Businesses that sell products in California — whether in stores, in catalogs or online — must contend with California’s Proposition 65. For the apparel and accessories industry, understanding your legal responsibilities is essential to avoiding costly lawsuits and fines.
Key Requirements
Proposition 65, officially known as the Safe Drinking Water and Toxic Enforcement Act of 1986, is a “right to know” law. It requires businesses to provide warnings to California residents about significant exposures to chemicals that cause cancer, birth defects or other reproductive harm. The requirement to provide a consumer warning applies to out-of-state businesses as long as their products cause exposures to individuals in California.
The Office of Environmental Health Hazard Assessment (OEHHA) administers the Proposition 65 program, which includes determining whether chemicals meet the scientific and legal requirements for placement on the Proposition 65 list and administering regulations that govern warnings and other aspects of Proposition 65. The list currently includes more than 900 chemicals.
To help businesses determine whether a warning is necessary, OEHHA has developed safe harbor levels for many Proposition 65 chemicals. A business does not need to provide a warning if exposure to a chemical occurs at or below these safe harbor levels. However, if the OEHHA has not established a safe harbor limit, businesses must include a warning unless they can prove the exposure of a carcinogen occurs at a level that poses “no significant risk” or that the level of exposure for a reproductive toxicant is below the “no observable effect level.”
Responsibility for Warning Consumers
Under OEHHA regulations that took effect in August 2018, the primary responsibility for providing Proposition 65 warnings falls on product manufacturers, producers, packagers, importers, suppliers or distributors. More specifically, 27 CCR Section 25600.2(b) requires such businesses to either provide a warning on the product label or providing notice and warning materials to “the authorized agent” for a retail seller. Businesses must receive an acknowledgment that the notice and materials were received. Pursuant to Section 25600.2(d), the retail seller is responsible for the placement and maintenance of the warning materials it receives from the product manufacturer, producer, packager, importer, supplier or distributor.
Under Section 25600.2(b), a consumer product manufacturer that does not sell directly to retailers has two options for compliance. One is to provide a warning on the product label or labeling, and the other is to provide both a written notice that a warning is required and warning materials to the packager, importer, supplier or distributor via their authorized agent. While manufacturers and others in the chain of commerce must take appropriate actions to ensure that the warning is passed along to the retailer and, ultimately, to the consumer, the exact process will vary based on the circumstances. In many cases, a manufacturer or producer will execute contracts with other entities along the chain of commerce for their product and/or the retailer to ensure that the warning is appropriately provided to consumers.
High Cost of Prop 65 Liability
Violations of Proposition 65 can be extremely costly, including fines of up to $2,500 per day. In addition, each item sold in California is considered a separate violation. While the California Attorney General’s Office is tasked with enforcing Proposition 65, the law also authorizes private suits by individuals or organizations “acting in the public interest.”
Private plaintiffs may only file a Proposition 65 lawsuit if they first provide at least a 60-day notice of the alleged violation to the business, as well as to the Attorney General and the appropriate district attorney and city attorney, and the Attorney General, district attorney or city attorney fails to take action. However, if successful, the plaintiff may be awarded 25% of any civil penalty assessed against the business, along with attorneys’ fees.
While the California Attorney General’s Office may lack the resources to pursue wide-scale enforcement of Proposition 65, private plaintiffs have filled the void. Between 2010 and 2017, businesses spent a total of $182.1 million to resolve Proposition 65 lawsuits, according to the Center for Accountability in Science. Of those businesses, approximately three-quarters were headquartered outside California. The California Attorney General’s Office also publishes annual reports of Proposition 65 settlements. In fiscal year 2018 (the most recent year available), the state recorded 829 Proposition 65 settlements totaling $35,169,924.
Key Takeaway
The effort and expense needed to comply with Proposition 65 can seem overwhelming, particularly for smaller businesses. However, as highlighted above, the price of inaction can be far more costly.
For most businesses, the best path forward is to work with experienced professionals to ensure that you thoroughly understand the chemical components of your products and then come up with a comprehensive compliance plan that will protect your business from unforeseen Proposition 65 liability. Of course, simply having a plan in place is never enough — it is essential to closely monitor all third-parties in the supply chain to ensure that products remain free of listed chemicals or contain the required warning labels.
Howard D. Bader serves as general counsel for clients in a wide range of industries on an international scale. With over three decades’ worth of legal experience, he has represented clients in numerous legal matters, including commercial litigation, intellectual property, bankruptcy and creditor’s rights and mergers and acquisitions, as well as numerous corporate transactions and business law matters.
Howard D. Bader
hbader@sh-law.com
(212) 784-6926
sh-law.com
