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  NOVEMBER 2013
 

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Sandler, Travis & Rosenberg

California's AB 227 Shields Businesses from Many Proposition 65 Lawsuits
Melissa Miller Proctor, Esq., Sandler, Travis & Rosenberg, P.A.

On October 5, 2013, California Governor Jerry Brown signed into law new legislation that should eliminate many frivolous Proposition 65 lawsuits. Under AB 227, California companies now have fourteen days to cure certain Proposition 65 violations before private lawsuits can be commenced against them. California's Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986 (Title 27 CCR 25000 - 27001), was enacted in November 1986, and was intended to protect California citizens and the State's drinking water sources from chemicals known to cause cancer, birth defects or other reproductive harm, and to inform citizens about exposures to such chemicals.

Proposition 65 requires businesses to notify Californians about significant amounts of chemicals in the products they purchase, in their homes or workplaces, or that are released into the environment, thereby enabling consumers to make informed decisions about protecting themselves from exposure to these chemicals. Specifically, companies selling products in California are required to provide a "clear and reasonable" warning before knowingly and intentionally exposing anyone to a listed chemical. A warning must be given for listed chemicals unless exposure is low enough to pose no significant risk of cancer or is significantly below levels observed to cause birth defects or other reproductive harm. Proposition 65's scope and requirements exceeds those of the Consumer Product Safety Improvement Act (CPSIA), covering different substances and phthalates as well as all products (adult and child products). For example, the Proposition 65 list encompasses lead, lead compounds (which are not defined), phthalates (including DnHP which is not banned by CPSIA), and items such as acrylamide (a substance used to clean water tanks and which is also released during the cooking of French fries), aspirin, and many other common consumer items.

 

The California Attorney General's Office, as well as any district attorney or city attorney, enforces Proposition 65 - assessing civil penalties of up to $2,500 per day of non-compliance against violators. In addition, Proposition 65 may also be enforced by private parties who purport to be acting in the public interest. Private enforcement is the most controversial aspect of Proposition 65, since many frivolous lawsuits have clearly enriched private plaintiffs and their attorneys with little or no benefits afforded to the State of California. In 2012, California businesses paid out approximately $22.5 million in Proposition 65 settlements to private plaintiffs. Because of the high costs of litigation, many California businesses opt to settle these cases with the private plaintiffs out of court - even in situations where, it turns out, no Proposition 65 signage was actually required or where no listed chemicals were in fact present.

Under AB 227, a private plaintiff will no longer be able to obtain a settlement in lieu of penalties or seek attorney's fees and costs if certain conditions are satisfied. First, the alleged violation must involve one of the following:

  1. exposure to alcoholic beverages or a chemical known to cause cancer or reproductive harm through the preparation of food or beverages sold on the violator's premises
  2. exposure to tobacco smoke on premises owned or operated by the violator
  3. exposure to chemicals known to cause cancer or reproductive harm in engine exhaust inside a facility owned or operated by the violator (i.e., parking lot)

Second, within fourteen days of receiving service of notice of the plaintiff's intent to file a lawsuit, the California business must cure the violation. Finally, the business must pay a civil penalty of $500 per facility or premises to the private plaintiff as well as provide the plaintiff with written proof of compliance with AB 227. Once the violations have been corrected, AB 227 prevents further enforcement actions against the business.

AB 227 may be the first step toward more aggressive reform of Proposition 65 as several additional measures are expected to be proposed by Governor Brown in 2014. However, until future reforms are enacted, companies doing business in California must continue to stay abreast of newly listed chemicals and ensure that their facilities and products comply with the signage and labeling requirements of Proposition 65.


Melissa Miller Proctor is a Member of Sandler, Travis and Rosenberg, P.A. and the Firm's Export Practice Leader, resident in the Scottsdale, Arizona office. With significant experience in export controls, customs laws and regulations, and international trade, Melissa works closely with clients to expand their markets while ensuring their regulatory compliance. She may be reached at (480) 305-2110 or via e-mail at mproctor@strtrade.com.

 
 
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