Understanding How Proposition 65 Affects Your Business - and What You Can Do About It!

Nossaman, Guthner, Knox & Elliott, LLP will conduct two Proposition 65 compliance seminars - in San Francisco on March 26, 2002 and in Los Angeles on April 23, 2002. The day long program will explain why all companies that manufacture, distribute or sell products used in California are affected by Proposition 65, whether they have facilities in the State or not. Practical tips on how to comply with the law and how to defend a lawsuit will also be discussed. This seminar is one of a series of seminars presented by Nossaman focusing on California's unique laws, and is free to clients and friends of the firm. In view of the recent increase in Proposition 65 enforcement activity, we recommend that every company that does business in California reassess its Proposition 65 compliance program in light of recent changes to this law.

Proposition 65 makes it unlawful for any person "in the course of doing business" to expose an individual in California to a chemical "known to the State" to cause cancer or reproductive toxicity without first giving a "clear and reasonable" warning. The law also prohibits the discharge of listed chemicals into drinking water. Nearly 800 chemicals are on the list, many of them common substances in everyday use. Significantly, the Act does not establish the amount of listed chemicals that may be in products or emitted by a business without a warning. Instead, warnings are required if a Californian is exposed to any detectible amount of a listed chemical (including unintended contaminants), unless a responsible business has determined (using exposure assessments) that the level does not require a warning. Because there are few state-approved "no significant risk levels" and even fewer testing and assessment protocols, this is both difficult and costly to do.

Violations are punishable by civil penalties of up to $2,500 per violation, per day. The Act is enforced through civil lawsuits, which under this unique law places the burden of proof on defendants. Primary jurisdiction is vested in the Attorney General and certain designated city and county prosecutors. In addition, private party "bounty hunters" may bring suit to enforce the Act if they first give written notice to the alleged violator and the public prosecutors, and the public prosecutors decline to commence a civil action within sixty days. A prevailing plaintiff is entitled to recover twenty-five percent of any civil penalty imposed, as well as its attorneys' fees and costs. If a putative defendant settles with the plaintiff, the plaintiff is generally considered to have "prevailed" and is entitled to attorney's fees and costs.

In the 14 years it has been on the books, literally thousands of companies, mostly out of state manufacturers and distributors of products containing one or more listed chemicals, have received notices of intent-to-sue, but only two cases have been decided by a trial on the merits. Because the defendant bears the burden of proving that warnings are not required using scientific exposure assessments and expert witnesses, these cases are extremely costly to defend. Because of this, California has spawned a cottage industry of bounty hunters (generally private individuals or organizations formed specifically to "enforce" Proposition 65) that send hundreds of notices each year, offering "pre-litigation" settlement for between five and six figures. Million dollar settlements are not uncommon.

Often dubbed "legalized extortion" by businesses, Proposition 65 cases have been brought against manufacturers, distributors and retailers of products ranging from brass keys to electrical cords, children's toys to diesel engines; pharmaceuticals to firearms; plumbing fixtures to fishing tackle; life-saving medical devices to power tools. In December 2001, over 3500 notices of intent to sue were filed against residential property managers, hotel and motel owners relating to exposures to second hand tobacco smoke; automobile manufacturers and dealers relating to car exhaust and touch-up paint; manufacturing facilities in California relating to air emissions; food processors relating to naturally occurring background levels of lead in tea. Other actions target over the counter drugs, cosmetics, and continue the trend of lawsuits against FDA-regulated products. Proposition 65 lawsuits are limited only by the bounty-hunter imagination.

This seminar will be chaired by Carol René Brophy, Nossaman partner and well-known Proposition 65 practitioner. Joseph Hower, Principal, Environ, will discuss the technical aspects of the law. The program will provide a statutory and regulatory overview aimed to help the novice understand the act and its requirements. The seminar also will provide basic tools to help participants to assess their in-house Proposition 65 compliance program, including information on conducting effective exposure and risk assessments, and pro-active strategies for avoiding Proposition 65 lawsuits. Patrick Richard of Nossaman's litigation department will also discuss the basics of defending a Proposition 65 lawsuit.

Seminar Schedule
San Francisco, CA
March 26, 2002
Crowne Plaza Hotel
8:00 A.M. to 3:30 P.M.

Los Angeles, CA
April 23, 2002
Downtown Marriott

Michelle Hart
415 438-7210
[email protected]

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