July 8, 2021

A Small Business Guide to Proposition 65

Small businesses operating both inside and outside of California may be unaware of Proposition 65 and its implications for their companies. Often a business first becomes aware of Proposition 65 when it receives a Proposition 65 notice threatening legal action and substantial penalties. A company unfamiliar with Proposition 65 or unaccustomed to litigation may find this unnerving. It may be asking what is this? And what should we do? The short answers are: 1) don’t panic; and 2) get in touch with a California Proposition 65 lawyer as soon as you receive the notice.

What Is Proposition 65?

Proposition 65 was enacted into law in 1986 as a ballot initiative. Proposition 65 requires California businesses to provide warnings to consumers against exposures to chemicals (above certain amounts set by the state) that are known to cause cancer, birth defects, or other reproductive harm. These chemicals can be in the products that Californians purchase for their homes or workplaces or are released into the environment. Any company that sells products into California whose products are found to exceed the proscribed level of chemicals may receive a Proposition 65 notice. By requiring that this information be provided, Proposition 65 enables Californians to make informed decisions about their exposures to these chemicals. Thus a company selling a product into California that has chemical levels above the proscribed amount must affix Proposition 65 warning labels to their products. They are not required to cease selling the products—they just cannot continue to sell them without the proper warnings. Proposition 65 warnings are fairly simple in most instances, and examples of usually-sufficient Proposition 65 warnings can be easily found online. That said, it is always a good idea to consult a Proposition 65 attorney regarding the sufficiency of a Proposition 65 warning.

Proposition 65 also prohibits California businesses from knowingly discharging significant amounts of listed chemicals into sources of drinking water. This primer does not focus on drinking water discharges.

Proposition 65 requires California to publish a list of chemicals known to cause cancer, birth defects or other reproductive harm. This list, which is updated yearly, has grown to include approximately 900 chemicals since it was first published in 1987. The list of chemicals can be found here. The levels beneath which an exposure is considered safe, thus not in need of a Proposition 65 warning, can be found here.

The teeth of  Proposition 65 is the penalties. A violator can be fined up to $2,500 per violation per day. Simple math shows that this number can become very high very quickly. If a company sold four similar products, each of which contains a listed chemical above the proscribed safe-harbor level for one year, it is potentially looking at $3.65 million in penalties.

What Does It Mean to Receive a Proposition 65 Notice?

As opposed to the California Attorney General handling cases where a company is selling products that contain excess amounts of the identified chemicals, the California Legislature has allowed private plaintiffs, and entrepreneurial lawyers, to bring civil claims to enforce Proposition 65 compliance.

Accordingly, lawyers and their clients—often shell companies established solely to act as plaintiffs in Proposition 65 litigation—scour companies’ products for likely violations.  They may go out and purchase suspected products and perform their own testing. They may follow news releases designed to inform them if a news agency reports a listed chemical present in a product or kind of product.In addition to locating physical product labeling requirements, changes made to Proposition 65 in 2018 require that each qualifying product on a company’s website must also include a warning “closely associated” with that product on the company’s website.

If a lawyer successfully identifies an offending product, he or she will send the company selling the product, and often any suppliers who had a hand in making the product, a Proposition 65 notice. This notice’s purpose is twofold: First, the company can adjust its operations to remove the allegedly offending chemical or affix a proper Proposition 65 warning; Second, it notifies the California Attorney General that it may step in and prosecute the case. The Attorney General has 60 days to step in and prosecute the action. For the vast majority of  Proposition 65 Notices, the Attorney General does not step in. If it does not, the private attorney and its client can institute a civil action against the recipient of the Proposition 65 Notice. Because the Attorney General usually does not intervene, private attorneys are incentivized to pursue a legal action or, more likely, a civil settlement. With the ability to obtain significant civil penalties, and the recovery of attorney fees, this is an enticing proposition for an entrepreneurial attorney, similar to what has been seen with alleged Americans with Disability Act violations.

What to Do if You Receive a Proposition 65 Notice

  • Do not panic. Very few Proposition 65 cases go to any kind of protracted litigation. The vast majority settle before litigation is filed or shortly after. That said, actually defending a Proposition 65 case can get expensive with the costs of experts needed to defend the allegedly offending product’s chemical content and the risk of a significant adverse monetary judgment.
  •  Secure samples of the allegedly offending products. Save some to perform your own testing. Save some for your California Proposition 65 lawyer.
  • Call a California Proposition 65 lawyer. Many of the private lawyers who specialize in prosecuting Proposition 65 cases are looking for a quick settlement and, thus, a better return on their investment. Engaging an experienced Proposition 65 attorney can help you identify possible defenses to the claims, of which there are several. Your lawyer can communicate with the plaintiff’s attorney to either convince them that there is not likely to be a big payday at the end of litigation and dissuade them from pursing the matter further or can obtain a quick settlement of the matter that is palatable to the company and allows the company to go about its business. Your lawyer can also advise you on the best way to implement testing and establish Proposition 65 labeling best practices to prevent these kinds of incidents from arising in the future.

If you have received a Proposition 65 Notice and have questions, please contact David Grant at Payne & Fears for insights on this area of law.