition and consumer harms. However, as the FTC shifted its focus almost exclusively to consumer protection, states too began similarly to reprioritize their enforcement. The consumer revolution of the 1960s and 1970s spawned new model acts whose consumer-oriented provisions found their way into state unfair competition statutes.147See infra notes 152, 157–158 and accompanying text. Over time, commentators began to refer to these statutes under the rubric of “consumer protection law” and forget about their business competition remit.148Cf. Budnitz, supra note 144, at 1155–58 (noting the development of the state unfair competition statutes, which relied heavily on consumer advocacy groups). Indeed, the leading treatise in this area largely ignores the business competition aspects of these statutes. See generally Carolyn L. Carter & Jonathan Sheldon, Nat’l Consumer L. Ctr., Unfair and Deceptive Acts and Practices (8th ed. 2012) [hereinafter NCLC Treatise]. That said, states do continue to enforce these statutes in purely business competition contexts as elaborated below.
State unfair competition statutes exhibit significant variance in their language, scope, and statutory requirements. Some of these differences reflect the sources on which state legislatures chose to model their statute. Others reflect governing precedent that has accrued subsequently. Some states also have more than one statute within the unfair competition genre.149See infra Section II.B.1. Such diversity exemplifies Brandeis’s “laboratories of democracy.”150New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting); Ralph Nader, State Legislatures as “Laboratories of Democracy”, Common Dreams (May 31, 2004), https://perma.cc/JM9D-ZZT2. However, it also complicates our analysis. To assess the suitability of these laws to combat supply chain abuses, we must explore their operative provisions in detail. We begin with an overview of the statutory landscape and its main antecedents.
1. Unfair Methods of Competition
Thirty-five states based their statutes off the FTC Act or the Model Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), which adopted the exact language of the FTC Act.151See infra Figure 1; see also Dee Pridgen, Richard M. Alderman & Jolina C. Cuaresma, Consumer Protection and the Law § 2:10 (2021); Letter from Nat’l Ass’n of Att’ys Gen. to Fed. Trade Comm’n Comm’rs & Dir. of the Bureau of Competition (Nov. 4, 2011), https://perma.cc/WUW8-4BHQ [hereinafter NAAG Letter]. California has two statutes modeled on the FTC Act, both of which prohibit unfair methods of competition and unfair acts and practices. Cal. Civ. Code § 1770(a) (West 2021); Cal. Bus. & Prof. Code § 17200 (West 2021). Some states adopted the FTC Act’s entire prohibition on “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce,”15215 U.S.C. § 45(a)(1); accord Alaska Stat. §45.50.471(a) (2021); Cal. Bus. & Prof. Code § 17200 (West 2021); Conn. Gen. Stat. Ann. § 42-110b(a) (West 2021); Fla. Stat. Ann. § 501.204(1) (West 2021); Haw. Rev. Stat. Ann. 480-2(a) (West 2021); 815 Ill. Comp. Stat. Ann. 505/2 (West 2021); La. Stat. Ann. § 51:1405(A) (2021); Me. Rev. Stat. Ann. tit. 5, § 207 (West 2021); Mass. Gen. Laws Ann. ch. 93A, § 2(a) (West 2021); Miss. Code Ann. § 75-24-5(1) (2021); Mont. Code Ann. § 30-14-103 (West 2021); Neb. Rev. Stat. Ann. § 59-1602 (West 2021); N.H. Rev. Stat. Ann. § 358-A:2 (2021); N.C. Gen. Stat. § 75-1.1(a) (2021); 73 Pa. Stat. and Cons. Stat. Ann. § 201-3 (West 2021); 6 R.I. Gen. Laws § 6-13.1-2 (2021); S.C. Code Ann. § 39-5-20(a) (2021); Vt. Stat. Ann. tit. 9, § 2453(a) (2021); Wash. Rev. Code Ann. § 19.86.020 (West 2021); W. Va. Code Ann. § 46A-6-104 (West 2021); Wis. Stat. Ann. § 100.20(1) (West 2021). while others adopted only one of the prohibitions.153E.g., Ariz. Rev. Stat. Ann. §44-1522 (2021); Ga. Code Ann. § 10-1-393(a) (2021). Utah is the only state that adopted the FTC Act’s prohibition on unfair methods of competition without adopting a prohibition on unfair acts and practices. Utah Code Ann. §13-5-2.5(1) (West 2021). State statutes modeled on the FTC Act were meant to complement federal law and became known as “Little-FTC Acts.”154See Butler & Wright, supra note 106, at 165. Critics believed that state law needed to complement the FTC Act because the FTC Act lacked a private cause of action, and critics accused the FTC of poor leadership, misallocation of resources, and protection of producers at the expense of consumers. See id. at 167–68.
Of the twenty-one states that adopted a prohibition on unfair methods of competition, fifteen explicitly mention the FTC Act and direct the courts to follow interpretations of the FTC Act or give them due weight.155Alaska Stat. § 45.50.545 (2021); Conn. Gen. Stat. Ann. § 42-110b(b) (West 2021); Fla. Stat. Ann. § 501.204(2) (West 2021); Haw. Rev. Stat. Ann. § 480-2(b) (West 2021); 815 Ill. Comp. Stat. Ann. 505/2 (West 2021); Me. Rev. Stat. Ann. tit. 5, § 207.1 (West 2021); Mass. Gen. Laws Ann. ch. 93A, § 2(b) (West 2021); Miss. Code Ann. § 75-24-3(c) (2021); Mont. Code Ann. § 30-14-104(1) (West 2021); N.H. Rev. Stat. Ann. § 358-A:13 (2021); 6 R.I. Gen. Laws § 6-13.1-3 (2021); S.C. Code Ann. § 39-5-20(b) (2021); Vt. Stat. Ann. tit. 9, § 2453(b) (2021); Wash. Rev. Code Ann. § 19.86.920 (West 2021); W. Va. Code Ann. § 46A-6-101(1) (West 2021). The remaining states do not explicitly mention the FTC Act within their statutes; however, three of them apply the Sperry & Hutchinson standard for unfairness.156See Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 35 So. 3d 1053, 1059 (La. 2010) (quoting Moore v. Goodyear Tire & Rubber Co., 364 So. 2d 630, 633 (La. Ct. App. 1978); Marshall v. Miller, 276 S.E.2d 397, 403 (N.C. 1981)). The others use a different standard or have not addressed the issue.
2. Unfair Acts and Practices
Of the thirty-five states that adopted a prohibition on unfair acts and practices,157Alaska Stat. § 45.50.471(a) (2021); Ariz. Rev. Stat. Ann. § 44-1522 (2021); Cal. Bus. & Prof. Code § 17200 (West 2021); Cal. Civ. Code § 1770(a) (West 2021); Conn. Gen. Stat. Ann. § 42-110b(a) (West 2021); Fla. Stat. Ann. § 501.204(1) (West 2021); Ga. Code Ann. § 10-1-393(a) (2021); Haw. Rev. Stat. Ann. § 480-2(a) (West 2021); 815 Ill. Comp. Stat. Ann. 505/2 (West 2021); Ind. Code Ann. § 24-5-0.5-3 (West 2021); Iowa Code Ann. §§ 714.16(2)(a), 714H.3(1) (West 2021); Ky. Rev. Stat. Ann. § 367.170(1) (West 2021); La. Stat. Ann. § 51:1405(A) (2021); Me. Rev. Stat. Ann. tit. 5, § 207 (West 2021); Md. Code Ann., Com. Law § 13-303 (West 2021); Mass. Gen. Laws Ann. ch. 93A, § 2(a) (West 2021); Mich. Comp. Laws Ann. § 445.903(1) (West 2021); Miss. Code Ann. § 75-24-5(1) (2021); Mo. Ann. Stat. § 407.020(1) (West 2021); Mont. Code Ann. § 30-14-103 (West 2021); Neb. Rev. Stat. Ann. § 59-1602 (West 2021); N.H. Rev. Stat. Ann. § 358-A:2 (2021); N.M. Stat. Ann. § 57-12-3 (West 2021); N.C. Gen. Stat. § 75-1.1(a) (2021); Ohio Rev. Code. Ann. § 1345.02(A) (West 2021); Okla. Stat. Ann. tit. 78, § 753 (West 2021); Or. Rev. Stat. Ann. § 646.608(1)(u) (West 2021); 73 Pa. Stat. and Cons. Stat. Ann. § 201-3 (West 2021); 6 R.I. Gen. Laws § 6-13.1-2 (2021); S.C. Code Ann. § 39-5-20(a) (2021); Tenn. Code Ann. § 47-18-104(a) (2021); Vt. Stat. Ann. tit. 9, § 2453(a) (2021); Wash. Rev. Code Ann. § 19.86.020 (West 2021); W. Va. Code Ann. § 46A-6-104 (West 2021); Wis. Stat. Ann. § 100.20(1) (West 2021); Wyo. Stat. Ann. § 40-12-105(a) (2021). six use the FTC’s new consumerist standard for unfair acts and practices,158See Iowa Code Ann. § 714.16(1)(n) (West 2021); Porsche Cars N. Am., Inc., v. Diamond, 140 So. 3d 1090, 1096-98 (Fla. Dist. Ct. App. 2014); State v. Weinschenk, 868 A.2d 200, 206 (Me. 2005); Legg v. Castruccio, 642 A.2d 906, 917 (Md. Ct. Spec. App. 1994); In re Miss. Medicaid Pharm. Average Wholesale Price Litig., 190 So. 3d 829, 841 (Miss. 2015); Morrison v. Allen, 338 S.W.3d 417, 439 (Tenn. 2011). Six states use the new standard even though the legislative history of the amendment makes clear that Congress did not intend to influence state law definitions of unfair acts and practices. S. Rep. No. 103-130, at 13 (1993). Although North Dakota does not have a prohibition on unfair acts and practices, its statute prohibits acts that are unconscionable and also violate the FTC’s definition of unfair acts and practices. N.D. Cent. Code § 51-15-02 (2021). while thirteen states continue to use the broader Sperry & Hutchinson standard.159See Mo. Code Regs. Ann. tit. 15, § 60-8.020 (2021); Okla. Stat. Ann. tit. 15, § 752(14) (West 2021); Alaska Tr., LLC v. Ambridge, 372 P.3d 207, 225–26 (Alaska 2016) (quoting State v. O’Neill Investigations, Inc., 609 P.2d 520, 535 (Alaska 1980)); Balthazar v. Verizon Haw., Inc., 123 P.3d 194, 202 (Haw. 2005) (quoting Haw. Cmty. Fed. Credit Union v. Keka, 11 P.3d 1, 16 (Haw. 2000)); Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960–61 (Ill. 2002) (quoting FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n.5 (1972)); Cheramie Servs., 35 So. 3d at 1059; Barron Chiropractic & Rehab., P.C. v. Norfolk & Dedham Grp., 17 N.E.3d 1056, 1065–66 (Mass. 2014) (quoting PMP Assocs., Inc. v. Globe Newspaper Co., 321 N.E.2d 915, 917–18 (Mass. 1975)); Gray v. N.C. Ins. Underwriting Ass’n, 529 S.E.2d 676, 683 (N.C. 2000) (citing Marshall, 276 S.E.2d at 403); State ex rel. Stenberg v. Consumer’s Choice Foods, Inc., 755 N.W.2d 583, 590–91 (Neb. 2008) (quoting Raad v. Wal-Mart Stores, Inc., 13 F. Supp. 2d 1003, 1014 (D. Neb. 1998)); Becksted v. Nadeau, 926 A.2d 819, 822–23 (N.H. 2007) (quoting State v. Moran, 861 A.2d 763, 766 (N.H. 2004)); Long v. Dell, Inc., 93 A.3d 988, 1000 (R.I. 2014) (quoting Ames v. Oceanside Welding & Towing Co., 767 A.2d 677, 681 (R.I. 2001)); State ex rel. Wilson v. Ortho-McNeil-Janssen Pharms., Inc., 777 S.E.2d 176, 195–96 (S.C. 2015) (quoting FTC Policy Statement on Unfairness, supra note 141); Christie v. Dalmig, Inc., 396 A.2d 1385, 1387–88 (Vt. 1979) (quoting Sperry & Hutchinson, 405 U.S. at 244 n.5). The states using the Sperry & Hutchinson standard are reluctant to move away from it because it would mean overturning decades of state precedent.160See Pridgen et al., supra note 151, at § 3:25; see also, e.g., ASRC Energy Servs. Power & Commc’ns, LLC v. Golden Valley Elec. Ass’n, 267 P.3d 1151, 1161 (Alaska 2011); People ex rel. Hartigan v. All Am. Aluminum & Constr. Co., 524 N.E.2d 1067, 1071 (Ill. App. Ct. 1988); Leardi v. Brown, 474 N.E.2d 1094, 1099 (Mass. 1985); Love v. Keith, 383 S.E.2d 674, 677 (N.C. Ct. App. 1989). There are also three states that do not explicitly follow either standard but have statutes that include a section stating that the FTC Act should be used as a guide in interpretation.161Ariz. Rev. Stat. Ann. § 44-1522(C) (2021); Conn. Gen. Stat. Ann. § 42-110b(b) (West 2021); Ohio Rev. Code Ann. § 1345.02(C) (West 2021). FTC Act interpretations of unfair acts and practices are not binding on the states, and some states could use the prohibition to apply to competitive harms as well. For example, Kentucky and Tennessee prohibit unfair acts and practices without prohibiting unfair methods of competition. Ky. Rev. Stat. Ann. § 367.170(1) (West 2021); Tenn. Code Ann. §47-18-104(a) (2021). However, both states have a purpose statement that includes protecting ethical businesses. Ky. Rev. Stat. Ann. § 367.120 (West 2021); Tenn. Code Ann. § 47-18-102(2) (2021). Finally, some states limit the application of their unfair acts and practices provision by enumerating the acts that qualify.162Cal. Civ. Code § 1770(a) (West 2021); Mich. Comp. Laws Ann. § 445.903(1) (West 2021); Or. Rev. Stat. Ann. § 646.608(1)(u) (West 2021); 73 Pa. Stat. and Cons. Stat. Ann. § 201-3 (West 2021). California has two unfair competition statutes. Both prohibit unfair acts or practices, but only one is enumerated. Compare Cal. Bus. & Prof. Code § 17200 (West 2021), with Civ. § 1770(a). Wyoming prohibits “unfair or deceptive acts or practices” within its enumeration of prohibited deceptive trade practices. Wyo. Stat. Ann. §§ 40-12-105, -106 (2021). For example, Pennsylvania lists twenty-one activities that constitute “unfair methods of competition” or “unfair or deceptive acts or practices,” and only those activities are actionable under Pennsylvania’s statute.16373 Pa. Stat. and Cons. Stat. Ann. §§ 201-3, 201-2(4) (West 2021). The enumerated acts in these statutes focus on harms unrelated to the supply chain context. However, statutes with unrestricted prohibitions on unfair acts and practices could potentially provide redress. Given such language’s generally accepted focus on consumer injuries, such actions would likely have to be framed in terms of the harm that supply chain misconduct causes to consumers.164See infra Section III.B.2. But see infra note 215 and accompanying text (describing the application of Oklahoma’s “unfair trade practices” statute to a business competition case).
