Loading ...Indecent Proposition
How to avoid the surprising sting of California’s Proposition 65, which is creating turmoil among suppliers, distributors and end buyers across the nation and hitting them where it hurts—in their wallets.
PREAMBLE
“Our company is an official licensee of products for our client, which is based in New York,” explains a promotional consultant at a distributor firm in California. “Our client has retail stores in outlets around the country, and we provide products to the stores they operate. We ordered promotional products for our client from a supplier, and it sent us the products along with Proposition 65 warning labels. (The labels were not affixed to the products because the products were to be distributed nationally, not just in California.) We then sent the products and warning labels to our client in New York.
“A purchase transpired on our client’s website and the products were shipped from its East Coast warehouse to California,” continues the promotional consultant. “Unfortunately, the client did not affix the warning labels to the products. In September, our client was served a Proposition 65 ‘60-Day Notice of Violation’ by a ‘citizen enforcer’ in San Francisco, California.”
The notice alleges that Californians, “through the act of buying, acquiring or utilizing the products” are exposed to “listed chemicals” (lead and cadmium) without the required Proposition 65 warning labels. Further, “exposures” are defined as occurring when California citizens “use, display, clean, repair, pack, unpack, arrange, store or otherwise handle the products.” Further, “These tasks cause consumers to be exposed directly or indirectly through the routine touching of the parts or portions of the products containing readily available surface amounts of the listed chemicals.”
The notice also states that in addition to the retail stores in which the products were sold, the sale of the offending products also has occurred “at other locations including, but not limited to, transactions made over-the-counter, business-to-business, through the internet and/or via a catalog by the violators.”
“Our client was served a complaint (lawsuit) in December,” says the promotional consultant. “I’ve worked in this industry for more than 12 years and this has never happened. This is unbelievable.”
PROPOSITION 65
The “this” to which the promotional consultant refers is California’s controversial Proposition 65, also known as the California Safe Drinking Water and Toxic Enforcement Act. Administered by the California Office of Environmental Health Hazard Assessment (OEHHA), Proposition 65 has been referred to as “the toxic tort of the 21st century.”
Voted in by a majority of Californians in 1986, the law requires businesses to notify citizens via warning notices about “significant” amounts of chemical compounds contained in their products and inks. However, many of the more than 700 specified compound levels identified on the Prop 65 list are permissible under federal regulations.
Under the law, a warning must be given unless businesses demonstrate that the exposure of the listed chemicals in their products is below the “significant risk level” as determined by the state of California. Often the quantities are limited to extremely low amounts, if not zero. Violating Proposition 65 by failing to provide warning notices or eliminating listed compounds from products and inks can result in penalties as high as $2,500 per violation, per day.
If “offensive products” make it into the state of California without the requisite warning notices, all involved—suppliers, distributors and end buyers—are potentially liable. And since the law affects inks, which often contain lead and cadmium to brighten their colors, all promotional products are fundamentally at risk—as our friend the promotional consultant demonstrates with his story.
“Because our client didn’t comply with Proposition 65 within the 60-day warning period, it was served a complaint (lawsuit),” continues the promotional consultant.
The complaint, which was prepared by a law firm that has filed hundreds of Proposition 65 cases against businesses in the past, cites the specific promotional products alleged to contain “unsafe” levels of lead and cadmium and seeks to remedy defendants’ “continuing failures” to warn Californians about “actual and potential exposure to lead and cadmium” “in or on consumer products placed into the stream of commerce by defendants.”
Further, the complaint asserts Californians “have suffered and continue to suffer irreparable harm” and calls for preliminary and permanent injunctive relief as well as civil penalties in the amount of $2,500 per day for each violation (backdated to September 2005, when the original notice was filed). Additionally, the defendant is asked to pay the plaintiff’s attorney’s fees and “further relief as may be just and proper.” In other words, anything else the San Francisco Supreme Court would like to throw in as far as financial reward would be just fine with the plaintiff.
PURE SCIENCE
Okay, wait a minute, time out—is it our imagination or is this case founded on sheer lunacy? How can a person “suffer irreparable harm” from merely touching something that contains lead? What about all that lead crystal from which we drink our wine? Doesn’t a person have to inhale or ingest lead in order to achieve lead toxicity?
The answer to this question could surely be found by contacting a chemist at the Food and Drug Administration.
