Baum v. J-B Weld Company, LLC

Background

Felix Baum filed a proposed class action against J-B Weld Company, LLC. J-B Weld manufactures epoxy, sealant, adhesive, and related products labeled “Made in U.S.A.” Baum alleged that the products contained more than a negligible amount of foreign-sourced content, including foreign-made tubes, bottles, caps, nozzles, syringes, and other components. He asserted claims under California’s Unfair Competition Law and Consumers Legal Remedies Act.

The dispute centered on California Business and Professions Code section 17533.7. That law generally prohibits “Made in U.S.A.” statements when the merchandise, or an article, unit, or part of it, was entirely or substantially made outside the United States. It contains a safe harbor for products whose foreign parts make up no more than 5 percent of the final wholesale value. Baum alleged that the foreign-sourced containers and other parts exceeded that percentage.

Baum identified 24 products and grouped them by product type. He alleged that the products used similar containers and packaging, carried the same “Made in U.S.A.” message below an American flag, and contained foreign-sourced components that made up more than 5 percent of their final wholesale value. He also alleged that he relied on the representations, would not have bought the products had he known the truth, and would buy similar adhesive products from J-B Weld in the future if their U.S. origin could be determined before purchase.

J-B Weld’s Motion

J-B Weld moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), arguing that Baum lacked Article III standing to challenge products he had not purchased and lacked standing to seek injunctive relief. It also moved under Rule 12(b)(6), arguing that section 17533.7 did not apply to packaging or containers, that exceeding the 5-percent safe harbor was not automatically a statutory violation, and that Baum had not adequately alleged that the merchandise was substantially made outside the United States.

Standing for Unpurchased Products

The court denied the Rule 12(b)(1) challenge. It explained that courts in the district had allowed plaintiffs to pursue claims involving unpurchased products when the purchased and unpurchased products were substantially similar. Relevant factors included whether the products were the same kind, had largely the same ingredients, and bore the same alleged mislabeling.

The court found Baum’s allegations sufficient at the motion-to-dismiss stage. He alleged that all 24 products used cardboard-backed blister packaging with the same “Made in U.S.A.” statement and that the products within the relevant categories used similar foreign-sourced tubes, caps, bottles, and other components. The court concluded that the unpurchased products were substantially similar to the products Baum purchased with respect to the alleged mislabeling.

Standing for Injunctive Relief

The court also denied J-B Weld’s challenge to Baum’s standing to seek injunctive relief. J-B Weld argued that Baum could not be misled again because he already believed the packaging was not made in the United States and had stated that he would not purchase the products in the future.

The court applied Ninth Circuit authority holding that a previously deceived consumer may still have standing to seek an injunction when the consumer cannot rely on the product’s advertising or labeling and therefore will not buy the product, even though the consumer would like to do so. Because Baum alleged that he would purchase epoxy and other adhesive products from J-B Weld if he could determine before purchase that they were substantially made in the United States, the court found his allegations sufficient.

Failure to State a Claim

The court denied the Rule 12(b)(6) motion. It did not decide whether foreign-made bottles, tubes, and caps must always be treated as part of the merchandise under section 17533.7. Instead, it held that determining whether those items are containers or parts of the merchandise depends on their function and the particular facts. The court noted that the containers and applicators arguably play a functional role in delivering and using the adhesives, making the issue a mixed question of law and fact that generally should not be resolved on a motion to dismiss.

The court also assumed, without deciding, that exceeding the 5-percent safe harbor does not by itself establish a statutory violation. Even under that assumption, it found Baum’s allegations adequate. Baum alleged that more than 5 percent of the products’ final wholesale value came from foreign-made parts and provided pricing-based estimates suggesting that the containers could account for a substantial portion of the products’ value. Viewing the allegations and reasonable inferences in Baum’s favor, the court held that he had pleaded a plausible statutory violation with sufficient specificity.

Disposition

The court denied J-B Weld’s Motion to Dismiss the Second Amended Complaint under Rule 12(b)(1) and Rule 12(b)(6). The order did not decide the ultimate merits of Baum’s claims or certify a class. Judge Edward Chen stated that the order disposed of Docket No. 43.