More Proposition 65 Reform on the Way?
Wed May 3rd, On Environmental Law, by Bick Law LLP
On the heels of new Proposition 65 “safe harbor” warning regulations adopted last year by the state, which will impose new and more stringent warning requirements on California businesses beginning August 2018, new legislation has been introduced that, if passed, may help level the playing field for businesses frustrated by the peculiarities of this law. In particular, the new bill (AB 1583) is designed to improve transparency and reduce litigation costs for business that are targeted by citizen enforcers.
Prop 65 requires companies that do business in California, and employ 10 or more people, to provide warnings to consumers about known potential exposures to any of almost 900 chemicals known to the state to cause cancer or reproductive harm. Prop 65 also allows for any person to enforce the statute “in the public interest” so long as the private enforcer has given proper 60-day notice of the alleged violation to the alleged violator, the Attorney General and other public enforcers, and no public enforcer has commenced and is diligently prosecuting an action.
In 2001, the Legislature reformed Prop 65 to curtail abuses by private enforcers by requiring a “certificate of merit” to be provided with the 60-day notice. Specifically, citizen enforcers must submit a certificate of merit to the state Attorney General’s office prior to serving a business with a 60-day notice of violation, in which the certifier must declare that he or she
has consulted with one or more persons with relevant and appropriate experience or expertise who has reviewed facts, studies, or other data regarding the exposure to the listed chemical that is the subject of the action, and that based on that information, the person executing the certificate believes there is a reasonable and meritorious case for the private action.
The citizen enforcer also must provide the Attorney General with factual information “sufficient to establish the basis of the certificate of merit”; however, under current law, the factual information supporting the certificate of merit is not discoverable by the defendant during litigation. Rather, only a prevailing defendant, after having incurred the costs and other burdens of litigation, may bring a motion for the court to conduct an in camera review, without the moving party present, of the factual information supporting the certificate of merit. Only if the court finds there “was no credible factual basis for the certifier’s belief that an exposure to a listed chemical has occurred or was threatened,” will the claim then be deemed frivolous and the defendant may obtain attorney’s fees.
Assemblyman Ed Chau (D-Arcadia) has introduced AB 1583, a bill that would require Prop 65 citizen enforcers to provide the factual basis supporting their certificate of merit to the alleged violator. The bill is enthusiastically welcomed by businesses that have long been frustrated with the constant threat of Prop 65 litigation by citizen “bounty hunters.”
AB 1583 allows the alleged Prop 65 violator to obtain the factual basis for the certificate of merit through normal civil discovery procedures. The bill also requires the Attorney General to serve a letter to the noticing party and the alleged violator stating the Attorney General believes there is not merit to the action, if the Attorney General so determines after reviewing the factual information submitted in support of the certificate of merit. Importantly, if the Attorney General does not serve such a letter, this shall not be construed as an endorsement by the Attorney General of the merit of the action.
These new requirements would assist greatly in reducing litigation costs and dissuading frivolous Prop 65 lawsuits, which have long been the bane of businesses servicing California consumers. Access to the supporting factual information would help businesses to more reasonably decide whether to litigate and defend the case or whether settlement is the appropriate course. As it is now, due to the costs of litigation and the threat of statutory penalties, most businesses simply settle the private enforcement lawsuits regardless of whether they were required to provide a Prop 65 warning and without knowing if the lawsuit had any merit.
AB 1583 is supported by the California Chamber of Commerce and numerous other entities. According to these stakeholders, because the bill would allow the alleged violator to obtain the factual basis for the certificate of merit via normal discovery procedures, a Prop 65 defendant would be on the same footing as defendants in other civil litigation matters. Ultimately, the bill comports with notions of fairness and transparency, which are notions that traditionally have not been associated with this controversial statute.
This new bill is consistent with Governor Brown’s recent proposals of certain reforms to strengthen and restore the intent of Prop 65. Noting that the statute has been abused by “unscrupulous lawyers driven by profit rather than public health,” Governor Brown proposed in May 2013 to (1) end frivolous, “shakedown” lawsuits, (2) improve how the public is warned about dangerous chemicals, and (3) strengthen the scientific basis for warning levels.
Prop 65 is difficult to reform statutorily because it requires two-thirds vote of each house of the Legislature and the amendment must “further the purpose of the law.” AB 1583 is consistent with the underlying intent of Prop 65, which is to ensure that consumers can make reasoned and informed choices when they purchase consumer products or enter certain establishments, while at the same time advancing the Governor’s call for an end to frivolous lawsuits by providing for fairness and transparency.
The bill is making its way through the Assembly and recently was referred to the Standing Committee on Appropriations.
Bick Law’s California Proposition 65 Lawyers and California Environmental Regulatory Lawyers will continue to monitor this situation and report back here as appropriate.