R.C. Bigelow, Inc. (Bigelow) is a tea company that sells tea bags filled with true teas (black, green, and oolong) as well as herbal teas. In 2017, Bigelow began including a logo on the back of its tea-bag packages that said, “MANUFACTURED IN THE USA 100% AMERICAN FAMILY OWNED.”
Some of the purchasers of those tea bags sued, claiming that they’d bought the Bigelow tea bags because they believed they were American made, when, in reality, the black, green, and oolong tea leaves are all grown and processed abroad. Bigelow imports the processed tea, then blends and packages it in the United States.
The plaintiffs’ claims were brought under a number of different legal theories, all of which essentially boil down to false advertising. They argued that Bigelow’s claim is literally false and inherently deceptive since the tea is grown and processed outside of the United States.
Bigelow, on the other hand, insisted that the “MANUFACTURED IN THE USA” statement is true because the tea is inserted into the tea bags in the United States. It also contended that the plaintiffs had not presented evidence to prove that a reasonable consumer would be misled into believing the tea inside the tea bags was from the US.
The plaintiffs filed a motion for summary judgment on the question of whether Bigelow’s packaging was misleading. The court ruled that the statement on Bigelow’s packaging was literally false, noting that purchasers are buying the tea bags “for the tea itself.”
“In fact,” said the court, “the tea leaves are not only a component part of the tea bag; they are the very essence of the tea bag.”
While this was a class action lawsuit brought by customers under California law, the Federal Trade Commission also enforces laws relating to claims that products are made in America. In fact, a new Made in USA Labeling Rule went into effect in July 2021.
This rule prohibits marketers from including unqualified Made in USA claims on labels, packaging, and promotional materials unless:
1) final assembly or processing of the product occurs in the United States;
2) all significant processing that goes into the product occurs in the United States; and
3) all or virtually all ingredients or components of the product are made and sourced in the United States.
According to the FTC, “Made in USA” means that “all or virtually all” of the product has been made in the United States. In other words, all significant parts, processing, and labor that go into the product must be of US origin. Products should contain no (or only a negligible amount of) foreign content.
There is no “bright line” rule establishing when a product is “all or virtually all” made in the United States, and the FTC looks to a number of factors when making this determination.
First, for a product to be considered “all or virtually all” made in the United States, the final assembly or processing of the product has to take place in the United States.
The FTC considers other factors as well if this minimum threshold is met, including but not limited to the portion of the product’s total manufacturing costs that are attributable to US parts and processing, and how far removed from the finished product any foreign content is.
Since the new rule was enacted, the FTC has been cracking down on false allegations that products were made in the United States. For more information about the applicable rules, visit the FTC’s website.
Please let us know if you have any questions about these FTC guidelines or similar state laws, or if you need assistance drafting guidelines and policies.
Photo by Mike Mozart, used under Creative Commons license.
