Prop 65 - A (former) litigation attorney's (now in-house counsel at a MD manufacturer) perspective.

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Prop 65 incentivizes businesses, especially SMEs, to take a hyper-risk-averse approach to Prop 65 labeling.

(I won't comment further on how this ultimately ends up defeating the intent of the law, which is to allow consumers to make informed decisions regarding the products they use and consume. Ergo, Litem Gratia Litem.)

From the litigation perspective, there are three main reasons driving this:

1. Ease of Plaintiffs Bringing Potentially Lucrative Lawsuits. The United States is notoriously litigious but there are barriers and deterrents to plaintiff's bringing frivolous or weak or low money lawsuits, none of which are very impactful upon the decision of whether or not to bring a Prop 65 suit.
  • No money, no honey. One barrier is the plaintiff's lawyer; believe it or not lawyers care about making money (/sarcasm) and if the lawyer doesn't feel they will get paid, they will not bring a lawsuit. The classic case is the personal injury lawsuit where the lawyer acts on a contingency fee and takes roughly 1/3 of the damages the plaintiff is awarded and if the plaintiff loses, they don't get paid. This forces lawyers to evaluate the case carefully before accepting it.
    • Prop 65 Analysis. The law provides for statutory minimum damages and various mechanisms to make sure the lawyer gets paid. As below, the plaintiff's allegations and the evidence they need to support them is minimal.
  • Loser Pays. One deterrent is the chance that the loser will need to pay the winner's attorney's fees, so if the plaintiff brings a weak case and loses, there's a chance they will have to pay the defendant's lawyer.
    • Prop 65 Analysis. If the defendant-company "wins" - the law does not provide an avenue to pursue the plaintiff for legal fees.
2. Evidence and Burden of Proof. Legal claims consist of factual elements that the plaintiff must first allege (to get in court) and prove (to win in court) by a preponderance of the evidence (typically - basically a 51% rule) each factual element. If the plaintiff fails to prove any one of the elements, then their case fails and the defendant does not need to even put their case forward. The burden is on the plaintiff and the burden is substantial. If the plaintiff is able to prove all of the elements, the burden then shifts to the defendant to present evidence either nullifying one of the elements or another defense.
  • Prove it or Lose it. The elements for a personal injury negligence case (tort) are (i) duty, (ii) breach, (iii) cause in fact [actual cause], (iv) proximate cause [legal cause], and (v) injury. The development of the common law over centuries distilled many hundreds of individual decisions into these five elements, which are widely believed to justify allowing the plaintiff to pursue their case if alleged, and, if proven, making the defendant pay for the plaintiff's injury.
    • Prop 65 Analysis. To get into court, Prop 65 requires the plaintiff to allege only two elements:
      • Element of an Element. The defendant's product contains, even in trace amounts, any one of the Prop 65 list.
      • No Secret Ingredients. The defendant knowingly exposed a California resident to the product (not the chemical) without a warning.
        • Right about now all you science-types are saying, well, easy enough, let's just attack their analytical methods or show that the sample was contaminated ... sorry - too late, you gotta save that for the judge - already in court, already spending money - expert witnesses who testify to analytical methods are not cheap and judges don't typically understand a lot of what they're saying anywho.
      • No Pain, Plenty of Gain. And going back to the negligence example, what's missing: Injury! - the plaintiff does not need to allege or prove that any person or group was harmed. Despite not even passing the "justice" sniff test, more below on how this ended up being particularly insidious in a way no one (will admit was) expected.
  • All Hands on Deck. Once the plaintiff has met their burden, the defendant is free to avail themselves of all available defenses of any nature. Fault of the plaintiff, that they were legally justified in injuring the plaintiff, and a host of other substantive and more technical defense.
    • Prop 65 Analysis. Prop 65 is what we call a creature of statute, in this case a Frankenstein. Common law develops over time from many cases that explore the nooks and crannies of fact patterns and situations, eventually settling upon principles of common application and discovery of new defenses.
      • Unsafe Harbor. One such example is the defense of "necessity" which arose in a case where a ship owner was sued for civil trespassing having tied their ship to another persons dock during a violent storm, which basically destroyed the dock but the ship remained afloat. In that case, the court ruled that the necessity of preserving the crew and ship outweighed the right of the dock owner to prevent access to his dock. So while the ship owner was required to pay to repair the dock, the claim of trespass could not stand. This makes sense, but despite the claim of trespass being hundreds of years old, this defense did not truly make it into the American common law in its current form until 1910 in a case out of Minnesota (Necessity (tort) - Wikipedia.).
      • Prove a Negative with Both Hands Tied Behind Your Back. As a creature of statute, Prop 65 limits by fiat the defenses available to a defendant (in addition to negating either of the two elements): Prove that there is no significant risk or no observable effect. Wow. Indeed, the California Court of Appeals opined that the burden on the defendant is "virtually impossible" without a full trial and possibly a "full scale scientific study." This is all during the course of a court case while racking up fines, legal fees and other costs.
3. Un-Recouped Costs of Litigation and Damages to Defendants. Finally, there is no ability for the defendant to recoup costs from the plaintiff even if they manage to win. And, as mentioned above, your CGL insurance policy won't cover it either - and this unintended consequence wasn't uncovered until a court case between an insurer and insured where the court ruled in favor of the insurer in denying coverage because --- there was no injury and insurance only protects against injuries. Wow again. Raw deal. Check your policies, people - if Prop 65 isn't in there maybe it should be.

How will I / do I advise my company?

Warn if it's there, warn if it might be there, warn if you're 94.94% confident it is not there, warn if someone else with the same product is warning about it, warn if it sits next to the shelf with something that warns. Blend in with the herd, don't call attention to yourself.

Unfortunately, our company's duty to the wonderful people of California to truly allow them to make and informed decision about our product is overridden by the duty to our shareholders and employees to ensure our company survives and thrives without ship-sinking, non-meritorious litigation. Why? Because we don't care if we can prove we haven't violated Prop 65, we care that we won't have to. I don't want to be in court because if we get there, we've already lost. And by the way, we might get sued anyway so make sure there's some cash on hand because our insurance might not cover it, or perhaps worse, we may need to sue them too.

Note: I relied heavily on the attached document to gather the information used as the basis for this and generally agree with their opinions. Worth a read if it is of interest. They spend a lot of time on the so-called "Bounty Hunter" provisions, which is an interesting analysis.
 

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