It has been almost forty years since Bruce Springsteen first famously celebrated being “Born in the USA.” From an advertising industry perspective, this song’s lasting popularity is no surprise; as advertisers know, “Made in the USA” is often a selling point for American industries.

The FTC knows this too. In late 2021, the FTC finalized a new rule cracking down on deceptive or misleading unqualified U.S. origin claims. The FTC’s new rule, which went into effect on August 13, 2021, does not create new substantive requirements for advertisers, but gives the FTC the ability to impose new, substantial monetary penalties for violating the rule.

Following the enactment of this rule, we have seen a rising number of class actions targeting place of origin claims. This post discusses some such class actions, as well as the FTC’s enforcement of its new rule.

FTC Rule On Unqualified “Made in the USA” Claims

The FTC’s rule prohibits marketers from making unqualified U.S.-origin claims unless:

This rule differs from the FTC’s prior guidance because:

Note that qualified U.S.-origin claims are not covered by this new rule, and are still subject to the FTC’s prior guidance.

FTC Enforcement Efforts Following Enactment of Rule

Under the new rule, the FTC has brought claims against:

The consumer class action space has seen challenges to similar “Made in USA” claims, including in recent cases against New Balance sneakers (Cristostomo v. New Balance Athletics, Inc., No. 21-cv-12095 (D. Mass. Dec. 20, 2021)), Genfoot America boots (Jackson v. Genfoot America, Inc., No. 22-cv-00036 (D.N.H. Jan. 28, 2022)) and Reynolds’ plastic wrap (Shirley v. Reynolds Consumer Products, No. 22-cv-00278 (N.D. Ill. January 17, 2022)).  A recent class action was filed against American Tuna Inc. for its claims that tuna products are “caught and canned” in the United States.  Craig v. American Tuna, No. 22-cv-00473 (S.D. Cal. Apr. 8, 2022).  Land Air Sea Systems, Inc. is facing a similar lawsuit for marketing its GPS devices as “USA Manufactured.”  Pinter v. Land Air Sea Systems, No. 22-cv-00185 (E.D.N.Y. Jan. 12, 2022).

Other Active “Place of Origin” Lawsuits

Place of origin claims, of course, are not limited to “Made in the USA.” Recent cases have challenged advertising claims that products are made in other places, such as:

In deciding whether complaints state a plausible claim that reasonable consumers are deceived by such advertising, courts tend to distinguish between claims explicitly touting that a product has been “made in” a certain location versus claims that merely tend to evoke a certain locale. For example, in a recent case involving King’s Hawaiian rolls, the court found that a mere reference to “Hawaii,” even when combined with imagery that evoked references to Hawaii, did not deceive reasonable consumers into thinking that King’s Hawaiian made its rolls in Hawaii.  Hodges v. King’s Hawaiian Bakery W. Inc., No. 21-cv-04541-PJH, 2021 U.S. Dist. LEXIS 215707 (N.D. Cal. Nov. 8, 2021).  The court in Steinberg v. Icelandic Provisions, Inc., No. 21-cv-05568, 2022 U.S. Dist. LEXIS 13478 (N.D. Cal. Jan. 25, 2022) reached a similar decision, finding that “heirloom Icelandic Skyr cultures” and advertisements created in Iceland did not mislead consumers into thinking the yogurt was made in Iceland, particularly since the product label indicated it was manufactured in New York.

When evaluating product claims for litigation risks, advertisers should keep in mind this distinction between claims that refer to or evoke imagery of a location, and claims that state the product was sourced in a location.  We will continue to watch this space for further developments.

Other Developments in U.S.-Origin Labeling

The new FTC rule is not the only significant development surrounding U.S.-origin claims. Immediately following the FTC’s decision to strengthen regulations surrounding these claims, Agriculture Secretary Tom Vilsack released a statement indicating the USDA intends to “complement” the FTC’s efforts by “initiating a top-to-bottom review of the ‘Product of USA’ label” in order to “determine what that label means to consumers.” The review appears to be ongoing. This past February, the USDA announced “a web-based survey/experiment to help gauge consumer awareness and understanding of current ‘Product of USA’ labeling claims on meat (beef and pork) products and consumer willingness to pay (WTP) for meat product labeled as ‘Product of USA’ using the current and potentially revised definitions of the claim.” And more recently, the House and Senate have considered proposed legislation that would limit “Product of USA” labels to beef products that are born, raised, and slaughtered in the United States.

Last year, President Biden issued an executive order directing the federal government to “maximize the use of goods, products, and materials produced in, and services offered in, the United States,” and advising that “[t]he United States Government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” As a result, “Made in the USA” claims may now be more important to marketers than ever.  But given the new FTC rule, its potential effects on consumer class actions, and recent developments in legislation and USDA regulation, the consequences of making an unsupported and unqualified “Made in the USA” claim may also be greater than ever.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Proskauer - Advertising Law | Attorney Advertising

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.

Copyright © JD Supra, LLC