Think You’re Proposition 65 Compliant? Not for Long…
 
By George Gigounas and Shelby Miller


All Consumer Packaged Goods (CPG) companies selling in California and other businesses in California should be well-versed in California’s Proposition 65 and its warning requirements. The law requires businesses to provide “clear and reasonable” warnings when they “expose” consumers to listed chemicals identified by the state to cause of cancer or reproductive harm (currently, over 800 chemicals are on the list, but only a handful are commonly relevant). The warnings are ubiquitous in California- you’ll find them posted at gas stations, grocery stores, your favorite coffee chain, and of course on thousands of CPGs in stores and online.

Prop 65 has created a cottage industry of lawyers and private citizens who enforce its provisions “on behalf of the general public” (that’s allowed). The law is popular with plaintiff’s lawyers—some of whom are known as “bounty hunters”—because they can collect attorneys’ fees and a portion of any settlement amount (statistics show more than 75% of the settlement fees can end up in their pockets). These lawyers search for products that are missing compliant warnings and then can sue the manufacturer, distributor, and the retailers of the product. The burdens of proof and technical defenses that Prop 65 requires make defense an expensive proposition. Most suits end in settlement as the cases are rarely worth that expense.

At its best, Prop 65 gives Californians information about the products they are buying. But it is also a non-negligible drag on the consumer economy. Some businesses even opt to slap a general Prop 65 warning on their products, regardless of whether they suspect that any listed chemical is present.

This will not be so simple under the newly changed warning requirements.

What’s Changing: Prop 65 recently underwent some significant changes to the warning requirements. The new revamped warnings we be required on all products manufactured after August 30, 2018.

The old “safe harbor” warning was: “WARNING: This product contains a chemical[s] known to the State of California to cause [cancer] [and/or] [birth defects or other reproductive harm].”

The new requirements include: replacing “contains” with “can expose”, the addition of a warning symbol, the requirement to list at least one chemical for each “exposure endpoint” (cancer and reproductive harm) that requires the warning, and the addition of the hyperlink to a Proposition 65 webpage. And if your product label contains any language besides English, the warning must also be provided in that language. An illustration of the change is below.

Currently compliant warning for a product containing lead:
WARNING: This product contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.

Future warning requirements for a product containing lead:
WARNING:       This product can expose you to chemicals, including lead and lead compounds, which is known to the State of California to cause cancer and birth defects or other reproductive harm. For more information go to: www.P65Warnings.ca.gov.

The requirements are less onerous for directly on-product warnings. There are additional intricacies of the new requirements that apply in different situations that should be reviewed, preferably with legal counsel.

Get to Know Your Products: Some chemicals are listed because they are known to cause cancer, some because they are known to cause reproductive harm, and some for both risks. Under the new requirements, warnings must contain the name of at least one chemical for each applicable endpoint, so companies must know what chemicals are present in their products, and thus what exact language is required. This step should be taken as soon as possible to inform your overall compliance plan.

Internet Warnings: For the first time, the new regulations describe the requirements and content for internet warnings. Because consumers are required to be warned before they purchase the product, warnings on the packaging is not enough for these sales, and companies selling CPGs online must provide the warnings online prior to check out.
 
The consumer must not have to “seek out” the internet warning. The warning language can be provided in full on the product page, in a pop-up before or during check-out, or a hyperlink stating “WARNING” can be utilized which takes the consumer to the full warning language.

When to Act: While not required until mid-2018, companies are free to switch to the new warning language at any time. When to adjust your warning language will depend on specific aspects of your manufacturing and supply-chain systems.

Some believe it is better to wait until closer to the deadline to start rolling out products with new warnings and changing (or adding) website warnings. The thinking is that leading the pack may alarm consumers and make them think that your product is less safe than your competitors’. And there is always a chance the regulations could be slightly tweaked before the effective date, leaving companies with some very expensive packaging to throw in the trash.

Since your pre-August 2018 products need only comply with the previous warning requirements, companies should keep detailed, verifiable, and readily accessible records on dates of manufacture of these products in order to quickly squash unmerited lawsuits.

Get Out In Front of Consumer Concerns: Expect your consumers to notice the changes, especially if this will be the first time your company displays the required internet warning. Train your customer support staff and create a script for responding to inquiries. Many companies, particularly in the nutritional supplement space, have added pages to their websites specifically addressing why they decided to add Proposition 65 warnings to their products. These companies explain the high costs and uncertain nature of defending against the numerous lawsuits as motives. However you choose to add some context, be very careful not misrepresent or contradict the warning itself.

Some Warnings Grandfathered-in: If your company was unlucky enough to be pegged by a Prop 65 lawyer in the past, the warning language agreed to in your settlement could be grandfathered-in after the new rules take effect. Any warning language in judge-approved consent judgments (as opposed to private settlements) continues to be compliant after August 2018. This exception applies only to the products at issue in the lawsuit.

August 31, 2018 marks a new open season for Proposition 65 bounty hunters. Assessing the warning requirements related to your CPGs early and devising a thorough plan will help to keep your consumers calm while making sure your company doesn’t become the next target.


George Gigounas, Partner at DLA Piper, resolves environmental and product-related litigation, enforcement, and compliance issues for DLA Piper clients with industrial, manufacturing, and product-based businesses.
 
Shelby Miller, Associate at DLA Piper, focuses her practice on complex commercial and business litigation and arbitration for clients in banking, technology and manufacturing industries, as well as consumer product regulatory counseling and defense of product enforcement actions. 

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                                                                   May 2017