Figure 1 categorizes state statutes according to whether they address unfair acts and practices or unfair methods of competition, whether those statutes involve a link to section 5 of the FTC Act, and the definition of “unfairness” employed in the statute.
Figure 1: State Unfair Competition Statutes
|State||Unfair Acts and Practices||Unfair Methods of Competition||FTC Link||Definition of Unfairness|
|AK||X||X||X||Sperry & Hutchinson|
|FL||X||X||X||Current FTC definition|
|GA||X||X||Current FTC definition|
|HI||X||X||X||Sperry & Hutchinson|
|IA||X||Current FTC definition|
|IL||X||X||X||Sperry & Hutchinson|
|LA||X||X||Sperry & Hutchinson|
|MA||X||X||X||Sperry & Hutchinson|
|MD||X||X||Current FTC definition|
|ME||X||X||X||Current FTC definition|
|MS||X||X||X||Current FTC definition|
|MT||X||X||X||Sperry & Hutchinson|
|NC||X||X||Sperry & Hutchinson|
|NE||X||X||Sperry & Hutchinson|
|NH||X||X||X||Sperry & Hutchinson|
|OK||X||Sperry & Hutchinson|
|RI||X||X||X||Sperry & Hutchinson|
|SC||X||X||X||Sperry & Hutchinson|
|TN||X||X||Current FTC definition|
|VT||X||X||X||Sperry & Hutchinson|
3. Deceptive Trade Practices
Not all state unfair competition acts were modeled on the FTC Act. Several model consumer protection acts were created in the 1960s and 1970s, and many states based their unfair competition laws on those model acts.165See Butler & Wright, supra note 106, at 170. In 1966, the National Conference of Commissioners issued the Uniform Deceptive Trade Practices Act (“UDTPA”), which enumerated eleven deceptive trade practices and included one catchall category that prohibited “any other conduct which similarly creates a likelihood of confusion or misunderstanding” for consumers.166See id.; Pridgen et al., supra note 151, at § 2:10. Almost all states have incorporated the UDTPA’s prohibition on deceptive trade practices into their unfair competition statutes.167Only Utah lacks a statute prohibiting deceptive trade practices. New York and Wisconsin separate their prohibition on deceptive trade practices from their statutes prohibiting other unfair acts. See N.Y. Gen. Bus. Law § 349(a) (McKinney2021) (prohibiting deceptive acts or practices); N.Y. Exec. Law § 63(12) (McKinney 2021) (prohibiting repeated fraudulent or illegal acts); Wis. Stat. Ann. § 100.18(1) (West 2021) (prohibiting deceptive representation or statement of fact); Id. § 100.20(1) (2021) (prohibiting unfair trade practices and unfair methods of competition). However, such prohibitions, by their nature, cannot redress supply chain violations. At best, they can merely hold companies liable for deceptive communications that deny or cover-up such abuses.168Cf. Kasky v. Nike, Inc., 45 P.3d 243, 249–50 (Cal. 2002). While such indirect enforcement strategies saw some initial success,169See id. at 262; Julia Fisher, Free Speech to Have Sweatshops? How Kasky v. Nike Might Provide a Useful Tool to Improve Sweatshop Conditions, 26 B.C. Third World L.J. 267, 270 n.18 (2006). deception claims have been consistently rejected in transnational supply chain cases in recent years.170See Hodsdon v. Mars, Inc., 891 F.3d 857 (9th Cir. 2018); Dana v. Hershey Co., 180 F. Supp. 3d 652 (N.D. Cal. 2016); McCoy v. Nestle USA, Inc., 173 F. Supp. 3d 954 (N.D. Cal. 2016). Corporations have doubtless gotten savvier in their messaging and take care now to include caveats that preclude liability.
It is possible, however, that a deception claim could target deceptive practices by supply chain entities that are more directly tied to abuses. For example, a manufacturer may use deception to entice workers who later become victims of human trafficking. Manufacturers may also employ deception to hoodwink outside inspectors and conceal their misconduct. Whether deception provisions in unfair competition statutes could address such deceptive practices in non-consumer contexts will be left to future research beyond the present scope.
4. Unconscionable Acts and Practices
In 1971, the National Conference of Commissioners on Uniform State Laws and the American Bar Association created another model act, the Uniform Consumer Sales Practices Act (“UCSPA”).171Pridgen et al., supra note 151, at § 2:10. The UCSPA applied only to “consumer transactions,” and academics criticized it for its narrow scope.172Id.; see also David A. Rice, Uniform Consumer Sales Practices Act—Damages Remedies: The NCCUSL Giveth and Taketh Away, 67 Nw. U. L. Rev. 369 (1972) (criticizing the UCSPA). However, the UCSPA did introduce a new concept into state unfair competition law by prohibiting unconscionable acts and practices.173Rice, supra note 172, at 372. The UCSPA was not very popular, and only three states adopted it.174Pridgen et al., supra note 151, at § 2:10 (naming Kansas, Ohio, and Utah as the states that adopted the UCSPA). However, seventeen states today include a prohibition on unconscionable acts and practices in their unfair competition statutes.175Ala. Code § 8-19-5(27) (2021); Ark. Code Ann. §4-88-107(a), (b) (2021); D.C. Code § 28-3904(r) (2021); Fla. Stat. Ann. § 501.204(1) (West 2021); Idaho Code § 48-603(18) (2021); Kan. Stat. Ann. § 50-627(a) (West 2021); Ky. Rev. Stat. Ann. § 367.170(2) (West 2021); 940 Mass. Code Regs. § 3.16(1) (2021); Mich. Comp. Laws Ann. § 445.903(1) (West 2021); Neb. Rev. Stat. Ann. § 87-303.01 (West 2021); N.J. Stat. Ann. § 56:8-2 (West 2021); N.M. Stat. Ann. § 57-12-3 (West 2021); N.D. Cent. Code § 51-15-02 (2021); Ohio Rev. Code. Ann. § 1345.03(A) (West 2021); Or. Rev. Stat. Ann. § 646.607(1) (West 2021); Tex. Bus. & Com. Code Ann. § 17.50(a)(3) (West 2021); Utah Code Ann. § 13-11-5(1) (West 2021).
States vary widely in their interpretation of unconscionability under their statutes, but they always require a consumer transaction.176See Pridgen et al., supra note 151, at § 3:16. Some states follow the UCSPA’s example and narrowly define unconscionable to only include contractual matters.177See, e.g., Penney v. First Nat’l Bank, 433 N.E.2d 901, 905–06 (Mass. 1982); Johnson v. Microsoft Corp., 834 N.E.2d 791, 800–01 (Ohio 2005). Other states have interpreted their prohibition on unconscionable acts more broadly.178The Oregon Supreme Court has stated that its statute applies to more than contractual matters. See Gordon v. Rosenblum, 393 P.3d 1122, 1128–31 (Or. 2017). Oregon’s Supreme Court explained that unconscionability hearkened back to the term’s pre-UCC meaning and could therefore apply to unconscionable debt collection practices even when the consumer-debtor lacked a contractual relationship with the collection agency. See id. at 1126–32. New Jersey’s Attorney General has similarly declared abusive debt collection practices unconscionable under its consumer fraud act. Cf. The Debt Collection Practices Act: Hearing on H.R. 29 Before the Subcomm. on Consumer Affs. of the Comm. on Banking, Fin. and Urban Affs., 95th Cong. 74–91 (1977). New Jersey courts have also interpreted the term fairly broadly within a consumer context by stating that “[t]he standard of conduct contemplated by the unconscionability clause is good faith, honesty in fact and observance of fair dealing.” Kugler v. Romain, 279 A.2d 640, 652–53 (N.J. 1971). Texas, too, has also interpreted its unconscionability provision broadly. See Latham v. Castillo, 972 S.W.2d 66, 68–69 (Tex. 1998) (finding unconscionability where an attorney represented that he was actively prosecuting a medical malpractice claim for his clients when in fact he was not). However, none of the states have applied an unconscionable acts provision to acts that do not directly harm consumers. Because supply chain abuses only harm consumers in indirect ways,179See infra Section III.B.2 (describing how supply chain abuses harm consumers). statutes that prohibit only unconscionable acts seem unlikely bets for supply chain litigation.
5. Unlawful Acts
Three states prohibit unlawful or illegal business activities.180See Cal. Bus. & Prof. Code § 17200 (West 2021); Nev. Rev. Stat. Ann. § 598.0923 (West 2021); N.Y. Exec. Law § 63(12) (McKinney 2021). These prohibitions allow the state’s attorney general, and in some cases private litigants, to bring suit for business violations of other state and federal laws.181See Saunders v. Super. Ct., 33 Cal. Rptr. 2d 438, 441 (Ct. App. 1994) (“The ‘unlawful’ practices prohibited by section 17200 are practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.”) (citing People v. McKale, 602 P.2d 731, 733–34 (Cal. 1979))); New York v. Feldman, 210 F. Supp. 2d 294, 300 (S.D.N.Y. 2002) (“Violations of State laws, as well as violations of Federal laws or regulations, can constitute fraud or illegality within the meaning of Section 63.” (quoting State v. Stevens, 497 N.Y.S.2d 812, 813 (Sup. Ct. 1985))). While Nevada only includes the provision as part of its prohibition on deceptive trade practices,182Nev. Rev. Stat. Ann. § 598.0923 (West 2021). California and New York prohibit unlawful business activities more broadly.183Cal. Bus. & Prof. Code § 17200 (West 2021); N.Y. E.2xec. Law § 63(12) (McKinney 2021). Both California and New York courts have stated that the prohibition can be used to address harm to consumers and business competitors.184See Feldman, 210 F. Supp. 2d at 299–300; Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 539 (Cal. 1999). Since supply chain abuses violate global norms at multiple levels, these statutes appear promising candidates. However, applying them to transnational claims would raise complex choice-of-law questions that remain as-yet unsettled.185See infra Section III.B.3.
6. Specialized Intellectual Property Statutes
More recently, Louisiana, Utah, and Washington adopted specialized statutes focused on intellectual property theft in addition to their general unfair competition statutes.186See La. Stat. Ann. § 51:1427 (2021); Utah Code Ann. § 13-5a-102 (West 2021); Wash. Rev. Code Ann. § 19.330.020 (West 2021); Arthur M. Mitchell III, Toshio Dokei, Seiji Niwa, Takako Onoki & Pascal Berghe, The Emerging Risks of Unauthorized IP in Your Supply Chain and How You Should Respond—Part II, Intell. Prop. & Tech. L.J., Jan. 2014, at 3, 8. These statutes make it unlawful to sell products in the state that were produced using stolen intellectual property. Louisiana’s statute works by declaring the sale of those products within the state to be both an unfair method of competition and an unfair act and practice.187See La. Stat. Ann. § 51:1427 (2021). Utah similarly prohibits unfair competition and then defines unfair competition as “an intentional business act or practice that . . . is unlawful, unfair, or fraudulent; and . . . leads to a material diminution in value of intellectual property.”188Utah Code Ann. § 13-5a-102(4)(a) (West 2021). The statute lists categories of unfair competition, which include: “infringement of a patent, trademark, or trade name” and “a software license violation.189See id. § 13-5a-102(4)(a)(ii)(B)–(C).
Washington’s statute is more complex and is completely separate from its general unfair competition statute. It declares the sale of products “using stolen or misappropriated information technology” to be an unfair act when it causes a “material competitive injury.”190Wash. Rev. Code Ann. § 19.330.020 (West 2021). The Washington statute includes further features that broaden its scope and effective reach, including in rem jurisdiction over unlawfully made goods and secondary liability for retailers and other third-party intermediaries.191See id. §§ 19.330.060, .070, .080. It exemplifies the potential for a modern, well-drafted unfair competition statute to target transnational misconduct.
These statutes testify to state concerns over global supply chain abuses that led them to enact legislation specifically to address such violations. Although only three states have currently enacted such laws, similar bills were presented to the legislatures in at least ten other states.192Mitchell et al., supra note 186, at 8. While limited to the context of intellectual property theft, such statutes demonstrate a willingness to project state unfair competition law transnationally.
