Tool Firm Loses Suit on USA Labels

A judge Thursday ordered Leatherman Tool Group Inc. to pay more than $13 million to customers in California after finding that the gadget maker sold products labeled “Made in USA” that contained foreign-made parts.

Portland, Ore.-based Leatherman, which makes a variety of multifunction, pocket-sized tools, was sued in March 2001 by Los Angeles plumber Ken Colgan, who said he had been misled into believing that a Leatherman tool he purchased with a “Made in USA” label was produced solely with U.S.-made parts.

Colgan’s attorney, Henry. H. Rossbacher, said Leatherman violated California laws that prohibit the use of such labels when the product or any of its parts are manufactured outside the United States.

Los Angeles County Superior Court Judge Victoria Chaney found that parts of 22 Leatherman tools were made outside the U.S. and that the company’s “misrepresentations ... were willful, knowing and intentional.”

Leatherman’s attorney, Fred Rafeedie, said the company would appeal Chaney’s ruling. The appeal will question the constitutionality of California’s labeling law, he said, noting that the law disallows “Made in USA” labeling even when most of the parts are made here and the product is assembled in the U.S.

If the ruling stands, California residents who purchased Leatherman tools after April 1, 1997, could get partial refunds. Colgan will receive $10,000.

The judge ordered the firm to use newspaper and magazine ads to notify consumers of the ruling. It wasn’t clear how many Leatherman products were sold in California during that period or how many customers might be eligible for refunds.