“You can’t get lead toxicity from merely touching a product that contains it—you have to ingest or inhale the substance,” says a chemist at an FDA district laboratory in California. “I’ve never seen any ceramic or glass wares that would transfer any appreciable amount of lead unless it was due to a fairly rare type of technical failure. By and large, when we’re talking about decorated products, it’s really hard to remove that kind of lead from the surface even intentionally, much less unintentionally.
“Generally—except for the terra cottas from Mexico that are made so poorly—we see very little excessive exposures in children or anybody else that have been associated with external lead on the decoration of mugs,” the chemist continues.
What about imported goods—how do decorators know what’s in products’ chemical composition when ordering from, for example, China? “We usually advise importers to have products tested prior to purchasing overseas,” he continues. “Once the products are received here in the U.S., the Chinese are very reluctant to give remuneration for goods that don’t meet requirements. Retailers should request tests and certificates from Chinese manufacturers ahead of time to show they’ve not only passed FDA but also Proposition 65 requirements. In this way, they’re guaranteed the goods will meet requirements once they arrive in the U.S.”
The FDA chemist emphasizes that the California Attorney General’s office has not always sided with citizen enforcers’ cases, particularly the overzealous, unfounded ones that have popped up lately. “The Attorney General has not joined some of these more recent lawsuits, where there is no evidence of practical exposure to individuals using the products,” he says. “As a result, one facility is required to meet a certain standard while another one is required to meet a different standard. This is a very difficult thing with which the testing industry is coping.”
“I get calls from chemists at international laboratories saying, ‘What am I doing? I tested the food-bearing surface of the product and it met the FDA standard; now I have to test the outside of it; I have to test it for lead; I have to test it for cadmium; I have to test its lip and rim separately; and so on,’” explains the chemist. “So there’s a lot of confusion in the testing industry about what complies with Proposition 65. And we’re getting really saturated with the rationale behind these lawsuits.”
PROHIBITION
You thought prohibition ended in 1933? It’s alive and well in the state of California, but instead of alcohol the culprits may surprise you.
The California Office of Environmental Health Hazard Assessment website posts the “watch list”of the 700+ Prop 65 listed chemicals, and on this list fluoride is included. The health risk category is listed as “chronic toxicity—tooth mottling, human data.” We’re confused, isn’t fluoride supposed to be good for your teeth? Isn’t this something we want in our toothpaste? So why is fluoride on the list of Prop 65 chemicals? We posed this question to the OEHHA—and received no response.
It gets better. An online CalProp65.com story indicates a notice was served by the Council for Education and Research on Toxics alleging that McDonald’s and Burger King caused exposures from French fries in May 2002. And Environmental World Watch served a slew of notices in June 2002 against Frito-Lay, Inc. for chips; General Mills, Inc. for Cheerios cereals; KFC of America, Inc. for potato wedges (jumbo); Procter and Gamble for Pringles snacks; and Wendy’s International, Inc. for French fries (biggie). The chemical in question was acrylamide.
A June 2002 FDA press release states, “FDA is unaware of any present data regarding acrylamide that would cause FDA to alter its current dietary recommendations for consumers.” And a statement issued by the National Restaurant Association pointed out that “the research on this issue is still very preliminary and no conclusions can be drawn from the current studies. Foods such as bread, cereal and French fries, among others, have been consumed for centuries.”
Indeed, common sense tells us Cheerios cereal is not going to create a health hazard for us. If Cheerios can be named a violator under California law, what is next? Could it be your company?
PROMOTIONAL PRODUCTS PROBLEM
“I’ve heard suppliers say, ‘Proposition 65 is a California problem,’” says an industry supplier who is not based in California and is very familiar with Proposition 65. “It is a national problem. I’ve heard distributors say, ‘It’s a supplier problem.’ It is not a supplier problem. It is an industry-wide problem.
“A supplier can ship to a distributor that may have a fulfillment program or company store that ultimately ships the products—even if it’s one piece—to California,” he continues. “Therefore, that product must have a Proposition 65 warning notice. If the supplier has advance notice the product is shipping to California, it can choose to use warning notices or an alternative decorating method.
“It is incumbent upon suppliers to know what’s in their products and inks to comply with Proposition 65,” the supplier says. “It is also incumbent upon distributors to inform suppliers if products will ultimately—either directly or indirectly—be shipped to California. The distributor can then decide whether to use Prop 65 warning notices or alternative decorating methods.
