Federal Judge: FTC Rule Does Not Override California’s Made in USA Safe Harbor

A federal judge in San Diego ruled on July 31, 2025, that the FTC’s Made in USA rule does not preempt California’s state law, which lets products carry the claim if foreign content stays under set limits. Wolters Kluwer’s VitalLaw reported the decision on August 6, 2025.

The case

Plaintiff Maria Corona sued hair care maker It’s a New 10, LLC, in February 2025. She said she bought its Silk Express Miracle Silk Leave-In at a Marshalls in Carlsbad, California, for about $8.99, relying on a “MADE IN THE USA” label. The complaint alleges the product contains foreign-sourced ingredients, including palm oil, tea leaf extract, hydrolyzed silk and silk amino acids.

Corona argued that California’s safe harbor was preempted by the stricter FTC standard. California allows a Made in USA claim if foreign content is no more than 5% of wholesale value, or up to 10% if certain inputs cannot be sourced domestically. The FTC requires that “all or virtually all” of a product be made in the USA.

What the court decided

• No preemption: Judge Gonzalo P. Curiel held that the federal statute and FTC rule do not displace California’s safe harbor. Congress declined to preempt state origin laws, and the two standards share a consumer protection goal.
• Mixed ruling on the claims: The court granted the motion to dismiss in part and denied it in part. The Fashion Law reported that the court found simply listing foreign ingredients was not enough. A plaintiff must allege facts showing foreign content exceeds the 5% or 10% thresholds.
• Scope: Claims over four similar named products could go forward, but claims over unidentified products were dismissed. Corona got 21 days to amend.

Why it matters for Made in USA

Brands selling in California face two standards at once. The FTC’s “all or virtually all” test still applies nationally, and the FTC can act even when a product fits within California’s safe harbor. Meeting the state’s 5% rule is not a defense to a federal claim.

For plaintiffs, the ruling raises the bar in California: they need to show the value of foreign ingredients, not just their presence. For brands, the safest course is to meet the stricter FTC standard or qualify the claim.

FAQ

What is California’s Made in USA safe harbor?

California allows a Made in USA claim if foreign content is no more than 5% of the final product’s wholesale value, or up to 10% if certain parts cannot be obtained domestically.

Does the FTC rule preempt California law?

No, according to this July 31, 2025, ruling in Corona v. It’s a New 10, LLC (S.D. Cal.).

Can a product meet California’s rule but still violate FTC rules?

Yes. The FTC’s “all or virtually all” standard is stricter and still applies nationwide.