Client Alert

Recent California Proposition 65 Developments Go Business’s Way for a Change

28 Jun 2018

Authored by Morrison & Foerster’s Proposition 65 + Chemicals Team

Introduction

It is rare for anything having to do with California’s infamous Proposition 65 warning law to be welcome news to businesses. While they do not cure Proposition 65’s ills, a dizzying flurry of recent developments that we report on below may prove an exception.

California Proposes Prop 65 Regulation Stating That Chemicals in Coffee Pose No Significant Risk of Cancer

On June 15, 2018, the Office of Environmental Health Hazard Assessment (OEHHA) announced a proposed regulation stating that coffee does not require a Proposition 65 cancer warning. OEHHA’s action was based on a June 13, 2018 monograph on coffee and cancer published by the International Agency for Research on Cancer (IARC), subsequent scientific literature, and OEHHA’s independent statistical analysis of these data.

OEHHA’s statement of reasons for the proposed regulation concludes on scientific grounds that, when found in coffee, exposures to all Proposition 65 chemicals – including acrylamide – that are created as an inherent result of roasting coffee beans or brewing coffee pose no significant risk of cancer. OEHHA further indicates that its proposed action will benefit the health and welfare of California residents by helping to avoid cancer warnings for coffee.

OEHHA’s conclusions are contrary to prior rulings by a California Superior Court in Proposition 65 enforcement litigation concerning acrylamide in coffee in Council for Education and Research on Toxics v. Starbucks Corp. et al., which we continue to defend.

OEHHA will hold a hearing on this proposed regulation on August 16, 2018, and will accept public comments on the proposed regulation until August 30, 2018. The fate of this proposal and its implications if adopted remain to be seen.

California Appellate Court Rules That Defendants in Consumer Product-Related Enforcement Cases Have Right to a Jury Trial.

For over a decade, the rule in California has been that jury trials are unavailable in Proposition 65 enforcement actions. But an appellate decision published on June 13, 2018 may result in a renewal of requests for jury trials in future Proposition 65 cases.

Specifically, in Nationwide Biweekly Administration v. Superior Court, the First District of the California Court of Appeal held that a jury trial is available to determine whether a defendant is liable for statutory civil penalties, but not to determine the appropriate remedies. While the case arose under a statute other than Proposition 65, the Court’s analysis revisited, and ultimately abandoned, a result reached in a Proposition 65 action a decade ago in DiPirro v. Bondo Corp. (2007) 153 Cal.App.4th 150.

In California, cases determining whether a jury trial is available include a history lesson. That is because the question of whether a particular claim is tried to a jury or to the court turns on whether it would have been decided in law or equity back in 1850, when the California Constitution was adopted. In Nationwide, the Court of Appeal realigned state law with U.S. Supreme Court jurisprudence that had observed that cases arising from a claim for statutory penalties were decided in courts of law. While courts are required to apply equitable principles to set the amount of civil penalties in enforcement cases, the Court of Appeal concluded that the Bondo court had incorrectly treated the entire case as one in equity.

Federal Legislation Introduced That Could Turn the Tables on Proposition 65 Enforcers

Legislation has been introduced in the U.S. Senate and House of Representatives that, in short, seeks to ensure that cancer and reproductive harm warnings of the type required by Proposition 65 be based on sound, scientifically based assumptions and risk analysis.

The proposed bills (HR 6022 and S 3109, introduced as the Accurate Labels Act) require any “covered declaration” requirement imposed by a state be (1) “risk-based”; (2) grounded in the “best available science”; and (3) subject to “appropriate weight of the evidence review” as those terms are defined in the proposed law. It further requires that any entity seeking to enforce the warning requirement in court would have the burden to establish, by a preponderance of the evidence, that the state requirement meets the three standards set forth above. (The bills also would provide an exemption for naturally occurring constituents that departs significantly from the definition in the Proposition 65 regulations.)

If this legislation were to pass both houses of Congress and be signed into law by the President, it would drastically alter the landscape of Proposition 65 enforcement by enabling defendants to present new express and implied preemption claims. It would also provide a mechanism for any person impacted to bring a federal civil action to enjoin enforcement of any requirement that does not comply with the law’s requirements.

HR 6022 has been referred to the House Committee on Energy and Commerce and S 3109 is before the Committee on Commerce, Science, and Transportation. Although it has broad industry support through the Coalition for Accurate Product Labels, because of the remaining legislative timetable and likely strong opposition by California’s Senators, the proposal probably faces an uphill bill in the current Congress.

California Appellate Court Rules That Prop 65 Safe Harbor Warning for Alcoholic Beverages Is Sufficient for All Purposes and Upholds Res Judicata Effects of Private Plaintiff Consent Judgments

In May, the Second District California Court of Appeal ruled in Doris Charles, et al. v. Sutter Home Winery, Inc., et al., that wine manufacturers, distributors, and retailers are not required to provide a separate Prop 65 warning disclosing the addition of arsenic to their products. The decision is significant for two reasons.

