Change in ‘Made in USA’ label debated

by Michael Gardner, San Diego Union Tribune

Frustrated Carlsbad entrepreneur Rio Sabadicci cannot sell his Vinturi wine aerator in California if it carries a ‘Made in USA’ label even though his popular invention is assembled in a Pomona plant and consists of just one import ‘ a small decorative band from China.

That’s because California law prohibits companies from making ‘Made in USA’ claims on labels unless each and every part comes from the United States. In contrast, the other 49 states follow a more lenient ‘ and more ambiguous ‘ federal law that permits some outsourcing as long as ‘virtually all’ of the product is of U.S. origin, according to a Federal Trade Commission advisory.

‘It goes beyond just my product,’ Sabadicci said in an interview. ‘It just strikes me as something that doesn’t make any sense at all.’

Assemblyman Brian Jones, R-Santee, agrees. He is carrying legislation that would conform California’s labeling law with federal rules.

Early unanimous victories in the Assembly have disguised the challenges ahead for Jones’ bill. Trial lawyers and a consumer group have since raised objections, foreshadowing an uncertain future for Assembly Bill 858.

It’s a high stakes confrontation. Many companies are seeking sales in today’s global and highly competitive markets. A ‘Made in USA’ label can provide an edge as long as the products are competitively priced and of similar quality.

‘The label denotes we are creating jobs in this country. We are helping the national economy. It denotes better quality,’ Sabadicci said.

He is not alone in the quest. Anthony Maglica, founder of the well-known Maglite flashlight brand based in Ontario, has joined the cause. Maglites, put together with just a ‘small percentage’ of imported parts, cannot carry the label in California although it can in other states, according to Maglica.

‘Consumers will never know that I employ hundreds of U.S. workers,’ Maglica wrote in a column published in the San Bernardino Sun that detailed his commitment to staying in California despite higher costs.

‘The passage of this bill would finally level the playing field between California manufacturers and those in the rest of the country that can claim the ‘Made in the USA’ mantle and the marketing advantage that comes with the moniker,’ he wrote.

(Companies based in other states that sell goods here must comply with California’s tougher labeling standard.)

A leading California consumer advocate believes the tougher standards should be left alone.

The labels are ‘beneficial to consumers who care where their products are made to have truthful information when determining what to buy,’ Richard Holober, executive director of the Consumer Federation of California, said in an interview. ‘The federal law is weaker so we are better off not changing a good standard,’

The legislation to amend California’s standards breezed through the Assembly last year without a single no vote. But its march to the governor’s desk slowed in the Senate Judiciary Committee following opposition from the Consumer Attorneys of California.

‘While the federal law uses terms such as ‘virtually all,’ the California law provides a bright line test. Consumers know they have a label law with clear meaning,’ John Montevideo, the group’s president, wrote a letter of opposition to the committee.

The Federal Trade Commission policy states that ‘all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no ‘ or negligible ‘ foreign content.’ Moreover, the FTC adds ‘the product’s final assembly or processing must take place in the U.S.’

Montevideo also said general legislative policy has been to not pre-empt court rulings as long as litigation is being pursued.

He noted that manufacturers are free to include labels promoting USA content. ‘Claims that truthfully say ’90 percent made in the USA,’ ‘assembled in the USA,’ ‘Assembled by California workers’ are all fine,’ he wrote. ‘Existing California law only prevents the dilution of the pure ‘Made in the USA’ brand.’

The state Supreme Court in late January 2011 ruled that consumers have standing to sue manufacturers that lure shoppers with false ‘Made in USA’ claims. The case, involving Kwikset locks that contained imported parts, had been closely watched by the industry. Kwikset has since stopped its country of origin labeling.

Trial lawyers have filed a number of other lawsuits alleging that companies have violated the no-exceptions standard in California law.

One of those is the Del Mar Law Group based in San Diego County, The firm’s website mentions ‘prosecuting multiple cases based on improper ‘Made in USA ‘claims by various manufacturers.’ Those class action suits involve CVS Pharmacy, Bell Sports Inc. and NeilMed Pharmaceuticals, among others, according to the website.

The firm issued a warning ‘Manufacturers Beware: Made in USA really means Made in USA in California.’ The blog summarizes a couple of key court rulings in its favor. Lawyers there did not respond to several emailed requests for comment.

Senate Judiciary Committee Chairwoman Noreen Evans, D-Santa Rosa, said Jones’ measure will receive a full hearing this spring.

Planning to testify is Joel Joseph, chairman and general counsel of the made in the USA Foundation, a coalition of manufacturers.

Labels play an important role, said Joseph, who is based in Southern California and has been involved in a number of related court cases. He helped develop some of the nation’s ‘country of origin’ laws.

‘Consumers have the right to rely on labels that say where products are made ‘ It’s important for consumers to vote with their wallet. American products create jobs and include American values’ related to working conditions and pay, Joseph said.

But he believes federal safeguards go far enough.

‘Having a different California standard just causes a lot of confusion,’ Joseph said.

A recent poll taken by the Alliance for American Manufacturing found that 97 percent of respondents have a favorable view of American-made goods and 90 percent support buy-American policies.

Assemblyman Jones is not the first lawmaker to propose changing label standards. Assemblyman Jim Beall, D-San Jose, carried similar legislation two years ago but it never received a hearing.