California Joins rest of Country in “Made in USA” Rules

California, the beacon of individualism and often marching to its own set of rules, has joined the rest of the country as Gov. Jerry Brown has signed SB 633 which revises California’s take on what constitutes “Made in USA”.

Up until this week, existing California law prohibited the sale or offering for sale in the state of any merchandise in which the words, “Made in U.S.A.,” “Made in America,” “U.S.A.,” or similar words appeared on the label when the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.  (Read our previous post on the California, the FTC and Made in the USA Claims here.) An epidemic of consumer class actions had been launched in the past several years claiming that this law was violated by California manufacturers and retailers even though the products met Federal and other state requirements for the proper use of “Made in USA labeling.

CA SB 633 allows merchandise made, manufactured, or produced in the United States to carry a “Made in USA” label if the merchandise has one or more articles, units, or parts from outside the United States if they do not constitute more than 5% of the final wholesale value of the product or if the manufacturer makes a specified showing regarding the articles, units, or parts from outside the United States and they do not constitute more than 10% of the final wholesale value of the product. The bill also does not apply to merchandise sold for resale to consumers outside of the state. Merchandise offered or sold outside the state would not be deemed mislabeled if the label conforms to the law of that state or country.

Specifically, the significant provisions of  Section 17533.7 of the California Business and Professions Code are amended as follows:

• (a) It is unlawful for any person, firm, corporation, or association to sell or offer for sale in this state any merchandise on which merchandise or on its container there appears the words “Made in U.S.A.,” “Made in America,” “U.S.A.,” or similar words if the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.
• (b) This section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if all of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 5 percent of the final wholesale value of the manufactured product.
• (c) (1) This section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if both of the following apply:
  • (A) The manufacturer of the merchandise shows that it can neither produce the article, unit, or part within the United States nor obtain the article, unit, or part of the merchandise from a domestic source.
  • (B) All of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 10 percent of the final wholesale value of the manufactured product.
• (c) (2) The determination that the article, unit, or part of the merchandise cannot be made, manufactured, produced, or obtained within the United States from a domestic source shall not be based on the cost of the article, unit, or part.
• (d) This section shall not apply to merchandise sold for resale to consumers outside of California.
• (e) For purposes of this section, merchandise sold or offered for sale outside of California shall not be deemed mislabeled if the label conforms to the law of the forum state or country within which they are sold or offered for sale.

The main sponsors of the bill touted the bill as leveling the playing field for California manufacturers and assisting California’s economy to grow.  One growth industry in California, purported class actions on behalf of consumers, will be severely tested.

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