First, the Court found that a chemical-specific Prop 65 warning was not necessary because the wine producers already employed OEHHA’s generic “safe harbor” warning for alcoholic beverages, which was essentially left unchanged by the agency’s updated regulations. Although plaintiffs claimed that a separate warning disclosing the addition of inorganic arsenic was required to prevent consumers from being misled, the Court ruled that the generic alcoholic beverage safe harbor warning was sufficient because it warns consumers of both the carcinogenic and reproductive toxicant effects of alcohol consumption.

Second, the court held that plaintiff’s claim was barred by a consent judgment in a prior Proposition 65 case. Although the consent judgment was entered in a case brought by a different plaintiff and did not involve the arsenic-specific allegations or non-Prop 65 claims raised by the current plaintiff, many of the defendant wine producers were parties to that consent judgment. In addition to finding privity as between the prior and current plaintiff and a sufficient identity of the primary rights as between the prior and current claims, the Court observed language in the prior consent judgment stating that it was intended to be a “full, final and binding resolution” against alleged violations of Prop 65 exposure that were or could have been asserted in that case against alcoholic beverage producers. The court’s res judicata analysis will therefore hopefully dissuade private-party plaintiffs from bringing Prop 65 complaints against companies that have already opted-in to a comprehensive Prop 65 consent judgment.

OEHHA Set to Adopt Changes to Prop 65 Safe Harbor Warning for Pesticides to Allow for Use of Federal Signal Words

OEHHA has also proposed to adopt a final rule to relieve an existing conflict between Prop 65 safe harbor warning requirements and federal and state pesticide laws. Under the latter, the term “warning” cannot be used as a signal word on pesticide labels unless it is specifically required by EPA or the California Department of Pesticide Regulation.

OEHHA’s proposed final rule would allow for a narrow exception where EPA or CDPR and Prop 65 label requirements conflict. Specifically, the words “ATTENTION” or “NOTICE” could be substituted within the protection of the Proposition 65 safe harbor where word “WARNING” was previously required.

The public comment period on this rulemaking is open until July 5th. If finalized, the rule will go into effect on August 30, 2018.

Federal Judge Issues Injunction Barring Enforcement of Prop 65 Cancer Warnings on Compelled False Speech Grounds

As we discussed at greater length earlier this year, the U.S. District Court for the Eastern District of California issued an injunction enjoining Proposition 65’s warning requirement as to the chemical glyphosate, the primary active ingredient in Round-Up®. In issuing the injunction, the Court found that: (1) glyphosate is hardly “known to cause cancer” given the disparity in conclusions about the chemical among reputable health authorities, and (2) a warning suggesting that glyphosate causes cancer in humans would be misleading to the average consumer. On this basis, the Court concluded that requiring a Proposition 65 warning due to glyphosate amounts to compelling false commercial speech in violation of the First Amendment.

While the injunction is a preliminary ruling only, for now, glyphosate manufacturers, agriculture, and food companies need not worry about providing Proposition 65 warnings due to glyphosate. Moreover, the Court’s reasoning on the constitutionality of Proposition 65’s warnings where scientific authorities are at odds and no risk is posed to humans is potentially significant as it could potentially have broader applicability to a number of other Proposition 65 listed chemicals.

California Appellate Court Unanimously Upholds Longstanding Prop 65 Safe Harbor Level for Lead as a Reproductive Toxicant

On June 5, 2018, the First District Court of Appeal affirmed a trial court’s decision upholding the longstanding Prop 65 “safe harbor level” for lead of 0.5 micrograms/day as a reproductive toxicant. The appellant, Mateel Environmental Justice Foundation, argued unsuccessfully that OEHHA improperly adopted regulations in 1989 that set the lead level below which no warning is required because it was based on an allegedly insufficient analysis of the underlying science and deferred to findings by the federal Occupational Safety and Health Administration.

The Court rejected Mateel’s allegations and concluded that OEHHA’s promulgation of the lead safe harbor level was not an abuse of discretion and was based on its own sufficient scientific analysis at the time. Although the Court recognized that scientific findings concerning the reproductive harm effects of lead have evolved since 1989, the Court concluded that it is within OEHHA’s discretion whether or when OEHHA chooses to revisit the duly promulgated lead safe harbor level. For now, therefore, the decision effectively ensures a continuation of the status quo for lead under Proposition 65.

Conclusion

Each of the developments described above comes as good news for businesses and their implications may well deserve more in-depth analysis and discussion in the days ahead. How broadly these developments will apply and whether they may represent the beginning of a new trend making Proposition 65 more rational and less of an irritant to businesses remains to be seen.

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