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Illinois District Court Withholds Judgment on Standing Issue in “Made in USA” Claims Against Supplement Manufacturer

Dec 22, 2017 | Posted by Parada K. Ornelas | Topic: Class Actions

The Federal Trade Commission (“FTC”) requires that to be labeled or advertised as “Made in USA,” a product must be “all or virtually all” made in the United States. This means that significant parts and processing that go into the product must be of U.S. origin, and should contain negligible or no foreign content. Businesses can also make a qualified “Made in USA” claim for products that include American content or processing but do not meet the criteria for making an unqualified claim. Nonetheless, because a company does not need the FTC’s approval before making a “Made in USA” claim, and FTC’s guidance are persuasive but not binding, advertising can remain unchecked and unverifiable--which is what Plaintiff Angel McDonnell claimed happened in a class action lawsuit recently brought against supplement manufacturer Nature’s Way Products, LLC (“Nature’s Way”) in the U.S. District Court for the Northern District of Illinois, Angel McDonnell v. Nature’s Way Products, LLC, Case No. 16C5011. 

Plaintiff alleged that the “Made in USA” labeling on Nature’s Way vitamin supplements was misleading as it actually contained a foreign-sourced ingredient, in violation of the Illinois Uniform Deceptive Trade Practices Act (“UDTPA”), the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) and certain other states’ consumer fraud laws.  The supplements, called Women’s Alive, contains vitamin C in the form of ascorbic acid, which plaintiff alleges was manufactured overseas. 

On Nature’s Way’s motion to dismiss plaintiff’s amended complaint, the district court dismissed the UDTPA claim, without prejudice.  The district court bought Nature Way’s argument that plaintiff had not adequately alleged that Nature’s Way’s representations on the labels will harm her in the future, and thus was not entitled to injunctive relief under the UDTPA. Specifically, the court was persuaded by the fact that plaintiff did not allege that she had recently purchased the product (she originally purchased the supplements between 2013 and 2014) and her filing of this lawsuit means that she is unlikely to be harmed in the future. 

The district court also dismissed plaintiff’s claims related to unidentified products made by Nature’s Way. Because plaintiff neither named the other products nor alleged that she purchased them or what the labeling on those products state, the court did not allow plaintiff to proceed with those claims on her own or on behalf of the putative class. 

Plaintiff, however, was allowed to proceed with her claims under the ICFA. The district court agreed with plaintiff that she was not required to plead with more specificity (i.e. the countries from which the ascorbic acid is sourced) in alleging deceptive or unfair act or practice by Nature’s Way. The court found that plaintiff’s allegations in the complaint that she paid more for the supplements because they were labeled “Made in the USA,” and that she would not have purchased them otherwise, were sufficient to state an ICFA claim. 

Finally, Nature’s Way argued that plaintiff could not seek relief on behalf of a multistate class because she did not reside in and did not purchase any of the products from those other states. The court noted a split within the district as to whether a plaintiff is required to establish standing at the pleading stage to pursue claims under state laws in which that plaintiff does not reside or cannot claim to have personally suffered an injury. Ultimately, the court found the line of cases, including Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997), and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), which holds that addressing standing at the pleading stage was premature, more persuasive. The court signaled that class certification was a “logical antecedent” to the standing issue. Thus, it remains to be seen whether plaintiff in this case could seek relief on behalf of a multistate class.