Made in the USA (For the Most Part)

Newspaper headlines report a new economic trend—manufacturing is returning to the United States. The country’s industrial production grew by 0.7 percent in July, its biggest jump since November 2014. This number represents everything made by factories, mines, and utilities. Before companies start slapping “Made in the USA” labels on their wares, they need to make sure they are familiar with the legal requirements to do so.

The Federal Trade Commission (the FTC) monitors the marketplace and aims to keep businesses from misleading consumers. Within the FTC’s jurisdiction is regulating “Made in the USA” claims.

If a product is labeled as “Made in the USA,” without any qualification, it must be “all or virtually all” made in the United States. “[A]ll significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no – or negligible – foreign content.” The FTC contemplates the site of final assembly or processing, the proportion of manufacturing costs paid to the U.S., and how detached the foreign material is from the finished product. For many businesses, this standard can be hard, if not impossible, to meet.

Since January 2015, the FTC has issued 46 letters to companies asserting misleading U.S. origin claims on a wide range of products, such as cookware, snow blowers, auto parts and pet products.

For example, the FTC recently determined that Shinola—a Detroit-based manufacturer of high-end watches, bicycles, and leather goods—did not meet it. Shinola advertises its products with the slogans “Built in the USA” and “Built in Detroit.” But in June of this year, the FTC called this labeling misleading because “100 percent of the cost of materials used to make certain watches . . . [and] more than 70 percent of the cost of the materials used to make certain belts” goes to imported materials. For example, Shinola’s watches incorporate Swiss-made timekeeping components.

Shinola’s founder had a good reason for why his company incorporated foreign parts:  many of the components are unavailable in the U.S. The components are imported to Detroit where Shinola’s 400 employees assemble watches in the company’s factory. The FTC, however, applied its “net impression” analysis and determined that Shinola’s slogans contradict reality. Shinola’s advertisements will now read “Built in Detroit using Swiss and Imported Parts.”

In light of the FTC’s stance on U.S. origin claims, companies should follow FTC decisions and exercise caution when saying “Made in the USA.” There is no bright line rule for whether a product is “all or virtually all” made in the USA. Companies should consider how their products fit within the FTC’s framework and only then decide whether their merchandise has, according to the FTC, been “Made in the USA.”

CPSC Chairman Attempts To Bridge The Divide, Signaling That Higher CPSC Civil Penalties Are Here To Stay

Airing dirty laundry. The CPSC has made public its internal dispute over civil penalties. On July 20, 2016, Consumer Product Safety Commission Chairman Elliot Kaye and Commissioner Robert Adler issued a joint statement addressing the diverging views among the CPSC commissioners over the agency’s recent settlements. The joint statement responded to other commissioners who had criticized CPSC’s higher civil penalty settlements. Continue Reading

Tesla Crash: Don’t Slam the Brakes on Autopilot

After 130 million miles driven without a fatality, Tesla Autopilot’s perfect track record ended tragically on May 7 with the first fatal crash of a car using Autopilot. Given the infrequency of fatal crashes involving autonomous vehicles, why are commentators suggesting that the auto industry “put the brakes” on this technology?

That’s unclear, especially with the facts here. Autopilot has a better safety record than human drivers. Overall, drivers in the United States cause one fatality roughly every 93 million miles. This was Autopilot’s first fatal accident in over 130 million miles driven. Continue Reading

Truly Whole Foods? The FDA Thinks Not

We wrote last month about the challenges facing Chipotle, a favorite restaurant of many Americans. Now another industry leader is facing similar challenges. Whole Foods Market Inc. has had a tough few years. Most recently, the Food and Drug Administration, in a series of crackdowns, told the industry’s leading company to clean up its act.

On June 8, the FDA issued a warning letter to the co-CEOs of Whole Foods, John Mackey and Walter Robb. The letter stated that the health food chain had 15 days to address the “serious violations” the FDA found while inspecting the company’s Massachusetts ready-to-eat food preparation plant in February. Continue Reading

New York Court of Appeals Addresses the Duty to Warn

On June 28, 2016, the Court of Appeals decided the following question: Does a manufacturer have a duty to warn about asbestos-containing parts made by someone else but used with its non-asbestos product? The Court answered, “Sometimes,” under a relatively narrow set of circumstances.

The plaintiff in Dummitt v. Crane Co., a Navy boiler technician from 1960-1977, alleged that he developed mesothelioma from exposure to asbestos insulation used with Crane Co.’s high-temperature steam valves. Crane Co. didn’t make the insulation, and its valves did not contain any asbestos. Continue Reading

GE Salmon: What’s Really at Steak

In April 2016, we posted about the lawsuit brought by environmental food and safety groups, along with fisherman trade associations, to reverse the FDA’s approval of a genetically engineered (GE) salmon. The complaint alleges that the FDA failed to evaluate how the GE salmon will impact the environment and that the farmed salmon will inevitably escape, “interbreed with wild endangered salmon, compete with them for food and space, or pass on infectious disease . . . .” Continue Reading

Toxic Substances Control Act Revised for the 21st Century

On June 22, 2016, President Obama signed the Lautenberg Chemical Safety Act into law.  The Act is the first significant change to the 1976 Toxic Substances Control Act in 40 years and amends the Environmental Protection Agency’s (EPA) methods for reviewing chemical substances before they are marketed and allowed to be used in consumer products.

The Act has several new key features: Continue Reading

Why Autonomous Cars Aren’t Hit by the Trolley Problem

Imagine you are driving down a two-lane mountain road.  As you round a bend, you see five pedestrians in your lane.  You do not have enough space to stop before hitting them, but in the other lane there is only one pedestrian.  Do you stay in your lane, killing five? Do you swerve into the other lane, killing one?  Or do you steer off the road and down the mountain, avoiding the pedestrian fatality but likely killing yourself?  Can you make that decision better than an autonomous car? Continue Reading

Chipotle Faces New Challenges

Are Chipotle’s problems over?  Not yet.  Chipotle’s stock price  plummeted after a series of foodborne illness outbreaks linked to its stores. Chipotle continues to face new lawsuits related to its food safety problems. This one comes from its investors: Chipotle shareholders have alleged that the fast food chain failed to disclose that “its quality controls were inadequate to safeguard consumer and employee health.”  Since the suit was filed in January 2016, numerous additional plaintiffs have joined in and the court has appointed a lead plaintiff and plaintiffs’ counsel.  Chipotle has not answered the claims yet. Continue Reading

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