BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2827


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          Date of Hearing:  May 3, 2016


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


          AB 2827  
          (Levine) - As Amended March 18, 2016


                              As Proposed to be Amended


          SUBJECT:  ADVERTISING: MADE IN THE U.S.A. LABEL: VIOLATIONS:  
          CURE 


          KEY ISSUE:  Should violations of the state's "made in the  
          u.s.a," and "made in america," labeling laws be added to the  
          consumer legal remedies act, which provides a potential  
          defendant with the right to cure potential violations of the  
          act?  


                                      SYNOPSIS


          California's "Made in U.S.A." law, revised just last year in  
          order to be more flexible, not only protects consumers against  
          false or misleading advertising, but also protects domestic  
          businesses and the market value of the "Made in America" label  
          by ensuring that companies cannot gain a competitive advantage  
          through false or misleading advertising.  Until January 1, 2016,  
          California was the only state in the nation that required  
          product manufacturers to source 100 percent of their products  
          domestically before using the "Made in USA" or "Made in America"  








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          label.  This requirement applied to all components and  
          subcomponents.  Thus, the entire supply chain was required to be  
          located within the United States.  California departed from this  
          historic and unique labeling requirement when it enacted Senate  
          Bill 633 ((Hill), Chapter 238, Statutes of 2015) which relaxed  
          the standards for use of the labels.  SB 633 allows a  
          manufacturer to use the Made in the U.S.A. label if 95 percent  
          of its product is domestically-produced, or 90 percent if the  
          remaining content could not be made or obtained within the  
          United States. 


          The author claims that at least one attorney has been busy in  
          the five months since SB 633 was enacted, stating that within  
          days of SB 633 taking effect, "hundreds" of demand letters were  
          sent out.  The letters demand that the companies do the  
          following: (1) cease and desist sales; (2) initiate a corrective  
          action advertising campaign; and (3) pull all products off the  
          shelves and refund purchases.  The author further states that  
          complying with these egregious demands would put the companies  
          out of business.  Further, although the letter invites companies  
          to "enter into discussions to resolve the demands," the author  
          asserts that many companies view this as a shakedown.  As  
          currently in print, this bill provides that notwithstanding any  
          other law, a person or business may cure an alleged "de minumus"  
          violation of the "Made in U.S.A." or "Made in California"  
          statutes in existing law within 33 days of receiving written  
          notice of the alleged violation. The original analysis of this  
          bill pointed out a number of philosophical and practical  
          problems with the bill as now in print, including but not  
          limited to the fact that a crucial term, "de mimimis" was not  
          defined.  Those problems have largely been addressed by the  
          author's proposed amendments, which delete the content of the  
          bill in its entirety and add violations of the state's "Made in  
          U.S.A." law to the Consumer Legal Remedies Act (Civil Code  
          Section 1770 et seq).  The author's proposed amendments are  
          reflected in this analysis. 










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          As currently in print, this bill is supported by a number of  
          business groups, including the California Chamber of Commerce,  
          and is opposed by consumer groups, labor unions, animal welfare  
          organizations, and the Consumer Attorneys of California.  As  
          proposed to be amended, the bill has no known opposition.


          SUMMARY:  Adds a violation of the state's "Made in U.S.A."  
          statute to the Consumer Legal Remedies Act (CLRA).   
          Specifically, this bill:


          1)Specifies that it is a violation of the CLRA to represent that  
            a product is made in the United States by using "Made in  
            U.S.A.," "Made in America," "U.S.A.," or similar words if the  
            merchandise or any article, unit, or part thereof, has been  
            entirely or substantially made, manufactured, or produced  
            outside of the United States, unless the product complies with  
            Section 17533.7 of the Business and Professions Code. 


          2)Incorporates the notice and right to cure provisions of the  
            CLRA to apply to Made in the U.S.A. claims made pursuant to  
            the CLRA. 


