The settlement covers consumers in California who bought AG clothing that was labeled “Made in USA” between June 4, 2010, and Feb. 29, 2016. The lawsuit was originally filed in June 2014 by David Paz and San Diego-based Del Mar Law Group. Paz claimed he bought a pair of AG jeans from a Nordstrom store in San Diego, in May 2014 because he believed the jeans were made domestically and so “he was supporting U.S. jobs and the U.S. economy.” Shortly after filing the suit on behalf of Paz, Del Mar Law Group filed a second lawsuit based on similar allegations by Louise Clark against Citizens of Humanity and Macy’s.
At the crux of both lawsuits is a state law declaring that companies can’t promote merchandise as made in America if any part “has been entirely or substantially made, manufactured or produced outside of the United States.” Passed in 1961, California’s statute is stricter than the national standard overseen by the Federal Trade Commission, which requires that a product marked as being made in the U.S. be “all or virtually all” made domestically. Both AG and Nordstrom have denied the allegations.
The settlement by AG and Nordstrom allows for consumers to receive either a $20 promotional code to be used on AG’s e-commerce site or a free pair of pants. In the case of the latter, the garments will be made available on a first-come, first-served basis from a maximum stock of 25,000 pairs. AG also agreed to pay up to $180,000 to cover the fees and costs for Paz and Del Mar Law Group.
Following the filing of the lawsuits against AG and Citizens of Humanity, California loosened the law for made-in-USA labels to align better with the federal standard. On Sept. 1, 2015, Gov. Jerry Brown signed legislation that allows manufacturers to advertise that a product containing one or more parts from outside the U.S. is made in America as long as the foreign components do not make up more than 5 percent of the product’s final wholesale value. The state’s revised Made-in-USA labeling also applies to merchandise that contains parts that can’t be obtained from a domestic source but total less than 10 percent of the final wholesale value.
For the proposed settlement, AG and Nordstrom are accepting claims from consumers until May 29.