BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
SB 12 (Corbett)
As Introduced
Hearing Date: April 16, 2013
Fiscal: Yes
Urgency: No
TW
SUBJECT
Consumer Protections: Made in California Program
DESCRIPTION
This bill would create the Made in California Program within the
Governor's Office of Business and Economic Development for the
purpose of encouraging consumer product awareness and to foster
the purchase of products manufactured in California.
This bill would also make it an unfair method of competition or
business practice to use the designated "Made in California"
label without participating in the Made in California Program.
BACKGROUND
In 2001, the "Buy California Program" was created within the
Department of Food and Agriculture for the purpose of
"encouraging consumer nutritional and food awareness and to
foster purchases of high-quality California agricultural
products." (Food & Agr. Code Sec. 58750.) The "California
Grown" label was created for this program, which gave farmers an
opportunity to participate in the marketing campaign promoting
California products. In 2010, a private California-based
marketing and management consulting firm of the California Grown
program released a study, which found that the specialty crops
in the California Grown program create $15.9 billion in economic
output annually. (Tootelian, California Grown Economic Impact
Study (Aug. 2010) (as of
April 1, 2013), p. 5.) The study also found that more than
137,435 jobs are created as a result of the program, and nearly
(more)
SB 12 (Corbett)
Page 2 of ?
$567.7 million in indirect business taxes, not including income
taxes, are generated from specialty agricultural products in
California. (Id.)
In addition to the vast agricultural products grown in
California that are marketed under the "Buy California Program,"
the author of this bill asserts that many other products made
and produced in California, many by small businesses, would
greatly benefit from another California labeling program.
Accordingly, this bill would create the Made in California
Program within the Governor's Office of Business and Economic
Development (office). This bill would also add a new category
of unlawful conduct under the Consumer Legal Remedies Act (CLRA)
(Civ. Code Sec. 1750 et seq.), and designate it an unfair or
deceptive trade practice for anyone to represent that a product
is made in California unless the product complies with the
standards adopted by the office.
This bill was heard by the Senate Business, Professions and
Economic Development on August 1, 2013, and passed out on a vote
of 9-0. This bill is substantially similar to SB 823 (Corbett,
2011), which passed out of this committee on a 3-2 vote, but
subsequently was held in the Assembly Appropriations Committee.
CHANGES TO EXISTING LAW
Existing law , the Consumer Legal Remedies Act (CLRA), prohibits
unfair methods of competition, acts or practices by any person
which either results in or is intended to result in the sale or
lease of goods or services to any consumer. Existing law
enumerates several methods of unfair competition, acts or
practices. (Civ. Code Sec. 1770.)
Existing law provides that any consumer who suffers damage as a
result of a practice declared to be unlawful under the CLRA may
bring an action against that person to recover damages, as
specified. Existing law allows for a class action suit to be
filed on behalf of a class of consumers adversely affected by an
unfair method of competition, act or practice. (Civ. Code Secs.
1780, 1781.)
Existing law provides for California to enter into marketing
agreements and to create the "Buy California Program." (Food &
Agr. Code Sec. 58750.)
This bill would create a "Made in California Program" (Program)
SB 12 (Corbett)
Page 3 of ?
within the Governor's Office of Business and Economic
Development (office) as a public and private collaboration.
This bill would state that the purpose of the program is to
encourage consumer product awareness and to foster purchases of
high-quality products manufactured in this state. This bill
would allow the office to develop and adopt standards that
permit a company to represent that a product is made in
California.
This bill would authorize the office to issue and make effective
marketing agreements, including, but not limited to, issuance of
a Made in California label. This bill would allow California
companies to participate in the program on a voluntary basis.
This bill would provide that the standards adopted by the office
may include:
the company primarily designs and manufactures a physical
product, rather than a digital product or a service;
the company manufactures one or more products in California;
and
the company has a California-based workforce and has the
desire to grow that workforce over time.
This bill would not apply to agricultural products subject to
the Buy California Program.
This bill would require each company to apply to the office for
use of the Made in California label.
This bill would authorize the office to require an application
fee, determined by the office, that shall not exceed the
reasonable costs to the office in providing the services for
which it is charged. This bill would require the office to
apply the proceeds from the application fees to cover the costs
of implementing the Program.
This bill would allow the office to accept applications to the
Program before the office fully develops and implements the
Program.
This bill would authorize the office to accept monetary or other
donations from business, nonprofit organizations, or individuals
for the purpose of implementing the Program.
This bill would require the office to report to the Legislature
on January 1, 2015, and each successive January 1, regarding its
SB 12 (Corbett)
Page 4 of ?
expenditures, progress, and ongoing priorities with the Program.
