10th Cir. Says Distributor's Made in US Claims 'Ambiguous,' Not Literally False

The U.S. Court of Appeals for the 10th Circuit on April 12 ruled that Texas construction equipment distributor I Dig Texas didn't falsely represent its skid steer attachments as being made in the U.S. The court said the company's advertisements were ambiguous on whether the products' parts are all American-made or whether the goods themselves were assembled in the U.S. (I Dig Texas v. Kerry Creager, 10th Cir. # 23-5046).

Settling a spat between two skid steer attachment distributors, the appellate court said that even if some components of the products came from foreign sources, I Dig Texas' ads stating that its goods are made in the U.S. are ambiguous and thus not "literally false."

The suit stems from I Dig Texas' product promotions in which it discourages consumers from buying products that are made in China. I Dig Texas posted pictures of distributor Creager Services' products, noting that they had been made in China, while also promoting its own goods as being made in the U.S. Creager sued, claiming that use of the photographs amounted to copyright infringement and that I Dig Texas misrepresented the origin of its products.

An Oklahoma district court found for I Dig Texas, leading to the appeal, where the Texas distributor again prevailed. Judges Robert Bacharach, Carolyn McHugh and Nancy Moritz initially noted that Creager needed to show that I Dig Texas' statements were literally false to prevail under the Lanham Act, which it can do by establishing that the statements were either "literally false" or "literally true, but 'likely to mislead or confuse customers.'"

Bacharach, the opinion's author, said that a "statement can be literally false only if it is unambiguous" and that an "ambiguous statement can't be literally false."

The court found I Dig Texas' claims to not be literally false. The company's goods were assembled in either the U.S. or China, but even for its U.S.-made goods, the distributor derived some components from foreign sources. For instance, its nitrogen power cells came from China and some nuts and bolts came from Canada. While Creager said I Dig Texas' advertisements were false because some components came from other countries, the court said the term "make could refer either to the origin of the components or to the assembly of the product itself."

Bacharach gave the example of Chrysler, which says its cars are American-made. "Someone might regard the statement as truthful if Chrysler assembles the cars in the United States even if some components came from overseas," he said.

The judge said the "same could be true of I Dig Texas's advertisements."

Creager additionally pointed to a line on I Dig Texas' website, which says that it provides "100% American Made Skid Steer Attachments," claiming that demonstrates that the company implied that all its attachments had been made entirely in the U.S. and assembled from domestic parts. While a "statement can be literally false by necessary implication," the court found an ambiguity to exist in the reference to "100%." This reference could either mean the attachments were assembled in the U.S. with U.S. parts or that only some of the goods made entirely of domestic parts were assembled in the U.S.

Creager also cited I Dig Texas' use of patriotic symbols to imply that its goods had been made in the U.S. The judge found that the "symbols bore an implication," but that no one can verify the "objective truthfulness" of the symbols.