We are writing to let you know about a recent development in a class action lawsuit involving “Made in U.S.A.” claims on goods sold in California that we brought to your attention back in June.
In a recent order denying a defendant’s motion to dismiss, the U.S. District Court for the Southern District of California concluded that products labeled “Made in U.S.A.” and sold in California must comply with both federal labeling laws and California’s state labeling standards (i.e., that the more permissive federal standard does not preempt the more restrictive state standard; both apply). A copy of this order is attached for your reference.
As you know, the U.S. Federal Trade Commission (“FTC”) has strict requirements for making unqualified U.S.-origin claims, such as “Made in U.S.A.” In order for a product to be eligible for an unqualified U.S.-origin claim, the FTC rules require that product to contain “all or virtually all” U.S. content (i.e., it can contain a de minimis amount of foreign content; generally viewed as requiring 95%+ U.S. content). As discussed in the email chain below, California’s “Made in U.S.A.” rules impose an even more stringent standard on products marked with an unqualified U.S.-origin claim (i.e., the product must contain 100% U.S. content). Thus, this decision means that companies selling products with a U.S.-origin claim nationally must ensure that the more stringent California standard is met – i.e., the products must contain 100% U.S. content/cannot contain any non-U.S. components.
This lawsuit serves as an important reminder to all companies that utilize U.S.-origin claims on their products (or that sell other companies’ products that contain a U.S.-origin claim) that the failure to comply with the FTC rules (and the more stringent California rules when the products are sold in California) could result in getting embroiled in a costly enforcement action.
If you have any questions regarding the use of U.S.-origin claims, please let us know.