Prop 65 Amendment Introduced to Reduce Lawsuits

By Josh Long

LOS ANGELESAn amendment that was introduced by California Assemblyman Mike Gatto would give businesses 14 days to cure violations of The Safe Drinking Water and Toxic Enforcement Act of 1986 (commonly referred to as "Proposition 65") without being subject to fines.

The bill will help small businesses avoid the expenses of litigation under a law that was intended to shield Californians from harmful chemicals, said Gatto, a Democrat representing Los Angeles.

Some plaintiff's lawyers have been criticized for seeking to exploit Proposition 65, which requires disclosures if consumer goods, foods and dietary supplements contain carcinogens or reproductive toxicants that exceed specified limits. Roughly 800 chemicals are subject to the warnings, and the 27-year-old law has led to 16,000 lawsuits and nearly $500 million in settlements, according to the national law firm, Alston & Bird, LLP.

Under the legislation, a person alleged to have violated Prop 65 would have 14 days after receiving notice to make amends by demonstrating to the California Attorney General, city attorney or district attorney in whose jurisdiction the notice was filed that the violation has been corrected. The bill would bar an enforcement action if authorities agreed that the violation has been corrected within that two-week period. Prop 65 allows the authorities named above and "any person in the public interest" to bring an enforcement action.

"The voters passed Prop 65 to be protected from chemicals that would hurt them. They did not intend to create a situation where shakedowns of California's small-business owners would cause them to want to close their doors," Gatto said in a statement Feb. 5.

Michael McGuffin, president of the American Herbal Products Association (AHPA), expressed concerns that goods in various stages of distribution throughout California would be unable to meet the 14-day cure period. Manufacturers have little control over products after they have entered the stream of commerce in multiple locations.

"Also, I have some concern that the attorney general and city attorney or district attorneys may not readily 'concur' that a violation has been corrected," McGuffin said in a statement.

Peg Carew Toledo, a partner with the Sacramento, Calif. law firm Mennemeier, Glassman & Stroud LLP, noted the amendment doesn't specify a defendant's burden of proof to show a violation has been cured. Also, it is silent on what happens if local authorities fail to act after receiving information from a defendant, she pointed out.

"I think the way's it's written, it needs some clarification," said Toledo, who specializes in Prop 65 defense and counseling.

Prop 65 provides for fines of up to $2,500 per day for each violation of the law. Appellate courts have not ruled on whether the fines should reflect the number of days a defendant has violated the law or the number of units sold without providing the proper warning, said Toledo. Trial courts have adopted both formulas, although she said most settlements calculate a civil penalty by counting up the number of units sold during the statute of limitations period and multiplying that figure by a fixed penalty amount.