Sears accused of misleading public on Craftsman line

A lawsuit says the company wrongly claimed its tools were made in America. A California judge refuses to certify class-action status, but plaintiffs say they will appeal.

By Jonathan Berr Dec 7, 2012 3:47PM
Sears store in Milford, Connecticut -- Spencer Platt/Getty ImagesSears Holdings (SHLD) says its Craftsman line is America's most trusted tool brand. But are those tools even made in America?

That issue is at the forefront of a claim that the company snookered consumers into believing that its famous Craftsman tools were made in the U.S. Sears has beaten back the lawsuit for now, but the battle appears to be far from over.

A California judge rejected an effort late last month to certify the suit as a class action. In his 42-page decision, Los Angeles County Superior Court Judge Anthony Mohr argued that there were "serious problems" with the case and that it would be a "nightmare" to manage because there are 40 million potential class members, according to the National Law Journal.

Sears, which registered the Craftsman trademark in 1921, cheered the decision. But Barbara Hart, the attorney representing the plaintiffs, said the ruling will be appealed. In an interview with MSN Money, Hart said that her clients will seek certification under a narrower class definition. 

"We are pleased with the court's ruling but as the matter is still pending, we decline to comment further," Sears spokesman Larry Costello wrote in an email.


Costello declined to say how many Craftsman tools were made in the U.S. and Hart, who filed suit against the retailer in 2004, isn't sure either. After the suit was filed, Sears took Craftsman tools off the shelves and blacked out the words "Made in America," she said.


Sears will not share records about where its Craftsman tools are made, but Hart said the company utilizes more than 130 Chinese manufacturers for the Craftsman line.


Craftsman has been one of the few bright spots for Sears in recent years as the retailer has  struggled to compete against larger rivals such as Wal-Mart (WMT) and Target (TGT). The stock has slumped more than 20% in the past year. Sears not a bargain for investors, trading at more than double its average 52-week price target of $17.83.


According to a recent report in the New York Times, the "Made in the USA" label has grown in popularity because it is a "signifier of old-school craftsmanship." It's also hard to find in today's global economy. The U.S. trade deficit with China alone is about $232 billion. 


--Jonathan Berr is long Target.  Follow him on Twitter@jdberr.

 

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794Comments
Dec 7, 2012 4:44PM
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Well this will absolutely force more into bankruptcy and foreclosures.  Nicely done US government once again you could care less about the people you server or suppose to be serving and pad your pocket books with kickbacks by lobbyists and don't get put into these new tax hikes cause you have accountants to hide the money.  Well done.
Dec 7, 2012 4:42PM
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Any company that misleads the American public , needs to fail.
Dec 7, 2012 4:41PM
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Moore Drop Forge in Springfield Massachusetts used to make the Craftsman hand tools but the unions drove them out.
Dec 7, 2012 4:41PM
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Craftsmen tools, as well as Kobalt (Lowes) are really owned by a company called Danaher.

Sears/Lowes are just the retail outlets for them. They both have the same "lifetime" warranty, which works well. I speak from experience as far as Craftsmen is concerned. I have not had to return any Kobalt tools yet. Some of my  Craftsmen tools are 30 years old.

Dec 7, 2012 4:40PM
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Just another blunder by the management at this dying giant.  How did they think thet were going to get away with labeling Chinese tools as " made in America" in this day and age.
Dec 7, 2012 4:31PM
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Very little is made in the US now and yet people wonder why there are no jobs! May just be a connection!
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