Benson v. Kwikset Corp.
| Citation | 15 Cal.Rptr.3d 407,120 Cal.App.4th 301 |
| Decision Date | 30 June 2004 |
| Docket Number | No. G030956.,G030956. |
| Court | California Court of Appeals |
| Parties | James BENSON, Plaintiff and Appellant, v. KWIKSET CORPORATION et al., Defendants and Appellants. |
The Cuneo Law Group, Jonathan W. Cuneo, Michael G. Lenett; Cuneo Waldman & Gilbert, Jonathan W. Cuneo, Michael G. Lenett, Washington, DC; Soltan and Associates, Venus Soltan, Costa Mesa; Milberg Weiss Bershad Hynes & Lerach, William S. Lerach, Elizabeth J. Arleo and Kevin K. Green, San Diego, for Plaintiff and Appellant.
Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Herschel T. Elkins, Assistant Attorney General, Ronald A. Reiter and Benjamin G. Diehl, Deputy Attorneys General, for California Attorney General as Amicus Curiae on behalf of Plaintiff and Appellant.
Jones, Bell, Abbott, Fleming & Fitzgerald, Michael J. Abbott, Fredrick A. Rafeedie, Los Angeles, and William M. Turner for Defendants and Appellants and for Amicus Curiae Leatherman Tool Group, Inc. on behalf of Defendants and Appellants.
Plaintiff James Benson, on behalf of the general public, sued defendants Kwikset Corporation (Kwikset), its parent corporation, Black & Decker Corporation (Black & Decker), plus Technolock, S.A. de C.V. (Technolock) for restitution and injunctive relief under the unfair competition law (Bus. & Prof.Code, § 17200; UCL) and the false advertising law (Bus. & Prof. Code, § 17500; section 17500). He alleged defendants violated statutory provisions prohibiting the marketing or sale of merchandise with "Made in U.S.A" or similar labels when the merchandise either contained foreign-made parts or involved foreign manufacture.
The trial court entered judgment for plaintiff enjoining Kwikset and Black & Decker (collectively defendants) from distributing locksets in California with inaccurate country of origin labels, and also ordered them to notify retailers and distributors they could return mislabeled locksets for either a refund or replacement with properly labeled products. By a postjudgment order, the court awarded plaintiff statutorily authorized costs, plus his attorney fees under Code of Civil Procedure section 1021.5. The court also awarded Technolock its costs.
Both plaintiff and defendants appeal. Defendants challenge the constitutionality and applicability of Business and Professions Code section 17533.7 (section 17533.7) which makes it unlawful "to sell or offer for sale ... any merchandise on which ... there appears the words `Made in U.S.A.' ... or similar words when the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States." They also attack the trial court's interpretation of Civil Code section 1770, subdivision (a)(4) (section 1770(a)(4)), declaring the use of "deceptive representations ... of geographic origin in connection with goods and services" as unlawful. Defendants also contend plaintiff failed to present legally adequate extrinsic evidence to establish their labels were likely to mislead the reasonable consumer.
For his part, plaintiff attacks the portions of the judgment declaring the provisions of the Federal Trade Commission Act (15 U.S.C. § 45 et seq.) cannot serve as predicate statutes for a UCL claim, and the extent of the restitutionary relief awarded by the trial court. Plaintiff also appeals from the postjudgment costs order, arguing the trial court erred both in awarding Technolock costs and in denying an award of its own out-of-pocket litigation expenses that were not recoverable as costs.
We reject both parties' claims and affirm the judgment and the postjudgment order.
Kwikset manufactures and sells hardware described as locksets, which can include deadbolts, doorknobs sets, door lever sets, and door handle sets. It has several plants located throughout the United States, plus one in Mexico. Between 1996 and 2000, Kwikset manufactured and sold 35 different varieties of locksets. Plaintiff presented evidence that defendants' attached labels to these products stating "Made in U.S.A.," "All American Made," or similar representations. However, some of these products included screws and pins made in Taiwan, a latch assembly that was sub-assembled at defendants' Mexico plant, or both foreign made parts and assembly.
