Foiled: Court Tosses ‘Made in USA’ Aluminum Pan Suit

That is the upshot of a September 22 tentative ruling from Judge George H. Wu of the Central District of California in Karpinski v. Handi-Foil Corp. The plaintiff did plenty of homework on where aluminum comes from. What he did not do was the math California law requires between the value of a product’s foreign parts and its final wholesale value. 

The Claim: It All Starts With a Rock

Handi-Foil sells disposable aluminum pans and containers labeled “Made in USA” next to an American flag. The plaintiff’s theory went all the way back to the mine. Aluminum starts as bauxite, which has not been mined in the United States since 1982 and is refined overseas. So, he argued, primary aluminum is always foreign, recycled aluminum is mostly foreign scrap, and all Handi-Foil does domestically is “stamp” foreign aluminum into pans. He sued under California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA), including warranty and fraud claims.

The Ruling: Right on Sourcing, Wrong on Value

Judge Wu gave the plaintiff more than the defendants would like. Plaintiffs do not need to plead an exact foreign-content percentage — the court doubted anyone could before discovery. Whether aluminum scrap or roll coils count as a “part” of a pan is a fact question for later. (Bauxite and alumina, a rock and a powder, are not.) And the foreign-aluminum theory was plausible.

But California’s statute has two safe harbors. A product can still say “Made in USA” if foreign parts make up no more than 5% of its final wholesale value, or no more than 10% if they truly cannot be sourced domestically. Joining a steady line of California federal courts (and the Ninth Circuit), Judge Wu held that plaintiffs must plead facts showing those safe harbors do not apply.

The complaint did not indicate how much they paid, what the pan is worth at wholesale, or what the aluminum costs. As the court pointed out, a pan could be mostly foreign aluminum by weight and still qualify if labor, machining, packing, and overhead make up more than 96% of its value. Without “even a single allegation” on the point, all five claims went out the door.

Co-defendant HFA, which allegedly manufactures the pans, got dismissed for extra reasons. The plaintiff never bought from it or saw its marketing, and his alter ego allegations were bare conclusions. The dismissal is without prejudice, so expect an amended complaint, this time probably with a spreadsheet attached.

The Takeaway

This one is a win for Handi-Foil, but it is a narrow one. The court’s roadmap tells future plaintiffs exactly what to plead: rough value estimates, input pricing, and cost breakdowns. Companies should assume those allegations are coming.

And California’s safe harbors do not help with federal regulators. As we previously discussed, the Federal Trade Commission expects products labeled “Made in USA” to be “all or virtually all” domestic, and it has been sending warning letters and collecting eight-figure judgments to prove it.

The practical fix is the same one that works here: know your supply chain down to the raw materials and keep records of what your foreign inputs cost relative to your wholesale price. That is the math the court asked for. It is better to have done it before a plaintiff’s lawyer asks.