In the November 2012 issue, Michele continued her ongoing challenges as a newbie compliance manager. We felt her pain as she conducted her first product safety recall of a huge order of kids’ golf visors because they contained too much lead and violated the Lead Paint Rule of the CPSIA.
In this issue, we can again commiserate with Michele because she’s just received a California Prop 65 “Notice of Violation” advising her company, Golfster Promo, that an insulated lunch cooler bag they sold to a leading golf club manufacturer was found by a private enforcer (aka “bounty hunter”) to contain excessive levels of phthalates in violation of Prop 65. So, what is poor Michele supposed to do now?
First, Michele needs a crash course to learn what phthalates are. After searching various websites and consulting with her test lab, she learned they are chemical plasticizers added to plastic materials to make them softer and more pliable when manufacturing common products such as tote bags, stress balls, padfolio covers, inflatable pool toys and rubber ducks.
Michele learned that phthalates can leach from plastics into food and liquids from food containers, drinkware and plastic food wrap or when young children suck on plastic toys or teething rings. Studies show that when infants and toddlers ingest high levels of phthalates in their early development years, some types of phthalates may cause a disruption of their normal male and female reproductive development. In 2008, the Consumer Product Safety Improvement Act (CPSIA) was enacted with a rule to limit, in toys and child care products, the amount of six different types of phthalates that are suspected of causing hormonal disruption in young children. Those limits are set at 1,000 parts per million (ppm) for each of the banned phthalates that may be found in children’s toys and child care articles such as pacifiers, sippy cups and baby bottles. Michele was extremely relieved that her lunch cooler bag, which is intended as a general-use item, was safe under the CPSIA.
However, Michele’s uplifted spirits were quickly dashed when she discovered that Prop 65 has a different set of rules when it comes to phthalates and the products that contain them. She was shocked to learn that with Prop 65 there is no age limitation for products containing phthalates. So, Prop 65 was applicable to her vinyl lunch cooler bag, even though it was not a toy or a child-care article. She was stuck and didn’t know what to do with the Notice of Violation she had received from the private enforcer.
In her research, Michele quickly learned some basic points about Prop 65:
- There are more than 800 chemicals listed under Prop 65 that are known to cause cancer, birth defects or other reproductive harm to humans if they are exposed to certain levels of the chemicals.
- Unlike the CPSIA, which regulates the content, or how much of a harmful chemical is contained in a product, Prop 65 is an exposure regulation, meaning that it is intended to regulate how much of a harmful chemical is exposed to a member of the general public. Exposure can be through touch, inhalation, ingestion and other means.
- However, in recent phthalate and lead cases, instead of following the usual course of regulating chemical exposure levels for these chemicals, private enforcers and the state attorney general have made it easier for all parties by limiting the maximum amount of regulated phthalates to 1,000 ppm, thereby mirroring the CPSIA’s content limits for phthalates.
- Michele also learned that her company could have avoided this violation if she had known that she could have applied a warning label to the product, giving California consumers a “clear and reasonable” warning that the cooler bag:“Contains a chemical known to the State of California to cause birth defects or other reproductive harm.” This warning label would have solved a lot of problems if she had known it was permissible under Prop 65 for most items sold or distributed in California.
- Private enforcers are given full authority under the law to seek damages, fines and penalties on behalf of the state. They can also recover their attorneys’ fees and court costs. After a private enforcer serves its 60-Day Notice of Violation to the alleged violator, the California attorney general has a right of first refusal to take the case and prosecute it in its own capacity or to allow the private enforcer to bring the action in California courts on behalf of the state.
- The vast majority of these cases settle out of court. Michele knew that she was “a little lamb on the way to a big barbecue” if she didn’t get her boss to hire a skilled Prop 65 attorney to help defend or settle this case in California. Luckily for Michele, her boss agreed that professional legal representation was needed, and he hired an experienced lawyer in San Francisco to file the necessary legal responses and start settlement negotiations. Unfortunately, the golf club client was also named as a party in the action, so Golfster Promo also had to defend and indemnify it from all damages and costs as well.
Independent testing of the bag revealed that samples of the bag contained high levels of DEHP, a banned phthalate, ranging from 1,176 to 2,295 ppm, which was clearly in violation of the 1,000 ppm maximum allowed by Prop 65. Is Golfster Promo doomed to lose this case? “Not so fast!” says the outside lawyer. If a company has fewer than 10 employees on its entire staff, the company is exempt from Cal Prop 65 requirements. Michele was elated! Golfster Promo had only five total employees, including the boss’ golden retriever, Emily, who served as the company’s receptionist in the front office.
Michele thought they had won. “Not so fast!” again said the lawyer. Unfortunately, the golf club client was also named in the Prop 65 suit, and they had more than 5,000 employees worldwide. The attorney said that Golfster Promo must still resolve the action on behalf of its client. Golfster can either settle the action or go all the way to trial. Unfortunately, this case was a sure loser and the cost of litigating it would be prohibitively expensive, according to the lawyer, so Michele’s boss gave the attorney the instructions to try to settle the case for as little money as possible. After several weeks of intense negotiations, Golfster Promo agreed to pay $125,000 in fines and penalties, a $12,000 “donation” to the private enforcer’s nonprofit environmental education foundation and a reimbursement of $65,000 in attorneys’ fees. The total amount came to $202,000. Of that amount, the state received about $94,000 and the private enforcer got the remainder.
Learn How To Avoid Michele’s Situation
This scenario can happen to any supplier and distributor in our industry. When sourcing products that you believe may have a chance of being shipped to California, the best practice is to have the product tested to reduce the risk of violating Cal Prop 65. Although it’s impossible to test for all of the 800-plus listed chemicals, your lab may advise on what the “usual suspects” can be for the chemicals that may be found in the products you are testing. Recently, the most frequently filed actions have been for lead, cadmium, phthalates and formaldehyde, but always consult your test lab for additional guidance.
Leeton Lee has been in the product safety and compliance industry for 18 years, starting as in-house legal counsel at The Walt Disney Company where he worked for seven years and helped to form Disney’s industry-leading Corporate Product Integrity Department and managed the company’s legal matters for its worldwide product safety and liability program. As an attorney for approximately 25 years, he has extensive experience in regulatory compliance and product safety, namely in toys, children’s products, promotional products and apparel. In addition to working at Disney, he has performed associate general counsel duties at industry leaders Sega Gameworks and Equity Marketing (aka EMAK Worldwide). He is currently vice president of regulatory compliance and general counsel at drinkware supplier ETS Express, Inc. in Oxnard, California. He is also a member of PPAI’s Product Responsibility Action Group (PRAG).
>>What You Don’t Know…
…Can hurt your company—especially where product safety is concerned. Access PPAI’s website at www.ppai.org/productsafety for dozens of resources including product guides, live and on-demand webinars, articles and other documents and links designed to help educate distributors and suppliers about product safety requirements and compliance. Click on PPAI’s Product Safety Best Practice Guide on Prop 65 at the above link for more information on this topic.