“We receive so many orders from distributors who just write ‘to be advised’ in the ‘ship to’ space,” he continues. “If the order is from a distributor in the Western U.S., we are leery and will call to request a ship-to destination because we might fulfill the order without using the alternative decorating method and later be advised the order is going to California—then we have to re-do the order or use warning labels. Our company prefers not to use the warning labels because we believe the labels are subject to misinterpretation among end buyers. If we are told by distributors—or we suspect—it’s going to be shipped to California, we use a zinc-based, high-temperature ink.
“In a lot of cases, when we’re dealing with a known California shipment, we will consider sending the distributor a pre-production sample of the product with the zinc-based ink, so the distributor can show it to the end buyer for approval,” he says. “You see, with zinc-based inks, the colors aren’t identical to the lead-based ink and aren’t as bright and pretty.”
PEOPLE’S COURT
“As a distributor firm, we understand safety laws established for things like toys so a child won’t bite off a stuffed animal’s nose and choke on it,” says the promotional consultant, “but this—this has really has blind sided us,” says the promotional consultant. “People need to be aware of this law and prepare for it so they won’t be blind sided, too.”
And he lives in California and sees Proposition 65 warnings every day. “You see, in California, when you go to grocery stores, you see Proposition 65 warning signs,” he explains. “Each individual item is not labeled, but there are placards in plain sight. When you go to Disneyland, it’s the same way. When you go to a gas station, you see a placard. When you go to the china department at Macy’s, you see Proposition 65 warning signs. It’s a crazy law.”
Funny he should mention Macy’s.
On July 28, 2003, Michael DiPirro v. Macy’s and Michael DiPirro v. J.C. Penney Company, Inc. went to trial simultaneously in the San Francisco Supreme Court, where many Prop 65 cases are heard. The DiPirro lawsuits were landmark cases because they set the precedent for what was possible in the world of Proposition 65 litigation. The plaintiff contended that Macy’s West and J.C. Penney caused exposures to lead through their sale of cosmetic products and that J.C. Penny caused exposure to lead through its sale of decorated glassware.
A total of 23 witnesses testified during the 72-day trial, with eight witnesses presented by the plaintiff and 16 witnesses presented by the defendants. None of the prosecution’s witnesses testified they had gotten ill from lead exposure and there were no blood samples with elevated levels of lead presented as evidence of such exposure.
Although, after presentation of evidence and arguments, the San Francisco Supreme Court did rule that J.C. Penney and Macy’s West were not liable for the sale of cosmetics containing an unacceptable amount of lead, it concluded that J.C. Penney had failed to show that exposure to lead from glassware fell below California’s exemption level—therefore the company was liable. Penney’s paid $347,650 in civil penalties to DiPirro, in addition to his attorney’s fees.
“It’s a huge problem for the industry,” says the promotional consultant. “As a distributor, we’re stuck. We have to keep the client happy and indemnify it.”
In the month of February alone, 158 60-Day Notices of Violation were served—on national companies such as Heineken USA, J.C. Penney Corporation, Inc., Pier 1 Imports Inc., Pottery Barn, Inc., Stein Mart Inc., Target Corporation Inc., Wal-Mart Stores, Inc. and The Yankee Candle Company, Inc. A majority of the notices were filed by the same “citizen enforcers.”
Has this law gotten out of control? Are we seeing the shadow side of liberalism, or is something else going on here?
PAY DIRT
An online story in The Sacramento Bee reports on June 10, 2004, the state’s Attorney General Bill Lockyer filed a lawsuit that called for the dissolution of California Community Health Advocates and the distribution of its money to further the health causes that the nonprofit originally was formed to advocate. Based in Rockin, California, the organization used money it won in Prop 65 lawsuits against businesses to pay off personal credit card debt, taxes and mortgage payments, according to Lockyer.
California Community Health Advocates collected $538,397, plus attorney and court costs, from settlements with 22 businesses in Southern California courts between 2000 and 2002, according to the lawsuit. Lockyer alleged that, instead of using the funds for environmental causes as the settlements required, $134,000 went to Lorell Long, who was executive director of the organization; $34,000 paid off credit card debt; and $34,000 went to buy musical equipment and sheet music, among other expenses. Long, a singer who opened a recording studio in 2000, did not return phone calls.
