From its name, you might believe that California's Proposition 65 — the Safe Drinking Water and Toxic Enforcement Act of 1986 — is not something that a company operating outside California need worry about. Unfortunately, this belief is incorrect.
California's Prop 65 applies very broadly and impacts food and beverage manufacturers who sell products in the state of California, in addition to virtually every other product sold to California consumers. The law requires companies to warn California consumers if the company's products contain a chemical "known to the state of California" to cause cancer or reproductive harm.
Indeed, in recent years, there has been Prop 65 litigation impacting the food & beverage industry in cases involving products containing lead, acrylamide, arsenic and mercury. There has even been Prop 65 litigation against fast food establishments regarding flame-broiled and grilled meat products that contain polycyclic aromatic hydrocarbons (PAHs) and PhIP (2-amino-1-methyl-6-phenylimidazo[4,5-b] pyridine). Further, there has been significant activity against dietary supplement manufacturers.
These matters are in addition to the thousands of Prop 65 cases filed every year against other non-food and beverages products such as exercise equipment, apparel, handbags and fashion accessories, office supplies and crafts, toys, automotive accessories and cosmetics.
Regulations of consumer products and food and beverages are not uncommon, but there are a several reasons why Proposition 65 is so problematic for companies.
First, the law is quite onerous. There are more than 850 chemicals on the state of California's Proposition 65 list of chemicals, and most of the chemicals on the list do not have "safe harbor" content levels. This makes compliance with the law quite challenging.
Second, Prop 65 is unique because, unlike most state and federal regulations, the law can be enforced by private individuals who file lawsuits acting "on behalf of" the general public. Private enforcers need not be harmed to bring a Prop 65 action and most do so after testing a product for chemicals on the state's list.
This has created an industry of Prop 65 plaintiffs (and more importantly, Prop 65 plaintiffs' attorneys) who profit from enforcing the law and filing lawsuits against companies in California. Thus, there is a financial incentive for plaintiffs to seek out purported "violations" of the law. As a result, most of the Prop 65 lawsuits in California are filed by private plaintiffs and not the California Attorney General's office.
Third, it is difficult for food & beverage companies to comply with the warning requirement of Prop 65 because consumers are likely to be alarmed if they see such a warning. Proposition 65 warnings must be "clear and reasonable" and likely to be seen by a consumer, under the Attorney General's regulations. The "safe harbor" warning language is not something that a consumer wants to see on a product before they consume it: "WARNING: This product contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm."
Finally, the law is problematic because it is so expensive for companies to defend against a Prop 65 lawsuit. A plaintiff only has to demonstrate that a product sold in California, without a Prop 65 warning, contains one of the chemicals on the state's list. As the law has been interpreted by California courts, the burden of proof then shifts to the defendant company to establish that average daily exposure to the product is below a safe harbor exposure level.
Developing the scientific evidence and expert analysis to meet this burden is costly, which is why the vast majority of Proposition 65 lawsuits are resolved via settlement. Similarly, although there is a "naturally occurring" defense to Proposition 65 for food products, it is difficult to establish and can be a costly defense to pursue.
Not surprisingly, some companies have taken bold steps to avoid Proposition 65 litigation. For instance, Starbucks has a detailed Proposition 65 warning sign placed in all of its California locations. Other companies have refused to ship to or sell certain products in California altogether.
The law can be overwhelming, but companies can take steps to minimize the risk of Proposition 65 litigation. Companies need to be aware of Prop 65 trends and, of course, need to know whether their products contain chemicals on the state's list.