On May 9, 2018, a California Court of Appeal ruled in Charles v Sutter Home Winery, Inc. that winemakers and distributors, which already were providing Proposition 65 safe harbor warnings for alcoholic beverages, did not have to provide separate Proposition 65 warnings for the alleged presence of arsenic in wine. This ruling not only resolves a longstanding dispute among the specific parties to the lawsuit, but confirms an important Proposition 65 warning principle: warnings do not have to identify every chemical being warned for, as long as they state the health risk being addressed.
Plaintiffs initially filed their lawsuit in 2015, asserting that defendants failed to provide Proposition 65 warnings to consumers about exposures to arsenic, a Proposition 65 carcinogen, in wine. The complaint also alleged derivative violations of the California Unfair Competition Law, the Consumer Legal Remedies Act, the California False Advertising Law, and breach of the implied warranty of merchantability.
Defendants argued, among other things, that they discharged their warning obligation for all listed chemicals in wine by providing Proposition 65 safe harbor warnings for alcoholic beverages, which identifies both the cancer and the reproductive harm endpoints in connection with the presence of ethanol. Plaintiffs countered that those warnings were not sufficient to warn for arsenic.
Defendants filed a demurrer, which the trial court sustained without leave to amend. Plaintiffs then appealed.
The appellate court’s ruling
In analyzing the parties’ arguments, the appellate court properly observed that “the purpose of Proposition 65 is to warn consumers of the two health risks—cancer and reproductive harm—associated with exposure to a listed chemical….” In other words, Proposition 65 warnings are intended to convey information about health risks, not about specific chemicals. Here, the safe harbor alcoholic beverage warning was sufficient to warn for all listed chemicals in wine, including arsenic, because the warning identified both Proposition 65 health endpoints of cancer and reproductive harm.
Significantly, the appellate court also addressed the new safe harbor warnings that will become fully effective on August 30, 2018:
“The new safe harbor warnings for foods and beverages that expose consumers to more than one listed chemical are deemed to be ‘clear and reasonable’ provided at least one of the listed chemicals is disclosed, regardless of the number contained in the product….In the new warnings that will take effect on August 30, 2018, OEHHA requires the disclosure of only one listed chemical per health risk and allows each business to decide whether to list additional chemicals in the warning they choose to provide….” (Emphasis added.)
The court concluded:
“Because it is undisputed defendants provided the safe harbor warning for alcoholic beverages, and because OEHHA has deemed this to be a ‘clear and reasonable’ warning, any alleged deficiency in the warning message—that it does not disclose the presence of inorganic arsenic—is not a violation of the regulations. Instead, it ‘is a matter for consideration by OEHHA and the Legislature, rather than the court’…. Under the circumstances in this case, the safe harbor warning for alcoholic beverages provides a complete defense.” (Emphasis added.)
The effect of a prior settlement
Finally, the appellate court addressed the effect of a prior consent judgment to which many defendants were parties. That prior settlement resolved claims regarding the alleged failure to provide alcohol warnings, and specifically stated that it constituted a “full, final and binding resolution ‘of any violation of Proposition 65 that has been or could have been asserted in the public interest against the Releasees arising out of exposure to the [alcoholic beverage products].’” (Emphasis added.) Because this release of claims provision did not limit itself to only the chemical ethanol as identified on the Proposition 65 list, it protected those settling defendants from Proposition 65 claims for all other listed chemicals in their alcoholic beverages – and precluded subsequent plaintiffs like the Doris plaintiffs from suing over other chemicals in those products.
The new safe harbor regulations, and their underlying rationale as explained in OEHHA’s Final Statement of Reasons, are clear that a business need only identify one chemical for each health endpoint, in order to be protected from claims as to all chemicals listed for that health endpoint. It is unfortunate that the defendants in this case had to expend what had to be substantial resources to have the appellate court confirm this principle. But businesses should take this principle to heart: a business seeking to avoid Proposition 65 enforcement actions should evaluate whether its warnings can identify at least one chemical for the cancer and reproductive harm endpoints – that way, it is protected from claims for all 900+ chemicals on the Proposition 65 list.
Finally, the appellate court’s discussion regarding the effect of a prior consent judgment should remind us all of the importance of how a settlement’s release of claims is structured.
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