III. Applying State Law to the Supply Chain Context
Violations of human rights and environmental standards are pervasive in global supply chains.193See Erik Loomis, Out of Sight: The Long and Disturbing Story of Corporations Outsourcing Catastrophe 11–17 (2015). Although both domestic and international law regulate global manufacturing and, in principle, enforce a baseline of minimum standards globally, in practice, compliance is sparse and enforcement difficult.194Pager & Priest, supra note 55, at 2447–49; see Loomis, supra note 193, at 2. Businesses compete to manufacture in countries with the most lax regulations.195Pager & Priest, supra note 55, at 2449. Rampant illegal use of underage workers, slave labor, and a host of environmentally destructive practices mar the production of everyday consumer goods.196Id. at 2437–39, 2444–46. By sourcing production globally from low-cost suppliers who engage in such abuses, unethical companies gain a competitive advantage, and business competitors and consumers are harmed in the process.197For a discussion on how supply chain violations harm consumers, see infra Section III.B.2.
The FTC Act and subsequent state unfair competition laws were designed to create a level playing field for businesses.198See James C. Lang, The Legislative History of the Federal Trade Commission Act, 13 Washburn L.J. 6, 7 (1974) (“The Federal Trade Commission Act exemplified the general feeling in Congress that the country remained helpless in the face of continued industrial combinations . . . . At the time the Federal Trade Commission Act was passed in 1914, 12 percent of the manufacturing establishments of the country employed 75 percent of the workers and represented 80 percent of the total industrial production.”); see also Butler & Wright, supra note 106, at 168 (discussing the push for states to adopt consumer protection acts). As noted, the FTC has declined to use its enforcement powers to address unfair competition and has focused in recent years on consumer protection claims. Therefore, by default, state law offers the most realistic option to address transnational supply chain abuses. Because regulatory corner-cutting saves money, these abuses give an unfair advantage to the firms that permit them, which makes them unfair methods of competition. The abuses also cause long-term harm to consumers and could thus potentially be considered unfair acts and practices. Finally, such violations could also qualify as unlawful acts under California’s and New York’s unfair competition statutes because they violate global norms established in both national and international law.199See infra notes 250–256 and accompanying text. In addition, several states treat violation of another statute, particularly one designed to protect the public, as per se unfair competition. See NCLC Treatise, supra note 148, at § 3.2.7. Whether this approach would extend to transnational supply chain violations remains too untested.
A. Precedent for Supply Chain Abuse Claims
1. Intellectual Property Theft
Unfair competition actions have successfully targeted IP infringement by foreign manufacturers.200See Pager & Priest, supra note 55, at 2467–69. Theft of IP is pervasive in many foreign countries. However, because such infringement occurs overseas, it falls outside the scope of U.S. IP laws, and IP enforcement under local laws is often unavailing.201Id. at 2451–52. Unfair competition law provides a valuable alternative. Because foreign manufacturers realize cost savings from stealing IP instead of paying for licenses, they enjoy an unfair price advantage vis-à-vis legitimate competitors.202See Pirates, Thieves, and Trolls, NAAGazette (Aug. 27, 2014), https://perma.cc/7AYX-GBHZ; see also Mitchell et al., supra note 186, at 5. Such cost savings can distort end-market pricing in ways that directly harm U.S. businesses.203See James R. Hagerty & Shira Ovide, Microsoft Pursues New Tack on Piracy, Wall St. J. (Mar. 16, 2014, 7:30 PM), https://perma.cc/4CEP-HG7F; see also Mitchell et al., supra note 186, at 3–4.
Businesses and state attorneys general have fought back against IP theft by bringing unfair competition actions, including some using laws specifically designed to address IP theft.204See Hagerty & Ovide, supra note 203; see also supra Section II.B.6 (discussing specialized IP statutes). Additional enforcement actions have been brough under the ITC’s section 337 unfair competition authority. See Pager & Priest, supra note 55, at 2464–65. Attorneys general from Arkansas, California, Louisiana, Maryland, Massachusetts, Oklahoma, Tennessee, and Washington have all brought actions under their respective state’s unfair competition acts to prevent businesses from selling products that have been produced using stolen IP.205Pirates, Thieves, and Trolls, supra note 202. Like other supply chain abuses, the IP violations occurred entirely overseas in the manufacturing process.206See Mitchell et al., supra note 186, at 7. The lawsuits, however, alleged that the unfair competition occurred in the United States.207See Pirates, Thieves, and Trolls, supra note 202. Courts have held that state unfair competition law applies in such cases because the products were sold, and the competitive harms were felt, in the forum states.208See Aldens, Inc. v. LaFollette, 552 F.2d 745, 750–51 (7th Cir. 1977); Speyer v. Avis Rent a Car Sys., Inc., 415 F. Supp. 2d 1090, 1099 (S.D. Cal. 2005); RLH Indus., Inc. v. SBC Commc’ns, Inc., 35 Cal. Rptr. 3d 469, 477–79 (Ct. App. 2005); Heath Consultants, Inc. v. Precision Instruments, Inc., 527 N.W.2d 596, 606 (Neb. 1995).
These lawsuits and enforcement actions have been highly successful. Most of the suits have ended in large settlements with the offenders paying civil penalties and agreeing to either license or stop using the stolen technology.209See Pirates, Thieves, and Trolls, supra note 202. For example, by threatening to use its power to ban imported barbeque grills produced using stolen IP, Louisiana’s Attorney General was able to get the offending company to agree to pay $250,000 to IP rightsholders.210Id. Another case, in California, ended in a default judgment with the court issuing a $3.2 million civil fine to a Chinese apparel company that used stolen software in its factory.211See Memorandum Opinion Regarding Entry of Default Judgment and Default Prove Up Hearing at 3, 5, People v. Ningbo Beyond Home Textile Co., No. BC499771 (Super. Ct. Cal. Aug. 7, 2017). And Washington state obtained a reported $10 million settlement from Brazilian aircraft manufacturer, Embraer, based on similar allegations.212Pager & Priest, supra note 55, at 2469.
State attorneys general stressed that they brought these actions because the overseas use of stolen technology harms competition in their state, and their state unfair competition laws are meant to “level the playing field.”213Hagerty & Ovide, supra note 203. Interestingly, Oklahoma’s Attorney General brought one of these suits under its Consumer Protection Act,214See id. which prohibits unfair trade practices but not unfair methods of competition.215Okla. Stat. Ann. tit. 15, § 753(20) (West 2021). Similar to the Sperry & Hutchinson test for unfair acts and practices, Oklahoma’s statute defines an “unfair trade practice” as “any practice which offends established public policy or if the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”216Id. § 752(14).
2. Human Rights & Labor Violations
California courts have also considered claims for human rights abuses under the state’s unfair competition statute. In Bureerong v. Uvawas,217922 F. Supp. 1450 (C.D. Cal. 1996). the plaintiffs claimed that they had been subjected to sweatshop conditions in violation of California’s unfair competition law.218Id. at 1458–59, 1477. In this case, the sweatshop was located within California. However, Bureerong set a precedent for later cases involving similar overseas abuses. Defendants moved for summary judgment in the case, which was denied by the court.219Id. at 1482. Eventually, the case settled for $4.5 million.220See Scott L. Cummings, Hemmed In: Legal Mobilization in the Los Angeles Anti-Sweatshop Movement, 30 Berkeley J. Emp. & Lab. L. 1, 27–28 (2009) (describing the settlement). In Doe I v. Unocal Corp.,221Nos. BC 237 980, BC 237 679, 2002 WL 33944506 (Super. Ct. Cal. June 11, 2002). the plaintiffs sued under California’s unfair competition law based on overseas human rights violations, including the use of slave labor.222See id. at *4. The defendants in Unocal moved for summary judgment because they claimed that California’s unfair competition statute does not apply to extraterritorial conduct.223Id. at *2. The court again rejected the motion, stating that the statute applies as long as some of the wrongful conduct or effects occur in California,224Id. at *14. and the case ended with a favorable settlement.225See Doe I v. Unocal Corp., 403 F.3d 708, 708 (9th Cir. 2005) (granting the parties’ stipulated motion to dismiss). Finally, the plaintiffs in Bowoto v. Chevrontexaco Corp.226No. CGC-03-417580, 2008 WL 3048896 (Super. Ct. Cal. Jan. 31, 2008). sued for similar overseas human rights abuses under California’s unfair competition law.227See id. at *1–4. The court again denied a motion for summary judgment based on extraterritorial claims,228Id. at *2 (“The law is well-settled that a UCL claim may proceed on the basis of unlawful conduct—regardless of where the injury occurs—so long as some of the challenged conduct occurred in California or some benefit of the challenged conduct accrues to a California defendant.”). although this time the case ended with a jury verdict in favor of the defendant.229See Bowoto v. Chevron Corp., 621 F.3d 1116, 1121 (9th Cir. 2010).
The California courts’ consistent refusal to grant summary judgment in these cases affirms that extraterritorial abuses of labor and human rights can constitute unfair competition. The abusive practices in question violated clearly established laws, thereby assuaging judicial concerns over ad hoc enforcement.230See supra Section II.A.; cf. Averitt, supra note 103, at 272, 275 (arguing that grounding “unfairness” in violations of established law would dispel fears about ambiguous and changing standards). Moreover, the latter two cases show that overseas supply chain abuses are actionable under California’s unfair competition law where the end products are sold in California.231See Speyer v. Avis Rent a Car Sys., Inc., 415 F. Supp. 2d 1090, 1099 (S.D. Cal. 2005) (construing California’s unfair competition statute to cover wrongful conduct that occurs out-of-state but results in injury in California) (first citing Norwest Mortg., Inc. v. Super. Ct., 85 Cal. Rptr. 2d 18, 24–25 (Ct. App. 1999); and then citing Yu v. Signet Bank, 82 Cal. Rptr. 2d 304, 307–08 (Ct. App. 1999)).
B. Crafting Claims Based on Specific Statutory Provisions
State attorneys general and private litigants should bring similar claims under state law for other supply chain abuses. Any widely proscribed practice that saves money can provide unethical businesses with a competitive advantage that potentially harms law abiding competitors. These actions can also harm consumers long-term. The following Section explores how these claims could be advanced under different statutory provisions.
1. Unfair Methods of Competition
The most promising basis for supply chain abuse claims is the statutory prohibitions on “unfair methods of competition.” Such language is generally understood to address harm to business competitors.232See FTC v. Raladam Co., 283 U.S. 643, 649 (1931). Business competitors are harmed by supply chain abuses when companies that engage in unlawful practices overseas gain a competitive advantage through the cost savings such practices confer. Business competitors are harmed by these abuses, because they must decide whether to commit similar abuses to remain competitive or comply with global standards and face competitors with significantly lower costs.233See Pager & Priest, supra note 55, at 2448–49. Avoiding such Hobbesian choices is precisely the situation that unfair competition law aims to prevent.234See FTC v. R. F. Keppel & Bro., 291 U.S. 304, at 312–13 (1934) (“A method of competition which casts upon one’s competitors the burden of the loss of business unless they will descend to [an immoral] practice . . . [is] the kind of unfairness at which the statute was aimed.”).
Supply chain abuses clearly meet the Keppel and Sperry & Hutchinson standards of unfairness because they violate widely accepted global norms enshrined in both international treaties and national law. Such abuses are not just unlawful in a technical sense, they violate deeply entrenched policy values and are often manifestly “immoral, unethical, oppressive, or unscrupulous.”235FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n.5 (1972). For this reason, any concern over ad hoc standards can be readily dismissed. And where the cost savings yielded are significant, the abuses also cause “substantial injury to . . . competitors.”236Id.
It is also worth recalling the solicitude that the Keppel Court showed for the children ensnared by the candy companies’ exploitative marketing.237Keppel, 291 U.S. at 313–14. Sperry & Hutchinson reiterated this point, explaining that such victimization of “children, who are unable to protect themselves,” underscored the immorality of the marketing scheme and bolstered the rationale for condemning such exploitation as unfair competition.238See Sperry & Hutchinson, 405 U.S. at 243 (quoting Keppel, 291 U.S. at 313). The slave laborers and child workers exploited in supply chain abuses are no less defenseless victims. The pristine environments that overseas producers despoil are similarly “unable to protect themselves.”239See id. Accordingly, the need to protect such overseas victims, and the absence of alternative relief, should also factor into the unfair competition rationale.
The IP and human rights precedents discussed above demonstrate the viability of unfair competition claims brought under state law in transnational supply chain cases. Other states’ legal precedents further confirm the underlying principle that unfair practices overseas can result in actionable competitive harms within the forum state.240See Aldens, Inc. v. LaFollette, 552 F.2d 745, 750–51 (7th Cir. 1977) (holding that Wisconsin’s Consumer Act applies to conduct that occurs outside the state but has a harmful effect in the state); Heath Consultants, Inc. v. Precision Instruments, Inc., 527 N.W.2d 596, 606 (Neb. 1995) (same under Nebraska law); see also Restatement (Second) of Conflict of Laws § 9 (Am. L. Inst. 1971). Therefore, unscrupulous practices by foreign producers that extract cost savings by exploiting workers or polluting ecosystems seem well within reach of state prohibitions on unfair methods of competition.
2. Unfair Acts and Practices
As noted, unfair acts and practices provisions are generally read to require consumer harm. Making a case for consumer harm is more difficult than proving competitive injury. Ostensibly, consumers would seem to benefit from the cost savings that supply chain abuses engender in the form of lower prices for the finished goods. However, an argument can be made that realizing such economies by inflicting human suffering, loss of life, and environmental degradation comes at too great a price for many consumers to accept. The California Supreme Court has observed that “[t]o some consumers, [production] processes and places of origin matter. . . . Whether a diamond is conflict free may matter to the fiancée who wishes not to think of supporting bloodshed and human rights violations each time she looks at the ring on her finger.”241Kwikset Corp. v. Super. Ct., 246 P.3d 877, 888–90 (Cal. 2011) (footnote omitted); see also Kasky v. Nike, Inc., 45 P.3d 243, 262 (Cal. 2002) (“For a significant segment of the buying public, labor practices do matter in making consumer choices.”). A 2015 consumer study showed that “66% of respondents [were] willing to pay more for products and services from companies that have demonstrated their commitment to positive social and environmental impact.”242Sustainable Selections: How Socially Responsible Companies Are Turning a Profit, Advert. Rsch. Found. (Nov. 9, 2015), https://perma.cc/SCU2-388Y.
