Filed by Bursor & Fisher and Reardon Scanlon on December 20, 2021, a class action lawsuit by Cristostomo et al. contended that New Balance falsely marketed its walking and running sneaker products as “Made in USA.”
The claim raised against New Balance Athletics, Inc., commonly known as New Balance, contends that as much as 30 % of the shoes’ individual components, inclusive of the soles, are not U.S. manufactured.
The plaintiffs alleged that the products with the tagline “Made in USA” are misleading. The initial lawsuit stated that while New Balance claims to sell several kinds of footwear that are “Made in the USA,” it turns out that only 30% of their footwear is actually made in the USA. In fact, one of the components made outside of the USA is the sole of the sneakers, which is one of the most important parts of the shoe.
In the 45-page lawsuit, the plaintiffs allege that New Balance’s “Made in USA” phrasing has fallen short of the requirements defined by the Federal Trade Commission (FTC).
The FTC regulations require all or virtually all of a product to be Made in the USA to be advertised as such. According to the complaint filed, New Balance has been outed by the FTC for misleading consumers, which can result in fines and penalties according to FTC guidelines.
Nevertheless, New Balance has continued to use the Made in USA claim for its “MADE” shoe series, possibly because consumers are willing to pay more for sneakers they believe are Made in the USA.
The story gets interesting; as noted above, this is not a first for New Balance as they have been taken to task previously over their Made in USA labeling.
In the previous 2019 case, New Balance, without admitting any liability, agreed in a settlement to disclose that its shoes do indeed have a domestic value of 70% or greater and had to pay $750,000 in damages.
In the 2019 case, plaintiffs did acknowledge that New Balance disclosed on its website and packaging that the products contain a domestic value of 70% or greater.
Still, the plaintiffs asserted that the term “domestic value” was not clear and that, as consumers, they were not likely to see the disclosures. The plaintiffs had also cited the Federal Trade Commission’s requirements for unqualified claims.
According to the FTC, all or virtually all ingredients or components of the product must be manufactured and sourced in the U.S. The manufacturer must clearly and conspicuously disclose any qualifying language.
Fast forward one year to December 23, 2022, and Boston’s District Court federal judge Angel Kelley for the District of Massachusetts has denied New Balance’s motion to dismiss the claim. The judge has ruled that the “Made in USA” branding on certain of their products was deceptive marketing.
New Balance did admit that they use up to 30% of foreign materials in the construction of the MADE collection, and they also noted this fact in the disclaimer for their customers.
Judge Kelley wrote that he will not dismiss the case as New Balance’s disclaimer are too inconspicuous and ambiguous for the average consumer to notice even when viewed. Kelly firmly stated that New Balance could not negate or limit a warranty if the product contains unqualified Made in the USA marketing.
With over 100 members, the complaint now seeks $5 million in damages.