On October 5, 2017, California Governor Jerry Brown signed Assembly Bill 1583 into law. It was promoted as a means of reducing frivolous Proposition 65 (Prop 65) lawsuits, but, as discussed below, it is doubtful that it will achieve any meaningful change.

Background: Prop 65 requires businesses to provide clear and reasonable warnings before knowingly and intentionally exposing any individual to chemicals known to the State of California to cause cancer or reproductive toxicity. Private plaintiffs, often referred to as “bounty hunters,” are allowed to bring actions on behalf of the public interest to enforce Prop 65’s requirements. They are authorized to retain 25% of any penalties collected and, where successful in obtaining settlements, also typically pocket much larger sums as reimbursement of their attorney’s fees and costs.

Prior to the initiation of a Prop 65 lawsuit, a bounty hunter must provide the alleged violator, the California Attorney General (AG), and other authorized public prosecutors with a 60-day notice of violation. Since the enactment of prior amendments to Prop 65, the 60-day notice of violation must include a “certificate of merit.” The certificate must attest that the plaintiff has consulted with an appropriate expert and, based on the expert’s review of facts, studies or other data, they believe that there is a reasonable and meritorious basis for the action. The factual information underlying the plaintiff’s certificate of merit must be provided to the AG’s office with the 60-day notice, but it is not discoverable by the alleged violator under current law.

The New Legislation: AB 1583 makes the following modifications to Prop 65:

  • It allows an alleged violator to obtain the factual basis for a certificate of merit through traditional discovery procedures, as long as the information is relevant and not subject to legal privileges.
  • If the AG believes there is no merit to a Prop 65 action—after reviewing the factual information for the certificate of merit and conferring with the noticing party—its office is required to serve a letter to the noticing party and the alleged violator stating that the action “lacks merit.” However, not serving such a letter is not to be construed as an endorsement by the AG of the bounty hunter’s action.
  • It requires the Governor’s Office of Business and Economic Development to provide information relating to a business’s obligation to comply with Prop 65 on its website.

Analysis and Outlook: AB 1583’s modifications to Prop 65 largely codify voluntary practices that have proven to make little ultimate difference in how bounty hunter actions progress. In most cases, such actions settle quickly because of the economic pressure litigation imposes on an alleged violator regardless of the strength of their defenses. While AB 1583 establishes a new legal requirement for private plaintiffs to disclose the basis of the certificate of merit, most already voluntarily provide this information upon request, especially if interest is concurrently expressed in exploring a potential settlement. Moreover, where the information is not volunteered, a discovery demand can only be made once litigation has commenced and, in response, most private plaintiffs will likely assert that the requested information is subject to a privilege claim under the attorney work-product doctrine.

It is also existing practice for the AG’s office to inform a private plaintiff if, based on its review of a 60-day notice and accompanying information, it believes a Prop 65 claim is without merit. However, the AG’s office has often narrowly interpreted “lacks merit” to involve only the elements of a plaintiff’s prima facie case: a showing of any detectable amount of exposure to a listed chemical and the absence of a clear and reasonable Prop 65 warning having been given. This narrow interpretation, which fails to consider the alleged violator’s defenses, including under the State’s safe harbor exposure levels, has resulted in the issuance of very few “lacks merit” letters. In addition, even under AB 1583, the AG issuing such a letter will not be dispositive or bar the bounty hunter from proceeding.

Conclusion: While it likely lacks meaningful teeth, AB 1583 formally goes into effect on January 1, 2018.

Rylee Kercher Olm, an associate not yet admitted to practice in California, and Lois Miyashiro, an environmental analyst, in the firm’s San Francisco office assisted in the preparation of this client alert.