More Uncertainty over the ‘Made in USA’ Label

A second federal judge’s ruling is making California apparel makers think twice about how they use their “Made in USA” labels.

On April 8, U.S. District Court Judge Janis Sammartino in San Diego ruled a trial can move forward in a case filed by Louise Clark against Citizens of Humanity, a denim label, and Macy’s.

At the center of the lawsuit is whether apparel makers should adhere to a more stringent California law when labeling their garments as “Made in USA” or refer to more-liberal federal regulations. The judge ruled that the two regulations can co-exist and denied the defendants’ request to have the case be dismissed.

Attorney Peter Ross of Los Angeles law firm Browne George Ross LLP, which represented Citizens of Humanity and Macy’s, said he hasn’t determined what the next step will be in the case. “We appreciate the judge’s carefully reasoned decision, but we think she reached the wrong conclusion,” he noted.

Calls to attorney John Donboli, whose Del Mar Law Group represented Clark, were not returned.

On May 31, Clark, a La Jolla schoolteacher, said she purchased a pair of Citizens of Humanity jeans at a Macy’s store in San Diego. She maintains in court documents that she suffered an “injury in fact” because her money was taken by the blue-jeans company as a result of the false “Made in USA” claims even though the garment was cut and sewn in California out of imported fabric and components. She also suffered because she genuinely believed the blue jeans were manufactured in the United States when they were not, court documents said.

This is the second time a federal judge has said the federal and state regulations can co-exist. On Oct. 27, U.S. District Judge Dana Sabraw in San Diego denied a motion to dismiss a similar lawsuit filed against the denim company AG, formerly called AG Adriano Goldschmied, and Nordstrom over a pair of AG jeans sold at Nordstrom with a “Made in USA” label.

The plaintiff in the AG case, filed June 4 by David Paz, maintained the AG label improperly described the jeans as “Made in USA” when the fabric and components such as zippers and rivets were imported even though the jeans were cut and sewn in Los Angeles.

Many apparel makers have maintained the federal regulation preempts the California regulation. Manufacturers have relied on the more liberal Federal Trade Commission Act and the Textile Fiber Products Identification Act, which permits a “Made in the USA” label if the product and the fabric are made in the United States. However, if the fabric is imported, the federal regulation states the label should read “Made in the USA of Imported Fabric.” If the minor trims or components are imported, they do not have to be included on the label because they do not make up a major portion of the product and are “de minimus” in relation to the value of the fabric and garment production.

But California’s more stringent “Made in USA” rules stipulate that if any fabric, trim or component in the garment is substantially made outside the USA, no matter how small that component, then the label must identify all imported components, such as, “Made in the USA of Imported Fabric and Components.”

Citizens of Humanity and AG were targeted with lawsuits, but six to seven other denim companies, including Current/Elliott, received pending-litigation letters that threatened to bring class-action lawsuits.