There may be reforms coming to Proposition 65 (Prop. 65) after several previous failed attempts and a growing chorus of complaints from business large and small over the years concerning the unfairness of the law, which was passed by voters in 1986. Some have argued that the law has been perverted by plaintiffs’ counsel more interested in the provision of the law that allows them to collect attorneys’ fees for private suits against business rather than in protecting the public’s health. In late May, by a vote of 72 to 0, the California State Assembly passed what’s being called the Gatto Bill (after its author, Assemblyman Mike Gatto, D-Los Angeles), part of a package of reforms endorsed by Gov. Jerry Brown to curb abuse of the state’s infamous law on toxic substance warnings. The bill’s fate in the Senate and the greater impact of reform, however, are less than clear.
The Gatto Bill (AB 227) gives businesses served with a Prop. 65 notice of violation 14 days to avoid suit by paying a $500 fine and posting a warning of exposure to toxic substances, if: (1) the alleged violation involves exposure to alcoholic beverages, chemicals necessary to prepare food and beverages for immediate consumption, secondhand smoke, or engine exhaust in a parking garage; and (2) the alleged violator has not been served a notice for the same alleged exposure in the past five years. The effect would be to make life easier for small businesses, specifically independent restaurants, which have been targeted by attorneys seeking large settlements over lack of warning signs for toxic chemicals. For the bill to become law, it must win two-thirds of the Senate’s vote, which the Senate has yet to calendar.
What makes the Gatto Bill more than just tilting at windmills is that Gov. Brown not only supports it, but is aiming his sights higher, and seeking an even broader set of reforms – the most comprehensive proposed changes to Prop. 65 ever. Last month, he released a list of proposals for sweeping reform of Prop. 65, which he said is “being abused by unscrupulous lawyers.” The changes would affect all businesses that make or sell consumer products. Among Brown’s ideas: capping attorneys’ fees, requiring a stronger evidentiary showing by plaintiffs before litigation, limiting the amount of money that goes to settlement in lieu of penalties, allowing some reproductive toxicants to be present in products at slightly higher (but still safe) levels without a warning, and requiring more specific exposure warnings. Most of Brown’s bullet points would make Prop. 65 more business friendly, but the latter suggestion—mandating specific warnings for each chemical potentially present—could be a costly and legally uncertain new frontier for business owners. At the moment, a generic warning of chemicals that could cause cancer or reproductive harm suffices.
Prop. 65 was enacted in 1986 to protect consumers from carcinogens and reproductive toxicants. It allows private citizens to file notices of violation against companies for failure to warn against exposure to officially listed substances. In the 26 years since Prop. 65 came into play, however, the legal landscape has come sharply into focus as one in which the state can set somewhat arbitrary maximum levels for chemicals, attorneys can use straw plaintiffs and vague allegations to file cookie-cutter suits against businesses, and compliance standards are determined by the most recent settlement terms rather than the law. It has become hard to weed out the frivolous suits from those with merit, especially under intense pressure to settle. On top of that, consumers are constantly puzzled by the vague and ominous warning signs posted in food courts and on product packaging.
The California EPA is drafting more specific proposals based on the Brown administration’s ideas, and plans to meet with business owners and attorneys on both sides of the debate. We will keep our clients and Prop. 65 contacts updated as these proposals move through the legislative process.