          EXISTING LAW:   Existing State Law:


          1)Makes it unlawful for any person, firm, corporation or  
            association to sell or offer for sale in this state any  
            merchandise on which merchandise or on its container there  
            appears the words "Made in U.S.A.," "Made in America,"  
            "U.S.A.," or similar words when the merchandise or any  
            article, unit, or part thereof, has been entirely or  
            substantially made, manufactured, or produced outside of the  
            United States.  (Business & Professions Code (BPC) Section  








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            17533.7.)
          2)Provides that merchandise made, manufactured, or produced in  
            the United States that has one or more articles, units, or  
            parts from outside of the United States may be labeled "Made  
            in U.S.A.," "Made in America," "U.S.A.," or similar words if  
            all of the articles, units, or parts of the merchandise  
            obtained from outside the United States constitute not more  
            than five percent of the final wholesale value of the  
            manufactured product.  (BPC Section 17533.7 (b).)


          3)Provides that merchandise made, manufactured, or produced in  
            the United States that has one or more articles, units, or  
            parts from outside of the United States may be labeled "Made  
            in U.S.A.," "Made in America," "U.S.A.," or similar words if  
            both of the following apply:


             a)   The manufacturer of the merchandise shows that it can  
               neither produce the article, unit, or part within the  
               United States nor obtain the article, unit, or part of the  
               merchandise from a domestic source; and


             b)   All of the articles, units, or parts of the merchandise  
               obtained from outside the United States constitute not more  
               than 10 percent of the final wholesale value of the  
               manufactured product.  (BPC Section17533.7 (c)(1)(A)(B).)


          1)Provides that California's domestic origin labeling law shall  
            not apply to merchandise sold for resale to consumers outside  
            of the State of California.  (BPC Section 17533.7 (d).)


          2)States that merchandise sold or offered for sale outside of  
            the State of California shall not be deemed mislabeled if the  
            label conforms to the law of the forum state or country within  
            which they are sold or offered for sale.  (BPC Section 17533.7  








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            (e).)


          3)Prohibits, under the Consumer Legal Remedies Act (CLRA), any  
            unfair methods of competition, acts or practices by any person  
            which either results in or is intended to result in the sale  
            or lease of goods or services to any consumer.  (Civil Code  
            Section 1770.)
          4)Provides, under the CLRA, that any consumer who suffers damage  
            as a result of a practice declared to be unlawful under the  
            CLRA may bring an action against that person to recover  
            damages, as specified, and allows for a class action suit to  
            be filed on behalf of a class of consumers adversely affected  
            by an unfair method of competition, act or practice.  (Civil  
            Code Sections 1780, 1781.)


          5)Requires, under the CLRA, thirty days or more prior to the  
            commencement of an action for damages, the consumer to do the  
            following:


             a)   Notify the person alleged to have employed or committed  
               methods, acts, or practices that are alleged to be  
               violations of the CLRA in writing (sent by certified or  
               registered mail, return receipt requested, to the place  
               where the transaction occurred or to the person's principal  
               place of business within California).  (Civil Code Section  
               1782 (a).)
             b)   Demand that the person correct, repair, replace, or  
               otherwise rectify the goods or services alleged to be in  
               violation of the CLRA.  (Civil Code Section 1782 (a).)


          1)Prohibits, under the CLRA, any action for damages if an  
            appropriate correction, repair, replacement, or other remedy  
            is given, or agreed to be given within a reasonable time, to  
            the consumer within 30 days after receipt of the notice.   
            (Civil Code Section 1782 (b).)








