Back in 2015, the California legislature amended the “Made in the USA” labeling law to provide a more liberal definition of how much content is allowable for a product to still be labeled as “Made in the USA.” See Cal. Bus. & Prof. Code, § 17533.7. The changes took effect at the beginning of 2016.

Prior to the amendment, the label could not be used if any part of the product was made outside the United States. The amendment allowed use of the “Made in the USA” label if 5% or less of the product was of foreign origin or 10% or less if various product components could not be made, manufactured, produced, or obtained within the United States. The labeling statute has wide application to all San Diego businesses because there is no statutory threshold for application. Often, statutes will only apply if the business has revenue or sales exceeding a certain dollar amount. The “Made in the USA” labeling law applies to all businesses regardless of size including “mom and pop” businesses that might fabricate, for example, t-shirts and baseball caps. “Made in the USA” labels are important to some consumers and can provide an important competitive advantage.

San Diego Corporate Law: Retroactive Effect of Statutory Changes

Following the statutory amendment, a case was filed in the US federal courts in San Francisco alleging violation of the “Made in the USA” labeling law against Tyson Foods, Inc., with respect to their pet food brand, Big Heart pet foods. In 2014 and 2015, the plaintiff bought dog treats called “Grillers” that were labeled “MADE IN USA.” But some portion of the Grillers product was made with non-domestic components including the tapioca, gluten, and vitamin and mineral additives.

At the trial level, the case was dismissed. The court held that the amended statute applied to the case even though the products were bought in 2014 and 2015. The quantity of non-domestic components to the Grillers dog treats fell under the quantities allowed under the amendment.

The court held that a statute is to be applied retroactively if certain conditions apply including:

  • No significant rights are vested in the potential plaintiff class affected
  • No substantial reversal of previous legislative policy
  • No about-turn in statutory philosophy with respect to the area of law

With respect to the “Made in the USA” law, the 2016 amendment did not negatively implicate any of the above concerns. The plaintiff did not have significant vested rights, the amendment was neither a “substantial reversal” or an “about-turn” in statutory philosophy. Thus, it was appropriate to apply the new law even though the statute did not explicitly state that it would be retroactively applied. The trial court was recently affirmed by the Ninth Circuit Court of Appeals. See here.

This is good for San Diego businesses that use “Made in the USA” labels. This ruling will impede lawsuits with respect to products made prior to 2016.

Contact San Diego Corporate Law

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. For the fourth year running, Mr. Leonard been honored as “Best of the Bar” by the San Diego Business Journal for 2018 and been confirmed as a “Rising Star” by SuperLawyers.com.

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