April 29, 2022

California Court of Appeal Clarifies Requirements for Proposition 65 Liability

The California Court of Appeal recently provided much needed clarification regarding the application of Proposition 65, which prohibits businesses from knowingly and intentionally exposing individuals to certain chemicals without first providing a written warning. In Lee v. Amazon.com, Inc., 76 Cal. App. 5th 200 (March 2022), the court addressed two key questions: (1) whether constructive knowledge of hazardous chemicals and potential exposure is sufficient under the statute, or if actual knowledge is required; and (2) what level of specificity is required in a Proposition 65 Notice of Violation.

Lee’s ruling is important for every company that sells consumer products because Proposition 65 obligations apply “to any retailer, manufacturer, producer, packager, importer, supplier, or distributor of the product.”  Lee, 76 Cal. App 5th at 231. A company found to have violated Proposition 65 can be fined up to $2,500 per violation per day, which can quickly add up, especially if the violator sells multiple offending products on a regular/daily basis.

The Basic Framework of Proposition 65

Proposition 65 generally requires that “[n]o person in the course of doing business [] knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual.” A knowing and intentional exposure is not actionable if the person (in this context, the seller of consumer products) first provides a written Proposition 65 warning, alerting the consumer to the chemical’s presence in the product. Private plaintiffs can sue for alleged Proposition 65 violations, but must first serve a Proposition 65 Notice of Violation on the alleged violator and the California Attorney General at least 60 days before filing a lawsuit, in order to give the government the opportunity to pursue the action. If the Attorney General does not sue in that 60-day period, the private plaintiff may. (For more information on Prop 65, see our previous article, “A Small Business Guide to Prop 65“).

Lee v. Amazon

In Lee, the plaintiff sought to hold Amazon accountable for selling skin-lightening creams—allegedly containing mercury—without proper Proposition 65 warnings. The case addresses two issues important to California businesses.

Proposition 65 Requires Only Constructive Notice

Before the Lee decision, it was an open question whether the phrase “knowingly and intentionally” requires actual knowledge of the presence of hazardous chemicals and potential for exposure or whether constructive knowledge is sufficient. “Constructive” knowledge generally is defined as “knowledge that one using reasonable care or diligence should have.”  Lee, 76 Cal. App. 5th at 228. The Lee court found that constructive knowledge alone is sufficient to trigger a seller’s Proposition 65 obligation because requiring anything more would create incentives for businesses to deliberately avoid information alerting them to the presence of hazardous chemicals and potential exposure.

A Proposition 65 Notice of Violation Need Identify Only the Product Category

The court also provided much-needed guidance on the specificity required in a Proposition 65 Notice of Violation. Proposition 65 requires that a pre-litigation Notice of Violation be served on the alleged violator identifying the allegedly offending product “with sufficient specificity” to inform the recipient of the nature of the items allegedly sold. The California Environmental Protection Agency’s Office of Environmental Health Hazard Assessment had previously offered guidance that it would be sufficient to identify the category of products at issue, such as “aerosol spray paint,” “car wax,” or “paint thinner.” The Lee court relied on this guidance to conclude that the plaintiff’s notice—identifying the broad category of “skin-lightening creams”—was sufficiently specific, particularly given that it also identified, albeit under a different name, at least one allegedly offending product.

Lessons Learned

Retailers, manufacturers, producers, packagers, importers, distributors, and sellers of consumer products can be sued in civil court and subject to penalties under Proposition 65 even if they had only constructive knowledge that they were exposing any individual to certain chemicals. Actual knowledge is not required. Companies should take care to inform themselves of the chemical compositions, and intended uses, of the products they sell, manufacture, produce, package, import, or otherwise distribute to ensure Proposition 65 compliance.

Upon receipt of a Proposition 65 Notice of Violation that describes even just a category of allegedly offending products, companies should carefully examine all products that fall within that description for Proposition 65 compliance. Companies should act quickly upon receiving a notice of violation to limit any continuing penalties.

Disclaimer: Please contact your Payne & Fears attorney for current guidance on the subject matter of this article.