May 3, 2003

Three Reform Bills Pending in Legislature

Three bills sponsored by the California Chamber of Commerce that would amend Proposition 65 were introduced this session. As of May 2, all three bills were to be designated as two-year bills.

AB 1447

AB 1447 (Matthews), as originally introduced [html/pdf], would have allowed a company receiving a notice of violation to offer to settle the matter by providing a warning or eliminating the exposure, and paying the enforcer's reasonable investigation costs. The bill was amended on April 10 [html/pdf] to remove this provision, and to allow the Attorney General to extend the 60-day pre-enforcement period if he needed more time to review the allegations made by the private enforcer. Additional amendments were proposed on May 1 to address concerns raised by environmentalists [html/pdf]. The April 23, 2003 analysis from the Assembly Environmental Safety and Toxic Materials Committee is available for download.

AB 1447 was passed by the ES&TM Committee, but will not be heard in the Judiciary Committee the deadline for fiscal review, and was therefore put on two-year status.

AB 1447 Bill Status | Bill History

AB 1176

AB 1176 (Campbell) would codify the principle of res judicata in the Proposition 65 settlement review process established in the 2001 SB 471 amendments. The bill would require the court to make the additional finding that a proposed settlement is "fair, reasonable, and in the public interest." It would require the Attorney General to make the terms of a proposed settlement publicly available, and would allow any person with an interest in the proceeding the right to intervene for the limited purpose of appearing and participating in a motion to approve a settlement. An approved settlement would bar any subsequent private enforcement actions, and would limit a private enfordcer to enforcing the terms of a settlement, rather than filing a new enforcement action. These terms would not apply to the Attorney General.

AB 1176 Bill Status | Bill History | Text as Introduced html\pdf

AB 1380

AB 1380 (Pacheco) included the proposals from AB 1176 and AB 1447 (including the original proposal and later amendment), as well as several additional reforms, including the following:

• the bill would prohibit public and private enforcers from bringing an enforcement action under the warning provision "against a retail seller of consumer products";
• the bill would replace the automatic 1000-fold safety factor with a floating safety factor of 10, 100, or 1000, depending on the nature and quality of the underlying data.
• the bill would exempt government contractors from liability for exposure to Proposition 65 listed chemicals where the chemicals were present as a result of government specifications, and the government entity was provided a warning about the exposure.

AB 1380 Bill Status | Bill History | Text as Introduced html\pdf

February 23, 2003

Bill Proposes Criminal Penalties for Violation of Prop 65

AB 623, introduced on February 19, 2003 by Assembly Member Lieber, would create criminal penalties for violation of Prop 65's discharge prohibition and warning requirements.

Any person who "negligently" causes an exposure or discharge is subject to a fine of $2,500-$10,000 for each day in which the violation occurs, or by imprisonment for up to six months, or both, for a first conviction. Subsequent convictions carry fines of up to $25,000 per day, and imprisonment of up to one year. Any person who "knowingly" causes an exposure or discharge is subject to a fine of $5,000-$25,000 per day, or by imprisonment of up to two years. Subsequent convictions carry fines of up to $50,000 per day, and/or imprisonment up to 3 years. A corporation that commits a second "knowing" violation may be fined up to $1 million, and a mandatory revocation of its authority to act as a corporate entity in California by the Secretary of State.

The court sentencing any defendant shall consider whether the defendant has expressed remorse for the acts and whether the defendant has made an "appropriate public apology that reflects the nature of the violation and the number of potential victims." Such an apology, however, shall not exempt the defendant from the penalties provided for knowing violations.

AB 623 Bill Status | Bill History | Text as Introduced html\pdf

Legislature Considers Unfair Competition Reforms

A series of private attorney general actions brought by law firms against numerous small (and often minority-owned) auto repair shops, restaurants, nail salons, and other businesses has caused a number of California legislators to call for reforms of the unlimited standing provisions of the California Unfair Competition Law (Business & Professions Code § 17200). Currently pending are two spot bills, AB 69 (Correa) and AB 95, with numerous co-authors, as well as a bill that seeks to resurrect a 1998 California Law Revison Commission recommendation on unfair competition reform, AB 102 (Pacheco/Harman). AB 95 and AB 102 are currently pending in the Assembly Judiciary Committee.

Only AB 102 at this time has any substantive provisions. The bill would create the following requirements for plaintiffs who seek to sue as private attorney general actions:

• the plaintiff has suffered distinct and palpable injury as a result of the acts or practices complained of
• the plaintiff is an adequate representative of the interests of the general public
• the plaintiff's attorney will adequately represent the interests of the general public,
• the plaintiff has claims typical of the claims of the general public.

Similar to Prop 65, the bill would require a 90-day notice of intent to sue, and would prohibit a private action if a public prosecutor or other private party was enforcing the same alleged violation. It would also require the court to determine "as soon as practicable after the bringing of a representative civil action . . . whether the action may be maintained." It imposes strict limitations on discovery, and requires the plaintiff's attorney to certify that the discovery is proper. The bill would also allow the court to consider any mitigating or corrective actions taken by the defendant after receiving the notice of intent to sue. AB 102 is not intended to impose any limitations on public prosecutors.

In a highly unusual step, the chairs of the two Judiciary Committees (Assembly Member Corbett and Senator Escutia) sent a letter on January 14 to California Supreme Court Chief Justice Ronald George in his capacity as the chair of the California Judicial Council. The letter asked what remedies judges had available to protect defendants in the pending lawsuits. The letter stated that "The Legislature intends to correct any statutory flaws that may be providing an incentive to use the UCL as an extortion tool."

Stay tuned!

2002 Legislative Update