Proposition 65

Proposition 65 Warning at Disneyland

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Proposition 65 was enacted as a ballot initiative in California in November 1986. The "intent was to lower Californians’ exposure to chemicals that may cause cancer or reproductive harm by requiring businesses to label products containing these substances."

In 2015, it was reported that a "wide-ranging study by Cal Poly University professor Michael Marlow finds, 'public health has not demonstrably improved because of Prop. 65.'"

Professional Plaintiffs

"Professional Plaintiffs" and regular citizens have been able to take advantage of Proposition 65's "unique 'bounty hunter' provision [which] gives private citizens the ability to enforce the law and collect a portion of the penalties businesses pay." On July 19, 2011, legal news service Law350 described Proposition 65 as a "treacherous trap for manufacturers and distributors and a lucrative source of settlements and attorney fees for a handful of professional plaintiffs."

As You Sow was founded to take legal action against businesses who allegedly violate Proposition 65

As reported at the Food Navigator on 01-Sep-2018 By Elaine Watson:

"According to the office of the California attorney general, the most prolific litigants in 2017 (when settlements topped $25.8m​​) included The Chanler Group Plaintiffs (which secured 147 Prop-65-related settlements in 2017), Brodsky & Smith Plaintiffs (115 settlements), Consumer Advocacy Group (30), Ecological Alliance LLC (72), and The Environmental Research Center (60), which have made millions out of Prop 65 suits in recent years."

On Sept 10 2015, it was reported at the OC Register:

"In 2014 alone, Proposition 65 cost businesses more than $29 million in settlement payments. Since 2000, California businesses have paid more than $228 million in settlements with about two-thirds of that money going to attorneys."

Impact on small businesses

A congressional hearing dated October 28, 1999 titled "Proposition 65's Effect On Small Business" referred to "private enforcers" who used Proposition 65 to "target small businesses which must settle because they cannot afford to fight frivolous lawsuits and still meet their payrolls." Further, it was testified that the "private enforcers" such as attorneys from As You Sow "often fail to inform small businesses that Proposition 65 exempts businesses with less than ten employees."

Excerpts from the hearing:

"The Committee has received some disturbing anecdotal evidence that some individuals are targeting small business through the third party provision. I am even more disturbed when I hear that some individuals have threatened legal action against businesses with fewer than ten employees. This is not covered by Proposition 65." - Nydia Velazquez

Chemcoat Labs

"In early 1993, one of my customers, American Manicure, called to tell me that he had been contacted by a lawyer, Clifford Chanler, representing a nonprofit organization called As You Sow, which was headed by Thomas Van Dyck. He was given a 60-day notice of violation which cited that his product, which contained toluene, was being sold in California without a warning label and, therefore, was not in compliance with Proposition 65."

"American Manicure was named in the first wave of the lawsuit and was eventually given the opportunity to settle the matter for $1,500."

"Several other of my accounts also received warning notices, along with many national brands of cosmetics. All were eventually named in the litigation by Mr. Chanler. As time went on, the settlement fees being demanded were growing larger and larger."

"Over the next few weeks, the first wave of companies named in the litigation had either settled with Mr. Chanler or were in the process of doing so. Some had opted to place a warning label on the products, with Mr. Chanler specifying the prescribed wording of the warnings, while others opted to reformulate their product removing toluene altogether."

"It was quite burdensome for our company for the following reasons. Being the manufacturer of the product in question, we were receiving numerous calls every day for information about the litigation to find out if nail polish was really harmful or was it just harmful in California. Who was this Clifford Chanler and did he have a right to do this? Who can we call for labeling requirements, et cetera, et cetera?"

"I fielded many questions and tried to stay informed so that I could help my accounts in any way possible, but at the same time our phone was ringing off the hook, we were also being asked to immediately submit samples without toluene, and at that time we did not even have a working formula for a new product."

"Once we did create a new product, it would require testing, new labeling, new material safety data sheets, new ingredient lists, and we had to start from scratch, and we needed it yesterday. And all of this was very time consuming to do it right."

"It was a heavy burden for a small company of only seven or eight employees, and the newly created product would not be as good as the original formula, but at a cost of approximately $3.00 more per gallon.

"By early summer of 1993, Mr. Chanler and AYS sent out the second wave of notices, and whoever he missed in his initial roundup was now being named in the second wave. By then the entire industry knew about this litigation that was spreading like wildfire, and many, fearing the high cost of litigation and also knowing that there was a lack of proof that nail polish did not cause harm, everyone just buckled under and paid a settlement fee."

"I do know of one company that tried to fight, but after spending $100,000 in legal fees, gave up and settled."

[...]

"Basically everyone wanted to know where all of this settlement money was going. As of today that question has never been answered, and I have never heard of even one case where someone or anyone has sued for birth defects or getting cancer from the use of nail polish."

[...]

"Since Proposition 65 has passed in California, it has cost small business thousands of dollars defending itself against false allegations. Lawyers, not consumers, have benefited. Please help." -Testimony by Marianne LaMura, Chemcoat Labs

Activa Products, Inc

"Recently a bounty hunter sued my company under Proposition 65 regarding a product called Scenic Sand. Now, this is the first lawsuit against any of our products in the 20 years that I have been with the company."

[...]

"The manner in which these proposition bounty hunters enforce Proposition 65 acts as a sledgehammer against small businesses. We requested that the plaintiffs attorney did not file the lawsuit until the toxicologist could finish his exposure testing that demonstrated that Proposition 65 warning was not needed. The plaintiffs attorney refused and filed suit anyway.

"It concerns me that bounty hunters can file these suits so easily against small companies like mine without any proof that the products at issue are unsafe or any proof that the AP certification is wrong." -Frank Strauss, Activa Products, Inc.

Ellis Paint Company

"But I thought that this was about fairness. I thought it was about warning the consumer, and I was mistaken about that. The bounty hunter requirements are about money, and against the advice of my attorney I did not settle.

"Mr. Chanler offered to settle with me for $5,000, and I did not accept that. He did file a suit, and as I was preparing my testimony today I had forgotten how angry I had gotten. When I got the lawsuit, it did not even have my name on it. This lawsuit is made out to Star Finishes Products, Inc. and Does 1 through 1,000. I am one of those Does 1 through 1,000.

"Mr. Chanler does not even take the time to see who he is suing. He just opens up the SIC code and finds the address and sends out these lawsuits.

"We did settle this case. The discovery is incredible. The wear and tear on my company was also incredible. It was during the time in the 1990s, if you remember, was during the California recession. It was a very hard time for business. Our total cash outlay, as outlined in my testimony, was $54,000. The amounts shown on the chart of $68,000 includes the one administrative person from my company that also spent time on this lawsuit." - Sandy Skommesa, Ellis Paint Company

References

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