Gov. Jerry Brown Proposes "Update" to California's Notorious Warning Law

On May 7, 2013, California Governor Jerry Brown announced plans to "update" Proposition 65, the 1986 voter initiative that is at the top of the list of laws that give California a bad name in the business community. Recognizing that there have been examples of "unscrupulous lawyers driven by profit rather than public health," the Governor's proposals would seek to impose additional requirements on private plaintiffs and their attorneys. The proposals would also take aim at changes to the law's standard for when warnings are required and what certain types of warning messages should say.

Proposition 65 allows private enforcers to bring actions "in the public interest" without requiring any showing of harm. Private enforcers can seek civil penalties of up to $2,500 per violation per day as well as injunctive relief. Plaintiffs who settle or prevail in litigation can seek to recover reasonable attorneys' fees. Public enforcers like the California Attorney General can also enforce the law, but over 90 percent of cases are brought by private plaintiffs. Millions of dollars change hands under Proposition 65, hundreds of lawsuits are filed each year, and signs are plastered all over California from parking garages to hotel lobbies, from restaurant entrances to Starbucks condiment stations.

The Governor has been a critic of certain aspects of Proposition 65 since his time as Attorney General. In consultation with his successor as Attorney General, Kamala Harris, he has outlined concepts for reform, but he has not yet proposed specific language for the amendments. Key features highlighted in the Governor's press release are the following:

• Place restrictions on attorney's fees in Proposition 65 cases.
• Require stronger demonstration by plaintiffs that they have information to support claims before litigation begins.
• Require greater disclosure of plaintiff's information.
• Set limits on the amount of money in an enforcement case that can go into settlement funds in lieu of penalties.
• Provide the State with the ability to adjust the level at which Proposition 65 warnings are needed for chemicals that cause reproductive harm.
• Require more useful information to the public on what they are being exposed to and how they can protect themselves.

These are fleshed out in somewhat greater detail in a white paper. In the coming weeks, the Governor's office intends to convene "working groups" of "stakeholders" to consider these conceptual proposals. Some may be implemented through changes to the Proposition 65 implementing regulations, while others will take legislation. According to the ballot initiative, Proposition 65 can only be amended by a two-thirds vote of the State Assembly and the State Senate, and then only to "further its purposes." The Governor's staff intends to press for changes to be adopted in 2013, apparently building on the momentum garnered by a narrowly tailored bill that has already been introduced to allow businesses time to "cure" alleged Proposition 65 violations once they are notified.

Since its passage by voter initiative over 25 years ago, Proposition 65 has been amended in significant part only once. That amendment, which was intended to impose additional requirements on private plaintiffs, has not prevented shakedown lawsuits. Moreover, those additional requirements have had the unintended consequence of increasing the attorneys' fees demands made to companies and the time and expense involved in resolving Proposition 65 claims.

Although some of the reforms outlined by the Governor could be helpful to companies, they do not address a number of concerns raised by the business community in recent years. Whether those concerns may be addressed in the working groups remains to be seen. Moreover, the proposed reform for warnings could result in an overhaul of the longstanding ways in which thousands of companies doing business in California have designed their Proposition 65 compliance programs.

Businesses should be engaged in and monitor the stakeholder discussions. The devil will be in the details.

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.