California Appellate Court Opinion Answers Longstanding Questions – And Further Incentivizes Warnings
In a March 11, 2022 opinion, the California Court of Appeal, First Appellate District, resolved key questions pertaining to Proposition 65 compliance and enforcement. While the key take-away message is that online retailers cannot rely on federal law to absolve them of responsibility to provide Proposition 65 warnings, the opinion answers a number of longstanding questions for the broader regulated community. These answers will provide even further incentives for businesses to provide warnings for consumer products in order to avoid enforcement lawsuits.
Background
In 2014, plaintiff Larry Lee issued a Notice of Violation alleging that Amazon.com failed to provide clear and reasonable warnings for exposures to mercury in skin-lightening creams, in violation of Proposition 65. Mr. Lee filed an enforcement action against Amazon.com later that year in Alameda County Superior Court (Lee v. Amazon.com, Inc., Case No. RG14738130).
Proposition 65, formally known as the 1986 Safe Drinking Water and Toxic Enforcement Act, prohibits persons in the course of doing business from knowingly and intentionally exposing individuals to listed chemicals without first providing a clear and reasonable warning, unless the business can establish certain exemptions. The law is enforced by civil lawsuits, which may be filed by public enforcers or any private person acting in the public interest. Violators are subject to civil penalties of up to $2,500 per day of violation as well as injunctive relief.
Mercury is listed under Proposition 65 as a reproductive toxicant. According to Mr. Lee and his experts, the skin-lightening creams contained high amounts of intentionally added mercury.
Concerns about mercury in skin-lightening creams extend beyond Proposition 65. The California Department of Public Health tested such creams in 2013, and issued health risk warnings in 2014 for those containing mercury. The European Union’s Rapid Alert System for dangerous non-food products (RAPEX) issued two alerts for such mercury-containing creams in 2013.
Amazon.com defended the lawsuit on a number of bases, including immunity from liability based on Section 230 of the federal Communications Decency Act (CDA), pursuant to which providers of “interactive computer services” are liable only for online speech that is directly attributable to them. In this case, Amazon.com argued that Mr. Lee improperly was seeking to impose liability based on the speech – i.e., the product descriptions – of the third-party sellers of the products. The trial court found in favor of Amazon on that and other issues – and the appellate court reversed and sent the case back to the trial court for further proceedings.
Lessons from the appellate opinion
At 82 pages, the appellate opinion is a lengthy one. The table below summarizes the appellate court’s key conclusions.
| Can a lab test finding high levels of a listed chemical in a single unit of a product be a sufficient basis for inferring that other units of the same product contain that chemical, without testing other units? | Yes. Here, the facts (including the high level seen) demonstrate that the mercury was intentionally added. “Where the chemical at issue is the product’s active ingredient, its complete absence in an individual unit would be fortuitous.” Accordingly, plaintiff was not required to test other units of the product line. |
| Does the “knowingly” aspect of a Proposition 65 warning violation include constructive (i.e., “should have known”) knowledge? | Yes. Otherwise, businesses could avoid liability by avoiding “actual” knowledge. |
| What does the “intentionally” aspect of a Proposition 65 warning violation mean? | That term means the intent to “move[] the product toward the consumer.” |
| Can a Notice of Violation confer “actual” knowledge of a violation even if it only describes a general product category, e.g., “skin-lightening creams”? | Yes. |
| Can online marketplaces like Amazon.com be considered retailer sellers even if they do not take title or possession of a product? | Yes. |
| Does a Proposition 65 plaintiff need to prove that consumers were actually exposed to the listed chemical? | No. “Expose” includes potential exposures. Businesses that place themselves in the chain of distribution are pivotal to bringing the product to the consumer, thereby creating the potential for exposures. |
| Was Amazon.com immune from liability pursuant to Section 230 of the CDA? | No. Here, Amazon.com was not a publisher of third-party information, but was subject to its own Proposition 65 obligations. |
What this means for businesses
The summary above is intentionally brief and over-simplified; the issues presented are quite nuanced and fact-specific. Still, many of the court’s conclusions appear to mirror the arguments that the regulated community for years has encountered from Proposition 65 enforcers. This court opinion further reinforces the one-sided, plaintiff-friendly difficulties that Proposition 65 defendants face, and should put businesses on full alert that the risk in not warning is significant.
Grimaldi Law Offices has been advising clients for over 20 years on chemical and product law. For knowledgeable advice and in-depth analysis of the recent developments in California chemical and product law, contact Grimaldi Law Offices at (415) 463-5186 or email us at https://grimaldilawoffices.com/contact/.
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