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          2)Prohibits, under the CLRA, any action for damages upon a  
            showing by a person alleged to have employed or committed  
            methods, acts, or practices declared unlawful by the CLRA that  
            all of the following exist:


             a)   All consumers similarly situated have been identified,  
               or a reasonable effort to identify such other consumers has  
               been made.
             b)   All consumers so identified have been notified that upon  
               their request the person shall make the appropriate  
               correction, repair, replacement, or other remedy of the  
               goods and services.


             c)   The correction, repair, replacement, or other remedy  
               requested by the consumers has been, or, in a reasonable  
               time, shall be, given.


             d)   The person has ceased from engaging, or if immediate  
               cessation is impossible or unreasonably expensive under the  
               circumstances, the person will, within a reasonable time,  
               cease to engage, in the methods, act, or practices.  (Civil  
               Code Section 1782 (c).)


          1)Allows, under the CLRA, an action for injunctive relief to be  
            commenced without compliance with 8), above, and allows a  
            consumer to amend his or her complaint without leave of court  
            to include a request for damages 30 days after the  
            commencement of an action for injunctive relief after  
            compliance with 8), above.  (Civil Code Section 1782 (d).)
          2)Specifies that attempts to comply with the CLRA by a person  
            receiving a demand shall be construed to be an offer to  
            compromise and shall be inadmissible as evidence pursuant to  
            Section 1152 of the Evidence Code, but that such attempts to  
            comply with a demand shall not be considered an admission of  
            engaging in an act or practice declared unlawful by the CLRA  








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            and that evidence of compliance or attempts to comply with  
            this section may be introduced by a defendant for the purpose  
            of establishing good faith or to show compliance with the  
            CLRA.  (Civil Code Section 1782 (d).)


          3)Makes it unlawful to represent that a product is made in  
            California, by using a specified "Made in California" label,  
            unless the product complies with the requirements of the Made  
            in California Program established by the Governor's Office of  
            Business and Economic Development and registers for the  
            program.  (Government Code Section 12098.10.)


          Existing Federal Law:


          1)Authorizes the Federal Trade Commission to regulate country of  
            origin claims pursuant to authority granted to it under the  
            Federal Trade Commission Act, which prohibits "unfair or  
            deceptive acts or practices."  (15 U.S.C. Sec. 45.)  
          2)Requires that a "Made in U.S.A." label be consistent with  
            orders and decisions of the Federal Trade Commission.  (15  
            U.S.C. Sec. 45 (a).)


          3)Provides that a product may be labeled as "Made in U.S.A." if  
            the product is all or virtually all made in the United States,  
            however a product using such a label may contain-in a  
            negligible amount-components made outside of the United  
            States.  (Federal Trade Commission, Enforcement Policy  
            Statement on U.S. Origin Claims, 62 Fed. Reg. 63756, 63765  
            (Dec. 2, 1997).)
          FISCAL EFFECT:  As currently in print this bill is keyed  
          non-fiscal.


          COMMENTS:  The Legislature has long considered consumer  
          protection to be a matter of high public importance.  State law  








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          is replete with statutes aimed at protecting California  
          consumers from unfair, dishonest, or harmful market practices.   
          The CLRA (Civ. Code Sec. 1750 et seq.), for example, was enacted  
          "to protect the statute's beneficiaries from deceptive and  
          unfair business practices," and to provide aggrieved consumers  
          with "strong remedial provisions for violations of the statute."  
           (Am. Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1,  
          11.)  The CLRA defines a number of generic acts as "unfair  
          methods of competition and unfair or


          deceptive acts or practices" including "[m]isrepresenting the  
          source, sponsorship, approval, or certification of goods or  
          services" (Civil Code Section 1770(a)(2),  as well as a number  
          of specific acts, such as violating, the Made in California  
          labeling law (Id, at (a)(27)).  Similarly, California's Unfair  
          Practices Act (BPC Section 17000 et seq.) has protected  
          California consumers from "unlawful, unfair or fraudulent  
          business act[s] or practice[s]" for over 70 years.  (BPC Section  
          17200.)