The problem comes when abuses by supply chain scofflaws disadvantage law-abiding competitors. Ethically sourced companies are pushed out of business by unscrupulous rivals. The result is a market failure that prevents consumers from buying from honest companies, even when they are willing to pay a premium for ethically produced goods. Such loss of consumer choice harms consumers by unfairly reducing alternative suppliers.243See, e.g., S. Prakash Sethi, Emre A. Veral, H. Jack Shapiro & Olga Emelianova, Mattel, Inc.: Global Manufacturing Principles (GMP)—A Life-Cycle Analysis of a Company-Based Code of Conduct in the Toy Industry, 99 J. Bus. Ethics 483, 515 (2011) (describing how Mattel abandoned its voluntary code of conduct because it faced higher procurement costs than its competitors and there seemed to be no economic consequence for its competitors’ unethical sourcing practices).
Some have looked to “fair trade” certifications and similar indications of ethical production to cure such market failures.244E.g., Margaret Chon, Marks of Rectitude, 77 Fordham L. Rev. 2311, 2311–12 (2009). Unfortunately, some certification marks serve as corporate smokescreens and vehicles for “greenwashing,” and it is difficult for consumers to know the difference.245See id. at 2316–19, 2332–33. Unethical companies often obtain certifications by hiding their violations during inspections.246See id. at 2316–17; Kishanthi Parella, Outsourcing Corporate Accountability, 89 Wash. L. Rev. 747, 774–76 (2014). When consumers cannot reliably tell whether a product was produced unethically or not, they often choose to buy the more affordable product and thereby unwittingly patronize abusive suppliers. Accordingly, certification marks have succumbed to their own market failure. Again, the lack of meaningful choice represents a form of consumer harm.
Furthermore, many supply chain abuses could be considered unfair acts and practices because they harm consumers in the long-term, despite their short-term benefit. For example, in In re C & D Electronics, Inc.,247109 F.T.C. 72 (1987). the FTC accepted a consent order from C&D Electronics admitting to committing unfair acts and practices when the company sold cable television descramblers that allowed consumers to watch cable television that they did not pay for.248See id. 73–74. In a separate statement, FTC Chairman Daniel Oliver explained that although the descramblers seemed to benefit consumers in the short-term, selling the descramblers was an unfair act that ultimately harmed consumers due to the resultant increased costs of cable television and possibly its ultimate elimination.249Id. at 80 (separate statement of Chairman Oliver).
Similar long-term harms can be caused by supply chain abuses. For example, violations of international fishing laws may benefit consumers in the short run by providing them with a greater supply of fish and lower prices. However, in the long run, consumers will be harmed by these violations because overfishing will lead to lower supply, increased costs, and eventually the possible elimination of entire species of fish.
3. Unlawful Acts
Another promising basis for supply chain abuse claims is statutory prohibitions on “unlawful acts.” California’s statute prohibits “unlawful, unfair or fraudulent business act[s] or practice[s],”250Cal. Bus. & Prof. Code § 17200 (West 2021). while New York’s statute prohibits “repeated fraudulent or illegal acts . . . in the carrying on, conducting or transaction of business.”251N.Y. Exec. Law § 63(12) (McKinney 2021). Both provisions have been read broadly to cover business conduct that is prohibited by other laws.252See New York v. Feldman, 210 F. Supp. 2d 294, 300 (S.D.N.Y. 2002); Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 539–40 (Cal. 1999) (“By proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable.” (quoting State Farm Fire & Cas. Co. v. Super. Ct., 53 Cal. Rptr. 2d 229, 234 (Ct. App. 1996))).
California and New York courts have explicitly held that unlawful acts could be based on violations of either state or federal law.253Feldman, 210 F. Supp. 2d at 300; Saunders v. Super. Ct., 33 Cal. Rptr. 2d 438, 441 (Ct. App. 1994) (“The ‘unlawful’ practices prohibited by section 17200 are any practices forbidden by law, be it . . . federal [or] state . . . .” (citing People v. McKale, 602 P.2d 731, 733–34 (Cal. 1979))). While no court in either state has addressed the question of whether the provision covers violations of international law, the statutes and case law leave the possibility open.254See Feldman, 210 F. Supp. 2d at 300 (“Violations of State laws, as well as violations of Federal laws or regulations, can constitute fraud or illegality within the meaning of Section 63.”) (quoting State v. Stevens, 497 N.Y.S.2d 812, 813 (Sup. Ct. 1985)); Cel-Tech, 973 P.2d at 539 (noting that the California statute’s “coverage is sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law.” (internal quotation marks omitted)). Since international law is part of U.S. law,255See The Paquete Habana, 175 U.S. 677, 700 (1900) (“International law is part of our law[.]”). it arguably should be considered under the California and New York statutes. This approach would encompass standards established by international treaties that the U.S. has ratified as well as norms recognized under customary international law.256See Louis Henkin, International Law as Law in the United States, 82 Mich. L. Rev. 1555, 1555–67 (1984).
An alternative approach would be to apply U.S. law extraterritorially. This view of unlawfulness would apply U.S. state and federal standards to assess the lawfulness of overseas manufacturing when the products are sold in U.S. markets.257The application of California or New York law would only apply to foreign manufacturers when goods are sold, and injury occurs in the forum state. The state law standard would thus regulate the market conditions within the forum state and only indirectly govern overseas conduct. The Court of Appeals for the Federal Circuit appears to have endorsed this approach in an unfair competition case under federal trade law.258See TianRui Grp. Co. v. Int’l Trade Comm’n, 661 F.3d 1322, 1329–30 (Fed. Cir. 2011) (“[I]n this case the Commission has not applied section 337 to sanction purely extraterritorial conduct; the foreign ‘unfair’ activity at issue in this case is relevant only to the extent that it results in the importation of goods into this country causing domestic injury.”). Such extraterritorial application of U.S. law raises legitimacy questions, however, because the U.S. would effectively be regulating the conditions of production occurring on foreign soil as a condition of domestic market access.259See id. at 1337–43 (Moore, J., dissenting); Pager & Priest, supra note 55, at 2479 (noting concerns over legal imperialism raised by such indirect regulatory diktats). Banning facially licit foreign goods based solely on how they were made potentially also contravenes WTO discrimination rules. See General Agreement on Tariffs and Trade, art. I(1), III(1), Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194; see also Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, ¶¶ 184, 186, WTO Doc. WT/DS58/AB/R (adopted Oct. 12, 1998).
A more prudent approach would restrict unfair competition actions to supply chain abuses whose impropriety is clearly established under: (1) both U.S. law and the laws of the source country where the violation occurred; or (2) both U.S. and international law.260Cf. Dana v. Hershey Co., 180 F. Supp. 3d 652, 666–67 (N.D. Cal. 2016) (considering a claim under California’s unfair competition law accusing Hershey of unfair and unlawful acts related to slave and child labor). The Dana court stated that the slave labor practices were both immoral and violated U.S. law and international labor conventions. See id. Note that the court did not consider whether the practices violated the law of the Ivory Coast where the labor practices occurred. See id. Adhering to such prudential limitations would prevent foreign defendants from complaining about being blindsided by unfair competition suits based on unpredictable and capricious standards.261See Pager & Priest, supra note 55, at 2481. Note that other unfair competition provisions implicate similar choice-of-law issues regarding their “unfairness” standards. Indeed, these questions lurk implicitly whenever unfair acts targeted under U.S. law are predicated on overseas violations. However, a detailed examination of such choice-of-law questions lies beyond the present scope. Suffice it to say that the most egregious forms of supply chain abuses—forced labor, exploitation of minors, and toxic-waste dumping—readily meet such standards because they are almost universally condemned, prohibited under widely adopted international conventions, and proscribed in national law by almost every country.262See id. at 2479–80, 2480 n.150.
C. Additional Considerations
State unfair competition statutes include many other provisions that potentially affect their suitability for supply chain litigation, and these too vary considerably between the states. For example, many state statutes include a purpose statement that can aid interpretation and, in some instances, broaden their scope. Geographic scope provisions and limits on extraterritoriality may restrict a statute’s reach. Another dimension affecting the enforceability of the statutes is whether the statute includes a private right of action. Nearly all include a private right of action for injured consumers or business competitors, but a few do not.263The only states that do not include a private right of action in their consumer protection statutes are Iowa and New York. Iowa has a second consumer protection statute that does provide a private right of action. However, that statute imposes additional limitations that make it ill-suited to the supply chain claims contemplated in this Article. See infra note 356 (comparing Iowa’s two consumer protection statutes). Right-of-action limitations, standing, and injury requirements may limit the plaintiffs that can bring suit. Conversely, statutes that authorize attorney general rulemaking authority and have favorable attorney’s fees provisions could facilitate transnational supply chain claims.
1. Purpose Statements
Some statutes include a purpose statement that specifies whether the statute is meant to protect consumers or both consumers and competitors.264See, e.g., Md. Code Ann., Com. Law § 13-102 (West 2021) (focusing on consumer protection); Vt. Stat. Ann. tit. 9, § 2451 (2021). Additionally, many of the statutes include a provision stating that the legislation is remedial in nature and should be construed liberally to effectuate its purpose.265See, e.g., Ind. Code Ann. § 24-5-0.5-1(a) (West 2021); Tenn. Code Ann. § 47-18-115 (2021). These statements can be extremely important because they can aid in interpretation of the statute and demonstrate the kinds of activities that are actionable.
For example, purpose statements can be helpful when they stipulate a purpose that is not necessarily clear from the statute’s prohibitions. Alabama’s statute prohibits unconscionable or deceptive acts or practices in trade or commerce.266Ala. Code § 8-19-5(27) (2021). Because the statute does not include a ban on unfair methods of competition, litigants and courts could be tempted to read the statute to only protect consumers and not business competitors. However, the statute also includes a purpose statement that contemplates protection of business competitors as well as consumers.267Id. § 8-19-2 (“The public health, welfare and interest require a strong and effective consumer protection program to protect the interest of both the consuming public and the legitimate businessperson.”). This could encourage courts to construe the statute as applicable to competitive harms that may have no noticeable effect on consumers.
2. Geographic Scope, Extraterritoriality & Secondary Liability
Four unfair competition statutes contain geographic scope provisions, which limit statutory enforcement to activities occurring within the state.268See Conn. Gen. Stat. Ann. §§ 42-110a(4), -110b (West 2021); N.H. Rev. Stat. Ann. § 358-A:2 (2021); N.Y. Gen. Bus. Law § 349(a) (McKinney 2021); Utah Code Ann. §§ 13-5-2.5, 13-5-5 (West 2021). New York’s geographic scope provision is found in its deception statute, which has been eliminated from consideration. For example, New Hampshire’s statute contains a geographic scope provision that limits actionable business activities to those occurring “in the conduct of any trade or commerce within this state.”269See N.H. Rev. Stat. Ann. § 358-A:2 (2021). Connecticut and Utah have very similar limitations.270See Conn. Gen. Stat. Ann. §42-110b (West 2021) (limiting the statute’s application to “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce”); id. § 42-110a(4) (defining trade and commerce as “the advertising, the sale or rent or lease . . . of any services and any property . . . in this state”); Utah Code Ann. §13-5-2.5 (West 2021) (limiting the statute’s application to “unfair methods of competition in commerce or trade”); id. § 13-5-5 (defining commerce as “intrastate commerce in the state of Utah”). In Massachusetts, a business bringing suit under the statute must show that the “actions and transactions constituting the alleged unfair method of competition or the unfair or deceptive act or practice occurred primarily and substantially within the commonwealth.”271Mass. Gen. Laws Ann. ch. 93A, § 11 (West 2021). The critical question for plaintiffs seeking to bring transnational supply chain claims under these statutes is whether such geographical limitations are construed to focus on the end-market sales giving rise to the unfair competition claim, which occur in the state, as opposed to the underlying violations in the production process, which take place overseas. Only the former construction would allow transnational claims to proceed.
Some states also limit remedies against extraterritorial conduct. Every state statute has implied extraterritorial limitations based on constitutional considerations.272Extraterritoriality limits also constrain remedies. Courts have generally denied nationwide injunctions based on violations on state unfair competition law, limiting such remedies to in-state sales and conduct. See Allergan, Inc. v. Athena Cosmetics, Inc., 738 F.3d 1350, 1358 (Fed. Cir. 2013); Consumer Prot. Div. v. Outdoor World Corp., 603 A.2d 1376, 1383 (Md. Ct. Spec. App. 1992). However, some states have imposed additional limitations. For example, some state courts have held that a presumption against extraterritorial application applies based on the statute’s purpose statement or geographic scope provision. Courts have denied actions under California’s unfair competition law from regulating employment outside of California that only affects citizens of other states.273See Sullivan v. Oracle Corp., 254 P.3d 237, 247–49 (Cal. 2011) (holding that California unfair competition statute “does not apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs”). However, the courts have acknowledged that the state could enjoin sales causing injury in California even if the misconduct occurs outside the state.274See id. at 248–49; see also Speyer v. Avis Rent a Car Sys., Inc. 415 F. Supp. 2d 1090, 1099 (S.D. Cal. 2005) (first citing Norwest Mortg., Inc. v. Super. Ct., 85 Cal Rptr. 2d 18, 24–25 (Ct. App. 1999); and then citing Yu v. Signet Bank., 82 Cal Rptr. 2d 304, 307–08 (Ct. App. 1999)). Even more restrictive, the Illinois Supreme Court has held that “a plaintiff may pursue a private cause of action under the Consumer Fraud Act if the circumstances that relate to the disputed transaction occur primarily and substantially in Illinois.”275See Avery v. State Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 853–54 (Ill. 2005). This ruling seems at odds with Illinois’s seemingly broad geographic scope provision, which states that the statute covers “any trade or commerce directly or indirectly affecting the people of this State.” 815 Ill. Comp. Stat. Ann. 505/1(f) (West 2021). Finally, Oklahoma’s statute does not have an explicit geographic scope provision, but the Oklahoma Supreme Court has stated that the appropriate inquiry is whether the consumer transaction occurred within the state.276Steinbeck v. Dollar Thrifty Auto. Grp., No. 08-cv-0378, 2008 WL 4279798, at *3 (N.D. Okla. Sept. 15, 2008) (citing Harvell v. Goodyear Tire & Rubber Co., 164 P.3d 1028, 1037 (Okla. 2006)).
