California Governor Signs Targeted Revision to Proposition 65 While Broader Reform Falters
Seller Beware: Consumer Protection Insights for Industry
Markingonly the second time that California's onerous Proposition 65 has been substantively amended in over 25 years, Governor Jerry Brown on October 5, 2013, announced that he has signed into law AB227, a bill aimed at reducing "bountyhunter" litigation against small businesses who operate restaurants, bars, parking garages, as well as other premises that permit smoking. The bill takes effect immediately.
We summarized a substantially similar version of the bill in our prior blog post. The citizen enforcement provision of Proposition 65 has now been amended for businesses that fail to provide warnings to consumers in the following specific situations:
- exposure to alcoholic beverages sold for onsite consumption;
- exposure to chemicals in food or beverages that are prepared and sold on the premises primarily intended for immediate consumption on or off premises, provided the chemicals are not intentionally added and were formed by cooking necessary to render the food palatable or to avoid microbiological contamination;
- exposure to environmental tobacco smoke caused by entry of persons (other than employees) on such premises where smoking is permitted; and
- exposure to chemicals known to the state to cause cancer or reproductive toxicity in engine exhaust, to the extent the exposure occurs inside a facility owned or operated by the alleged violator and primarily intended for parking noncommercial vehicles.
The law now gives these businesses 14 days to comply with the warning requirements before an enforcement action can be filed. It also sets the fine at a one-time payment of $500 (indexed for inflation). This provision can only be invoked once with respect to a violation arising from the same exposure in the same facility or on the same premises.
Private enforcers of Proposition 65 who target businesses in these situations have to follow special procedural requirements for giving notice, including informing the businesses of their rights under this provision. To invoke the protections of this provision, a business likewise must follow certain procedures set out in the statute.
With only $125 per violation available to the bountyhunter, and no provision for attorneys fees, the law significantly reduces the financial incentive for bountyhunters and their attorneys to target businesses in these circumstances. In recent years, restaurants in particular have been targets of such suits covering such commonly found chemicals in food as acrylamide in coffee, PhIP in grilled chicken, and PAH's in flame-grilled burgers.
Broader Reform Remains Uncertain
As we also reported previously, Gov. Brown in May 2013 sought much broader reform of Proposition 65 by convening a group of stakeholders for intensive discussions on amending the statute. Hampered by the need to obtain two-thirds approval of any changes, the participants (who included Arnold & Porter's Trent Norris) were unable to come to a consensus on reforms before time ran out in the legislative session in early September. The proposed reforms were modest and generated little enthusiasm among business interests, and specific opposition was formally voiced by interests in the plaintiffs' bar who opposed revisions aimed at fostering judicial review of attorneys' fees awards that are agreed to in proposed settlements.
The Administration has said it will continue to consider revisions to the warning provisions of regulations administered by the Office of Environmental Health Hazard Assessment, following a public workshop held in July 2013. Additional discussions on possible legislative reforms also appear possible in the next legislative session.
© 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.