          Until January 1, 2016, California was the only state in the  
          nation that required product manufacturers to source 100 percent  
          of their products domestically before using the "Made in USA" or  
          "Made in America" label.  This requirement applied to all  
          components and subcomponents.  Thus, the entire supply chain was  
          required to be located within the United States.  California  
          departed from this historic and unique labeling requirement when  
          it enacted Senate Bill 633 ((Hill), Chapter 238, Statutes of  
          2015) which relaxed the standards for use of the labels.  SB 633  
          allows a manufacturer to use the Made in the U.S.A. label if 95  
          percent of its product is domestically-produced, or 90 percent  
          if the remaining content could not be made or obtained within  
          the United States. 


          Despite the relaxed labeling standards, consumer protection  
          regarding country of origin labeling is a matter of important  








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          public policy.  California consumers who care about truthful  
          labels suffer an economic loss when they purchase a product they  
          would not otherwise have purchased, had not the label accurately  
          stated the product's origins. Further, California's "Made in  
          U.S.A." law protects domestic businesses and the market value of  
          the "Made in America" label by ensuring that companies cannot  
          gain a competitive advantage through false or misleading  
          advertising. 


          The value of a "Made in America" label in the manufacturing  
          sector is substantial.  Studies show that Americans will pay a  
          premium to purchase products exclusively manufactured in the  
          United States and that consumers rely on the "Made in USA" or  
          "Made in America" label to guide their purchases. Manufacturers  
          seem to understand the value of these labels to consumers, as  
          demonstrated by the fact that California's largest corporation,  
          Apple Inc., recently shifted production of its Mac Pro personal  
          computer line to the United States as part of a "$100 million  
          'made in the USA' push."  (Burrows, Apple Kicks Off "Made in  
          USA" Push with Mac Pro (Dec. 18, 2013) The San Francisco  
          Chronicle  
           (as of January 4, 2014).)   
          Announcing the company's shift to domestic production, Chief  
          Executive Officer Tim Cook said "[w]e don't want to just  
          assemble the Mac Pro here, we want to make the whole thing here.  
          This is a big deal." (Ibid.)  Apple's decision reflects the  
          market reality that products advertised or labeled as "Made in  
          U.S.A." have a decisive marketplace advantage over their foreign  
          counterparts. Indeed, an April 2013 Gallup poll found that 45  
          percent of Americans surveyed had made a recent special effort  
          to buy products that were made in the U.S.A., and that 64  
          percent of those surveyed would pay more to buy an American-made  
          product than a similar product made in another country.  (Jones,  
          Patriotism, Jobs Primary Motivations for 'Buying American' (Apr.  
          30, 2013) Gallup Economy <  
          http://www.gallup.com/poll/162110/patriotismjobs-primary-motivati 
          ons-buying-american.aspx> (as of January 5, 2014).)








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          Author's Stated Need for the Bill.  The author claims that at  
          least one attorney has been busy in the five months since SB 633  
          was enacted, stating that within days of SB 633 taking effect,  
          "hundreds" of demand letters were sent out.  The letters demand  
          that the companies do the following: (1) cease and desist sales;  
          (2) initiate a corrective action advertising campaign; and (3)  
          pull all products off the shelves and refund purchases.  The  
          author further states that complying with these egregious  
          demands would put the companies out of business. Further,  
          although the letter invites companies to "enter into discussions  
          to resolve the demands," the author asserts that many companies  
          view this as a shakedown. 


          Further, the author has given the Committee an example of a  
          lotion manufacturer in his district whose principle market is  
          overseas that was sued because its label complied with foreign  
          labeling rules, but not California's "Made in the U.S.A." laws.


          The author of this bill also states that SB 633 was not intended  
          to require companies to pull all their products off the shelves.  
           Rather, the intent of SB 633 was to "help promote manufacturing  
          in California, to encourage the establishment of small  
          businesses, and to help create jobs in the state and to make the  
          "Made in U.S.A." or "Made in California" labeling standard  
          consistent with the "all or virtually all" standards used by all  
          49 other states and the federal government." 