Thus far, our discussion of supply chain abuses has assumed a unitary actor who violates global norms overseas and then exports the resulting products to the United States. However, global supply chains are often organized via complex chains of intermediaries.277See Loomis, supra note 193, at 8–19. The manufacturer that commits the overseas violations could be a foreign company that does not export products directly to the United States. That manufacturer might supply parts to another manufacturer. The assembled products could be sold in turn to a distributor or importer, who could in turn sell the product to a domestic retailer. In these scenarios, suing the foreign-based manufacturer who committed the violations will run into numerous obstacles including geographic scope provisions, extraterritoriality and due process constraints, and personal jurisdiction. Such suits are unlikely to succeed.
Alternatively, one could sue intermediaries further down the supply chain. However, since these actors would not have directly engaged in the underlying misconduct, they would generally only be liable based on secondary liability rationales such as aiding and abetting or vicarious liability.278E.g., In re Trilegiant Corp., 11 F. Supp. 3d 132, 142–43 (D. Conn. 2014) (“This Court finds that CUTPA does provide a cause of action for aiding and abetting liability.”); Black v. F & S, LLC, No. 5:02CV105, 2008 WL 5110728, at *5 (W.D.N.C. Dec. 2, 2008); Advanced Constr. Corp. v. Pilecki, 901 A.2d 189, 196 (Me. 2006) (“In an action for the tortious conduct of an agent, both the agent and the principal can be held liable.”); Hanover Ins. Co. v. Sutton, 705 N.E.2d 279, 293–94 (Mass. App. Ct. 1999) (upholding ruling finding that the defendant had violated the statute by aiding and abetting a breach of fiduciary duty). Such suits require proof of additional elements such as knowledge of, or control over, the upstream violations.279See Pager & Priest, supra note 55, at 2487–91 (discussing secondary liability theories in supply chain cases). Courts generally apply standard tort doctrines governing such cases.280See id.; see also NCLC Treatise, supra note 148, at § 10.1.2. These suits also face an uphill battle.
3. Right-of-Action Provisions and Standing
One of the greatest differences between the state statutes concerns who can bring suit. Some statutes include a private right of action for injured consumers or business competitors, while others do not. All state unfair competition statutes provide for a public enforcer to enforce the law, which is usually the state attorney general.281Pridgen et al., supra note 151, at §§ 2:10, 7:1. The attorney general or other public enforcer often has broad powers under the state’s statute, but those powers can vary widely between states.282See id. § 7:1; Michael F. Brockmeyer, An Overview of State Consumer Protection Acts, ALI-ABA Course Materials J., Aug. 1989, at 59, 66.
Oftentimes, the public enforcer is meant to enforce the law on behalf of injured businesses or consumers and can seek civil penalties and restitution for injured consumers.283See Brockmeyer, supra note 282, at 61, 67. The public enforcer usually is able to take action even before a business or consumer is injured.284See, e.g., Alaska Stat. § 45.50.495 (2021); 6 R.I. Gen. Laws § 6-13.1-5 (2021). However, many states allow the public enforcer to bring an action only if it would be in the public interest. Unfortunately, none of the statutes define public interest and very few courts have discussed the issue, so it is unclear to what extent this additional requirement restricts the public enforcer’s authority, if at all. In most cases, the hurdle seems easily satisfied.285Massachusetts requires courts to find that injunctions sought by the attorney general are in the public interest before they may be granted. See Mass. Gen. Laws Ann. ch. 93A, § 4 (West 2021). However, that requirement is not very stringent and is satisfied by a showing that “equitable relief will not adversely affect the public.” See Commonwealth v. Mass. CRINC, 466 N.E.2d 792, 798 (Mass. 1984). The Supreme Court of Illinois has found its public interest requirement satisfied when the defendant’s actions have affected a large number of people. See People ex rel. Daley v. Datacom Sys. Corp., 585 N.E.2d 51, 65 (Ill. 1991). South Carolina’s statute requires suits brought by the attorney general to be in the public interest. S.C. Code Ann. § 39-5-50(a) (2021). South Carolina courts have held that the requirement implicitly applies to private suits as well. E.g., Noack Enters., Inc. v. Country Corner Interiors of Hilton Head Island, Inc., 351 S.E.2d 347, 349–50 (S.C. Ct. App. 1986). Therefore, the statute cannot be used to redress purely private wrongs. Id. Similarly, Washington courts have read a public interest requirement into the state’s statute; however, the court’s definition of public injury is very broad and easy to satisfy. See, e.g., Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 535 (Wash. 1986) (en banc); see also Rush v. Blackburn, 361 P.3d 217, 224–28 (Wash. Ct. App. 2015) (discussing the factors to establish an injury to the public interest). However, Georgia’s public interest requirement could pose a greater obstacle: Courts have stated that action may only be brought if the defendant has breached a duty owed to “the consuming public in general.” See Henderson v. Gandy, 608 S.E.2d 248, 252 (Ga. Ct. App. 2004) (quoting Zeeman v. Black, 273 S.E.2d 910, 914 (Ga. Ct. App. 1980)), aff’d, 623 S.E.2d 465 (Ga. 2005). Depending how “consuming public” is defined, supply chain violations might not qualify. ost states also provide the attorney general with the power to investigate possible violations and issue subpoenas and cease and desist orders, and all states allow their public enforcer to seek injunctions to eliminate the activity that is violating the statute.286Brockmeyer, supra note 282, at 61, 66.
Nearly all the statutes also provide a private right of action.287Pridgen et al., supra note 151, at § 6:1; see also Brockmeyer, supra note 282, at 67–68. Some states provide a private right of action for consumers only.288Some states limit lawsuits to consumers by creating a private right of action only for consumers who purchase or lease goods or services primarily for personal, family or household purposes. E.g., Ala. Code §§ 8-19-10(a), 8-19-3(2) (2021); Md. Code Ann., Com. Law § 213(1) (West 2021). Other states provide a private right of action to injured businesses as well.289See, e.g., Haw. Rev. Stat. Ann. § 480-2(e) (West 2021); Macomber v. Travelers Prop. and Cas. Corp., 804 A.2d 180, 195 (Conn. 2002) (interpreting Connecticut’s consumer production act to allow suits by injured competitors). However, under some statutes, businesses are only entitled to bring a lawsuit as an injured consumer and may not make a claim as an injured competitor.290See, e.g., Ala. Code § 8-19-10(a) (2021); Iowa Code Ann. § 714.16(1)(n) (West 2021). Most statutes also limit their prohibitions to activities occurring in “trade or commerce.” Vermont has held that this provision limits businesses’ right to bring suit because such plaintiffs lack a consumer relationship with the defendant. See Foti Fuels, Inc. v. Kurrle Corp., 90 A.3d 885, 892–93 (Vt. 2013). However, Vermont’s interpretation appears to be based on a misreading of the FTC Act, on which Vermont statute was based. The Supreme Court of Vermont cited language restricting use of the FTC Act’s unfair acts provision to actions entailing “substantial injury to consumers” and incorrectly read such language to limit regulation of unfair methods of competition. See id. at 892 (citing 15 U.S.C. § 45(n)). Yet, such language has no bearing in unfair methods cases. See FTC v. Colgate-Palmolive Co., 380 U.S. 374, 384 (1965) (describing the distinction between unfair methods of competition and unfair acts and practices); see also FTC Policy Statement on Unfairness, supra note 141. The court’s restrictive holding also appears at odds with Vermont’s own statute, which states its purpose is to redress anti-competitive practices and encourage fair and honest competition. Vt. Stat. Ann. tit. 9, § 2451 (2021). Other statutes do allow businesses to bring a lawsuit for competitive injuries.291See, e.g., Macomber, 804 A.2d at 195 (“[A] consumer relationship is not a prerequisite to having standing to assert a CUTPA violation.” (citing Larsen Chelsey Realty Co. v. Larsen, 656 A.2d 1009, 1019 (Conn. 1995))); Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 35 So. 3d 1053, 1057 (La. 2010). Moreover, none of the statutes expressly prohibit a public enforcer from bringing suit for competitive business injuries. In contrast to private suits, most statutes do not require proof of injury for the public enforcer to bring a suit; therefore, as long as the activities meet the statute’s other requirements, the public enforcer may bring an action for prohibited activities that cause injury to business competitors.
4. Rulemaking Provisions
In addition to a right of action, many state statutes also grant the attorney general or other public enforcer the power to promulgate rules and regulations interpreting and enforcing the statute.292Brockmeyer, supra note 282, at 66. While a few states only allow their public enforcer to promulgate procedural rules,293E.g., Ariz. Rev. Stat. Ann. § 44-1526(A)(4) (2021); Kan. Stat. Ann. §50-630(a) (West 2021). in most of the statutes, the rulemaking authority is described as the power to “prescribe forms and adopt rules as may be necessary.”294E.g., N.D. Cent. Code § 51-15-05 (2021); accord 815 Ill. Comp. Stat. Ann. 505/4 (West 2021); Iowa Code Ann. § 714.16(4)(a) (West 2021). This is a fairly vague, but broad power that could allow the public enforcer to adopt rules interpreting their statutes’ prohibitions.
Other states more explicitly provide their public enforcer with the ability to issue rules declaring certain practices to be unfair or deceptive.295E.g., Md. Code Ann., Com. Law § 13-205(a) (West 2021); Ohio Rev. Code Ann. § 1345.05 (West 2021). Those provisions would allow the public enforcer to pass a rule stating that it is unlawful to sell goods produced with certain supply chain abuses. For example, Montana provides its Attorney General with the power to make rules interpreting the provision that prohibits unfair methods of competition and unfair acts and practices.296Mont. Code Ann. § 30-14-104(2) (West 2021). This power could be particularly useful because the Attorney General could promulgate a rule interpreting the provision to specifically include the sale of goods produced using supply chain abuses. Promulgating such a rule would make it easier for consumers and the public enforcer to bring suit in Montana for supply chain abuse. Attorney general rulemaking could potentially affect the liability of supply chain intermediaries. Where such a rule singles out specific suppliers, industries, or regions with a track record of past abuses, it could ratchet up diligence requirements for companies transacting with such suppliers.297See Pager & Priest, supra note 55, at 2507–08 (discussing liability based on willful blindness). Administrative rulemaking could also be potentially helpful in states that prohibit only unfair acts and practices. Some such states provide their attorney general with broad rulemaking authority. E.g., Md. Code Ann., Com. Law § 13-205(a) (West 2021); Me. Rev. Stat. Ann. tit. 5, § 207.2 (West 2021). Declaring specific supply chain abuses to be “unfair” could potentially help overcome the difficulties that suits under “unfair acts” standards pose in making out the requisite consumer harm.
On the other hand, some rulemaking provisions make it more difficult for supply chain abuse cases to succeed. For example, Oregon requires its Attorney General to pass a rule declaring a practice to be unfair before suit can be brought against a business committing that act.298Or. Rev. Stat. Ann. § 646.608(4) (West 2021). This requirement could help Oregon establish a rule declaring supply chain abuses to be unfair; however, it would also prevent consumers from suing if the Attorney General decides not to act.
5. Injury Requirement
Some statutes that provide a private right of action require a private plaintiff to sustain injury before he or she may bring suit. Some states require a plaintiff to prove injury before the court can award damages.299E.g., La. Stat. Ann. § 51:1409(A) (2021); N.C. Gen. Stat. § 75-16 (2021). Other states also require proof of injury for the plaintiff to receive injunctive or declaratory relief.300E.g., Ky. Rev. Stat. Ann. § 367.220(1) (West 2021); Ohio Rev. Code Ann. § 1345.09(D) (West 2021). Most states require injured plaintiffs to meet a higher burden for damages than for injunctive relief.301Compare Alaska Stat. § 45.50.531(a) (2021) (providing a private right of action for damages for those with an “ascertainable loss of money or property”), with id. § 45.50.535(a) (providing a private right of action for an injunction for “any person who was the victim of the unlawful act”).
The language of the injury requirement also varies from state to state. Some states specify that the plaintiff must have actual damages302E.g., Ark. Code Ann. § 4-88-113(f)(1) (2021); 815 Ill. Comp. Stat. Ann. 505/10a(a) (West 2021). or any “ascertainable loss of money or property.”303E.g., Alaska Stat. § 45.50.531(a) (2021); Conn. Gen. Stat. Ann. § 42-110g(a) (West 2021). Other states simply require injury or loss.304E.g., Fla. Stat. Ann. § 501.211(2) (West 2021); Md. Code Ann., Com. Law § 13-408(a) (West 2021). No state requires proof of injury for actions brought by the public enforcer because the statutes allow the public enforcer to take action as soon as he or she has cause to believe a violation has occurred.
