In the case Louise Clark v. Citizens of Humanity LLC et al., case number 3:14-cv-01404, pending in the U.S. District Court for the Southern District of California, in denying the defendants’ motion to dismiss, the court concluded that California’s “Made in USA” law, Business & Professions Code section 17533.7, is neither unconstitutional nor preempted by federal law.
The plaintiffs allege the defendants jeans violate California law because the jeans were manufactured in the USA with at least some foreign made components. In addition, although some of the products bore a qualified label that read “MADE IN USA OF IMPORTED FABRIC,” the plaintiffs allege the clothing “contained foreign-made component parts beyond the fabric.” In addition, other jeans are allegedly made with zipper parts manufactured abroad.
In the motion to dismiss, the defendants argued California’s “Made in the USA” statute is preempted by federal law. Specifically, the defendants argued the California law violates the dormant commerce clause of the U.S. Constitution, and is preempted by the Federal Trade Commission Act as well as the federal Textile Fiber Products Identification Act, which requires some clothing to be labeled as American-made. The court disagreed concluding: that it is not impossible to comply with both laws; the California law does not stand as an obstacle to accomplishing the FTC regulation’s objectives; and manufacturers may comply with both laws by either using “Made in USA” labels on items entirely made in the USA (with all components being sourced in the USA), or by using a distinct label for products sold in California.
For a discussion of the difference between the federal and California law see the prior post “Is that ‘Made in USA’ Claim More Than Skin Deep.”
Take away…If a product’s labels contains an unqualified “Made in the USA” claim, or has other similar origin claims, be sure to audit component suppliers to confirm the source or origin of all ingredients/components. Where are they sourced? It is not enough to say the ingredients/components were purchased from a distributor in the U.S. Instead, to substantiate the “Made in USA” claim, companies should verify up the supply chain the source of each ingredient. If portions of the product are sourced internationally, then qualify the claim in a manner that is truthful and not misleading.
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Reblogged this on Kronick's Business Services Law Blog.