New Balance will be forking over funds to pay for what’s been ruled as false representation of its Made in the USA claim.
A class-action lawsuit alleging the Massachusetts-based footwear company misrepresented the country of origin for some of its products has ended in a settlement that will require New Balance to pay $750,000 in damages.
The judgement was reached after New Balance agreed to a settlement with the plaintiffs for their initial suggestion of $750,000 in damages. Court documents suggest that the sum total of goods affected by the misrepresentation could have been as high as $5 million. Along with the settlement came an immediate injunction blocking New Balance from using the offending advertising in the future.
The initial complaint from the plaintiff group was filed on Jan. 26, 2017 and alleged that New Balance had “sold hundreds of thousands of pairs of shoes to consumers throughout the State of California based on the misrepresentation that these shoes are “Made in the USA.” The plaintiff used New Balance’s own claims that it considers a shoe to be “Made in the USA” if it contains a “domestic value of 70 percent or greater” as proof that the brand’s frequent advertisement as a domestic producer is fraudulent.
New Balance responded saying, “New Balance publicly acknowledges it advertises that its shoes are Made in the USA when domestic value is at least 70 percent…Put differently, New Balance admits that it has a common policy of advertising that its shoes are Made in the USA even when up to 30 percent of the value of the shoes is attributable to foreign-made components and/or labor.”
The complaint argued that, even with the disclaimer, consumers “reasonably believed that these products were American-made” when a significant portion of the product was made elsewhere, with China given as an example. Furthermore, the plaintiff alleges that New Balance was able to charge more for these products under that false assumption.
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The lawsuit names the “New Balance Made” premium sneaker line as being the primary offender and a list of qualifying footwear will be produced once the final hearing is heard in June. New Balance will only be made to pay out $10 per pair up to a limit of approximately $535,000. After that has been reached, a pro-rated payout will be given to each claimant that the court expects to equal around $3.62 to $5.43, given the typical claim rate in class action lawsuits.
Footwear from the New Balance Made line begins at $124.99 and can reach as high as $299.99 for a pair of running shoes.
The fine will be placed in a fund that can be accessed by any of the “several hundred thousands of individuals” that the plaintiffs, a group of consumers from California, have designated as recipients for the payout. Anyone who purchased a “Made in the USA” shoe from New Balance from Dec. 27, 2012 to January of this year is an eligible recipient and can recover a maximum of $10, representing the amount of non-domestic product found in the shoe, per qualifying product.