Louisiana Municipal Police Employees’ Retirement System v. The Hershey Co.

The Hershey Company (Hershey) (defendant) was the largest chocolate producer in North America and a major purveyor of chocolate and related products around the world. Cocoa, much of which Hershey obtained from Ghana and the Ivory Coast, was the key ingredient in making chocolate. Although Ghana and the Ivory Coast banned the use of child and forced labor, such labor was pervasive in both countries. Hershey had attempted to stop the use of improper labor in Ghana and the Ivory Coast. For example, in 2001, Hershey signed a protocol targeting the end of the worst forms of child labor in the harvesting of cocoa by 2005, including by implementing a voluntary system for certifying that cocoa was obtained properly. However, a 2011 report revealed that child labor, including the trafficking of children to Ghana and the Ivory Coast to harvest cocoa, continued to be a significant industry problem. Moreover, as of this litigation, no certification system was in place, although Hershey promised to begin such certification by 2020. Hershey maintained relationships with its cocoa suppliers, which included visits to cocoa farms by Hershey executives, such as Hershey’s chairman. The Louisiana Municipal Police Employees’ Retirement System (LAMPERS) (plaintiff), a Hershey shareholder, made a demand pursuant to § 220 of Delaware’s Corporation Law to inspect Hershey’s books and records regarding whether there was mismanagement at Hershey due to Hershey’s involvement in violations of Ghana or Ivory Coast law regarding the use of child or forced labor. The case was referred to a special master. Hershey moved to dismiss the complaint, arguing that LAMPERS lacked a credible basis to infer any Hershey mismanagement. The master agreed and recommended that the chancery court grant Hershey’s motion. LAMPERS filed exceptions to the master’s recommendation.