Proposition 65 (Prop. 65) requires California businesses with 10 or more employees to put a clear and reasonable warning on their products if they contain certain harmful chemicals on the Prop. 65 list above allowable levels. Companies should carefully respond to Prop. 65 notices of violation as these can be costly interruptions to business.
Every entity in a supply chain may be responsible for violations of Prop. 65, including manufacturers, producers, importers, suppliers, packagers, or distributors of consumer products. Businesses whose products contain a chemical on the Prop. 65 list above a safe allowable threshold must either print a warning on their packaging, or provide materials to their direct customers, such as retailers, to notify customers.
The Proposition 65 list contains chemicals that are known to cause cancer or reproductive toxicity. Businesses subject to Prop. 65 requirements can avoid providing a warning to consumers if they are able to demonstrate that:
A company with higher than allowable levels of Prop. 65 chemicals should clearly warn customers that the product may cause cancer, birth defects, or other harm.
Companies with nine or fewer employees do not need to comply with Prop. 65. However, some retailers require Prop. 65 compliance from all suppliers. Companies should closely examine their vendor agreements or retailer purchase orders for more information.
Proposition 65 is enforced through civil lawsuits, brought by public enforcers or private individuals operating in the public interest. A party intending to sue for an alleged violation of Proposition 65 must provide a 60-day notice to the Attorney General and to the alleged violator. This gives the Attorney General time to decide whether they want to file a lawsuit against the company based on the served notice. This also provides the defendant with time to address violations and avoid any continuing penalties. If the Attorney General does not take an action within those 60 days, the private plaintiff can proceed with litigation. Notices are not retrospective, which means the company is not given an opportunity to fix past violations.
Companies are not required to take any action when served with a 60-day notice. However, it is important to act quickly in response to a Prop. 65 complaint. Companies found to be in violation of Proposition 65 can be assessed a penalty of up to $2,500 per day for each violation and may be required to pay the plaintiff’s attorneys’ fees.
Some companies may want to immediately add Prop. 65 warning labels to all their products sold in California, without pursuing scientific study. Violations are costly, and the plaintiff may serve 60-day notices for the company’s other products. Companies should carefully discuss this option with their Chugh, LLP attorney before acting.
Most cases of Proposition 65 violations are settled out of court because of the significant costs involved, and because businesses must prove that no violation occurred. Additionally, most insurance policies do not cover the costs of Proposition 65 litigation.
Once a company is served with a lawsuit, and before a case is settled, it should consult with its attorney to see whether any defenses can be applied. Some of these defenses may include:
A strong legal defense team can help the defendant secure a more favorable settlement.
Almost all Proposition 65 cases settle out of court. Therefore, it is important to work with an experienced attorney that can devise good settlement strategies. Chugh, LLP attorneys use the law and facts to address the weaknesses of the plaintiff’s case and reach a quick resolution. For help understanding your company’s Proposition 65 risk, or for help addressing other legal compliance issues, contact your trusted Chugh, LLP attorney.
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