          Author's Proposed Amendments.  In response to the Committee's  
          concerns with the language of this bill as now in print, the  
          author proposes to delete the content of the bill in its  
          entirety and instead amend the CLRA by adding the following  
          paragraph to subdivision (a) of Section 1770:










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            (28) Representing that a product is made in the United States  
            by using "Made in U.S.A.," "Made in America," "U.S.A.," or  
            similar words if the merchandise or any article, unit, or part  
            thereof, has been entirely or substantially made,  
            manufactured, or produced outside of the United States, unless  
            the product complies with Section 17533.7 of the Business and  
            Professions Code.


          It is noteworthy that paragraph (27) of subdivision (a) of  
          Section 1770, added to the CLRA in 2013, as discussed below,  
          addresses violations of the "Made in California" labeling law.   
          Section 1770 (a)(27) provides as follows:


            (27) Representing that a product is made in California by  
            using a Made in California label created pursuant to Section  
            12098.10 of the Government Code, unless the product complies  
            with Section 12098.10 of the Government Code.


          It is also possible that Made in the U.S.A. violations are  
          already governed by the CLRA, which lists "[m]isrepresenting the  
          source, sponsorship, approval, or certification of goods or  
          services" as an unfair method of competition and an unfair or  
          deceptive act or practice.  (Civil Code Section 1770 (a)(2).)   
          In order to clarify the law and given that the Made in  
          California labeling law is already incorporated into the CLRA,  
          it seems appropriate to also incorporate the "Made in the U.S.A.  
          " law, set forth in BPC 17533.7, into the CLRA.  And it seems  
          particularly appropriate that the two similar provisions be  
          listed sequentially in the CLRA.


          Right to Cure Violations in the CLRA are More Protective of  
          Consumers than Those of the bill in Print.  Under existing law,  
          a consumer who suffers damage as a result of an unlawful  
          practice under the CLRA may bring a private right of action and  
          recover actual damages; an order to enjoin the unlawful act;  








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          restitution; punitive damages; or any other relief that the  
          court deems proper.  (Civil Code Section 1780.)  Notably,  
          pursuant to Civil Code Section 1782 (b), the potential defendant  
          has the ability to "cure" a violation within 30 days after  
          receipt of the consumer's claim seeking damages by correcting  
          the problem.  However, a consumer can still file an action for  
          injunctive relief without having to wait the 30 days.  Also,  
          after waiting the 30 days, the consumer can amend the complaint  
          to include a request for damages. 


          How does the "right to cure" provision in the CLRA adequately  
          serve the interests of consumers in a way that the "right to  
          cure" provision originally proposed in this bill did not?   
          First, the requirements for the defendant to demonstrate that a  
          violation has been "cured" are extensive and specific.  Under  
          the CLRA, a consumer's claim for damages is only foreclosed upon  
          the prospective defendant's showing that all of the following  
          exist: (1) all consumers similarly situated have been  
          identified, or a reasonable effort to identify such other  
          consumers has been made; (2) all consumers so identified have  
          been notified that upon their request the person shall make the  
          appropriate correction, repair, replacement, or other remedy of  
          the goods and services; (3) the correction, repair, replacement,  
          or other remedy requested by the consumers has been, or, in a  
          reasonable time, shall be, given; and (4) the person has ceased  
          from engaging, or if immediate cessation is impossible or  
          unreasonably expensive under the circumstances, the person will,  
                                     within a reasonable time, cease to engage, in the methods, act,  
          or practices.  (Civil Code Section 1782 (c).)  Second, the CLRA  
          specifically allows actions for injunctive relief to be filed  
          without the notification requirement or the 30-day right to  
          cure.  Finally, the consumer's civil action for damages is not  
          foreclosed in a case where the defendant has failed to comply  
          with all of the requirements, above.  None of these requirements  
          or specifications is present in the bill as it is now in print.