Plaintiff testified a product label stating "Made in the USA" meant to him "that whatever is in that package should be made — the parts, labor, and the whole component should be made in [the] USA." He purchased Kwikset products "[b]ecause they had a reputation for being ... quality product[s], and I was aware they were made in the USA." Based on what he subsequently learned about the manufacture of Kwikset's products, he did not believe its country of origin labels were honest.
Plaintiff also called two other witnesses who had purchased Kwikset products. Both witnesses testified a "Made in U.S.A." or similar label was an important factor in their purchasing decision, they interpreted the label to mean all of the parts and all of the labor used to manufacture the product occurred here, and felt they had been deceived by the country of origin labels on Kwikset's products.
After plaintiff filed this action, Kwikset decided to stop using country of origin labels on its products, completing the process of removing them from products distributed in California by October 2000. In addition, as a result of a subsequent and unrelated investigation by the United States Federal Trade Commission, defendants entered into a consent order. It precludes defendants from: (1) representing "in any manner ... the extent to which any ... product" distributed in interstate commerce "is made in the United States" unless "all, or virtually all, of the component parts of such product are made in the United States and all, or virtually all, of the labor in manufacturing such product is performed in the United States"; and (2) using "the legend `All American Made,' ... or otherwise represent[ing] that a product is entirely made in the United States unless such product is in fact 100% made in the United States."
After trial in this case, the court issued a 21-page statement of decision. It rejected plaintiff's reliance on sections 45 and 45a of the Federal Trade Commission Act, concluding the act did not provide a private right of action. As for section 17533.7, the court recognized it "is an extremely strict statute" but rejected defendants' claim the law was unconstitutional. It construed the section as precluding a "`Made in USA' label where the `merchandise' is entirely or substantially foreign," or "where any `article, unit, or part thereof' is entirely or substantially foreign." Applying this construction, the court found certain Kwikset products manufactured between 1996 and 2000, at one point or another bore unlawful country of origin labeling because the products contained either "a screw or pin made `entirely ... outside of the United States,'" or had a "latch assembly that was sub-assembled in Mexico...."
The court also found section 1770(a)(4) applied, but since this statute was "not [as] strict," a violation of it would occur only when, viewing "the labeling from the perspective of those consumers for whom the geographic designation is important," "the merchandise as a whole is deceptively labeled." Under this construction, the court concluded "locksets that incorporate only a few screws or pins made in Taiwan are not deceptively labeled with a `Made in USA' label, but are deceptively labeled with an `All American Made' label." In addition, "a lockset incorporating a latch assembly that was sub-assembled in Mexico is deceptively labeled with either designation." The court identified several Kwikset products containing labels that violated section 1770(a)(4). With respect to section 17500, the trial court "applie[d] the same analysis ... as ... the alleged violation of section 1770[(a)(4)]."
Although recognizing defendants "ceased all use of the USA designation on all of their locksets" in early 2000, "the court conclude[d] that it is appropriate to assure compliance with ... California [law] ... by enjoining defendants ... from labeling any lockset intended for sale in the State of California `All American Made,' or `Made in USA,' or similar unqualified language, if such lockset contains any article, unit, or part that is made, manufactured, or produced outside of the United States." In addition, the court ordered defendants to notify "retailers, dealers and distributors" in California "that any lockset in the[ir] ... inventory that contains the `Made in USA' or `All American Made' or similar designation may be returned ... for replacement with an equivalent item in compliant packaging, or ... a refund of the original purchase price." However, balancing the equities, the court declined to "order a return or refund program as to the ultimate consumers...."
Finally, the court directed the entry of judgment in favor of defendant Technolock, "find[ing] no evidence whatever of any wrongdoing on its part that would warrant relief against" it.
The complaint contained three counts under the UCL and one count alleging a violation of section 17500 for false advertising.
The UCL permits a party to seek injunctive and restitutionary relief for any "unlawful, unfair or fraudulent business act or practice...." (Bus. & Prof.Code, §§ 17200, 17203 & 17204.) Thus, (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527; see also People ex rel....
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