With the world’s sixth largest economy, California is a huge market for food, drugs, dietary supplements, medical devices and cosmetics. At the same time, it is where manufacturers and sellers of such products face a formidable source of litigation known as California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”), which requires companies to provide “clear and reasonable” warnings to consumers if a product exposes them to a chemical known to the state of California to cause cancer, birth defects or other reproductive harm in excess of the maximum daily exposure level (a “safe harbor” level) established by California’s Office of Environmental Health Hazard Assessment (OEHHA). Proposition 65 applies to all products distributed in California and covers both in-state and out-of-state businesses that sell products or provide services to California consumers. As such, its reach extends well beyond California.
 
Proposition 65 Warning Requirement
 
Proposition 65 does not restrict the amount of the listed chemicals in consumer products. Instead, it only requires that a product containing any of these chemicals be accompanied by a “clear and reasonable warning.” The standard language reads:
 
“WARNING: This product contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.”
 
Proposition 65 Incentives for Plaintiffs & Dilemma for Food And Drug Manufacturers
 
Proposition 65 allows for both injunctive relief and civil penalties of up to $2500 per violation per day. Its significance is reinforced by the fact that Proposition 65 allows any individual acting in the public interest to file lawsuits to enforce its provisions and provides 25% of the civil penalties assessed to be paid to the plaintiff, with the rest going to the State of California. Successful plaintiffs can also recover attorneys’ fees.
 
As a California Appellate Court has noted, bringing a Proposition 65 lawsuit is “so absurdly easy.” Proposition 65 does not require a plaintiff to allege that anyone has been harmed by the product in question or that the product is defective. Instead, a plaintiff simply needs to show that one of more than 900 listed chemicals is present—in any amount—in a product, and the burden of proof is on the defendant to establish that the exposure at issue did not require a warning. There is strong pressure for defendants to settle because proving an exemption is often difficult and cost prohibitive.
 
Not surprisingly, there are many bounty hunters who have aggressively filed thousands of Proposition 65 claims against manufacturers, distributors and retailers sometimes only for the settlement value. In fact, between 1988 and 2006 more than 25,000 businesses faced claims under Proposition 65. And in 2010 alone, 187 settlements generated roughly $13.6 million, of which approximately $7.8 million went to plaintiff’s lawyers.
 
Questions of liability may arise between various companies in the supply chain. Under Proposition 65, any listed chemical present in the product—regardless of its ultimate origin—may trigger a warning requirement, if the amount is above its “safe harbor” level. Consequently, Proposition 65 liability may arise regardless of whether the chemical was added by the manufacturer or was present in the environment as a result of pollution.
 
Almost all Proposition 65 claims are settled before trial. After the settlement, products must be reformulated to remove the chemical at issue or bear Proposition 65 warnings. Where the chemical at issue is difficult to eliminate, however, food, drug and dietary supplement manufacturers/distributors face a dilemma, as the other alternative—posting a Proposition 65 warning on their food/drug/dietary supplement product—may, frankly, not be a commercially feasible option.
 
Proposition 65 Possible Defenses & Recommendations
 
A mere presence of one or more of the listed chemicals does not necessarily mean there is Proposition 65 liability, and there are several exemptions/defenses available to defendants who bear the burden of proof. For example, no warning is required (1) when a business has less than 10 employees; (2) when exposure to a chemical occurs at or below the “safe harbor” level, or the exposures are so low as to create no significant risk of cancer or birth defects or other reproductive harm; (3) when the listed chemical occurs naturally in food; (4) when an exposure takes place less than 12 months subsequent to the listing of the chemical by the OEHHA; and (5) when federal warning law preempts state law.
 
Proposition 65 defenses, however, are often difficult to establish. For example, to establish a “naturally occurring” defense, a defendant must prove that the chemical is, in fact, “naturally occurring” and does “not result from any known human activity” such as soil pollution or the use of pesticides. Many plaintiffs have targeted the dietary supplement industry because they know the cost of establishing “naturally occurring” levels of chemicals in soil, botanicals and minerals is extremely high and the task is quite difficult under the court cases that have addressed this issue. Nevertheless, some defendants have successfully made this argument and prevailed against Proposition 65 claims.
 
Manufacturers and sellers of food, drug and dietary supplement products should consult with an attorney before deciding whether and how to provide Proposition 65 warnings in California. When companies receive a Proposition 65 60-day Notice of Violation, they should immediately contact an experienced defense lawyer to strategize their options.
 
References furnished upon request.