Coffee Defendants Victorious in Proposition 65 Appeal

The long and circuitous journey of a Proposition 65 lawsuit alleging exposures to acrylamide in coffee seems to finally be at an end. The California appellate court in CERT v. Starbucks Corporation, (2022) 84 Cal.App.5th 879, has confirmed that, under a Proposition 65 regulation issued by the California Office of Environmental Health Hazard Assessment (OEHHA) in 2019, no cancer warnings are required for coffee. Beyond that, the opinion provides useful insights on entitlement to attorneys’ fees and Section 998 offers to settle in Proposition 65 cases. With the California Supreme Court recently  denying plaintiff’s petition for review of the appellate court’s ruling, coffee sellers can now rest assured that they need no longer worry about providing cancer warnings.

Proposition 65 Warnings and Acrylamide

Proposition 65 is a California chemical right-to-know law requiring manufacturers, retailers, and others to provide clear and reasonable warnings for significant exposures to any one of the almost 1000 chemicals on the list of chemicals maintained by OEHHA. One of the chemicals on the list is acrylamide.

In addition to being found in other products, acrylamide is produced during the coffee bean roasting process. Consequently, roasted coffee beans and the coffee made from these beans contain this Proposition 65 substance.

Proposition 65 and Coffee Lawsuit

The issue of whether Proposition 65 warnings should be required for coffee products has been in litigation in a California court for the past 12 years. In 2010, The Council for Education and Research on Toxins (CERT) filed a lawsuit in California against dozens of respondents that sell, roast, and distribute coffee. In the suit, CERT alleged that acrylamide was present in coffee distributed and sold in the state and posed a significant cancer risk to consumers. Therefore, these products required a Proposition 65 warning.

However, in June 2019, OEHHA adopted a regulation stating that “Exposures to chemicals in coffee, listed on or before March 15, 2019, as known to the state to cause cancer, that are created by and inherent in the processes of roasting coffee beans or brewing coffee do not pose a significant risk of cancer.” According to the agency, “this determination was informed by an in-depth review in 2018 by the World Health Organization’s International Agency for Research on Cancer (IARC) of more than 1,000 studies of coffee and cancer, as well as additional studies published after IARC’s evaluation.”

After the coffee-related regulation was adopted and coffee was exempted from Proposition 65’s cancer warning requirement, the lawsuit’s defendants raised the new regulation as an affirmative defense to the plaintiff’s claim and filed a motion for summary judgment.

In 2020, the court granted the defendants’ motion for summary judgment and ruled that the defendants were entitled to a defense based on the new regulation. In other words, defendants were not required to provide cancer warnings for products. The trial court also found that CERT’s claims regarding acrylamide exposures from other coffee additives, such roasted nuts, were outside the scope of the litigation because they were not properly alleged in CERT’s pre-litigation Notices of Violation and complaint.

In November 2020, the plaintiff filed a notice of appeal. On October 26, 2022, the Court of Appeal filed its opinion, concluding that the regulation was validly adopted and that claims regarding coffee additives are beyond the scope of the plaintiff’s actions.

Notably, the appellate court also rejected CERT’s claim that it was entitled to its attorneys’ fees based on the fact that defendants had been providing Proposition 65 warnings for coffee. CERT’s entitlement to fees is premised on California Code of Civil Procedure Section 1021.5, which requires a person seeking fees thereunder to demonstrate that its actions conferred a significant public benefit. In this case, the court observed that under OEHHA’s coffee regulation no acrylamide warnings at all were required for coffee.

Therefore, any warnings provided actually “disserved Prop. 65’s purpose to inform the public of significant cancer risks,” and could not meet the public benefit requirement of Section 1021.5. (Emphasis in original.) Also interestingly, the court noted that the mere enforcement of a statutory violation does not automatically entitle a party to fees under Section 1021.5.

Finally, the court rejected the winning defendants’ claims for their own costs against CERT. Defendants claimed reimbursement for costs because their settlement offers to CERT, made to CERT pursuant to California Code of Civil Procedure 998, offered better terms than what CERT actually obtained in court. Under Section 998, a party to a lawsuit who rejects a valid Section 998 offer is liable for certain litigation costs (including expert costs) incurred by the offering party, if it turns out that the settlement deal offered by that party was more favorable than what the rejecting party ultimately receives in a court judgment. A Section 998 offer thus can be a powerful tool to shift bargaining leverage among litigants. Here, however, the court determined that the Section 998 offers were not valid because they included a requirement that CERT, in its individual capacity, provide defendants with a general release of claims. That term, the court concluded, was overly broad because it encompassed claims beyond the scope of the litigation.

What Does this Development Mean for Coffee Retailers and Distributors

CERT filed a petition for review with the California Supreme Court, and that petition was denied on February 15, 2023. Thus, manufacturers and other sellers can rest assured that no cancer warnings are required for coffee. Beyond that, this opinion offers insights for companies facing Prop 65 bounty hunter claims. First, this ruling strongly suggests that claims involving low number of “violative” sales should not automatically entitle the bounty hunter to fees because no significant public benefit has been incurred. As the CERT court noted, the mere enforcement of a statutory violation is not enough to establish a “significant public benefit.” Second, defendants in Prop 65 lawsuits should use extreme care in crafting Section 998 offers in order to avoid challenges to their validity.

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