'Made in U.S.A.' Claims Must Follow Both California, Federal Standards Says Judge in Labeling Class Action
Products labeled “Made in the U.S.A.” and sold in California must comply with both federal labeling laws and California’s tougher standards, said the Southern California U.S. District Court on Oct. 27 as it denied a move to dismiss a class action lawsuit brought against AG Adriano Goldschmeid (AGAG) and Nordstrom for allegedly false labeling claims on imported jeans. Although federal labeling laws allow for products to contain some foreign-origin parts and still be labeled as U.S.-made, while California’s rules require all parts to be U.S.-origin, the two sets of laws don’t create a conflict that must be resolved in court. Rather, companies can and must follow both standards, said the District Court.
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The class action was brought by David Paz of San Diego, who allegedly went to Nordstrom and bought a pair of “The Protégé” brand jeans made by AGAG. The jeans were labeled “Made in the U.S.A.,” but Paz later learned the fabric, thread, buttons, rivets and subcomponents of the zipper assembly were manufactured elsewhere. He filed suit, alleging that he bought the jeans believing them to be of superior quality because they were U.S.-made, and was tricked out of his money the false labeling.
Section 17553.7 of the California Business and Professions Code provides that it is unlawful to sell merchandise marked “Made in the U.S.A.” if the “merchandise or any article, unit or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.” Paz says the jeans violate this state law because they are labeled Made in the U.S.A but have foreign components.
On the other hand, the Federal Trade Commission Act only requires products be “in whole or in substantial part of domestic origin” in order to qualify for “Made in the U.S.A.” claims. A subsequent FTC clarification said that “all significant parts and processing that go into the product” must be of U.S. origin. Thus, the FTC Act allows for “Made in the U.S.A.” claims when a product contains material from a foreign country, while the California Business and Professions Code does not. Another federal law, the Textile Fiber Products Identification Act, requires that U.S.-origin textile products be identified as U.S. origin on the label.
Nordstrom and AGAG argued the federal and California standards on what constitutes U.S.-origin are in conflict, and therefore the federal laws override the state law. They also said the requirement to identify as “Made in the U.S.A.,” combined with the less-stringent federal standard, means the federal government may require labeling or a textile product as U.S.-origin even as California prohibits the labeling claim because of foreign parts. Nordstrom and AGAG filed a motion to dismiss the case in September.
Despite the apparent disagreement between California law and federal law, District Judge Dana Sabraw denied the motion. There is no conflict between the California law and federal labeling laws, because it is possible to comply with both, she said. In general, companies can sell products without a “Made in the U.S.A” label in California to comply with the state’s tougher standards, and with such a label everywhere else. And for textile products specifically, a label would meet both standards if it identified apparel as “Made in the U.S.A. of imported fabric.” That would satisfy the Textile Fiber Products Identification Act’s requirement to identify U.S.-origin textile products under the FTC Act’s looser standard, but would still follow the general intent of the California law to protect consumers from false labeling claims, said Judge Sabraw.
The decision in the Nordstrom case was immediately picked up by the plaintiff in a similar lawsuit related to textile labeling directed against Macy’s and Citizens of Humanity (see 14061701). On the same day Judge Sabraw filed her opinion, lawyers for Louise Clark requested the judge in the class action case take notice of her counterpart’s decision. Macy’s and Citizens of Humanity filed a motion to dismiss in July using the same arguments of legal conflict and federal preemption relied on by Nordstrom and AGAG. Because both cases are at the federal District Court level, the judge in the Macy’s case, Janis Sammartino, is not required to follow Judge Sabraw’s decision.
(David Paz v. AG Adriano Goldschmeid, et al., S.D. Cal. 3:14-01372, dated 10/27/14, Judge Sabraw)
Email ITTNews@warren-news.com for a copy of the order denying Nordstrom and AGAG’s motion to dismiss.