When it comes to made-in-USA claims, defense says plaintiffs were like, “Whatevs”
Which 30 Percent?
When a handful of California consumers sued New Balance Athletics Inc. in 2017, their accusations were fairly straightforward. Unlike many high-profile athletic footwear manufacturers, New Balance maintains a manufacturing presence in the United States. According to the class action complaint, New Balance has sold hundreds of thousands of pairs of shoes to California consumers based on the misrepresentation that they are made in the USA, when rather they are made up of a substantial percentage of foreign-made components.
The plaintiffs maintained that these advertisements were misleading, since a substantial percentage – 30 percent – of the value of each shoe is “attributable to foreign-made components and/or labor.” This much, the complaint states, New Balance admitted openly.
School on a Saturday
Out in the open or not, the consumers, who originally brought suit in California State Superior Court, held that the 30 percent discrepancy was enough to trigger violations of California’s False Advertising Law, Consumer Legal Remedies Act, and Unfair Competition law and constituted breach of warranty, negligent misrepresentation and unjust enrichment. (The case was later removed to federal court, in particular the Southern District of California.)
Then things got weird.
New Balance, in a filing opposing class certification, launched an odd attack on the plaintiffs. The company alleged that the class certification was flawed for a variety of reasons, justified most notably by a study conducted by one of New Balance’s expert witnesses. The study looked at “300 California residents who, since 2015, actually purchased New Balance shoes that were labeled ‘Made in the USA.’” The study claimed that more than 70 percent of the respondents said they were indifferent to New Balance’s domestic production claims.
The study also claimed that of the remaining respondents – those who were not indifferent to the origin claim – “very few felt that the shoe is not genuinely ‘made’ in this country if 70% of the value of the shoe comes from domestic sources.”
One last indignity – the filing also maintained that the named plaintiffs in the class action were, themselves, indifferent to the made-in-the-USA claims. “Named Plaintiffs in this case ... are individuals who were solicited for this litigation through targeted social media advertisements that led them to a class action website trolling for potential plaintiffs.” The filing cited the original complaint testimony about the qualifying purchases – two of the plaintiffs had purchased the shoes for medical reasons and the third because the shoe was comfortable for running.
Whether or not this interesting attack on the plaintiffs’ claims was the cause of settlement negotiations, talks began in early 2018 and have only recently resolved, with a final plan expected by late April 2019. At one point a settlement plan was floated that would have awarded consumers $750,000 – $10 refunded per purchase, with a $50 refund cap per person and a $100 refund cap per household – but details of the latest plan are not yet available.
Companies should be mindful of what is required to make a made-in-the-USA claim and stay within the parameters for such claims set by both state and federal laws.