Kathleen Pender
October 7, 2013

Gov. Jerry Brown on Saturday signed a bill that will protect certain businesses from what he once called “frivolous shake-down” lawsuits over Proposition 65, the voter-approved California law that requires companies to post warning signs or labels when they expose customers to certain chemicals that cause cancer or birth defects.

Prop. 65 does not prohibit companies from using what has become a very long list of harmful chemicals, except for adding them to drinking water. But it does require companies with 10 or more employees to post warning labels of certain sizes and in certain places when customers are exposed to named substances above a certain limit.

Companies that fail to comply with the law can be sued by the attorney general or, as is more often the case, citizens represented by private attorneys.

Over the years, some attorneys have made a business out of suing businesses for violations of Prop. 65. Many of these cases result in settlements that resulted in payments to the plaintiffs and paid attorneys fees for their lawyers.

They also have resulted in toxic chemicals being removed from many products and penalties paid to the state. The attorney general publishes an annual report on these settlements on its Web site.

“While Proposition 65 has motivated businesses to eliminate or reduce toxic chemicals in consumer products, it is also abused by some lawyers, who bring nuisance lawsuits to extract settlements from businesses with little or no benefit to the public or the environment,” Brown said in a press release in May when he proposed sweeping changes to Prop. 65.

Brown’s proposal, among other things, would have capped attorney fees, limited certain types of payments and provided better, more specific warnings to consumers. Although Brown’s effort did not produce any legislation this year, he did sign a much narrower bill that applies only to a limited group of hazardous substances.

Under AB227, companies that get a notice saying they are in violation of Prop. 65 can protect themselves from lawsuits if they take corrective action within 14 days, pay a $500 fine and notify whoever filed the notice that they have fixed the problem.

“If the business owners comply, they would be safe from legal action — including Prop. 65’s crushing $2,500 per-day retroactive fine, plus legal fees, and the stress of battling unfair litigation,” according to a statement from the bill’s author, Assemblyman Mike Gatto, D-Los Angeles.

Gatto says this new process is similar to fix-it tickets, which let motorists expunge tickets for safety violations if they pay a small fine and show proof that they have fixed the problem.

The Prop. 65 fix-it ticket only applies to violations for exposure to four types of substances: vehicle exhaust at a parking garage, alcohol, second-hand smoke and certain chemicals that occur naturally when preparing foods, such as Acrylamide that occurs when baking or roasting coffee, or benzene, which occurs during grilling. The last three would help places like restaurants, bars, coffee shops, delis or larger businesses — such as hotels or grocery stores — that have restaurants or coffee bars on premises.

“In the last several months, more than two-dozen brick-and-mortar businesses in Southern California, including several popular restaurants and cafes, have been threatened with lawsuits for simply neglecting to have posted signs (or signs of the correct size), that warn about beer, wine or chemicals that result from the natural process of cooking food. “Some businesses have paid settlements of $10,000 or more to make the suits go away quickly,” Gatto said in a press release.

The final version of the law is much narrower than what Gatto originally proposed in February.

“As originally proposed, anyone who received a notice of violation of Proposition 65 had 14 days within which to ‘correct the violation.’ If they did so, then action would not be brought against them,” says Barbara Adams, a San Francisco attorney who has represented companies in Prop. 65 cases.

“The question of what would constitute correcting the violation was left open. As passed, the change applies only to food preparation establishments for chemicals that naturally occur when food is cooked, to places where people are allowed to smoke, and to parking garages.” In these cases, all that’s required “is a warning of appropriate size and language and location,” she says. “There is no change in the law when it comes to products that are sold in California.”

Caroline Cox, research director with the Center for Environmental Health in Oakland, which has brought many Prop. 65 cases against companies, is happy with the final bill.

“It started out being a very open-ended bill that probably would have gotten rid of the good things Prop. 65 has accomplished,” she said. “It basically takes care of some particular situations in which small businesses were getting jerked around — I think you could call them frivolous lawsuits.”

Berkeley attorney Cliff Chanler, whose firm has collected millions of dollars representing individuals suing businesses over Prop. 65, says “less than one-half of 1 percent of our clients’ cases would be impacted” by the final version.