Proposition 65 – Will California’s Toxics Warning Law Finally Be Reined in?
Over 25 years ago, voters in the State of California approved a relatively obscure ballot initiative known as the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as “Proposition 65.” At the time, both advocates and opponents of the initiative described it primarily as an environmental protection law, aimed at preventing the discharge or release of known chemical carcinogens and reproductive toxicants in ways that might contaminate sources of drinking water. During the intervening years, however, it has become clear that rather than serving the interests of environmental protection, the statute’s greater significance has been to create new product liability standards for a range of consumer goods in which small quantities of targeted chemicals may be present.
The business community has long criticized Proposition 65 as an unnecessary, super-regulatory scheme the requirements of which are set and enforced by private “bounty hunters” motivated primarily by financial self-interest rather than a desire to promote legitimate chemical safety and human health goals. From time to time, these criticisms have prompted proposals to “reform” Proposition 65 and curb the potential for private party abuse. Most recently, California Edmund “Jerry” Brown has called for a renewed effort to “revamp Proposition 65 by ending frivolous ‘shake-down’ lawsuits, improving how the public is warned about dangerous chemicals and strengthening the scientific basis for warning levels.”
Warnings for Exposures to Listed Chemicals
Central to Proposition 65 and the criticisms surrounding it is the statute’s chemical warning requirement. The requirement has several discrete elements: (1) persons “in the course of doing business” are (2) prohibited from “knowingly and intentionally” exposing consumers to chemicals that are (3) “known to the state to cause cancer or reproductive toxicity” without first giving a (4) “clear and reasonable warning” (except as otherwise provided by the statute).
In this context, a person “in the course of doing business” includes any individual person or company that employs 10 or more employees.” Covered exposures can include exposures to any detectable amount of a listed chemical, no matter how small, although warnings are not required if the person responsible can show that the exposure poses “no significant risk” of causing cancer or will produce no observable reproductive health effect. Covered chemicals include only those specifically listed as known to the state to cause cancer or reproductive harm; thus, no warnings are required for exposures to chemicals that are not carcinogens or reproductive toxicants, even though they may have other potential health consequences. Finally, warnings do not have to be provided separately to each exposed individual and may be provided by general methods such as consumer product labels, mailings, and posted notices, provided that the warning accomplished is “clear and reasonable.” Of course, a form of warning that may be clear and reasonable in one context (exposure to chemicals in foods and beverages) could be viewed as confused and misleading in another (exposure to chemicals in clothing or furniture).
Penalties for violating the Proposition 65 warning requirement can be substantial, amounting to as much as $2500 per day per violation. Thus, in cases involving exposures to chemicals in consumer products, involving mass sales of products consumed over a period, potential penalties can quickly reach up to tens or hundreds of thousands (if not millions) of dollars. Moreover, penalties can be imposed in civil enforcement brought either by the California Attorney General’s office (or by various designated local enforcement agencies) or by private groups not acting under any governmental authority (so-called “bounty-hunters” that are authorized to pursue enforcement actions “in the public interest”). In private enforcement actions, courts can award attorney’s fees to the party initiating the action. In many cases, the fee award can easily dwarf the corresponding amount of statutory penalties.
The relative ease with which plaintiffs can establish a prima facie case for liability under Proposition 65, along with the prospect of recovering both penalties and attorney’s fees, has been viewed as providing incentives for some lawyers to file private party enforcement actions simply to force lucrative settlement with little or no benefit to the public. In one case cited by the Governor’s office, for example, a private enforcement group issued 45 Proposition 65 notices of violation to a group of banks that allegedly had exposed people to second-hand cigarette smoke (a Proposition 65-listed carcinogen). The group claimed that the banks encouraged smoking near bank entrances and ATMs without giving warnings required under the statute. The Attorney General’s office took the view that the notices were without merit and misleading and could constitute unlawful business practices under other provisions of state law.
Proposals for Reform
Reining in the potential for abuse represented by the second hand smoke and similar cases is precisely the goal behind the proposed reforms recently announced by Governor Brown. According to the Governor, “Proposition 65 is a good law that’s helped many people, but it’s being abused by unscrupulous lawyers,” and proposed reforms represent an effort “to improve the law so it can do what it was intended to do – protect Californians from harmful chemicals.”
Among the (mostly legislative) reforms under consideration are proposals to:
- Cap or limit attorney’s fees in Proposition 65 cases.
- Require stronger demonstration by plaintiffs that they have information to support claims before litigation begins.
- Require greater disclosure of plaintiff’s information.
- Set limits on the amount of money in an enforcement case that can go into settlement funds in lieu of penalties.
- Provide the State with the ability to adjust the level at which Proposition 65 warnings are needed for chemicals that cause reproductive harm.
- Require more useful information to the public on what they are being exposed to and how they can protect themselves.
Interestingly, some of the more prominent private Proposition 65 enforcement groups have come out (at least nominally) in favor of these proposals. On the same day the Governor announced them, The Chanler Group (which describes itself as “the nation’s leading law firm that represent citizens acting in the public interest to enforce Proposition 65”) came out with its own press release stating that it “supports the reforms proposed by Governor Edmund G. Brown Jr. to strengthen and restore the intent of Proposition 65 to protect Californians from exposures to harmful chemicals found in consumer products.”
How serious such expressions of support truly are remains to be seen. In the meantime, companies potentially facing Proposition 65 claims relating to products they make or sell in California are well-advised to retain competent California legal counsel as early as possible to ensure a seat at the table as negotiations over potential settlements of the claims move forward.
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