BILL ANALYSIS �
SB 823
Page 1
Date of Hearing: June 28, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 823 (Corbett) - As Amended: May 31, 2011
SENATE VOTE : 23-13
SUBJECT : Consumer Protection: Made in California Program
KEY ISSUES :
1)Should a "Made in California" Program be established within
the Office of Economic Development, in order to encourage
consumer product awareness and foster purchase of high-quality
goods made in this state?
2)Should using a designated "Made in California" label without
participating in the "Made in California" Program constitute
unfair competition or an unfair or deceptive business
practice?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
This bill creates a Made in California Program within the
recently established Governor's Office of Economic Development
(OED). In order to increase consumer awareness and encourage
the purchase of goods manufactured in California, this program
will authorize the OED to enter into agreements with companies
that meet program standards. The OED will create and issue
"Made in California" labels to companies that meet OED
standards, so that consumers will know when they are buying
goods that were manufactured within the state. This bill would
make misrepresenting a product through the unauthorized use of
the label an unfair method of competition or deceptive practice,
subject to the remedies provided in the Consumer Legal Remedies
Act. (Civil Code Sections 1750 et seq.) By expressly
restricting violations to uses of the particular label made and
issued by the OED, it is apparently the author's intent that a
company that manufactures its goods within the state, but does
not participate in the program, may still use a label indicating
that the good is made in California, so long as it is not, or
SB 823
Page 2
does not purport to be, a label made and issued by the OED. The
bill is co-sponsored by Small Business California and the
California Small Business Association. It is also supported by
several labor organizations. There is no known opposition. The
bill passed off the Senate Floor on a 23-13 vote and passed out
the Assembly Business & Professions Committee on a 6-0 vote.
SUMMARY : Creates the Made in California Program within the
Governor's Office of Economic Development and makes it an unfair
method of competition or an unfair or deceptive business
practice to use a designated "Made in California" label without
participating in the Made in California Program. Specifically,
this bill :
1)Makes it an unfair method of competition or unfair or
deceptive business practice to sell or lease, or intend to
sell or lease, a product using a "Made in California" label to
a consumer, unless the product complies with standards adopted
by OED.
2)Authorizes OED to develop and adopt standards that permit a
company to represent that a product is made in this state.
Those standards may include any of the following:
a) The company primarily designs and manufactures a
physical product, rather than a digital product or service.
b) The company manufactures one or more products in this
state.
c) The company has a California-based workforce and has the
desire to grow that workforce over time.
1)Authorizes OED to issue and make effective a marketing
agreement, including, but not limited to, the issuance of a
"Made in California" label to businesses willing to
participate in the Made in California program, as specified.
2)Requires OED to submit a report to the Legislature on January
1, 2013, and annually each January 1 thereafter, regarding the
expenditures, progress, and ongoing priorities of the Made in
California Program.
3)Establishes, within the State Treasury, a special fund, upon
appropriation of those funds by the Legislature, to be used to
further the purposes of the Made in California program.
SB 823
Page 3
4)Exempts from the provisions of this bill agricultural products
subject to the Buy California Program within the Department of
Food and Agriculture.
5)Defines "manufacture" to mean the process of taking raw
materials or components and adding value to those materials
and components in order to create a final, recognizable
product. Specifies that "manufacture" does not include the
process of completing a final assembly from subassemblies made
elsewhere, or the act of packaging a product.
EXISTING LAW :
1)Makes unlawful certain acts as unfair methods of competition
and unfair or deceptive practices undertaken by any person in
a transaction intended to result in, or which do results in
the sale or lease of goods to any consumer. (Civil Code
Section 1770.)
2)Permits a consumer who suffers damage as a result of an act or
practice made unlawful by the above provision to bring an
action, including a class action if appropriate, to recover or
obtain actual damages, injunctive relief, restitution,
punitive damages, or any other relief that the court deems
proper. (Civil Code Sections 1780 and 1781.)
3)Requires a consumer, at least 30 days prior to commencing an
action authorized by the above provision, to notify the person
alleged to have committed the unlawful act or acts and demand
that the person correct, repair, replace, or otherwise rectify
the goods or services alleged to be in violation. Specifies
that, except for certain class actions and actions for
injunctive relief, a consumer may not commence an action if an
appropriate correction, repair, replacement, or other remedy
is given to the consumer within 30 days receipt of the notice,
or within a reasonable period of time agreed to by the
consumer. (Civil Code Section 1782.)
