We Investigate Labor Violation Claims Against Fair Trade Chocolatier Theo Chocolate

Fair Trade is big business, especially when it comes to chocolate. The rich, bittersweet confection has shown record sales in the United States in recent years.  Even though the International Chocolate Organization estimates chocolate stamped with the fair trade label only amounts to about .5 percent  of the total chocolate revenues worldwide, statistics show that ethically endorsed chocolate is still close to the heart – and the wallet – of many Americans.

This is particularly true in Seattle, where Fair-for-Life certified Theo Chocolate  is touted as a Northwest specialty that is respected for its entrepreneurial spirit and ethical investments. Its co-owners, Joe Whinney and Debra Music are reputed to have been the first to establish an organic fair trade chocolate factory in the United States, and have been a dynamic success when it comes to partnering with other ethical investors in Africa and other areas of the world. Theo’s gift shop and paid-factory tours both do a brisk business, lending support to the company’s revenues of $12 million for 2012.

But in recent years, that ethical commitment has been called into question by a select chorus of critics who charge that Theo’s labor policies in the United States don’t match its fair trade claims abroad. And, they argue, the perceived failings are really due to a flaw in the fair trade industry itself.

Claims of labor mis-management at Theo Chocolate

The criticisms are linked to a labor relations dispute that critics say emerged in 2009, shortly after Theo Chocolate had landed a profitable marketing contract with Whole Foods. In its attempt to meet increased demand, say critics, Theo’s management stripped away safety precautions, subjecting factory workers to injury, unreasonable working conditions and untenable hours. When workers attempted to speak up and then form a union, the management allegedly took a direct route to sabotage their efforts, intimidate workers and, in some cases, outright fire them.

Theo’s management has strongly denied the accusations, stating that it did not fire anyone or attempt to intimidate workers. It says that workers voted independently, with the majority deciding in 2010 that they did not want union representation.

Since that time, the accusations have grown louder and more caustic, with both the Teamsters 117 and the International Labor Rights Forum, a nonprofit organization that usually focuses on workers’ rights in developing countries, adding their voices to the fray. In the process, the accusations levied against the seven-year-old-company have broadened to include general complaints about unchecked environmental hazards in the factory that allegedly caused workers to become sick and multiple physical “serious” injuries in the workplace. One former employee, Mackenzie Jahnke said that workers were “blowing out their hips, blowing their knees, blowing out their wrists, … blowing out their backs … People were getting really damaging injuries all over the place.”

The complainants have also criticized the Swiss-based Institute of Marketecology for certifying Theo in 2010, and then recertifying it in 2011, after several successful performance audits.

In October 2012, ILRF published what it called a “case study” entitled, Aiding and Abetting: How Fair Trade Certifier is Destroying Workers’ Rights. It uses the format of a linear union grievance report with limited attributed sources to make its case and to accuse Theo Chocolate of “union busting,” and “a failure to hold up (its) commitment to consumers.”

When asked why Theo Chocolate’s side of the issue was not included in the report, ILRF Executive Director, Judy Gearhart, stated that the organization had made several attempts to obtain input from the company’s owners, Joe Whinney and Debra Music, but had been unsuccessful in doing so.

In order to understand the perspective that the ILRF has taken in this case, we decided to investigate its claims ourselves. We wanted Theo’s side of it, but we also felt Swiss certifier IMO and the current and former staff should have a chance to be heard.

Alleged production speed-up at Theo Chocolate

The ILRF report asserts that the management increased production demands to meet Whole Foods sales expectations in 2009. The management, on the other hand, says that the economic downturn of 2008 had actually forced a “drop in production.”

The City of Seattle economic indicators for 2009 and 2010 confirm that the business climate was tough that year, which reflected an across-the-board decrease in business income in 2009 and 2010.

According to the National Confectioner’s Association, while candy sales were slightly up in 2009 and 2010, cocoa and sugar prices were at historic highs, and all niche ingredients such as nuts were escalating in price. Whole Foods also reflected a modest increase in sales in 2010, but had been hit hard in 2009 by the downturn, and like most other stores across the country, was cutting back on expansions, the bread-and-butter of Theo’s continued growth.

Reported injuries at Theo Chocolate

According to the ILRF report, Theo’s manufacturing process led to multiple serious injuries by its staff in 2009. “As a result of the production speed-up, several workers were seriously injured,” reports the ILRF (page 4).

Gearhart stated in a March 18, 2013 interview that this information was obtained from multiple interviews of workers, which the ILRF oversaw with the assistance from University of Washington law students in 2012. (According to the director of UW’s Clinic Law Program, Professor Debbie Maranville, this project was not conducted as part of the university’s law clinic.)

When asked what “seriously injured” meant, the types of injuries and how many workers had sustained injuries, Gearhart said the workers’ privacy rights prevented her from disclosing any information.

