ADventures in Law

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<img class="alignright wp-image-5327" src="https://adttorneys.bakerhostetlerblogs.com/wp-content/uploads/sites/33/2019/05/US-Flag-Barcode-GettyImages-1033245324_1200x630.jpg" alt="" width="438" height="230" />In the past few months, a minority of the commissioners have called for the Federal Trade Commission (FTC or Commission) to take the heretofore unprecedented step of seeking consumer redress in Made in USA (MUSA) cases. (In the past such cases only involved money when penalties were imposed for violating an existing order).  In a concurring <a href="https://www.ftc.gov/system/files/documents/public_statements/1407368/182_3038_nectar_sandpiper_patriot_rks_and_jjs_concurring_statement_0.pdf">statement</a> in a series of Made in USA settlements announced in September 2018, Commissioner Slaughter and Chairman Simons noted the possibility that consumer redress could be an option for Made in USA enforcement when consumers paid a premium for the allegedly mislabeled products. In subsequent statements, both clarified that in their view a showing of a price premium, while an important factor, was not legally required for the Commission to obtain redress. Further, as noted in their initial concurring statement, both Commissioners emphasized the importance of the  Commission’s intended review of its approach to remedies and emphasized the need to have a forward-looking approach to the issue, including signaling to the public how the Commission intends to approach enforcement in this area. How to incentivize the right behavior was also a topic of discuss at the FTC’s Made in USA workshop last fall (which is worth watching in full if you have time on your hands available <a href="https://www.ftc.gov/news-events/events-calendar/made-usa-ftc-workshop">here</a>.

When the orders were accepted for final entry, Commissioner Slaughter reversed her position and <a href="https://www.ftc.gov/public-statements/2019/04/dissenting-statement-commissioner-rebecca-kelly-slaughter-regarding">dissented,</a> arguing, in light of her newfound understanding, that as a showing of a price premium was not legally required in order to seek redress, she would now seek consumer redress given the egregious nature of the violations. This time, Chairman Simons <a href="https://www.ftc.gov/public-statements/2019/04/concurring-statement-chairman-joe-simons-regarding-matters">wrote</a> separately to state that he’d had that understanding all along but still preferred a forward-looking approach, and he cited the upcoming Made in USA workshop as an appropriate vehicle to consider issues such as the use of new or expanded remedies. Simons then concluded by saying that “in considering new remedies and litigation strategies, it is important that the agency not do so in a vacuum. It will be crucial for the Commission to understand whether pursuing an alternative approach may drain resources from or otherwise undermine the FTC’s other important enforcement programs without commensurate benefits to consumers.”

It is thus somewhat surprising to note that a now unanimous Commission just accepted a MUSA settlement with Williams-Sonoma that includes a $1 million consumer redress payment. However, the Commission took this unprecedented step without having yet issued any report from its Made in USA workshop or any explanatory statements. One can guess that some or perhaps all of the commissioners viewed the violation as outrageous, in that the Commission <a href="https://www.ftc.gov/system/files/documents/closing_letters/nid/musa_williams-sonoma_closing_letter.pdf">closed a similar investigation in 2018</a> against Williams-Sonoma based in part on the company’s assurance that it would undertake a review of its Made in USA claims process. However, at least up until this point, a majority of the Commission had not expressed support for consumer redress under such circumstances. Of course, absent any explanation, it’s also entirely possible that the commissioners felt there was adequate evidence that consumers had paid a price premium for the products in question. In sum, the proposed settlement leads to a lot of unanswered questions. What were the factors that led the Commission to unanimously seek consumer redress? How does the Commission intend to use such factors in the future? Are there other factors that might prompt the Commission to seek redress in MUSA cases?

Made in USA claims and enforcement have already been trending upward, and it seems likely that in light of concerns around the supply chain and the COVID-19 outbreak, MUSA claims (and thus enforcement) will only increase. As a result, one hopes that we will hear more from the Commission shortly on the issue of redress.

As a postscript, it’s also worth noting that the FTC’s action followed on the heels of a <a href="https://www.truthinadvertising.org/tina-org-files-deceptive-made-in-usa-complaint-against-williams-sonoma/">complaint filed by the TruthinAdvertising.org (TINA)</a>. TINA has filed numerous complaints with the FTC, and it seems likely that its success with respect to Williams-Sonoma (which it has already touted on its website) will only lead to more efforts in this area.

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FTC Finally Strikes Gold With Made in USA Enforcement: Williams-Sonoma Agrees To Pay $1 Million in Consumer Redress