          This bill, as proposed to be amended, would add violations of  








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          the "Made in the U.S.A." law to the list of "unfair methods of  
          competition and unfair or deceptive acts or practices"  
          enumerated in the CLRA.  By including the unlawful use of the  
          "Made in the U.S.A" law under the CLRA, this bill would provide  
          a private right of action for a consumer who suffers damage as a  
          result of a product being labeled with "Made in U.S.A.," "Made  
          in America," "U.S.A.," or similar words if all of the articles,  
          units, or parts of the merchandise obtained from outside the  
          United States constitute more than five percent (or 10 percent  
          in some cases) of the final wholesale value of the manufactured  
          product.  But it would also give businesses the opportunity to  
          correct violations of the law within 30 days.  Providing a  
          business with an appropriate method of rectifying an otherwise  
          mistaken use of the "Made in in the U.S.A" label under the  
          conditions articulated in the CLRA arguably provides an  
          appropriate balance between consumer protection and business  
          concerns regarding the potential for frivolous litigation.


          Violations of the Made in California Labeling Law are Already  
          Incorporated into the CLRA.  In 2013, violations of the Made in  
          California labeling law were added to the list of "unfair  
          methods of competition and unfair or deceptive acts or  
          practices" enumerated in the CLRA when SB 12 (Corbett, Ch. 541,  
          Stats. of 2013) was signed into law.


          The analysis of SB 12 by the Senate Judiciary Committee quoted  
          the California Small Business Association, as follows, in  
          support of the bill: 


               We believe this bill will help small businesses be  
               competitive by promoting the production of goods in  
               California.  We are proud to be Californians and should  
               promote products made in California.  The more production  
               that takes place in California[,] the more jobs will be  
               available."  While this bill aims to increase California  
               product promotion, it also seeks to protect consumers and  








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               California businesses from improper use of the Made in  
               California label.  This bill would provide appropriate  
               consumer protection by including the unlawful use of the  
               Made in California label under the CLRA, and provide a  
               private right of action against businesses that improperly  
               utilize the label.  Accordingly, businesses would be  
               incentivized to participate in the program since proper  
               compliance and usage of the Made in California label would  
               help these businesses improve sales. 


          Presumably, the provisions of this bill, as it is proposed to be  
          amended, would provide appropriate consumer protection to the  
          public, by including the unlawful use of the words "Made in  
          U.S.A.," "Made in America," "U.S.A.," or similar words in the  
          CLRA while protecting both businesses and consumers from misuse  
          of those terms.    


          ARGUMENTS IN SUPPORT:  In support of the bill as now in print,  
          the California Small Business Association, states that:

               Small businesses respect the law and will continue to do  
               so.  They have not intentally (sic) broken them but often  
               the interpretation is at odds as well as information on new  
               regulations not communicated to the small business owners.   
               However, many of our small businesses have been subject to  
               threats of frivolous lawsuits and shakedowns.  This "right  
               to cure" is a giant step forward.

          In support of the bill as it is now in print, the California  
          Manufacturers & Technology Association, states that:

               Right-to-cure provisions represent a real, necessary  
               protection from predatory lawsuits that ultimately cost  
               California manufacturers to fight, win or lose. 

          The California Chamber of Commerce, states the following about  
          the bill in print:








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               AB 2827 is a job creator as it will provide businesses with  
               a limited time period in which to resolve alleged labeling  
               violations regarding product "Made in the USA" or "Made in  
               California" without facing devastating litigation.  
               Consistent with other areas of the law, AB 2827 seeks to  
               limit litigation for alleged de minimums violations  
               regarding representation of where the product was made.  

