Cal Biz Lit

Assembly Bill 1252: Is There Hope for a Real Proposition 65 Reform?

CBL had said that an upcoming post would talk about another new Proposition 65 reform effort, Assembly Bill 1252. And now we will.

Here’s what AB 1252 would change: Right now, in almost all cases, if a Proposition 65 private party enforcer serves a 60 day notice, the company that allegedly caused an exposure to a listed chemical without giving a warning can do one of two things: wait for the enforcer to file suit and defend the case, or negotiate a settlement. For smaller companies, either of these options can be financially ruinous.

In 2013, Assembly Member Mike Gatto sponsored, the legislature passed and the governor signed AB 227, a very modest, and almost meaningless amendment of Proposition 65, applying to four potential exposures: alcohol beverages, food preparation (i.e., prepared foods in restaurants, etc.), environmental cigarette smoke, and vehicle exhaust. This amendment provided that for these exposures only, suit could not be filed against a company that, within 14 days of service of a 60 day notice, corrected the alleged violation and agreed to pay a penalty of $500.

AB1252 applies the same rules to all alleged violations by companies with between 10 and 24 employees (companies with fewer than 10 employees are entirely exempt from Proposition 65). Specifically, the amendment would require that in a 60 day notice to a company with fewer than 25 employees, the would-be enforcer  give the companynotice of a process for avoiding suit by corrective action. That process is further set out in the bill as follows:

(k) (1) A person who serves a notice of alleged violation of Section 25249.6 pursuant to paragraph (1) of subdivision (d) upon a person who, in the course of business, employs fewer than 25 employees, shall complete, as appropriate, and provide to the alleged violator a notice of the special compliance procedure and proof of compliance form pursuant to paragraph (2) and shall not file an action for that exposure against the alleged violator, or recover from the alleged violator in a settlement payment in lieu of penalties or reimbursement for costs and attorney’s fees if all of the following conditions have been met:

(A) Within 14 days after service of the notice, the alleged violator has done all of the following:

(i) Corrected the alleged violation.

(ii) Agreed to pay a civil penalty for the alleged violation of Section 25249.6 in the amount of five hundred dollars ($500).

(iii) Notified, in writing, the person who served the notice of the alleged violation, that the violation has been corrected. The written notice shall include the notice of special compliance procedure and proof of compliance form specified in paragraph (2), which was provided by the person serving notice of the alleged violation and which shall be completed by the alleged violator as directed in the notice.

(B) The violator has delivered the civil penalty to the person that served the notice of the alleged violation within 30 days of service of that notice. The person that served the notice of violation shall remit 75 percent of the penalty to the Safe Drinking Water and Toxic Enforcement Fund within 30 days of receipt of the funds from the alleged violator.

The bill was sent to the Assembly’s Environmental Safety and Toxics Materials Committee. Staff’s analysis can be found here. The committee had a hearing on April 14, voting down the bill 5-2, but then unanimously scheduling it for reconsideration. Reconsideration hasn’t been scheduled for hearing yet, but we expect that when the bill next appears, it will have been the subject of some fairly major revisions.

CBL will keep you posted.

Finally, Cal Supremes Schedule Hearing in Contractual Arbitration Case

For years now, companies, consumers and their lawyers have been waiting to see what would happen to the law involving contractual arbitration in Sanchez v. Valencia Holdings.  The California Supreme Court has been sitting on this case for years:  The Court of Appeal issued its ruling in November, 2011, invalidating a commonly used retail automotive installment sales contract arbitration clause on the grounds of unconscionability. The auto dealership defendant filed a petition for hearing in January, 2012, and the Supremes granted a hearing two months later.  It looked as though the case was fully briefed in November, 2012, and then the Supremes invited supplemental briefing.  That was all done (including lots of amicus briefing) in March of last year.

And now, just three years and three months after the petition for review was filed, the world is going to get its first hint about what the newly constituted California Supreme Court (three of seven have been seated on the court since the court granted a hearing in this case)  thinks about binding arbitration clauses in consumer contracts. The Court has set this for hearing on May 5 at 9:00 a.m. in the Supreme Court's courthouse in San Francisco.

As CBL pointed out almost a year ago here,  there are about 25 cases on hold at the Supreme Court pending the decision in Sanchez. And if Cal Supremes rule for the consumer, there's a pretty good chance this case will be headed for the US Supremes, and we can see what they think.