High court allows 'Made in USA' label lawsuit

January 27, 2011 1:02:14 PM PST
Four Southern California residents won the right from the California Supreme Court Thursday to sue a lock company for allegedly falsely labeling its locks as "Made in U.S.A."

The court said by a 5-2 vote in a ruling issued in San Francisco that such lawsuits are permitted under the state Unfair Competition Law.

The decision allows James Benson and three other citizens who sued Kwikset Corp. in Orange County Superior Court to return to that court to seek an injunction barring the company from falsely labeling its locks.

In earlier proceedings, the plaintiffs offered evidence that the company's locks had some parts made in Taiwan and were partially assembled in Mexico. Kwikset is based in Lake Forest in Orange County.

The four citizens said they had a patriotic desire to buy American-made items and wouldn't have bought the locks if they had known they were not fully made in the United States.

Jonathan Cuneo, a lawyer for the plaintiffs, said, "It's an important ruling that empowers consumers.

"Many people buy products based on the label, because they are kosher or made in U.S.A. or organic or fresh," Cuneo said.

"This ruling reinforces the power of consumer choice," he said.

The high court ruling turned on an amendment enacted by state voters in 2004 to revise the Unfair Competition Law, which prohibits unfair and fraudulent business practices.

The amendment, which was intended to stop shake-down lawsuits against small business, required that individuals suing under the law must have personally suffered economic loss from the alleged unfair practice.

Kwikset argued that the lock buyers had no right to sue because they had received working locks and therefore had no economic loss.

But the court said the buyers did suffer economic harm because the product's value to them was diminished and they paid more for the locks than they would have if the product had been accurately labeled.

Justice Kathryn Werdegar wrote, "To some consumers, processes and places or origin matter...In particular, to some consumers, the 'Made in U.S.A.' label matters."

A spokesman for Kwikset was not immediately available for comment.

According to the court, the company in response to the lawsuit decided to discontinue its country-of-origin labels and agreed with the Federal Trade Commission to restrict its use of such labels.

But Cuneo said his clients believe it is important to obtain a state court injunction against the company as well.


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