               The Consumer Legal Remedies Act (CLRA) allows consumers to  
               pursue costly litigation against businesses for over 20  
               different "unfair methods of competition," including  
               deceptive representations as to the geographical source of  
               the good.  This financial threat of litigation has created  
               an opportunity for attorneys to leverage businesses into  
               quick monetary settlements for alleged misrepresentations  
               on labels of goods that represent "Made in USA" or Made in  
               California" or even a specific location in California.   
               While certainly there are egregious examples of where a  
               company has misrepresented the geographical source of a  
               good, there are numerous examples of where all, or the  
               majority of all ingredients, components or parts of the  
               product are sourced in the geographical location identified  
               and yet the threat of litigation is still leveraged against  
               these businesses. 

          In support of the bill, as now in print, the Civil Justice  
          Association of California, states that:

               The right to cure concept is already found in a number of  
               California statutes, including the Consumer Legal Remedies  
               Act (see Civil Code § 1782), Private Attorneys General Act  
               (PAGA) (see Labor Code § 26993(c)(2)), and Civil Code  
               sections dealing with construction-related accessibility  
               complaints (see Civil Code § 55.56.) 

               AB 2827 is necessary because California companies have  
               recently received demand letters alleging violations of the  
               California Government Code § 12098.10 and Business and  








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               Professions Code § 17533.  These letters include demands  
               that many companies would find impossible to meet without  
               going bankrupt: the examples we have seen called for ending  
               the sale of all disputed products, full recalls, refunds,  
               and advertising campaigns to inform consumers of the "true  
               nature" of disputed products.  Companies must choose  
               between meeting these unreasonable demands, settling out of  
               court and providing the plaintiff attorneys with a  
               financial windfall, or engaging in costly litigation to  
               defend their labels.  AB 2827 is a practical way to protect  
               California manufacturers and businesses from abusive  
               litigation by allowing a company to cure an alleged  
               violation by including (but not limited to) changing the  
               label going forward.   

               By allowing a prospective label change and time to cure  
               prior to commencement of a civil action, this bill provides  
               a means to act on genuine concern about the accuracy of  
               information provided to consumers via origin labeling. At  
               the same time the bill removes the incentive for abusive  
               lawsuits intended to enrich litigators rather than protect  
               consumers. 

          ARGUMENTS IN OPPOSITION:  The Animal Legal Defense Fund writes  
          the following in opposition to this bill now in print:

               Giving businesses the right to "cure" errors on labels  
               would not only undermine consumer confidence that their  
               choices matter, it might also endanger the health of pets  
               in California, the more immediate threat to which I refer  
               above. You are likely aware that many pets died in 2007  
               after consuming adulterated products containing ingredients  
               imported from China. Many concerned pet owners and  
               guardians determined afterward to purchase only those  
               products labeled Made in the USA, which they believe to be  
               safer. While existing law enacted through S.B. 633 does  
               permit a producer to use the Made in the USA label even for  
               products in which 10% of the ingredients derive from  
               foreign sources, the threat to animals arising from that  








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               policy choice is considerably less severe than the threat  
               to animals that A.B. 2827 might create-namely, that  
               dishonest producers, armed with a free pass, will peddle  
               their products as American-made even while they might be  
               substantially derived from foreign sources. Indeed, several  
               lawsuits are currently working their way through federal  
               courts in California against major pet food retailers  
               alleged to have resorted to deceptive marketing. A.B. 2827  
               might enable these defendants to walk away, leaving the  
               injuries of the California consumer-plaintiffs unredressed.

          In opposition of the bill, as now in print, the California  
          Teamsters Public Affairs Council states that: 

               This bill is premature given that California just enacted  
               laws dealing with these two labeling statutes and requiring  
               a new procedure to enforce them is not necessary. Further,  
               the "right to cure" violations expressed in the bill is  
               completely ambiguous.  There is no definition of how a  
               company would "cure" what is in essence fraud on the  
               consumer. 

