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NBTY: What does it take to be made in the U.S.A?

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Friday marked the beginning of a potential class action against vitamin manufacturer NBTY in Florida federal court, alleging deceptive labeling of some of their products. For manufacturers, it may be good for business to label products ‘made in USA’, with an American flag emblem nested proudly on the product. However, legal standards place constraints on how the product must be made and what parts it must consist of in order to bear this label.

The proposed class of consumers in Sweat v. NBTY, Inc., allege that the company deceptively labels its products as being ‘Made in [the] U.S.A.’, and that the consumers purchased the products in reliance on that representation. Instead, the products purportedly contain substantial ingredients sourced from foreign countries. Specifically, the vitamins are alleged as violating the Florida Deceptive and Unfair Trade Practices Act and the Federal Trade Commission Act’s labeling standards.

Both the Federal Government and individual states have standards that products must abide by in order to bear the label ‘Made in the U.S.A.’. The Federal Trade Commission standard is explained in 15 U.S.C.A. § 45a [1], requiring “all or virtually all” of the product to be made in the United States. California’s standard, outlined in the state’s business and professions code, is more detailed, and arguably more exacting.[2] The statute generally makes it unlawful to label a product as ‘Made in America’, ‘Made in the USA’ or ‘U.S.A., if the merchandise (or part of it) has been “entirely or substantially made, manufactured, or produced outside of the United States.”[3] The statute then provides a variety of ways in which to show that a product violates this standard, including showing that the parts of the merchandise obtained outside of the United States constitute over 5 percent of the wholesale value of the final product.[4]

Since the NBTY class action alleged violation of Florida and federal law, plaintiffs will ultimately need to satisfy those standards. But California businesses should also be wary of these regulations.

[1] “To the extent any person introduces, delivers for introduction, sells, advertises, or offers for sale in commerce a product with a “Made in the U.S.A.” or “Made in America” label, or the equivalent thereof, in order to represent that such product was in whole or substantial part of domestic origin, such label shall be consistent with decisions and orders of the Federal Trade Commission issued pursuant to section 45 of this title. This section only applies to such labels. Nothing in this section shall preclude the application of other provisions of law relating to labeling. The Commission may periodically consider an appropriate percentage of imported components which may be included in the product and still be reasonably consistent with such decisions and orders. Nothing in this section shall preclude use of such labels for products that contain imported components under the label when the label also discloses such information in a clear and conspicuous manner. The Commission shall administer this section pursuant to section 45 of this title and may from time to time issue rules pursuant to section 553 of Title 5 for such purpose. If a rule is issued, such violation shall be treated by the Commission as a violation of a rule under section 57a of this title regarding unfair or deceptive acts or practices. This section shall be effective upon publication in the Federal Register of a Notice of the provisions of this section. The Commission shall publish such notice within six months after September 13, 1994.
[2]  Cal. Bus. & Prof. Code § 17533.7.
[3] Cal. Bus. & Prof. Code § 17533.7.
[4] Cal. Bus. & Prof. Code § 17533.7.
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