Proposition 65

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Contributors

Proposition 65 was passed by the voters in 1986 and requires businesses to provide warnings to California consumers when they may be exposed to listed chemicals known to cause cancer, birth defects or reproductive harm. These chemicals can be found in the products that California consumers purchase, in their homes or workplaces, or that are released into the environment. Proposition 65 is overseen by the California Office of Environmental Health Hazard Assessment (“OEHHA”). As part of administering Proposition 65, California maintains a comprehensive list of these chemicals which is updated annually. Currently, there are approximately 900 chemicals identified by OEHHA.

Enforcement of Proposition 65 can be handled by government attorneys, such as the California Attorney General’s Office, as well as city attorneys and district attorneys. More often however, Proposition 65 claims are made and filed by consumer advocacy law firms (i.e., bounty hunters) on behalf of private citizens against manufacturers, wholesalers, retailers or other businesses that failed to provide the requisite warnings.

Lawsuits for Proposition 65 violations must be preceded by a 60-day notice of violation which allows for early settlement, a “cap” on exposure and provisions for curing the failure. If a lawsuit is filed, fees and costs can rise dramatically and settlement can only be secured through a court approved consent judgment.

In the bounty hunter scenario, the vast majority of the settlement proceeds (80-90 percent) are allocated to attorney’s fees. The remainder goes to the OEHHA fund and the private party enforcer. Because of the percentage of attorney’s fees, Proposition 65 has created a cottage industry among bounty hunter law firms and their hand-picked private party enforcers. If a matter is settled before a formal complaint is filed with a superior court, the parties are free to allocate the amount of proceeds that go to the bounty hunters as attorney’s fees. But, as noted above, if a formal complaint is filed, the settlement takes the form of a consent judgment that must be approved by the court.

In the past, courts routinely approve consent judgments irrespective of the percentage of the attorney’s fees. But one judge in the Alameda Superior Court is taking a hard look at the amount of attorney’s fees when deciding whether to approve a consent judgment. In particular, Judge Peter Borkon of Department 15 recently issued two tentative rulings on motions to approve consent judgments which reduced the attorney’s fees from 90 percent (as provided in the proposed consent judgments) to 45 percent. In reducing the fees, Judge Borkon relied on several opinions from California appellate courts and the Ninth Circuit. The bounty hunter challenged the tentative ruling arguing that the opinions did not arise from Prop 65 cases and did not involve consent judgments agreed to by the parties. As of the date of this writing, the outcome in those two cases is unknown. Nevertheless, the fact that at least one judge is looking to reduce the amount of attorney’s fees in Prop 65 cases – which in turn reduces the settlement amount – is a welcomed development for companies who face Prop 65 litigation.