According to Whinney and Music, however, there was only one injury that had been brought to the management’s attention. They did decline to say what kind of injury had been sustained, citing privacy concerns for the worker.

“We can confirm Theo had one injury reported to L&I [Washington Labor and Industries] in all of the calendar year 2009,” Theo management stated in a March 21, 2013 email.

The State of Washington places significant focus on workplace safety, and requires employers, and workers as a result, to file detailed reports in all cases of workplace injury or accident. Washington also has strict time limits for disclosing hospitalizations in cases of serious injuries (page 17).

Theo’s disclosure that there had only been one injury reported was later confirmed by a worker who had suffered an injury during the period in question. For privacy reasons, the worker has requested not to be named. Speaking through a third party, the worker stated that the injury was sustained in the factory, and had been reported to the management. A report was filed with the state of Washington, and according to the worker, the claim resulted in “workers comp (coverage) for about two weeks,” before being discharged to work. The worker also stated that the injury took approximately three months to heal.

According to the injured worker, neither the ILRF nor the law students on its team assigned with interviewing Theo employees interviewed this worker.

According to Theo's management, no other workers contacted them in 2009 or 2010 concerning workplace injuries. They continue to maintain that there have been no “serious” injuries at the factory.

Cat Gipe, who currently serves as Theo’s Marketing Assistant did confirm that the company brought in a trainer to review ways to decrease the chance of repetitive injury, a risk factor in Theo’s factory.

IMO's investigation procedures during audits

According to the ILRF report, the Swiss certifier IMO conducted several audits in 2010 and 2011, including a visit on November 18, 2010. The ILRF contends IMO did not use due diligence, claiming that there were few arrangements made for confidentiality during staff interviews and that “staff were expected to ask permission from their managers to speak with the auditors during their regular workday.”

The ILRF writers fail to mention that in an effort to fully investigate the complainant’s concerns, the IMO arrived unannounced. Meinshausen said that neither the management nor the complainants were informed ahead of time of the date or time of the audit.

“(There was) no notification at all,” said Meinshausen. “(The) IMO auditor appeared at the company on the morning of the 18^th Nov. 2010 for a two-day, in-depth, spot-check audit, without any employees or management being notified beforehand (about either the audit or the allegations).”

The ILRF also suggests that only a small portion of the staff were interviewed. However, according to Meinshausen, 40 percent of the staff (not counting management) were interviewed, 22 of 55 individuals. They were selected by the auditors “based on specific allegations/complaints received about individuals’ working situation.” Statements had been received from other individuals by mail or phone earlier in the investigation process.

The other IMO visit mentioned in report occurred in March 2011 and was an annual audit, not an unannounced investigation. At the time of the audit, Theo Chocolate was also hosting a Food Network film crew and the production department was unusually busy with Easter and summer sales preparations. These factors were among the challenges the auditors had to consider as they assessed the safety environment of Theo’s production facilities. The staff interviews were an added task, likely at the request of the complainants.

Undisclosed Fair for Life ratings by IMO

The ILRF has asserted in several instances that the IMO has refused to provide any information about audit results. In March of this year, we requested information from IMO about Theo’s assessments and were told:

In 2010, the company reached a total of 231 points (minimum for certification: 192) for its employment conditions and 60 (minimum for certification: 39) for its fair trading practices.

In 2011, (Theo) reached 287 points (minimum for certification: 272) for its employment conditions and 83 (minimum 72) for its fair trading practices.

IMO also provided documentation showing that a workplace injury had been “recorded and adequately followed up” by the employer during the previous year. It said that its rating system requires any serious injuries to be noted in specific format, and that according to the assessments, “We can confirm that Theo has not violated any Fair for Life Health & Safety minimum requirements.”

Did Theo intentionally hire a "union busting" consultant?

The ILRF charges that proof that Theo actively participated in “union busting” lies with the company’s decision to hire David Acosta, who it says worked with American Consulting Group, a company that it says has been previously linked with union avoidance tactics.

According to Rachel Taber, who worked for Theo as a tour guide, “Theo hired a professional union avoidance consultant … from the firm American Consulting (Group) to dissuade people through intimidation (and) emotional blackmail …”

We called American Consulting Group. Its spokesperson said that the private consulting company had never been retained by or worked for Theo Chocolate. He seemed surprised to hear that his company was suspected of providing “union busting” advice to Theo’s employees.

The spokesman said that “David Acosta is not, and never has been an employee of ACG” and expressed some concern about having its name mentioned by Teamsters and ILRF online when “we didn’t do any work for (Theo Chocolate).” It also confirmed that no one had called ACG first to inquire about whether Acosta worked for the company.

According to Theo owner Joe Whinney, their decision to hire an “outside party” was prompted by requests from some employees to be able to gain input “from a third party." We were not able to contact the individuals who had made the requests.