These requirements could pose a problem for consumers bringing supply chain abuse claims if the statute requires private litigants to prove actual damages or an ascertainable loss of money or property. It would be hard for a consumer to bring a successful claim for supply chain abuses under those statutes because it is very unlikely that the consumer would have suffered a cognizable injury.
6. Mental State Requirement
Most states do not require a private plaintiff to prove the defendant’s mental state to win actual damages or an injunction. Therefore, the standard rule is strict liability for defendants with a scienter requirement for heightened penalties.305See, e.g., Miss. Code Ann. § 75-24-20 (2021) (requiring a knowing and willful violation for criminal liability); Mo. Ann. Stat. § 407.020(3) (West 2021) (requiring “intent to defraud” for criminal liability); N.H. Rev. Stat. Ann. § 358-A:10(I) (2021) (requiring a “willful or knowing violation” for treble damages); N.C. Gen. Stat. § 75-15 (2021) (requiring a knowing violation for civil penalties). Statutes in Idaho, Iowa, Nevada, New Mexico, Oregon, South Dakota, and Wyoming also require plaintiffs to prove mental state to bring suit. See Idaho Code § 48-603 (2021); Iowa Code Ann. § 714H.5(7) (West 2021); Nev. Rev. Stat. Ann. § 598.0915(15) (West 2021); N.M. Stat. Ann. § 57-12-2(D) (West 2021); Or. Rev. Stat. Ann. § 646.638(1) (West 2021); S.D. Codified Laws § 37-24-6 (2021); Wyo. Stat. Ann. § 40-12-105(a) (2021). However, these statutes present unlikely vehicles for supply chain suits for other reasons. See infra Section III.D.4. Some statutes also require a mens rea for some provisions but not others. For example, North Dakota requires intent for deception claims but not for unconscionability. See N.D. Cent. Code § 51-15-02 (2021). Alabama and Indiana are the notable exceptions to the general rule of strict liability. Alabama’s statute provides a defense to defendants who can show by a preponderance of the evidence that they did not commit the violation knowingly.306Ala. Code § 8-19-13 (2021). Indiana also provides a defense for suppliers who committed a bona fide error “notwithstanding the maintenance of procedures reasonably adopted to avoid the error.”307Ind. Code Ann. § 24-5-0.5-3(d) (West 2021). These requirements could prevent plaintiffs from successfully suing domestic retailers who turn a blind eye to supply chain abuses. Particularly in Alabama, domestic retailers could claim that they did not know about the supply chain abuses used to create their products, so they should not be held liable under the statute. It would be more difficult for a retailer to claim the same in Indiana because the retailer would have to show that it had reasonably adopted procedures to avoid the practices.
7. Attorney’s Fees
Finally, the availability of attorney’s fees could be an important consideration in evaluating state statutes.308The availability of punitive damages could also factor into such calculus. Ten states explicitly authorize awards of punitive damages. NCLC Treatise, supra note 148, at § 184.108.40.206. Others may grant such awards based on implied authority. Id. Further exploration of remedies, however, lies beyond the present scope. Given the expense of bringing transnational claims and the resource constraints within which public interest litigators often operate, the ability to recover attorney’s fees could affect the decision to proceed with a supply chain abuse claim. Fortunately, most state statutes provide for recovery of attorney’s fees by anyone granted a private right of action, whether a consumer or business plaintiff.309State statutes that provide attorney’s fees to consumer plaintiffs include: Alaska Stat. § 45.50.537 (2021); Cal. Civ. Pro. Code § 1021.5 (West 2021); Conn. Gen. Stat. Ann. § 42-110g (West 2021); Fla. Stat. Ann. § 501.2105 (West 2021); Ga. Code Ann. § 10-1-399 (2021); Haw. Rev. Stat. Ann. § 480-13 (West 2021); 815 Ill. Comp. Stat. Ann. 505/10a(c) (West 2021); Ind. Code Ann. § 24-5-0.5-4 (West 2021); La. Stat. Ann. § 1409 (2021); Me. Rev. Stat. Ann. tit. 5, § 207 (West 2021); Md. Code Ann., Com. Law § 13-408 (West 2021); Mass. Gen. Laws Ann. ch. 93A, § 9(3A)–(4) (West 2021); Mo. Ann. Stat. § 407.025 (West 2021); Mont. Code Ann. § 30-14-133 (West 2021); Neb. Rev. Stat. Ann. § 59-1609 (West 2021); N.C. Gen. Stat. § 75-16.1 (2021); N.H. Rev. Stat. Ann. § 358-A:10 (2021); Ohio Rev. Code. Ann. § 1345.092 (West 2021); Okla. Stat. Ann. tit. 15, § 761.1 (West 2021); Or. Rev. Stat. Ann. § 646.638 (West 2021); 6 R.I. Gen. Laws § 6-13.1-5.2 (2021); S.C. Code Ann. § 39-5-140 (2021); Tenn. Code Ann. § 47-18-109 (2021); Vt. Stat. Ann. tit. 9, § 2461 (2021); Wash. Rev. Code Ann. § 19.86.090 (West 2021); W. Va. Code Ann. §§ 46A-6-104, -106 (West 2021). There are a few outliers that do not allow consumer plaintiffs to receive attorney’s fees. Those states include Arizona, Iowa, Mississippi, New York, Utah, and Wisconsin. State statutes that provide attorney’s fees to business plaintiffs include: Conn. Gen. Stat. Ann. § 42-110g (West 2021); Fla. Stat. Ann. § 501.2105 (West 2021); Ga. Code Ann. § 10-1-399 (2021); Haw. Rev. Stat. Ann. § 480-13 (West 2021); 815 Ill. Comp. Stat. Ann. 505/10a(c) (West 2021); La. Stat. Ann. § 1409 (2021); Mass. Gen. Laws Ann. ch. 93A, § 9(3A)–(4) (West 2021); Md. Code Ann., Com. Law § 13-408 (West 2021); Neb. Rev. Stat. Ann. § 59-1609 (West 2021); N.C. Gen. Stat. § 75-16.1 (2021); N.H. Rev. Stat. Ann. § 358-A:10 (2021); Or. Rev. Stat. Ann. § 646.638 (West 2021); S.C. Code Ann. § 39-5-140 (2021); Tenn. Code Ann. § 47-18-109 (2021); Wash. Rev. Code Ann. § 19.86.090 (West 2021). While statutory terms vary as to the extent to which such awards are mandatory or discretionary, many states recognize a strong presumption in favor of awarding attorney’s fees, even where the statutory language is discretionary.310NCLC Treatise, supra note 148, at § 12.8.3. However, some states do limit the availability of attorney’s fees if the court finds that the plaintiff rejected a reasonable settlement offer.311E.g., Ga. Code Ann. § 10-1-399(d) (2021) (“[T]he court shall deny a recovery of attorneys’ fees and expenses of litigation which are incurred after the rejection of a reasonable written offer of settlement made within 30 days of the mailing or delivery of the written demand for relief required by this Code section . . . .”); Ind. Code Ann. § 24-5-0.5-4(k) (West 2021) (“A supplier may not be held liable for the attorney’s fees and court costs of the consumer that are incurred following the timely delivery of an offer to cure as described in subsection (j) unless the actual damages awarded, not including attorney’s fees and costs, exceed the value of the offer to cure.”); Mass. Gen. Laws Ann. ch. 93A, § 9(4) (West 2021) (“[T]he court shall deny recovery of attorney’s fees and costs which are incurred after the rejection of a reasonable written offer of settlement made within thirty days of the mailing or delivery of the written demand for relief required by this section.”). On the flip side, some states allow a defendant to collect attorney’s fees if the court determines that the lawsuit was frivolous or brought in bad faith.312E.g., Alaska Stat. § 45.50.537(b) (2021) (“If the action is found to be frivolous, the attorney fees to be awarded to the defendant shall be full reasonable attorney fees at the prevailing reasonable rate.”); Fla. Stat. Ann. § 501.2105(5) (West 2021) (“In any civil litigation initiated by the enforcing authority, the court may award to the prevailing party reasonable attorney’s fees and costs if the court finds that there was a complete absence of a justiciable issue of either law or fact raised by the losing party or if the court finds bad faith on the part of the losing party.”); Ga. Code Ann. § 10-1-399(d) (2021) (“[I]f the court finds the action continued past the rejection of such reasonable written offer of settlement in bad faith or for the purposes of harassment, the court shall award attorneys’ fees and expenses of litigation to the adverse party.”).
D. State Statutes’ Viability for Policing Supply Chain Abuses
As the foregoing discussion has shown, not all state unfair competition laws are equally suited for supply chain abuse claims. Some state statutes can be eliminated from consideration because they prohibit only deception, enumerate unfair acts inapplicable to supply chain cases,313See, e.g., Cal. Civ. Code § 1770(a) (West 2021); Mich. Comp. Laws Ann. § 445.903 (West 2021). or narrowly define unfair methods of competition.314See, e.g., 73 Pa. Stat. and Cons. Stat. Ann. § 201-2(3) (West 2021). Statutes that prohibit unfair methods of competition or unlawful acts offer the greatest potential to support supply chain abuse claims. Prohibitions on unfair acts and practices represent the next best option. Other provisions that may be important to support a supply chain abuse claim include a private right of action, a broad geographic scope provision, a low injury requirement, and strict liability.
1. Statutes with the Greatest Potential
Statutes that prohibit unfair methods of competition provide the best option to support a claim for supply chain abuse. The state statutes with the greatest potential include Alaska, California, Connecticut, Florida, Hawaii, Illinois, Louisiana, Mississippi, Montana, Nebraska, North Carolina, South Carolina, Washington, West Virginia, and Wisconsin. These states all prohibit unfair methods of competition, provide a private right of action, and provide for strict liability.315Alaska Stat. §§ 45.50.531(a), .471(a) (2021); Cal. Bus. & Prof. Code §§ 17200, 17203 (West 2021); Conn. Gen. Stat. Ann. §§ 42-110a(4), -110g (West 2021); Fla. Stat. Ann. §§ 501.204(1), .211(1) (West 2021); Haw. Rev. Stat. Ann. §§ 480-2(a), -13(a) (West 2021); 815 Ill. Comp. Stat. Ann. §§ 505/2, /10a(a) (West 2021); La. Stat. Ann. §§ 1405.A, 1409.A (2021); Miss. Code Ann. §§ 75-24-5(1), -15(1) (2021); Mont. Code Ann. §§ 30-14-103, -133(1) (West 2021); Neb. Rev. Stat. Ann. §§ 59-1602, -1609 (West 2021); N.C. Gen. Stat. §§ 75-1.1(a), -16 (2021); S.C. Code Ann. §§ 39-5-20(a), -140 (2021); Wash. Rev. Code Ann. §§ 19.86.020, .090 (West 2021); W. Va. Code Ann. §§ 46A-6-104, -106(a) (West 2021); Wis. Stat. Ann. § 100.20(1)-(5) (West 2021). California’s statute includes unlawful acts within its definition of unfair competition, affording more than one basis to find unfairness. Cal. Bus. & Prof. Code § 17200 (West 2021). Furthermore, all but Alaska, California, Mississippi, and Montana, allow consumer and business plaintiffs to receive attorney’s fees.316See Cal. Civ. Pro. Code § 1021.5 (West 2021); Conn. Gen. Stat. Ann. § 42-110g (West 2021); Fla. Stat. Ann. § 501.2105 (West 2021); Haw. Rev. Stat. Ann. § 480-13 (West 2021); 815 Ill. Comp. Stat. Ann. 505/10a(c) (West 2021); La. Stat. Ann. § 1409 (2021); Neb. Rev. Stat. Ann. § 59-1609 (West 2021); N.C. Gen. Stat. § 75-16.1 (2021); S.C. Code Ann. § 39-5-140 (2021); Wash. Rev. Code Ann. § 19.86.090 (West 2021); W. Va. Code Ann. §§ 46A-6-104, -106 (West 2021). Alaska, California, and Montana allow consumer plaintiffs, but not business plaintiffs, to receive attorney’s fees. Alaska Stat. § 45.50.537 (2021); Cal. Civ. Pro. Code § 1021.5 (West 2021); Mont. Code Ann. § 30-14-133 (West 2021). Neither Montana nor Mississippi provide a private right of action to businesses.
Unlike the other states in this category, Connecticut’s statute includes a geographical limitation requiring the unfair method of competition to occur in trade or commerce “in this state.”317Conn. Gen. Stat. Ann. §§ 42-110a(4), -110b (West 2021). However, federal courts in Connecticut have held that the violation does not need to occur in Connecticut as long as the violation is “tied to a form of trade or commerce intimately associated with Connecticut.”318Titan Sports, Inc. v. Turner Broad. Sys., Inc., 981 F. Supp. 65, 71 (D. Conn. 1997) (emphasis omitted) (quoting H & D Wireless Ltd. P’ship v. Sunspot, No. H-86-1026, 1987 U.S. Dist. LEXIS 16591, at *4 (D. Conn. 1987 Feb. 24, 1987)); Uniroyal Chem. Co. v. Drexel Chem. Co., 931 F. Supp. 132, 140 (D. Conn. 1996). Similarly, Connecticut state courts have focused more on where the harm was felt than where the violation was actually committed.319See, e.g., W. Dermatology Consultants, P.C. v. Vitalworks, Inc., 78 A.3d 167, 188–91 (Conn. App. Ct. 2013), aff’d, 153 A.3d 574 (Conn. 2016). The Appellate Court of Connecticut has stated “[w]e decline to give extraterritorial effect to § 42–110a (4) for actions taken in the pursuit of trade or commerce occurring wholly outside the state.”320Id. at 188. However, the court then went on to find that the violation in that case did not occur in Connecticut because the harm was felt in New Mexico.321See id. at 188–91. Such emphasis on the location of the commerce and harm suggests that Connecticut’s statute will support supply chain abuse claims where the abuse occurred outside the state, but the harm was felt inside the state where the product was sold.
