California Governor Signs Bill To Limit Certain Prop. 65 Lawsuits

Governor Jerry Brown recently signed into law Assembly Bill 227 (Gatto) to provide a two-week grace period to address certain alleged violations of failure-to-warn requirements under Proposition 65.

In addition to the previously required “60-day” notice, AB 227 mandates that a potential Prop. 65 plaintiff first provide certain potential defendants a notice of special compliance procedure and “proof of compliance” form. The potential defendant then has 14 days after receiving the notice to (1) correct the alleged violation, (2) pay a $500 civil penalty, and (3) notify the potential plaintiff that the violation has been corrected using the provided “proof of compliance” form. This $500 civil penalty is substantially smaller than the potential $2,500 per day per violation civil penalty otherwise provided for in Section 25249.7 of Prop. 65. The law limits application of this grace period to once for every violation arising from the same exposure at the same location. This new compliance procedure is limited to alleged violations for exposure to four categories of substances:

• alcohol legally consumed on an alleged violator’s premises;
• chemicals that occur naturally in food prepared for consumption (which were not intentionally added);
• second-hand smoke exposure on premises where smoking is permitted, if caused by non-employees; and
• vehicle exhaust at primarily non-commercial parking garages.

The Governor had proposed his own legislation in May 2013 with broader changes to Prop. 65, including capping attorney fee awards, requiring stronger proof by plaintiffs prior to litigation, requiring greater disclosure by plaintiffs, limiting the amount of money in an enforcement case that can go into settlement funds in lieu of penalties, and providing for more useful warnings to the public. No legislation has been passed under this proposal. AB 227, while narrower, is nonetheless described in a press release by the bill’s sponsor, Assemblyman Mike Gatto (D-Los Angeles) as providing a “fix-it ticket” method to curb “meritless lawsuits.”

Prop. 65 was passed in 1986. By its own terms, amendments to Prop. 65 require a two-thirds supermajority vote of the Legislature and it has therefore been difficult to reform. AB 227, which amends Cal. Health and Safety Code Section 25249.7, was approved on September 11, 2013 on a 75-0 vote and signed into law on October 5, 2013, making it the first substantial amendment to Prop. 65 in 15 years.