Lockyer also sued two other groups, Consumer Cause and Consumer Advocacy Group, both of Los Angeles, saying they misused funds that were won in lawsuits enforcing Proposition 65.
“The California Attorney General is primarily responsible for enforcing Proposition 65, but an action may also be brought ‘by any person in the public interest…’,” says William W. Funderburk, Jr., J.D., of Los Angeles-based Stanzler Funderburk & Castellon LLP. “This private enforcement provision has led to a rise in ‘bounty hunter’ groups who bring lawsuits, purportedly in the public interest, but who are more likely motivated by the potential of recovering 25 percent of any penalties assessed and attorney’s fees.”
“Proposition 65 was originally approved by the voters of California to warn the public about chemical releases that impacted the water supply,” says Andrew Bopp, director of public affairs for the Society of Glass and Ceramic Decorators (SGCD). “However, Proposition 65 is open to creative legal interpretation, and there is a tremendous amount of money to be made by developing a creative theory related to products where any one of hundreds of listed chemicals may be present.”
Bopp continues, “A plaintiff need not allege that actual harm has been inflicted on anyone or even that a product is defective to file a Proposition 65 notice.” He emphasizes that any glass or ceramic ware that had failed to meet FDA safety standards could not be distributed in the U.S. and would be subject to immediate recall if already on the market.
Bopp adds, “As is almost always the case when Proposition 65 allegations are made, no Prop 65 plaintiff has claimed that glass or ceramic ware has harmed anyone or violated federal safety standards.”
If you choose to use the warning labels, the good news is the warnings are all but ignored by Californians who are so used to seeing them day in and day out. “Given the profusion of warning labels in California for everything from keys to lawn mowers, most California consumers simply ignore the ubiquitous Proposition 65 warnings,” says Bopp.
However, Bopp emphasizes that the key to triumphing over Prop 65 is communication. This is how his organization, the SGCD, has maintained success over Prop 65 litigants—by sticking together in solidarity. Likewise, he urges promotional products suppliers, distributors and end buyers to “work together to ensure that wares sold in or shipped to California include warnings.”
Communication among suppliers, distributors and end buyers is more important than ever. The good news is you have the information and tools provided in this article to avoid being blind sided.
PPB
Brittany Glenn is a former associate editor for PPB.
PARTIAL PREEMPTION?
There is hope for at least partial preemption of Proposition 65 in the form of recent federal legislation.
“On March 8, the House of Representatives voted in favor of H.R. 4167, the National Uniformity for Food Act,” says Andrew Bopp, director of public affairs for the Society of Glass and Ceramic Decorators (SGCD). “This prohibits any state from establishing or enforcing notification or warning requirements for food, food components or packaging that were not approved by the U.S. Food and Drug Administration.”
“If enacted, H.R. 4167 would prevent California enforcement of Proposition 65 warning requirements for food and food packaging that differed from FDA requirements unless the agency formally approved of the warnings,” continues Bopp. “As approved by the House, this bill would apply to all food packages including glass bottles.”
“The bill must now be introduced and passed by the Senate before it can be submitted to the President for approval. The Grocery Manufacturers Association (GMA) is the leading industry group supporting this legislation, which is opposed by the Attorney General of California, some food safety officials and consumer activists. SGCD is working with legislators and the GMA coalition to support this legislation.”
If you believe your company would benefit from the passing of this legislation into law, PPAI encourages you to support the Senate version of H.R. 4167. To view a copy of the legislation, visit the PPAILaw website at www.capwiz.com/ppa/issues.
PROACTIVE PREVENTION
The best offense is a good defense. The trick to staying ahead of a Prop 65 60-Day Notice of Violation and the ensuing litigation is to protect your business from unnecessary exposure. Forewarned is forearmed.
Suppliers
Distributors
PROP 65 LEGAL COUNSEL
PROP 65 ONLINE
California Office of Environmental Health Hazard Assessment/Cal EPA www.oehha.ca.gov/prop65
CalProp65
www.calprop65.com
Prop 65 Clearinghouse
www.prop65clearinghouse.com
Prop 65 News
www.prop65news.net
The Society of Glass and Ceramic Decorators (SGCD)
www.sgcd.org