“The reason I hired David Acosta was because he was a former union organizer, he was willing to speak unbiasedly and just answer employee questions. We had voluntary meetings, so no one was compelled to meet with him,” said Whinney in a February 20, 2013 interview.

Both Whinney and Music deny attempting to prevent collective bargaining at Theo Chocolate.

ILRF report: Who is supposed to call whom?

According to ILRF's Executive Director, Judy Gearhart,  ILRF “gave Theo and IMO the chance to comment on the report, at which time would have been a good time to say there are no accident reports, there were no serious injuries. But they did not.”

Whinney and Music said the existence of the ILRF report was first disclosed to them shortly after it had been published* in October 2012. The company has released copies of two letters (dated November 30, 2012 and December 7, 2012) that it wrote to Gearhart after receiving a copy of the report.

“Theo was first made aware of a report in November 2012 at a Whole Foods meeting in Austin, Texas, when we were approached by Sean Rudolph, Campaigns Director of the ILRF, who handed us the report,” Theo disclosed in a March 21, 2013 email. “We had never seen it before, nor did we have any knowledge of its existence prior to that meeting.”

Whinney and Music said that after receiving the report, they contacted the ILRF “to update them on the recommendations that had already been met, to alert them to false allegations contained in the report, and to invite them again to meet with us and visit our factory and employees in Seattle to learn more. ILRF declined this invitation.”

Gearhart said that any meetings that take place should be between Theo, the Teamsters union and the complainants, not between Theo and the ILRF, and should address demands that the ILRF submitted to Theo and which were summarized in the ILRF report.

Whinney and Music state that the first three of the four demands are already in place, and that this has been brought to the attention of the ILRF. As to the fourth, Whinney stated to Gearhart in his November 30, 2012 letter that Theo “cannot agree to initiate communications that imply our support or (our opposition to) union organizing. Our duty as an employer is to remain neutral and refrain from influencing our employees’ decisions.” The employees’ preferences, he said, were made clear when they voted in October 2010 not to unionize.

Fair Trade versus what?

Everyone who has worked at Theo, including individuals who actively participated in campaigning or voting for union representation say that they were passionate about their work at Theo.

Jahnke and Taber, who both left the company in 2010, said that their interest in union representation was, in Taber’s words, because “we cared about (Theo) and we wanted to improve it.”

“My aim … has never been to harm Theo or IMO in any way,” said Taber about her support for the union. “I loved my job.”

It’s a dedication that’s still reflected in Theo’s small but growing cadre of employees, many of whom, like Cat Gipe, have focused their careers on fair trade principles.

“It’s because of Theo that I changed my major," said Gipe, who says she uses her degree in Global Development Studies “all the time” and is very supportive of the company’s ongoing focus on fair trade.

So what’s the true story about the current dispute with Theo Chocolate? Is it about improving working conditions? Is it about the outcome of a company vote not to unionize? Or is it about the fate of fair trade as model of corporate social responsibility?

The ILRF has refused to reveal how many complainants it has interviewed, and how many of the original individuals are still involved with the Teamster’s dispute. The ILRF has indicated that the privacy of current or past employees could be in jeopardy by doing so, a point that in stressful labor disputes often merits respect. But it’s a reasoning that apparently has also underscored and colored much of the way that the report was written, since there appear to be few statements that have been firmly attributed to a source.

The ILRF and Teamsters appear to have taken great care in describing events that allegedly occurred at Theo (although our research alone indicates that there is more to the story than Aiding and Abetting suggests). But the ILRF has yet to explain to Theo’s many customers and fair trade affiliates who have invested their time, money and faith in social change initiatives with Theo why they should stop believing in a company that has met that commitment with continuous success. The Teamsters owe it to its potential union members to explain how attacking the reputation of a company that disagrees with its assertions will foster a positive working environment in such uncertain economic times.

* April 4, 2013 Correction and Update: Although the ILRF report was published with an October 2012 completion date, Executive Director Judy Gearheart has pointed out that "(the ILRF) did not release the report until February, as documented by our press release, etc," and that "(the ILRF) gave (Theo Chocolate) several months to review (it) prior to publication."

Theo Chocolate states that the two letters  it sent in response (November and December 2012) were an effort to provide input to ILRF, but that Theo was not successful in arranging a direct meeting with Gearhart for the purposes of doing so prior to the release of the report.

Sources include:

Gearhart, Judy, ILRF, interview March 18, 2013

Gipe, Cat, interview, March 1, 2013

Music, Debra and Whinney, Joe, interview Feb. 20, 2013

Jahnke, Mackenzie, interview March12, 2013

Taber, Rachel, interview, March 10, 2013

Requests for interview with Teamsters Local 117 representative were not returned.

Image of Theo Chocolate candy courtesy of Ann Marie Michaels.

Image of Theo Chocolate Factory courtesy of Eli Duke.