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California's Prop 65: A vehicle for large attorney's fees

| 3 Comments


Jarrett Dieterle
Legal Intern, Manhattan Institute's Center for Legal Policy

For several years, Manhattan Institute's Trial Lawyers, Inc. series has chronicled the vast profits accumulated by the plaintiff's bar. Another example of outsized attorney profit comes in the form of California's Proposition 65, which is meant to protect Californians against exposure to hazardous toxins. Passed by voter initiative in 1986, the law holds that no person in the course of business can knowingly expose others to toxins that are carcinogenic or can lead to birth defects; to be in compliance, companies must post notices and signs where exposure to such toxins is possible.

One of the enforcement mechanisms for Prop 65 is private actions, which can be brought if they are "in the public interest." In practice, this means that plaintiff attorneys can identify proscribed toxins in such seemingly-innocuous things as everyday house-cleaning products or vehicles parked in a parking lot and then charge businesses with knowingly exposing people to these agents. Companies, seeking to avoid costly litigation, are often quick to strike a settlement deal. Furthermore, the statute shifts the burden on the defendants to prove that they did not expose the plaintiffs to dangerous amounts of the proscribed toxins, further incentivizing settlements over a trial. The end result is large attorney's fees for the plaintiff's counsel, sometimes ranging as high as millions of dollars. From 2007-2011, attorney's fees made up some 67% of the money from Prop 65 settlements.

In the 2006 case Consumer Defense Group v. Rental Housing Industry Members, 137 Cal. App. 4th 1185, the California Court of Appeals described the ease with which Prop 65 claims can be brought:


The point is ... bringing Proposition 65 litigation is so absurdly easy that the sorts of attorney fees on which the parties settled here are objectively unconscionable. More than half a million dollars for walking into a group of apartments (and there is evidence that some of that might have been falsified!) looking for signs (and--just to give the exercise a little verisimilitude, also looking for pools and spas) and then serving a boilerplate, form notice based on such ubiquitous things as paint and parking deserves only the most minimal compensation.

The California Attorneys General office, tasked with monitoring private actions brought under Prop 65, is often so overwhelmed with the many notices of alleged Prop 65 violations that it is unable to weed out dubious cases brought by private attorneys merely seeking to line their pockets.

Although Prop 65 has received more scrutiny in recent years, attorneys are still profiting from the statute. In 2011 - the most recent year from which data is available - attorney's fees comprised over 70% of the total amount of Prop 65 settlements. Prop 65 allows dubious claims to be brought against businesses in order to obtain quick settlements featuring large attorney fees - all in the name of protecting Californians from dangerous substances.

3 Comments

We need tort reform...ASAP!

Do you know of any person or entity that has empirical evidence on the success of Proposition 65 achieving its intended goal i.e. eliminating listed chemicals and toxicants in products (controlling for existing social norms trends to eliminate the same)

The efficacy of Prop 65 in reducing exposure to toxins is somewhat contested. For example, see this 2006 study that suggests Prop 65 has been successful in reducing exposure to toxins:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=887187

In contrast, other studies suggest that Prop 65's list of dangerous toxins is underinclusive. Another critique is that there is no surefire way to analyze Prop 65's success at all, leading to further ambiguity about the law's effects. See:

http://www.acsh.org/publications/pubid.146/pub_detail.asp

Finally, the Washington Legal Foundation has published several studies on Prop 65, detailing its flaws both legally and as an environmental enforcement mechanism.

http://www.wlf.org/publishing/publication_detail.asp?id=1760

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.