California's Proposition 65 reformed to end "frivolous" lawsuits.
On October 5, 2013, California Governor Jerry Brown signed into law A.B. 227, amending Proposition 65. The bill aims to end “frivolous shakedown” lawsuits against businesses based on California’s Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Prop. 65, a voter-initiative-based law which requires businesses to post warnings about chemicals known to the state as causing cancer or reproductive harm. We previously discussed this legislation and Gov. Brown’s Prop. 65 reform package in June.
A.B. 227 amends the law so business owners faced with a private enforcement action may take corrective action, pay a $500 fine and provide notice of the fix – a solution that the bill’s sponsor, Assemblyman Mike Gatto (D-Los Angeles), compared to motorist “fix-it” tickets. The changes went into effect immediately, on October 5.
Under Prop. 65, private citizen enforcers must send a “60-day notice” of the violation to the alleged violator, along with the California’s Office of the Attorney General, before filing suit. Businesses sued for failing to post proper Prop. 65 warnings face steep penalties of $2,500 a day, plus the private enforcer’s attorneys’ fees and costs. Some of these private enforcement actions have led to the development of what some critics, including Gov. Brown, call a “cottage industry” based on “nuisance” suits and shakedowns.
Under A.B. 227, businesses that receive a 60-day notice of violation could avoid costly litigation or settlements by correcting the violation within 14 days. The alleged violator would send to the private enforcer the $500 penalty and a completed proof of compliance form describing the corrective action taken and attaching a copy of the new warning along with a photograph of the warning’s placement on the premises. Of the $500 penalty, 75 percent will be paid to the state’s Safe Drinking Water and Toxic Enforcement Fund and the remaining 25 percent will be paid to the private enforcer. An alleged violator could use this “fix-it ticket” option only once, and the amendments do not prevent the Attorney General or other public prosecutor from taking enforcement action.
The new amendments only apply to certain Prop. 65 actions involving exposure to (1) vehicle exhaust at parking garages; (2) alcohol; (3) second-hand smoke; and (4) certain chemicals in food or beverages that are not intentionally added and occur naturally in preparation processes like grilling or frying, such as a acrylamide or benzene.
Gov. Brown’s broader array of proposed reforms – including capping attorneys’ fees and limiting settlement payments – were not adopted in legislation this year.