          In opposition of the bill, the Consumer Federation of California  
          (CFC) states about the bill in print: 

               On January 1, 2016, Senate Bill 633 (Hill) became law.  SB  
               633 lowered the standard to allow a product containing as  
               much as 10% imported content to be lawfully offered for  
               sale in California bearing a "Made in USA" or "Made in  
               America" label.  We believe the legislature should grant  
               this brand new law a reasonable time period to operate  
               before further weakening an important truth in advertising.  
                This bill would create a perverse incentive for certain  
               business to take advantage of a blanket immunity from  
               enforcement of a consumer protection law.  

          SIMILAR PRIOR LEGISLATION:  AB 2624 (Medina, 2014) would have  
          made it unlawful to sell any product that contains the words  
          "Made in North America," "North American Made," or similar words  








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          on the product or its container unless all or virtually all of  
          the product was made in the United States, Canada, or Mexico.   
          This bill would have also added misrepresenting a product as  
          made in North America to the list of unfair methods of  
          competition and unfair or deceptive acts or practices actionable  
          under the Consumers Legal Remedies Act.  This bill died on the  
          Senate Inactive File.

          SB 661 (Hill, 2014) would have provided that merchandise made,  
          manufactured, or produced in the United States that has an  
          article, unit, or part from outside of the United States may be  
          labeled and sold in California as "Made in U.S.A." or "Made in  
          America" if the following requirements are met:  (1) the  
          manufacturer of the merchandise certifies that it can neither  
          produce the article, unit, or part within the United States nor  
          obtain the article, unit, or part of the merchandise from a  
          domestic source; (2) the manufacturer's determination that the  
          article, unit, or part cannot be produced or obtained within the  
          United States from a domestic source is not based on the cost of  
          the article, unit, or part; and (3) the article, unit, or part  
          of the merchandise obtained from outside the United States  
          constitutes only a negligible part of the final manufactured  
          product.  This bill failed passage out of the Senate Judiciary  
          Committee on a 2-5 vote.

          AB 890 (Jones, 2013) would have provided that a product sold in  
          California could carry the label "Made in U.S.A." if it was  
          substantially made, manufactured, or produced in the United  
          States as measured by the following criteria: at least 90  
          percent of the components, parts, articles, or units of the  
          merchandise were manufactured in the United States; United  
          States manufacturing costs constitute at least 90 percent of the  
          total manufacturing costs for the merchandise; and the  
          merchandise was last substantially transformed or assembled in  
          the United States.  This bill failed passage out of the Senate  
          Judiciary Committee on a 2-5 vote.

          AB 858 (Jones, 2012) was substantially similar to SB 663 (Hill,  
          2015).  This bill failed passage out of the Senate Judiciary  








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          Committee on a 2-3 vote.

          ABX6 8 (Beall, 2010) identical to AB 858, this bill was  
          introduced in the Sixth Extraordinary Session but was never  
          referred to a policy committee.

          SB 1004 (Holmdahl, Ch. 676, Stats. 1961) codified California's  
          "Made in the U.S.A." law, making it unlawful for any person,  
          firm, corporation, or association to sell or offer for sale any  
          merchandise that advertises itself as being made or manufactured  
          in the United States when any article, unit, or part of the  
          merchandise has been entirely or substantially made,  
          manufactured, or produced outside of the United States.

          REGISTERED SUPPORT / OPPOSITION:




          Support (for the bill as now in print)


          California Chamber of Commerce


          California Manufacturers & Technology Association


          California Retailers Association


          California Small Business Association


          Civil Justice Associations of California












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          Opposition (for the bill as now in print)


          Animal Legal Defense Fund  


          California Conference Board of the Amalgamated Transit Union


          California Conference of Machinists


          California Teamsters Public Affairs Council


          Consumer Federation of California


          Engineers & Scientists of California, Local 20, IFPTE Local 20,  
          AFL-CIO


          Professional & Technical Engineers, IFPTE Local 20, AFL-CIO


          UNITE-HERE, AFL-CIO


          Utilities Workers Union of America, Local 132, AFL-CIO




          Analysis Prepared by:Alison Merrilees and Amanda Hall / JUD. /  
          (916) 319-2334












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