While all these states have statutes with strong potential to support a supply chain abuse claim, the Mississippi and Montana statutes offer fewer enforcement options. Both states have statutes that allow suits brought by the state’s public enforcer or consumers but not by business competitors. Even though Mississippi and Montana have prohibitions on unfair methods of competition,322Miss. Code Ann. § 75-24-5(1) (2021); Mont. Code Ann. § 30-14-103 (West 2021). indicating a focus on competitive business injuries, the private right-of-action provisions bar business competitors from suing in those states.323Miss. Code Ann. § 75-24-15(1) (2021) (providing a private right of action for people who have purchased the goods or services primarily for personal, family, or household purposes); Mont. Code Ann. § 30-14-133(1)(a) (West 2021) (providing a private right of action for consumers). Moreover, consumers can only bring suit for injunctive relief.324Both states require an ascertainable loss of money or property for consumers seeking damages. Miss. Code Ann. § 75-24-15(1) (2021); Mont. Code Ann. § 30-14-133(1)(a) (West 2021). Suits seeking damages or claiming competitive business injuries must be brought by the attorneys general in both states.
2. Statutes That Are Promising, But More Uncertain
Other promising statutes remain clouded by interpretive uncertainty. Statutes in Massachusetts, New Hampshire, New York, and Utah all fall into this category. Massachusetts, New Hampshire, and Utah have statutes that prohibit unfair methods of competition but are subject to geographic scope provisions that make their application to supply chain abuse cases less promising.325See Mass. Gen. Laws Ann. ch. 93A, §§ 1(b), 2(a) (West 2021); N.H. Rev. Stat. Ann. § 358-A:2 (2021); Utah Code Ann. §§ 13-5-2.5, -5 (West 2021). Unlike the Connecticut precedent, which read the geographic limitation to focus on the locus of the end-market sales giving rise to the unfair competition claim,326See supra notes 317–321 and accompanying text. New Hampshire and Massachusetts have precedent suggesting a contrary approach. New Hampshire precedent remains sparse and state courts have yet to address this issue. However, the U.S. District Court for the District of New Hampshire has held that “[i]t is the ‘offending conduct’ that must occur within the state—the ‘unfair method of competition or any unfair or deceptive act or practice’ in trade or commerce—not the actual sale.”327Pacamor Bearings, Inc. v. Minebea Co., 918 F. Supp. 491, 504 (D.N.H. 1996); see also Precourt v. Fairbank Reconstruction Corp., 856 F. Supp. 2d 327 (D.N.H. 2012); Mueller Co. v. U.S. Pipe & Foundry Co., No. 03-170, 2003 WL 22272135, at *5–6 (D.N.H. Oct. 2, 2003). Similarly, an appellate court in Massachusetts has opined that “[o]nly the allegedly unscrupulous conduct is relevant in determining whether the action occurred ‘primarily and substantially’ within Massachusetts.”328Renwood Winery, Inc. v. Landmark Label, Inc., No. 04-P-1402, 2005 WL 2757537, at *8 (Mass. App. Ct. Oct. 25, 2005) (quoting Kuwaiti Danish Comput. Co. v. Digit. Equip. Corp., 781 N.E.2d 787, 797–99 (Mass. 2003)). The Supreme Judicial Court of Massachusetts’s position thus far has been more ambiguous; the Court has merely held that the statute applies when “the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth.” Kuwaiti, 781 N.E.2d at 799. If such interpretations prevail, and assuming “conduct” refers only to the underlying violation and not its competitive downstream consequences, then such limitations would effectively bar transnational supply chain claims. However, because the precedent on this score remains unsettled, there appears room to argue for contrary position.
The Utah statute provides even greater uncertainty but potentially more promise. Utah’s unfair competition statute limits its application to unfair methods of competition occurring in “commerce or trade,”329Utah Code Ann. § 13-5-2.5 (West 2021. and the statute narrowly defines commerce as “intrastate commerce in the state of Utah.”330Id. § 13-5-5. However, no courts have yet interpreted this provision. In theory, a plaintiff could still argue that selling the products tainted by supply chain abuses in the Utah market constitutes the relevant unfair method of competition. Oklahoma has interesting case law to support this view as its courts have held that for purposes of its statute, the unfair act is considered to occur wherever the consumer transaction occurs.331See Steinbeck v. Dollar Thrifty Auto. Grp., No. 08-cv-0378, 2008 WL 4279798, at *3 (N.D. Okla. Sept. 15, 2008) (citing Harvell v. Goodyear Tire & Rubber Co., 164 P.3d 1028, 1037 (Okla. 2006)). However, until this issue is actually litigated, it is uncertain whether Utah courts will agree to adopt such a construction.
Finally, New York has a unique statute that provides its Attorney General with the power to enjoin “fraudulent or illegal acts . . . in the carrying on, conducting or transaction of business.”332N.Y. Exec. Law § 63(12) (McKinney 2021). As noted, California also includes unlawful acts in its definition of unfair competition, so its statute could be used similarly. See Cal. Bus. & Prof. Code § 17200 (West 2021). “Illegal acts” has been defined by the courts to include actions that violate state or federal law, but the New York courts have made no mention of international law.333See New York v. Feldman, 210 F. Supp. 2d 294, 300 (S.D.N.Y. 2002) (quoting State v. Stevens, 497 N.Y.S.2d 812, 813 (Sup. Ct. 1985)); see also infra Section III.B.3 (discussing whether prohibitions on unlawful acts should include violations of international law like supply chain abuses). Because most supply chain abuses involve violations of international or foreign law, it remains unclear whether New York’s statute could be used to target overseas misconduct. Moreover, the suit would have to be brought by the attorney general because New York does not grant consumers or businesses a private right of action.334See N.Y. Exec. Law § 63(12) (McKinney 2021).
3. Statutes That Could Possibly Support Supply Chain Claims
The next most promising statutes are those that prohibit unfair acts and practices. These statutes are less promising because their language is generally understood to focus on consumer harm, which is more attenuated in supply chain abuse cases.335But see supra notes 215–216 and accompanying text (describing enforcement action by Oklahoma’s attorney general under the state “unfair acts” statute in an IP supply chain case despite the apparent absence of consumer harm). The state statutes that could possibly support a claim for supply chain abuse under a theory of consumer harm include Arizona, Georgia, Indiana, Iowa, Maine, Maryland, Missouri, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, and Vermont. All of these state statutes focus on harm to consumers and include a prohibition on unfair acts and practices.336Ariz. Rev. Stat. Ann. § 44-1522 (2021); Ga. Code Ann. 10-1-393(a) (2021); Ind. Code Ann. § 24-5-0.5-3 (West 2021); Iowa Code Ann. § 714.16(2)(a) (West 2021); Me. Rev. Stat. Ann. tit. 5, § 207 (West 2021); Md. Code Ann., Com. Law § 13-303 (West 2021); Mo. Ann. Stat. § 407.020(1) (West 2021); Ohio Rev. Code. Ann. §§ 1345.02(A), .03 (West 2021); Okla. Stat. Ann. tit. 15, § 753(20) (West 2021); Or. Rev. Stat. Ann. § 646.608(1)(u) (West 2021); 6 R.I. Gen. Laws § 6-13.1-2 (2021); Tenn. Code Ann. § 47-18-104(a) (2021); Vt. Stat. Ann. tit. 9, § 2453(a) (2021). Interestingly, Tennessee’s statute includes a purpose statement that mentions protecting legitimate business enterprises, but Tennessee courts have held that the legislature would have included a prohibition on unfair methods of competition if it had wanted to protect business competitors. See Tenn. Code Ann. § 47-18-102 (2021); Sherwood v. Microsoft Corp., No. M2000-01850-COA-R9-CV, 2003 WL 21780975, at *31 (Tenn. Ct. App. July 31, 2003). Also intriguing is the use of Oklahoma’s statute to target foreign infringement of IP as discussed above. See supra notes 215–216 and accompanying text. While non-precedential, the fact that the Oklahoma attorney general pursued such an action without a clear consumer harm rationale suggests that Oklahoma’s statute might be receptive to a liberal interpretation. Ohio and Maryland’s statutes both enumerate practices that are covered, but their lists are nonexclusive.337See Md. Code Ann., Com. Law § 13-301(14) (West 2021); Ohio Rev. Code. Ann. §§1345.02(A), .03(B) (West 2021); Wash. Home Remodelers, Inc., v. Consumer Prot. Div., 45 A.3d 208, 217–18 (Md. 2012) (quoting Golt v. Phillips, 517 A.2d 328, 331 (Md. 1986)). Unlike the other states in this list, Vermont’s statute also prohibits unfair methods of competition, but the Supreme Court of Vermont has limited the statute’s application to consumer transactions based on a misreading of the FTC Act.338See Vt. Stat. Ann. tit. 9, § 2451 (2021); supra note 290 and accompanying text. Finally, all of these states, except Iowa, include a private right of action for consumers.339Ga. Code Ann. 10-1-399(a) (2021); Ind. Code Ann. § 24-5-0.5-4(a) (West 2021); Me. Rev. Stat. Ann. tit. 5, § 213 (West 2021); Md. Code Ann., Com. Law §13-408 (West 2021); Mo. Ann. Stat. § 407.025(1) (West 2021); Ohio Rev. Code. Ann. § 1345.09(A) (West 2021); Okla. Stat. Ann. tit. 15, § 761.1(A) (West 2021); Or. Rev. Stat. Ann. § 646.638 (West 2021); 6 R.I. Gen. Laws § 6-13.1-5.2(a) (2021); Tenn. Code Ann. § 47-18-109(a)(1) (2021); Vt. Stat. Ann. tit. 9, § 2461(b) (2021). A private right of action is implied in Arizona. See Sellinger v. Freeway Mobile Home Sales, Inc., 521 P.2d 1119, 1122 (Ariz. 1974).
Rulemaking provisions in Georgia, Maryland, and Vermont make those statutes the most promising of all the consumer protection statutes. All three of those states allow their attorneys general to promulgate substantive rules interpreting and enforcing the provisions of their consumer protection statutes.340Ga. Code Ann. 10-1-394(a) (2021); Md. Code Ann., Com. Law § 13-205(a) (West 2021); Vt. Stat. Ann. tit. 9, § 2453(c) (2021). Vermont has a prohibition on unfair methods of competition, and the Attorney General could pass a rule allowing supply chain abuse cases under that provision. Maine and Missouri also have broad rulemaking provisions; however, their high injury requirements make those statutes less promising because they eliminate consumer suits. Me. Rev. Stat. Ann. tit. 5, §207.2 (West 2021); Mo. Ann. Stat. § 407.145 (West 2021). Attorneys general in those states could promulgate rules stating that their unfair acts and practices provisions include the sale of goods produced using supply chain abuses. Promulgating such a rule would make it easier for consumers and the public enforcer to bring suit for supply chain abuse.
Application of the Ohio statute is less certain than the other state statutes because federal courts in Ohio have read in a presumption against extraterritorial application. The U.S. District Court for the Northern District of Ohio has said that the offending conduct must take place in the state.341Shorter v. Champion Home Builders Co., 776 F. Supp. 333, 339 (N.D. Ohio 1991) (referring to section 1345.04 of Ohio’s consumer protection act, which states “[t]he courts . . . have jurisdiction over any supplier with respect to any act or practice in this state” (quoting Ohio Rev. Code Ann. § 1345.04 (West 2021))). However, the statute remains promising because state case law is far less clear on the requirement.342The federal court in Shorter cites Brown v. Market Developers, Inc., 322 N.E.2d 367 (Ohio Ct. Com. Pl. 1974), and Brown v. Liberty Clubs, Inc., 543 N.E.2d 783 (Ohio 1989). However, neither of these cases expressly hold that the conduct must occur in Ohio. Regardless, plaintiffs in Ohio should argue that selling products produced with supply chain abuses constitutes the unfair act and consumers are harmed when the product is sold in the state.
Oregon’s statute differs from all the others because it enumerates practices that are unlawful, and includes “unfair or deceptive conduct in trade or commerce” as one of the prohibitions.343Or. Rev. Stat. Ann. § 646.608(1)(u) (West 2021). The statute also prohibits “unconscionable tactic[s] in connection with selling” goods or services. Id. § 646.607(1). However, the courts have never applied this prohibition to conduct that does not directly harm a consumer. Oregon is also unique because a suit cannot be brought under the prohibition on unfair trade practices unless the Attorney General has first passed a rule declaring the practice to be unfair.344Id. § 646.608(4). In this case, the Oregon Attorney General would have to pass a rule declaring the sale of products produced using various supply chain abuses to be an unfair trade practice.
The consumer protection statutes that are least likely to successfully support supply chain abuse claims are those that have a high injury requirement for private claims (although a public enforcer could still bring a claim in those states). Maine, Missouri, Rhode Island, and Oregon have high injury requirements that would prevent a consumer from bringing a supply chain abuse case seeking either damages or an injunction.345See Me. Rev. Stat. Ann. tit. 5, § 213(1) (West 2021) (requiring private plaintiffs to suffer “any loss of money or property”); Mo. Ann. Stat. § 407.025(1) (West 2021) (requiring an “ascertainable loss of money or property”); Or. Rev. Stat. Ann. § 646.638(1) (West 2021); 6 R.I. Gen. Laws § 6-13.1-5.2(a) (2021) (requiring “ascertainable loss”). Given the attenuated nature of consumer harms in the supply chain context, such injury requirements would be difficult to meet. Tennessee has a high injury requirement only for suits seeking damages,346Tenn. Code Ann. § 47-18-109(a)(1) (2021) (conditioning damage awards on an “ascertainable loss of money or property”). Private injunctions require only a showing that the plaintiff was adversely affected by the violation. Id. § 47-18-109(b). so consumers in Tennessee will only be able to seek injunctive relief in supply chain abuse cases. Consumers in all the other states that provide a private right of action can bring suit seeking damages or an injunction.
