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A recent jury decision in <em>Banks et al. v. R.C. Bigelow, Inc., et al</em>., Case No. 2:20-cv-06208, in the Central District of California may serve to embolden more consumer class action filings in the Golden State over domestic origin claims in advertising. The plaintiffs, Kimberly Banks and Carol Cantwell, represented a certified class of California consumers who purchased Bigelow Tea products labeled “Manufactured in the USA 100% American Family Owned.” They argued that this claim was deceptive because the tea leaves themselves and many flavors were not entirely made in the United States and were largely imported from abroad, violating California’s Consumer Legal Remedies Act (CLRA), breaching the express warranties and constituting an intentional misrepresentation. Bigelow, on the other hand, argued that the label was accurate, as the teas were blended and thus “manufactured” in facilities throughout the U.S.

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Earlier, on July 8, 2024, the court granted partial summary judgment in favor of the plaintiffs on liability for the CLRA and breach of warranty claims prior to the trial, finding that the “Manufactured in the USA 100% American Family Owned” statement was false and that it was material to consumers when purchasing Bigelow Tea. This meant that the trial focused on only two key issues: (1) whether consumers were financially harmed by the labeling, and to what extent, and (2) whether Bigelow knowingly misled the public.

During the five-day trial, jurors heard from a number of experts and witnesses, including the plaintiffs’ expert, economist Colin Weir, who testified on damages. Weir testified that he estimated that class members overpaid approximately 11% for Bigelow Tea, in the amount of $3,266,679. He reached his conclusion by conducting a conjoint analysis study of hundreds of tea buyers to determine the overpayment attributable to the “Manufactured in the USA 100% American Family Owned” representation. Jurors also were presented with email exchanges between the company’s CEO, Cindi Bigelow, and other employees discussing the “Manufactured in the USA” claim. A 2016 email chain shown to the jury showed company executives debating whether they could use the “Made in USA” label. Throughout the email chain a Bigelow executive suggested the company could use “Blended in the USA,” “Packaged in the USA,” “Manufactured in the USA” or a combination of the terms. The plaintiffs also called Bigelow executive Christopher Costello, Bigelow’s vice president of sales and marketing in 2017, to elicit testimony that showed Bigelow’s marketing campaigns were meant to show their American roots, often featuring heavily at professional baseball games. &nbsp;

Bigelow maintained throughout trial that its labeling was a good-faith effort to highlight its American family ownership and packaging operations, not an attempt to mislead. Specifically, Bigelow stated that the line “Manufactured in the USA” was meant as a reference to the facilities in Connecticut, Idaho and Kentucky where Bigelow’s products are blended and packaged and which were staffed with American employees. While some of its tea was grown in the U.S., a large portion was imported from China, Sri Lanka and other countries. It is interesting to note that some varieties of tea are not susceptible to being grown and harvested in the United States due to specialized cultural practices, climate and other environmental factors.

Ultimately, the jury found in favor of the plaintiffs on all three claims and awarded $2,360,744 in compensatory damages, but it did not award any punitive damages.

The ruling highlights the Ninth Circuit’s recognition of price premium as the measure of damages in consumer class action suits and continued acceptance of conjoint analyses, which often are criticized by the defense as unreliable. Nevertheless, the jury’s denial of punitive damages suggests that juries may be reluctant to award punitive damages in cases where customers received a product of value, notwithstanding the misleading label.

The outcome of this case undoubtedly cautions companies using the “Made in USA” label or its equivalent, such as “Manufactured in the U.S.,” “Built in the U.S.” or “Born in the USA,” to ensure they meet the “all or virtually all” standard set out in the Federal Trade Commission’s <a href="https://www.ecfr.gov/current/title-16/chapter-I/subchapter-C/part-323" target="_blank" rel="noreferrer noopener">labeling rule</a>. The “all or virtually all” standard means that the final assembly or processing of the product occurs in the U.S., all significant processing that goes into the product occurs in the U.S. and all or virtually all of the ingredients or components are U.S. sourced or made. For more guidance on “Made in the USA<a>”</a> claims, check out the <a href="https://www.bakerlaw.com/podcasts/ad-nauseam/" target="_blank" rel="noreferrer noopener">AD Nauseam podcast</a> episode “<a href="https://www.adventures-in-law.com/blogs/" target="_blank" rel="noreferrer noopener">Claims that Products are Made in the USA</a>” and the <a href="https://www.adventures-in-law.com/blogs/">ADventures in Law blog</a> Made in the USA series <a href="https://www.adventures-in-law.com/blogs/ambiguities-in-the-ftcs-new-made-in-usa-rule-part-1/" target="_blank" rel="noreferrer noopener">Part 1</a>, <a href="https://www.adventures-in-law.com/blogs/made-in-usa-part-two-how-far-back-do-you-have-to-look/" target="_blank" rel="noreferrer noopener">Part 2</a> and <a href="https://www.adventures-in-law.com/blogs/made-in-usa-part-three-materials-not-available-in-the-us/" target="_blank" rel="noreferrer noopener">Part 3</a>.

Reading the Tea Leaves: What’s Next for ‘Made in the USA’ Claims?