This bill would provide that representing that a product is made
in California when it does not comply with the standards adopted
by the office would be an unfair or deceptive act or practice
under the CLRA.
This bill's provisions relating to the CLRA would only be
operative after the office has adopted standards for the
Program.
COMMENT
1. Stated need for the bill
The author writes:
California businesses need a unifying brand targeted at
consumers who care about [California] jobs, the environment
and quality. This label assures consumers that the product
was manufactured in [California] and carries the excellence
and standards that this state offers.
Manufacturers that embrace California's high quality, safety,
and environmental standards as a vital component of their
business strategy should have this marketing advantage. The
myriad of similar products on the market make it difficult for
consumers to differentiate between products that are made in
California versus elsewhere.
With [California's] unemployment rate nearing 10 [percent],
this much needed statewide marketing strategy can help our
small businesses maintain [a] competitive edge against
businesses that decide to manufacture out of the state or even
out of this country and thus bringing the jobs with them.
2. This bill would make it an unfair method of competition or
business practice for improper use of the Made in California
label
Under existing law, the Consumers Legal Remedies Act (CLRA), it
is an unfair method of competition and unfair or deceptive act
or practice to engage in specified activities that either intend
to or actually result in the sale or lease of goods or services
to any consumer. (Civ. Code Sec. 1770.) This bill would create
the Made in California Program (Program) and provide that
SB 12 (Corbett)
Page 5 of ?
utilizing the new "Made in California" label without complying
with the Made in California Program standards is an unfair
method of competition and deceptive act or practice.
In support of this bill, the California Small Business
Association notes that "[w]e believe this bill will help small
businesses be competitive by promoting the production of goods
in California. We are proud to be Californians and should
promote products made in California. The more production that
takes place in California[,] the more jobs will be available."
While this bill aims to increase California product promotion,
it also seeks to protect consumers and California businesses
from improper use of the Made in California label. This bill
would provide appropriate consumer protection by including the
unlawful use of the Made in California label under the CLRA, and
provide a private right of action against businesses that
improperly utilize the label. Accordingly, businesses would be
incentivized to participate in the program since proper
compliance and usage of the Made in California label would help
these businesses improve sales.
The author argues that, in order to ensure the success of the
Program, it is important to set specific standards for
businesses to meet in order to participate in the Program. The
CLRA provisions included in this bill would not become effective
until standards are adopted by the Governor's Office of Business
and Economic Development, because it would not make sense to
hold businesses liable for violating the CLRA if the standards
do not exist.
3. Right to cure violations of the CLRA
Under existing law, a consumer who suffers damage as a result of
an unlawful practice under the CLRA may bring a private right of
action and recover actual damages; an order to enjoin the
unlawful act; restitution; punitive damages; or any other relief
that the court deems proper. (Civ. Code Sec. 1780.) By
including the unlawful use of the "Made in California" label
under the CLRA, this bill would provide a private right of
action for a consumer who suffers damage as a result of the
fraudulent use of the designated "Made in California" label.
Notably, Civil Code Section 1782 provides the potential
defendant with a right to cure. Pursuant to Civil Code Section
1782(b), the potential defendant has the ability to "cure"
within 30 days after receipt of the consumer's notice and if the
SB 12 (Corbett)
Page 6 of ?
potential defendant has corrected the problem, no civil action
can be maintained. Providing a business with an appropriate
method of rectifying an otherwise mistaken use of the "Made in
California" label or mistaken non-compliance with the Program
arguably provides an appropriate balance between consumer
protection and business concerns regarding the potential for
frivolous litigation.
4. Proposed standards for Made in California Program
This bill would authorize the office to adopt standards that
would permit a company to represent that a product is made in
this state and use the designated "Made in California" label.
In adopting the standards, the office may include for
consideration (i) whether the company primarily designs and
manufactures a physical product, rather than a digital product
or service; (ii) whether the company manufactures one or more
products in this state, or (iii) whether the company has a
California-based workforce and has the desire to grow that
workforce over time. These elements are designed to give the
office direction; however, the office will ultimately be given
the authority to designate specific standards for adoption.
Support : California Small Business Association; dB Control;
PLASTIKON Industries; Primus Power; Tesla Motors, Inc.
Opposition : None Known
HISTORY
Source : Small Business California
Related Pending Legislation : AB 509 (Blumenfield, 2013) would
make it an unfair method of competition or business practice to
use a label designating that a product was "made in" a
particular city or county label unless either the product is
manufactured in the city or county identified on the label or
the company has a workforce based in that city or county.
Prior Legislation : SB 823 (Corbett, 2011) See Background.
Prior Vote : Senate Committee on Business, Professions and
Economic Development (Ayes 9, Noes 0)
**************
SB 12 (Corbett)
Page 7 of ?