## Facts

- Foreign factory workers employed by independent suppliers in several countries alleged abusive and unlawful working conditions while producing goods sold by Wal-Mart.
- Wal-Mart adopted “Standards for Suppliers” and incorporated them into supply contracts, setting labor-related requirements (e.g., forced labor, child labor, working conditions).
- The contracts allegedly gave Wal-Mart discretion to inspect supplier facilities and penalize or terminate suppliers for noncompliance.
- Plaintiffs alleged Wal-Mart publicized the Standards and ethical sourcing program, creating expectations that workers would benefit.
- Plaintiffs claimed Wal-Mart failed to adequately monitor suppliers or ensure compliance, enabling suppliers’ violations.
- Plaintiffs sued Wal-Mart in federal district court; the court dismissed the complaint under Rule 12(b)(6), and final judgment was entered to permit appeal.

## Issues

1. Whether the supplier contracts incorporating Wal-Mart’s Standards showed an intent to confer enforceable rights on factory workers as third-party beneficiaries under California contract law.
2. Whether Wal-Mart’s oversight rights and purchasing power made it a joint employer (or otherwise created an agency/employment relationship) with supplier employees.
3. Whether Wal-Mart’s adoption and publication of the Standards created a common-law duty of care to monitor or prevent suppliers’ labor-law violations affecting supplier employees.
4. Whether plaintiffs stated an unjust enrichment claim based on Wal-Mart’s alleged benefit from goods produced under unlawful or abusive conditions.

## Decision

- The Ninth Circuit affirmed dismissal of all claims.
- The Standards and related contract terms gave Wal-Mart a right, not a duty, to monitor and enforce; the contracts did not manifest intent to make workers third-party beneficiaries.
- Wal-Mart’s contractual leverage and compliance program did not show the level of day-to-day control over the manner and means of plaintiffs’ work required for joint-employer status.
- Wal-Mart’s adoption and public statements about the Standards did not create a common-law duty to protect supplier employees from suppliers’ conduct.
- The unjust enrichment claim failed because the pleadings did not establish the type of relationship or circumstances under California law that would make Wal-Mart’s retention of any benefit “unjust.”

## Legal Principles

- Under California law, third-party beneficiary status requires a clear manifestation that the contract was made expressly for the third party’s benefit; generalized supplier standards in a buyer–supplier contract are insufficient absent such intent.
- Contractual provisions reserving discretion to inspect or enforce compliance typically confer a right to act and do not, without mandatory language, create an enforceable duty owed to nonparties.
- Joint-employer liability turns on control over the manner and means of work (e.g., hiring, firing, supervision, pay, daily direction); economic influence and standards-setting, without direct operational control, are generally insufficient.
- Voluntary corporate codes of conduct and ethical sourcing representations do not, by themselves, create a common-law duty to monitor or prevent misconduct by independent suppliers absent a recognized duty basis (such as a special relationship or a legally cognizable undertaking).
- Unjust enrichment under California law requires circumstances making retention of a benefit inequitable; a remote benefit from a supply chain, without more, does not state the claim.

## Conclusion

The Ninth Circuit held that Wal-Mart’s supplier Standards and contractual oversight mechanisms did not create enforceable contractual or tort obligations to foreign supplier employees, did not establish a joint-employer relationship, and did not support an unjust enrichment theory, warranting dismissal for failure to state a claim.


Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677 (9th Cir. 2009)