Prop 65 enforcement; the lawsuit mill

Prop 65 was clear about its purpose from the start: it was created to protect and inform consumers. To this end—and to help keep companies and manufacturers honest—it was determined that "any individual acting in the public interest" could file a lawsuit for Prop 65 violations, essentially crowdsourcing the policing of the legislation to citizen enforcers, law firms, and advocacy groups.

Great intentions, questionable outcomes. What do we mean by that? Let's explore an all-too-common scenario with our fictional kale chip company.

We've started manufacturing kale chips with creative flavors, delicious texture, and minimal crumbling—a major feat with kale! Within our first year of production we've been picked up by multiple retailers around the country. We carefully test our products for heavy metals—dark leafy greens are notorious for having high amounts, of course—and have been thrilled to find a few large-scale organic growers who consistently supply us with kale that tests under the conservative Prop 65 safe harbor levels for lead.

Over time, we run our heavy metal panel on every few batches instead of every individual one, which is standard practice in food manufacturing and reasonable after the consistently low levels we've seen. Unfortunately, the harvest from one farmer has slightly elevated metal levels one year and we don't catch it before the production run. Although the amounts are far below any levels of concern to the FDA, EU, WHO, or any other governing bodies, the lead content violates the Prop 65 limit of <0.5mcg per serving. Unaware, we ship cases of our kale chips throughout the country.

In California, someone shopping for Prop 65 violations to try and sue small companies and gain a significant buck (literally, this happens) grabs a bag of our kale chips at the grocery store and sends it to a local food lab for testing. Our lead levels report back at 0.021mcg/g, bringing the total lead in a 28g serving of our kale chips to 0.588mcg and just barely violating Prop 65's lead limit of 0.5mcg per serving. Bingo! Shortly thereafter, we're served with a Prop 65 violation notice from the shopper-plaintiff's attorney.

At this point, the clock begins ticking. The Prop 65 violation notice that we received was registered with the Attorney General and starts a 60 day wait period before any litigation may begin. This provides time for law enforcement officials, including the Attorney General, to investigate the notice themselves and opt to pursue the case (unlikely, for our kale chips), or for the violation to be settled to the satisfaction of the plaintiff. The stakes are high; the fines for violations are $2,500 per day and the defendant (us) may have to pay the plaintiff's steep attorney fees.

Back at Kale Chip HQ, we frantically call our lawyers. We know that we can't fight the case; Prop 65 litigation is costly and can drag on for years. Our lawyers quickly reach out to the plaintiffs in the case to discuss the violation. The plaintiffs were waiting for the call and said they were willing to settle for $50,000 plus coverage of their attorney fees. It doesn't feel right, but we don't see any alternative. Our lawyers assure us that this is just how it goes with Prop 65 so we write the check and return our focus to controlling our supply chain, the fear of another Prop 65 violation lodged deep in our hearts.

Of course, this isn't the only way that Prop 65 violations play out. Countless lawsuits over the decades have decreased harmful chemicals in household items, cosmetics, food, clothing, and more, resulting in a less toxic world for hundreds of thousands of consumers. But unfortunately, our example of what's known as the Prop 65 'bounty hunter' is becoming increasingly more common.

Back in 2000 there were 447 Prop 65 violation notices served. In 2020, there were 3,551, a nearly eight-fold increase. In 2019 (the last year currently reported for settlements), there were 898 settlements and a total of nearly $30 million paid in settlement fees. Comparatively, 2000 reported 199 settelements and brought about $11 million paid in total settlement fees.

What's going on? Some call it a lawsuit mill. Various law firms, organizations, and individuals have discovered that there's a lot of money to be made in Prop-65 enforcement, and they're busy doing just that. When scanning the lists of plaintiffs in these cases, the same names and organizations often crop up again and again, like Russell Briner, who between 2004 and 2013 sent out over 1,000 Prop 65 violation notices and reportedly profitted over $600,000, or Brodsky  & Smith Plaintiffs, who settled a total of 185 cases in 2019 for well over $3 million dollars.

Notably, of the $3 million in total settlement fees from Brodsky & Smith's cases, over $2.8 million (or about 90%) went to attorney fees. Compare this with a 33-40% range in attorney fees for other types of lawsuits. This is significant—and common in Prop 65 settlements. By law, 75% of the settlement in a Prop-65 case must go to California's OEHHA, with only the remaining 25% going to the claimant, attorney fees not included (hence the markup on legal fees). In addition to this provision, a plaintiff that proves they will use the settlement fees to further the Prop 65 cause is allowed to keep 100% of the earnings, which has led to the creation of numerous environmental and advocacy groups with questionable motives, some even sharing the address of the law firm that represents them.

Over the years, the OEHHA has added revisions to Prop 65 in an attempt to make it harder for people to take advantage of the law. While helpful, these efforts have clearly not done enough to discourage bounty hunters from using Prop 65 law for their own benefit, as shown by the sharp rise in notices served and millions paid over the past few decades.

In sum, the good of Prop 65 is all-too-often obscured by its shortcomings. The California Chamber of Commerce, one of most active voices pushing for Prop 65 reform, shares this position on their website:

"The CalChamber supports the underlying intent of Proposition 65, which is to ensure that consumers can make reasoned and informed choices when they purchase consumer products or enter certain establishments. Unfortunately, the intent of Proposition 65 has been undermined by ever-increasing attempts to use the law solely for personal profit, which has exploded into a million-dollar cottage industry. For this reason, the CalChamber ardently supports reforms to end frivolous 'shakedown' lawsuits, improve how the public is warned about dangerous chemicals, and strengthen the scientific basis for warning levels and initial listings." 

We couldn't agree more.

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