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Proposition 65 Settlement May Establish New Industry Standard for Lead and Cadmium in Chocolate

Nine chocolate manufacturers have entered into a comprehensive settlement resolving Proposition 65 claims that they allegedly exposed individuals to lead and cadmium in chocolate products without clear and reasonable Proposition 65 warnings. The settlement, intended to inject some scientific discipline into the required compliance measures while establishing a new industry standard, is set to be reviewed by the San Francisco Superior Court for approval on February 14, 2018.

The Proposition 65 claims were brought by As You Sow, which issued 60-day Notices of Violation against several manufacturers and retailers of chocolate products beginning in 2014. As You Sow followed up on one such Notice of Violation when it filed a lawsuit against retailer Trader Joe’s Company in San Francisco Superior Court in November 2015. Reflecting the statutory and regulatory preference that manufacturers, rather than retailers, bear the obligation of Proposition 65 compliance, the parties to the settlement represent a significant portion of chocolate manufacturers: Barry Callebaut USA, LLC, Blommer Chocolate Co., Cargill, Inc., The Hershey Company, Lindt & Sprungli (including its affiliated company Ghiradelli Chocolate Company), Guittard Chocolate Company, Mars Incorporated, Mondelez International, and Nestle USA. These entities will be formally named as defendants in an amended complaint.

Notably, the settlement implicitly acknowledges that lead and cadmium in chocolate products are naturally occurring. The settlement establishes complex requirements regarding investigation of both the natural and man-made sources of lead and cadmium in chocolate, as well as evaluation of feasible measures to reduce such levels. This work is to be undertaken by a committee of experts chosen by the initial parties to the settlement, pursuant to a fairly aggressive timetable which can be modified if circumstances so warrant. The expert committee, which must conduct its work on a “consensus basis” rather than by majority vote, also is required to determine the concentration of lead and cadmium in chocolate products, above which a warning is required. The committee’s work will be funded by the settling defendants.

Beginning one year after the court approves the settlement, settling defendants must provide warnings for their chocolate products based on lead and/or cadmium concentrations that are tied to the cacao percentage in the products. If the expert committee does not make recommendations regarding such levels, the levels will be automatically reduced to specified “drop down” levels beginning on the 7th year after the court approves the settlement, as described below.

For lead:

Cacao percentage in product Lead concentration above which a warning is required in parts per million (ppm) “Drop down” lead concentration in parts per million (ppm)
Up to 65% 0.100 ppm 0.065 ppm
More than 65% and up to 95% 0.150 ppm 0.100 ppm
More than 95% 0.225 ppm 0.200 ppm

 

For cadmium:

Cacao percentage in product Cadmium concentration above which a warning is required in parts per million (ppm) “Drop down” cadmium concentration in parts per million (ppm)
Up to 65% 0.400 ppm 0.320 ppm
More than 65% and up to 95% 0.450 ppm 0.400 ppm
More than 95% 0.960 ppm 0.800 ppm

 

The settlement specifies the warning text and method of transmitting the warning, which mirror the new Proposition 65 safe harbor regulations. In addition, its provisions regarding enforcement create incentives for settling defendants to regularly test for the presence of lead and cadmium in their chocolate products.

The settlement allocates payments among As You Sow’s fees, civil penalties, payments in lieu of civil penalties, and funding of the expert committee. Settlement payments are tiered based on the type of settling entity (grinder/wholesaler/chocolate ingredient supplier, candy manufacturer or retailer) and size (based on U.S. sales). The maximum amount that may be paid is $210,375; such payment would be made by a settling large grinder/wholesale/chocolate ingredient supplier with US sales of over $500 million.

The settlement also will allow other entities to join as settling defendants pursuant to an opt-in provision. This opt-in structure is likely to induce other chocolate manufacturers and, possibly, also retailers, to participate. Whether or not other chocolate producers formally participate in the settlement by becoming opt-in parties, this settlement likely will become a de facto industry standard governing the presence of lead and cadmium in chocolate products.

 

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Ann Grimaldi

Ms. Grimaldi maintains a diverse environmental law practice focusing on chemical and product regulation and litigation defense. Her practice areas include Proposition 65, California's Safer Consumer Products Regulations, California's Rigid Plastic Packaging Container Act and the federal Toxic Substances Control Act. Ms. Grimaldi graduated from the University of California Hastings College of the Law magna cum laude and holds a Bachelor of Science Degree in Bacteriology from University of California, Davis. Prior to attending law school, she worked as a research assistant in laboratories at the University of California, San Francisco Cancer Research Institute and at the University of California, San Francisco School of Medicine.

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