4. Statutes Unlikely to Support Claims for Supply Chain Abuses
Finally, some statutes appear ill-suited to target transnational supply chain abuses. As noted, state statutes that only prohibit deceptive practices fall outside the present inquiry because deception claims focus on corporate communications rather than actual abuses and have a poor track record of late.347See supra notes 169–170 and accompanying text (noting the failure of deception claims in recent supply chain cases). Moreover, while deception provisions could potentially be re-imagined to bear on supply chain misconduct more directly, their application in non-consumer contexts remains speculative.348See supra text following note 169. Fifteen states have statutes limited to deception. Those states include Colorado, Delaware, Georgia, Hawaii, Illinois, Maine, Minnesota, Nevada,349Nevada has a unique statute that includes a prohibition on unlawful activities but only within its definition of deceptive trade practices. See Nev. Rev. Stat. Ann. § 598.0923 (West 2021). Furthermore, the statute only grants a private right of action to victims of consumer fraud. See id. § 41.600. Both provisions imply that to be considered unlawful under the statute, the act must involve deception. Another Nevada provision refers to harming “competitors and to destroy or substantially lessen competition,” Id. § 598.0953(1), which a federal district court read as indicating intent to protect business competitors as well as consumers. See Del Webb Cmtys., Inc. v. Partington, No. 2:08–cv–00571, 2009 WL 3053709, at *10 (D. Nev. Sept. 18, 2009) (citing S. Serv. Corp. v. Excel Bldg. Servs., Inc., 617 F. Supp. 2d 1097, 1099 (D. Nev. 2007)). However, the court still stated that the competitive harm must be caused by a deceptive trade practice to be actionable. Id. at *11. New York, Ohio, Oklahoma, South Dakota, Virginia, Wisconsin, and Wyoming.350Colo. Rev. Stat. § 6-1-105 (2021); Del. Code Ann. §§ 2513, 2532 (2021); Ga. Code Ann. § 10-1-372 (2021); Haw. Rev. Stat. Ann. § 481A-3 (West 2021); 815 Ill. Comp. Stat. Ann. § 510/2(a) (West 2021); Me. Rev. Stat. Ann. tit. 10 § 1212.1 (West 2021); Minn. Stat. Ann. §§ 325D.44, 325F.69 (West 2021); N.Y. Gen. Bus. Law § 349(a) (McKinney 2021); Ohio Rev. Code Ann. § 4165.02(A) (West 2021); Okla. Stat. Ann. tit. 78, § 53 (West 2021); S.D. Codified Laws § 37-24-6 (2021); Va. Code Ann. § 59.1-200(14) (2021); Wis. Stat. Ann. § 100.18(1) (West 2021). Wyoming’s statute prohibits unfair acts and practices but only within its definition of deceptive trade practices. See Wyo. Stat. Ann. § 40-12-105(a)(xv) (2021). The Wyoming Supreme Court has interpreted this phrase narrowly. See Herrig v. Herrig, 844 P.2d 487, 495 (Wyo. 1992). Private actions also require consumer reliance on the deception. Wyo. Stat. Ann. § 40-12-108 (2021).
State statutes that prohibit only unconscionable acts also appear unlikely bets. In principle, unconscionability is a malleable concept, and sufficiently egregious supply chain abuses could be deemed to fall within its remit.351Cf. Baptist Health v. Murphy, 226 S.W.3d 800, 811 n.6 (Ark. 2006) (“An ‘unconscionable’ act is an act that ‘affront[s] the sense of justice, decency, or reasonableness.’” (quoting Unconscionable, Black’s Law Dictionary (8th ed. 2004)). However, unconscionability provisions have historically been understood to focus on consumer harms.352Statutes prohibiting unconscionable acts in Alabama, Washington D.C., Idaho, Kansas, New Jersey, Texas, and Utah narrowly define or interpret unconscionable acts or practices to include only practices used in contracts with consumers. See D.C. Code § 28-3904(r) (2021); Idaho Code § 48-603C (2021); Kan. Stat. Ann. § 50-627(b) (West 2021); Tex. Bus. & Com. Code Ann. § 17.46 (West 2021); Robinson v. Deutsche Bank Nat’l Trust Co., 932 F. Supp. 2d 95, 102–03 (D.D.C. 2013); Gerald Duncan Auto Sales, Inc. v. Russell (In re Russell), 181 B.R. 616, 623 (M.D. Ala. 1995) (quoting Layne v. Garner, 612 So. 2d 404, 408 (Ala. 1992)); State ex rel. Stovall v. ConfiMed.com, L.L.C., 38 P.3d 707, 714 (Kan. 2002); D’Agostino v. Maldonado, 78 A.3d 527, 540 (N.J. 2013); Wade v. Jobe, 818 P.2d 1006, 1016–17 (Utah 1991). New Mexico’s statute similarly defines unconscionable trade practices to only include contractual practices. See N.M. Stat. Ann. § 57-12-2(E) (West 2021). New Mexico’s statute is different because it also includes a prohibition on unfair trade practices, but it defines the term narrowly to require some form of deception. See id. § 57-12-2(D); see also Lohman v. Daimler-Chrysler Corp., 166 P.3d 1091, 1093 (N.M. Ct. App. 2007) (“The gravamen of an unfair trade practice is a misleading, false, or deceptive statement made knowingly in connection with the sale of goods or services.” (internal quotation marks omitted) (quoting Diversey Corp. v. Chem–Source Corp., 965 P.2d 332, 338 (N.M. Ct. App. 1998))). Given the attenuated harms to consumers that supply chain abuse engender, this seems unlikely to yield a viable claim. Some states have not explicitly limited or construed their statutes to be consumer-focused, which leaves room for a broader construction.353Arkansas, Nebraska, and North Dakota have statutes that prohibit unconscionable acts without defining the term. See Ark. Code Ann. § 4-88-107(a), (b) (2021); Neb. Rev. Stat. Ann. § 87-303.01 (West 2021); N.D. Cent. Code § 51-15-02 (2021). Kentucky is a little different because it prohibits unfair acts and practices, but then defines unfair to mean unconscionable. Ky. Rev. Stat. Ann. § 367.170 (West 2021). State courts have not further defined unconscionable. See Garrett v. State Auto Prop. & Cas. Ins. Co., No. 3:09–cv–404, 2009 WL 5125812, at *5 (W.D. Ky. Dec. 21, 2009). North Dakota’s prohibition on unconscionable practices has also not been interpreted by the courts and includes the FTC’s definition of unfair acts and practices in an unusual way. N.D. Cent. Code § 51-15-02 (2021) (prohibiting “any act or practice, in connection with the sale or advertisement of any merchandise, which is unconscionable or which causes or is likely to cause substantial injury to a person which is not reasonably avoidable by the injured person and not outweighed by countervailing benefits to consumers or to competition”). While courts could still read these provisions to apply to contexts beyond consumer harm, this would be an unlikely and considerable departure from current unconscionability jurisprudence. However, the existing precedential landscape makes such expectations unlikely. Therefore, none of these statutes seem promising vehicles to target supply chain abuse.
Finally, California, Michigan, and Pennsylvania have statutes that enumerate their prohibitions, and a supply chain abuse claim would not fit into any of the enumerated acts.354See Cal. Civ. Code § 1770(a) (West 2021); Mich. Comp. Laws Ann. § 445.903(1) (West 2021); 73 Pa. Stat. and Cons. Stat. Ann. §§ 201-2, -3 (West 2021). California also has a non-enumerated statute that prohibits unfair methods of competition broadly, which is much better suited for these claims.355Compare Cal. Civ. Code § 1770(a) (West 2021), with Cal. Bus. & Prof. Code § 17200 (West 2021). See generally supra Subsection III.D.1 (discussing the availability of section 17200 for supply chain abuse lawsuits). Iowa similarly has a second consumer protection statute that can be eliminated from consideration given the obstacles to bringing supply chain abuse claims under it and the availability of a more attractive statutory alternative.356Compare Iowa Code Ann. §§ 714H.1–714H.8 (West 2021), with id. §§ 714.16–714.16A. See generally Subsection III.D.3 (discussing the availability of sections 714.16 and714.16A for supply chain abuse lawsuits). Iowa’s second statute falls short because it only prohibits deception and unfair practices, § 714H.3.1, limits private rights of action to consumers, § 714H.5, requires the goods to be purchased for consumer use, § 714H.3.1, requires ascertainable loss of money or property to obtain damages and allows defendants to evade liability if they can show “that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid the error.” Id. § 714H.5(7). These statutes, too, can therefore be ruled out.
E. Implementing a Supply Chain Litigation Strategy
Having clarified the statutory landscape and evaluated the viability of different statutory options, it remains to discuss litigation strategy. Transnational supply chain claims remain relatively novel terrain in unfair competition law and bringing one would break new ground in many states. Accordingly, it is worth giving some thought to the elements of a successful strategy.
Picking the right statute in the right state is undoubtedly a threshold requirement, and many of the relevant technical considerations and legal rationales have been covered in the preceding sections. However, ensuring a sound legal foundation is only the first step. Solid evidence to establish both the overseas violation and domestic harm matters too. Moreover, basing the claim on an unambiguous violation of a clearly established global norm instantiated in both U.S. and international or foreign law would avoid choice-of-law controversies that could undermine the perceived legitimacy of such extraterritorial action.357See supra notes 260–261 and accompanying text.
Other strategic considerations relate to the choice of plaintiffs and defendants. With regard to the former, enlisting a state attorney general (or designated public enforcer) to bring the suit offers significant advantages. Public enforcers typically enjoy broader authority under state unfair competition statutes than private plaintiffs, including heightened remedial powers.358See Prentiss Cox, Amy Widman & Mark Totten, Strategies of Public UDAP Enforcement, 55 Harv. J. on Legis. 37, 47–48 (2018). The involvement of public enforcers also offers political leverage that can be useful in compelling settlements. Moreover, even if they do not join the litigation, enlisting the support of attorneys general could offer potential advantages in the form of administrative rulemaking.
Because litigating transnational claims can be logistically challenging, thought should be given to assembling a broader coalition of entities in support of an unfair competition action. International non-governmental organizations (“NGOs”) that work on issues related to specific supply chain violations can often provide relevant expertise, industry data, and contacts in the source country that facilitate procedural and evidentiary aspects of the case. U.S. companies that compete with the prospective defendants may also have relevant knowledge regarding overseas practices and can supply market data vital to establish a domestic injury.
The existence of an established domestic industry within the forum-state matters for reasons beyond logistical support and potential source of plaintiffs. Both judges and juries may prove more sympathetic to a case of first impression when local jobs are at stake. This, in turn, logically dictates the choice of defendant: the goal should be to sue a foreign manufacturer that competes directly with local companies.359It is no accident that the defendants chosen in the IP-focused supply chain cases described above correspond to local industries in the states where these claims were litigated. Massachusetts, which has a large fishing industry, sued a Thai seafood manufacturer; California, which has many local garment makers, sued foreign t-shirt manufacturers; Oklahoma, which has a home-grown oil industry, sued a foreign petroleum equipment maker; and Washington state, home to Boeing, sued its Brazilian rival, Embraer. See Pager & Priest, supra note 55, at 2468.
The choice of defendant might also be influenced by strategic considerations related to publicity and the potential for an early settlement. Supply chain litigation represents a systemic problem. Its solution therefore requires a systemic approach that focuses on longer-term goals beyond the achievement of one-off victories over individual scofflaws. The goal should be to maximize broader deterrence across entire industries and regions. Targeting the most egregious offenders helps to generate publicity and put other firms on notice that they could be next. A soft-touch enforcement strategy that emphasizes remedial commitments to future compliance, verified through ongoing monitoring, may offer greater value than seeking punitive damages. Similarly, supply chain litigators should coordinate with NGOs to conduct outreach campaigns that educate foreign suppliers about global norms and facilitate compliance efforts. Realizing synergies between such efforts can maximize their long-term impact. The ultimate goal should be to encourage the internalization of global compliance norms through systemic change.360See id. at 2516–18.
As the federal government retreats into partisan gridlock and the Supreme Court reins in the extraterritorial application of federal law, the states are stepping up. One area in which state law is widely anticipated to play an expanded role is international human rights litigation. With the Supreme Court effectively putting an end to transnational litigation under the ATS, commentators are looking to state law to serve as a replacement.
While commentators have focused on common-law tort as the primary vehicle for transnational litigation, state unfair competition statutes offer a largely overlooked alternative that is, in many ways, vastly superior. Compared to common-law-tort actions, transnational unfair competition actions are more versatile, less problematic for federal preemption and federalism concerns, and particularly well-suited to overcome the jurisdictional and procedural hurdles that can hamper other transnational lawsuits. Unfair competition law can target a wide array of transnational supply chain misconduct, including high-profile enforcement priorities such as IP theft. Indeed, unfair competition suits have already successfully targeted supply chain violations overseas in cases involving both IP infringement and human rights abuses.
Given the FTC’s unwillingness to intervene federally in policing supply chain abuses, it is time for the states to step up and lead. And where the states lead, the federal government may yet follow. There is a long tradition of innovative developments in unfair competition law starting at the state level and eventually making their way into federal law.361See Davis & Whytock, supra note 25, at 423. Given the pervasiveness of global supply chain violations, the lack of alternative remedies, and the deleterious effects that such abuses pose to U.S. companies and jobs, state unfair competition law offers a much-needed tool that could make a meaningful dent in the problem. This Article provides a comprehensive roadmap to unlock staate unfair competition law’s potential.