Clark v. Citizens of Humanity, LLC
2015 U.S. Dist. LEXIS 50155
| S.D. Cal. | 2015Background
- Plaintiffs Robyn Marnell and Louise Clark bought jeans labeled “Made in U.S.A.” from Citizens of Humanity via BOP, LLC and Macy’s; they allege component parts (fabric, thread, buttons, zipper parts, rivets) were foreign-made.
- Plaintiffs allege reliance on the “Made in U.S.A.” designation, overpayment, and that garments were inferior; they seek class relief under California consumer protection laws.
- Operative claims: (1) California Consumers Legal Remedies Act; (2) California Business & Professions Code § 17200 (UCL); (3) Cal. Bus. & Prof. Code § 17533.7 (prohibiting unqualified "Made in U.S.A." labels when any part is substantially made abroad).
- Defendants moved to dismiss arguing § 17533.7 is preempted by federal law (FTC standards under the FTCA and the TFPIA) and that § 17533.7 violates the dormant Commerce Clause.
- The court judicially noticed several FTC materials and a similar district-court order, addressed preemption and dormant-commerce-clause arguments, and denied the motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 17533.7 is preempted by the FTC standard (FTCA/FTC guidance) | §17533.7 can coexist with FTC rules; states may impose stricter labeling; manufacturers can use different labels for CA or qualified labels | FTC permits "all or virtually all" standard; CA’s stricter (effectively 100%) rule frustrates FTC objectives and is preempted | Not preempted — no impossibility and no obstacle to FTC objectives; both aim to prevent deception and manufacturers can comply with both laws |
| Whether § 17533.7 is preempted by the TFPIA (and its allowance of qualified labels) | §17533.7 permits qualified "Made in U.S.A." labels that disclose imported components, so TFPIA and §17533.7 can coexist | §17533.7 (as interpreted) forbids any use of "Made in U.S.A." on garments with foreign components, conflicting with TFPIA | Not preempted — court finds §17533.7 silent on qualified labels and permits them, so TFPIA does not preempt it |
| Whether § 17533.7 violates the dormant Commerce Clause | §17533.7 protects consumers from deceptive advertising; burden on commerce is minimal because qualified labels are available | Law imposes burdens on interstate commerce (different labeling, separate inventory, or not selling in CA) and provides little public benefit; may push manufacturing abroad | No violation — legitimate state interest in preventing deception; permitting qualified labels avoids undue burden on interstate commerce |
| Whether dismissal is appropriate at Rule 12(b)(6) stage based on preemption/dormant commerce arguments | Plaintiffs: factual allegations plausibly show CA law governs labeling and preemption/dormant-commerce defenses fail as matter of law | Defendants: federal law/regulation preempts state law and constitutional limits bar §17533.7 | Court denied motion to dismiss, finding plaintiff allegations survive and defenses unsuccessful on the pleadings |
Key Cases Cited
- Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001 (9th Cir. 2008) (discusses Rule 12(b)(6) dismissal based on preemption)
- Rose v. Arkansas State Police, 479 U.S. 1 (1986) (Supremacy Clause invalidates conflicting state laws)
- Bank of Am. v. City & County of San Francisco, 309 F.3d 551 (9th Cir. 2002) (explains conflict preemption standards)
- Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963) (conflict preemption framework)
- Hines v. Davidowitz, 312 U.S. 52 (1941) (state law cannot pose obstacle to federal objectives)
- City of New York v. FCC, 486 U.S. 57 (1988) (federal regulations carry preemptive effect like statutes)
- Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986) (dormant Commerce Clause principles for facially discriminatory vs. evenhanded statutes)
- Valley Bank of Nev. v. Plus Sys., Inc., 914 F.2d 1186 (9th Cir. 1990) (balancing test for dormant Commerce Clause burdens vs. state interests)
- Alaska Airlines, Inc. v. Long Beach, 951 F.2d 977 (9th Cir. 1992) (facially neutral statute violates dormant Commerce Clause only if burdens clearly exceed benefits)
- Benson v. Kwikset Corp., 152 Cal. App. 4th 1254 (2007) (California interpretation of §17533.7 regarding unqualified labels)
- Int’l Ass’n of Machinists & Aerospace Workers v. BF Goodrich Aerostructures Group, 387 F.3d 1046 (9th Cir. 2004) (plain-language statutory interpretation principles)