California federal court recently rejected a plaintiff's argument that California's "Made in USA" labeling statute is preempted by the Federal Trade Commission's (FTC) Made in USA Labeling Rule. The decision is an important reminder that when both federal and state laws regulate the same issue—as they do here with origin claims—advertisers must comply with the stricter of the two standards.
The Case
In McCoy v. McCormick & Co., the plaintiff brought a false advertising action challenging the labeling of French's mustard products as "Crafted and Bottled in Springfield, MO, USA" and "American Flavor in a Bottle." The plaintiff alleged that these unqualified claims were misleading because key ingredients—such as mustard seed and turmeric—were sourced from outside the United States, including Canada.
McCormick moved to dismiss, arguing that California's Made in USA statute (Business & Professions Code § 17533.7) includes safe harbor provisions that permit a limited amount of foreign content in products labeled as U.S.-made, and that the complaint failed to allege facts showing a violation of that law.
Rather than addressing the safe harbors directly, the plaintiff argued they didn't apply—because, in the plaintiff's view, the California law was preempted by the FTC's stricter Made in USA rule. That rule prohibits unqualified claims unless "all or virtually all" of a product's components are U.S.-made and sourced.
The Court's Ruling
The court rejected the plaintiff's preemption argument. Although the FTC rule includes a preemption provision, it only displaces state law to the extent a state requirement is inconsistent with the federal rule. Here, the court found no such inconsistency.
California's statute, while arguably less stringent in certain respects (allowing up to 5% or, in some cases, 10% foreign content), does not permit conduct the FTC prohibits—and shares the same consumer protection goal. The laws can coexist, the court concluded, and compliance with one does not excuse noncompliance with the other.
With the preemption argument off the table, the court evaluated whether the plaintiff had adequately alleged that McCormick's product falls outside California's safe harbor. It concluded the complaint did not meet that threshold—but granted the plaintiff leave to amend.
Why It Matters
This decision confirms that federal law does not always preempt state law—even where the federal standard is stricter. Advertisers must evaluate both sets of requirements and adhere to whichever standard is more demanding.
For Made in USA claims, that means complying with the FTC's "all or virtually all" rule, even if a product might meet California's percentage-based safe harbor. At the same time, if a claim violates California's statute—even if it might survive under federal law—it can still trigger litigation and liability in California.
Takeaway for Marketers
Advertisers making Made in USA claims should carefully assess compliance under both federal and applicable state laws. The McCoy decision underscores that California's Made in USA statute is alive and well—and that federal compliance does not immunize companies from state law challenges. It will be interesting to see if other courts disagree with this decision and reach a different in the future.
That said, McCormick isn't entirely out of the woods. The court granted the plaintiff leave to amend the complaint to allege that the product does not satisfy California's safe harbor. We'll continue to monitor the case for further developments.
If you have questions about Made in USA claims or other country-of-origin disclosures, or if you'd like assistance reviewing your labeling and advertising practices, contact Holly Melton at hmelton@fkks.com or any other member of the Frankfurt Kurnit Advertising, Marketing & Public Relations Group.
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