Designer Denim Companies Face Lawsuits Over Made in USA Labels

Many Americans buy products they believe to be made in the United States because they think they are of higher quality and because they want to support the U.S. economy.

However, in recent apparel news, there have been many lawsuits that have been filed by unsatisfied customers who have purchased products from mostly high-end brands that were not actually American made, even though the companies claimed they were. The most recent Made in USA lawsuits target two designer denim companies.

Jeans manufacturer, Citizens of Humanity, along with other retailers and manufacturers are facing accusations from California consumers that their Made in USA claims are false since jeans holding that label did not comply with California law that requires that all components within the jeans be made entirely in this country.

According to one of these Made in USA lawsuits, which was filed by plaintiff Louise Clark in a California federal court in June 2014, while Citizens of Humanity jeans contain Made in USA labels, the jeans she purchased include fabric and other components that are foreign-made, including fabric, thread, rivets and buttons.

As such, Clark alleges that Citizens of Humanity, “through an unlawful, unfair and deceptive course of conduct” marketed its jeans as Made in the USA and distributed them through Macy’s and Shopbop, in violation of the Consumers Legal Remedies Act.

This Made in USA class action lawsuit is a particularly important one because it speaks to the differing standards in labeling required for clothing and accessories offered for sale in the U.S.; namely, California’s stricter statute covering domestically produced merchandise.  And therefore, has a direct impact on nearly all retailers and designers in the U.S.

Additionally, another Made in the USA class action lawsuit was filed in California against AG Adriano Goldschmied and Nordstrom by the same attorneys, challenging jeans labeled Made in USA. The near-identical complaints allege the Made in USA labels are misleading because the fabric, thread, buttons, subcomponents of the zipper assembly, and/or rivets in the jeans were partially manufactured outside the United States.

Made in USA Labeling Regulations

The Federal Trade Commission (FTC) guidelines provide that Made in the USA or similar claims mean that “all significant parts, processing, and labor that go into the product must be of U.S. origin.”  Not all component parts, however, need to be made in the United States.  Under the FTC guidelines, a product may still be labeled Made in USA if the imported component parts make up a “negligible” portion of the final product.

However, California’s requirements are more stringent and prohibit Made in USA labeling where “the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.”

What constitutes “substantially made” and what constitutes a “part” has been construed broadly by California courts.  One court said tools were not Made in USA because some components “underwent manufacturing processes abroad” and “the foreign inputs into the tools and their component working parts were direct, significant, and not far removed from the finished product.”

Another court defined “substantially made” as meaning “where the foreign operation, process, or activity employed to create the merchandise is found to be considerable in either amount, value, or worth.”  It held that a lockset was not Made in USA in part because foreign-made screws and pins were a “distinct component of merchandise that is necessary for its proper use or operation.”

In other words, California’s Made in USA labeling law is stricter than federal law because it requires that 100 percent of the materials used to make the product be American made.

Apparel companies are particularly vulnerable to claims of violating this law, as their goods are typically composed of many components sourced from numerous locations around the world.

The Made in USA Jeans Class Action Lawsuits are Paz v. AG Adriano Goldschmied, Inc., Case No. 3:14-cv-01372 and Clark v. Citizens of Humanity, LLC et al, Case No. 3:14-cv-01404, both in the U.S. District Court, Southern District of California.

Join a Free Citizens of Humanity ‘Made in the USA’ Class Action Lawsuit Investigation

If you purchased one or more Citizens of Humanity apparel products in California in the past four years based, in part, on a “Made in the USA” label, you may be able to seek compensation by joining a class action lawsuit investigation.

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