4)Establishes within the Department of Food and Agriculture
(DFA) a public and private collaboration, known as the "Buy
California Program," in order to encourage consumer
nutritional and food awareness and to foster purchases of
high-quality California agricultural products. Permits the
secretary of the DFA to make marketing agreements with
elements of the food and agriculture industry that are willing
SB 823
Page 4
to participate in the program. (Food and Agriculture Code
Sections 58749 and 58750.)
COMMENTS : According the author, this bill seeks to reduce
California's unemployment rate and an alleged loss of
manufacturing jobs in the state by increasing consumer awareness
and encouraging the purchase of goods manufactured in
California. Specifically, SB 823 would create a "Made in
California" Program within the Governor's Office of Economic
Development (OED), which was established by executive order by
Governor Schwarzenegger in order to create and maintain jobs
that "are critical to California's economic well-being and
quality of life." (Executive Order S-05-10.) Consistent with
those goals, the "Made in California" Program proposed by this
bill would authorize the OED to enter into agreements with
companies that meet program standards by making their goods
within the state, using a California-based workforce, and
demonstrating a desire to grow that workforce over time. The
OED will create and issue "Made in California" labels to
companies that meet OED standards, so that consumers will know
when they are buying goods that were manufactured within the
state. This bill is apparently inspired by, and loosely modeled
after, the "Buy California" and "California Grown" programs that
promote the purchase of agricultural goods grown or produced
within the state.
In addition to creating this new program, SB 823 will add the
unauthorized use of "Made in California" labels to the list of
acts and practices that constitute unfair competition or
deceptive business practices under the Consumers Legal Remedies
Act (Civil Code Section 1750 et seq.). That Act authorizes a
consumer who is harmed as a result of an unfair competition or a
deceptive business practice to bring an action to recover
specified damages or injunctive relief. (Id. Section 1780.)
However, subject to certain exceptions for class actions or
actions for injunctive relief, the consumer must first give the
offender a 30-day notice and an opportunity to correct or
otherwise rectify the harm. (Id. Section 1782.) The bill was
previously amended to clarify that the offense only applies to
the unauthorized use of the specific "Made in California" that
is issued to program participants. It is apparently the
author's intent, therefore, that a company that manufactures its
product in California, but who does not want to participate in
the program, can still use a label that says "Made in
California" - however, a company that does not participate in
SB 823
Page 5
the program may not use the label that is issued by the OED
unless it also participates in the program and meets OED
standards.
The bill does not create specific program standards; rather, it
sets forth general guidelines that the OED may use in developing
and adopting those standards at some point in the future.
Although the bill does not set any date by which the OED must
develop standards, it does, nonetheless, require the OED to
report to the Legislature on January 1, 2013, and each
successive January 1 thereafter, regarding the program's
expenditures, progress, and ongoing priorities. Finally, this
bill establishes a "Made in California Fund" within the State
Treasury, to receive any funds that the Legislature may
appropriate for that purpose.
ARGUMENTS IN SUPPORT : According to the author's office,
"California's unemployment rate has increased to 12.4%, one of
the highest in the nation. Non-farm payroll jobs decrease by
33,500 each month, according to the California Employment
Development Department? Our economy cannot be sustainable
without products made in California, and our consumer market
will continue to be sluggish until we increase the state's
employment rate. Our main source of employment in the state
continues to be local and small companies." The author believes
that the "Made in California" program will promote the purchase
of goods produced in California and thereby help reduce some of
these troubling trends. In support of this belief, the author
points to the success of the "Buy California" and "California
Grown" efforts carried out by the California Department of Food
and Agriculture. According to the author, the "California Grown
Program is a good example of how companies can benefit from
collaboration with other businesses and the state. Sales of
California Grown produce increased by 7.2% after the start of
that marketing campaign and generated $897 for California's
businesses, workers, and economy."
According to the co-sponsor, Small Business California, "SB 823
would state intent standards for a product to be labeled �and]
will also authorize the OED to partner with interested
businesses that are willing to participate in this voluntary
program through a marketing agreement to develop a program
similar to the California Grown Program. SB 823 would
effectively start a true public-private partnership that will
effectively promote California manufacturers."
SB 823
Page 6
REGISTERED SUPPORT / OPPOSITION :
Support
California Small Business Association (co-sponsor)
Small Business California (co-sponsor)
American Federation of State, County and Municipal Employees
California Conference Board of the Amalgamated Transit Union
California Conference of the Machinists
California Labor Federation
California Metals Coalition
California Official Court Reporters Association
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
Service Employees International Union, California State Council
Solaria
Solyndra
Tesla Motors, Inc.
UNITE HERE!
United Food and Commercial Workers - Western States Conference
Utility Workers Union of America, Local 132
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334