On August 30, 2016, OEHHA’s long-awaited amendments to the Proposition 65 clear and reasonable warning regulations became final.  The amendments bring two major changes: (1) an allocation of responsibility for providing warnings between retailers and suppliers; and (2) revisions to the safe harbor warning requirements, including warning content and methods of transmission.

Allocation of Responsibility

Under the existing Proposition 65 regulations, any party in the supply chain could be held liable for failure to provide a warning.  The revised regulations allocate responsibility for warnings primarily to manufacturers, distributors, and importers (together, suppliers), with retailers responsible in specified circumstances.

Suppliers can meet their warning obligation “either by affixing a label to the product bearing a warning…, or by providing a written notice directly to the authorized agent for a retail seller.”  27 Cal. Code Regs. § 25600.2.

The only situations where a retailer is primarily responsible for providing a warning (i.e., may be liable in an enforcement action) are when:

• The retailer sells the product under its private label, brand, or trademark.
• The retailer has knowingly and intentionally introduced a listed chemical into the product, or caused a listed chemical to be created in the product.
• The retailer has covered, obscured or altered a warning label.
• The retailer has received warning information and materials from the supplier and does not post them—note that consent for the warnings from the retailer is not required; the supplier need only send the information to the retailer’s authorized agent.
• The retailer has actual knowledge of the potential product exposure requiring the warning, and the suppliers are exempt

A retailer can modify this allocation by contract, requiring its suppliers and other vendors to provide a warning, as long as a required warning is ultimately provided.

If a warning is not provided and the retailer meets one of these conditions, it will find itself in the same situation as before the amendments: it can be sued by a private or public enforcer, and it will need to consider seeking defense and indemnity from its supplier.

The Five Business Day Exemption for Retailers

The good news for retailers is that they will not be liable for an enforcement action in which a product was supplied by a domestic, non-exempt entity that did not provide warning materials to the retailer, and none of the other four conditions apply, provided that they stop selling the product at issue or provide a warning for it within five business days of receipt of the 60-day Notice initiating the enforcement action.

Safe Harbor Warning Methods for Consumer Products

Labeling

The regulation requires that warnings be “prominently displayed” on a label, labeling or sign.  The warning must be displayed such that, when compared with other words, statements, or designs on the label, the warning is “likely to be read and understood by an ordinary individual under customary conditions of purchase or use.”

Environmental warnings must be displayed so that they should be seen and understood by an “ordinary individual in the course of normal daily activity.”

In-Store Signage and Catch-All Warning

To meet the safe harbor method for brick-and-mortar stores, warnings must be provided on product labels or at the point of display (product-specific posted or shelf signs). Point of sale signs (other than the BPA signs) are not approved safe harbor warning methods.

A retailer may also provide a warning by any electronic device or process that provides the warning prior to or during the purchaser without requiring the consumer to seek out the warning.  Examples include electronic shopping carts, QR Codes, smart phone applications, barcode scanners, and self-checkout registers.

Online and Catalog Warnings

For online transactions, retailers must include either the warning or a clearly-marked hyperlink using the word “WARNING” on the product display page, or by otherwise prominently displaying the warning to the purchaser prior to completing the purchase.  For catalogs, warnings must be clearly associated with corresponding products.

According to OEHHA guidance, online and catalog warnings must be provided even if the product is already labeled with a warning.  Warnings contained within general website content will not meet the safe harbor method.

Safe Harbor Warning Messages for Consumer Products

To meet the safe harbor, the amendments require the inclusion of a warning symbol and specific identification of at least one chemical in the product that is associated with the warning’s toxicological endpoint (cancer or reproductive harm). Warnings must be provided in the same language or languages as any other label, labeling or sign accompanying a product.

Standard warning language

Carcinogen or Reproductive Toxicant Warning

 WARNING This product can expose you to [name of one or more chemicals], a chemical [or chemicals] known to the State of California to cause [cancer] [birth defects or other reproductive harm]. For more information go to www.P65Warnings.ca.gov/product.

Warnings for Both Cancer and Reproductive Toxicity

 WARNING This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause cancer, and [name of one or more chemicals], which is [are] known to the State of California to cause birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.

Short form warnings

The regulations permit the use of short form warnings on products that do not require chemical identification (OEHHA’s original purpose in permitting short form warnings was for products for which the standard warnings is not practical due to size or amount of packaging):

 WARNING–Cancer–P65Warnings.ca.gov/product.

 WARNING–Reproductive Harm–P65Warnings.ca.gov/product.

If a product is labeled with a short form warning, a retailer may provide the short form warning on the website for online transactions.

Warning language for specific products

The amendments contain several product-specific safe harbors that generally tweak the warning language or add additional requirements, including:

• Food and dietary supplements
• Alcoholic beverages
• Food and non-alcoholic beverages in restaurants
• Raw wood
• Furniture
• Prescription drugs and emergency medical or dental care
• Diesel engine exhaust
• Vehicle and RV exhaust
• Parking garages
• Amusement parks
• Petroleum products in industrial settings
• Service stations and automotive repair
• Smoking areas.

Timing

The amendments are not mandatory until August 30, 2018.  Products manufactured prior to August 30, 2018 may either comply with the regulations as previously written or the new regulations.  Warnings imposed by court-ordered settlements or final judgments are grandfathered in and will still be deemed compliant with Proposition 65.

On March 28, 2018, Superior Court Judge Elihu Berle issued a proposed statement of decision that would require coffee roasters and retailers to provide Proposition 65 cancer warnings for coffee sold in California.

What the case is about

Plaintiff Council for Research and Education on Toxics (CERT) asserts that approximately 70 coffee roasters and retailers are required to provide cancer warnings for exposure to acrylamide in coffee. Acrylamide is listed as a carcinogen based on laboratory animal studies, but has not been proven to cause cancer in humans. Acrylamide is not added to coffee, but is formed in a complex chemical reaction when coffee is roasted (as is the case with other foods such as French fries and potato chips, in which acrylamide is formed when they are baked or fried).

Prop 65 liability issues

Once a plaintiff demonstrates an exposure to a listed chemical, Prop 65 puts the burden on defendants to demonstrate that the amount of exposure to a carcinogen such as acrylamide falls below the level at which a warning is required. For carcinogens, that level is defined as the no significant risk level, which is a default level of one excess case of cancer in 100,000 persons exposed. A business may seek to apply an “alternative significant risk level” (ASRL), where justified by “sound considerations of public health.” One such consideration is the so-called “cooking exemption”: “Where chemicals in food are produced by cooking necessary to render the food palatable or to avoid microbiological contamination.”

Phased dispute

The decision followed an initial phase of trial, in which Judge Berle found that the roasters failed to prove that:

• the level of acrylamide in coffee was below the NSRL;
• requiring a Proposition 65 warning for exposure to acrylamide in coffee violated the First Amendment by imposing misleading speech because coffee use was not associated with an increased risk of cancer, and was actually associated with a decreased risk of certain cancers; and
• the Proposition 65 warning requirement was preempted by federal law.

Before the second phase of trial, the court granted summary adjudication to the plaintiff, finding that virtually all of the defendants knowingly and intentionally exposed individuals to acrylamide in coffee without providing a warning, on at least one occasion.

The second phase

The issues remaining to be tried were the ASRL defense, and the issues of civil penalties and injunctive relief, if the defendants did not prevail. In the first part of this phase, the parties submitted expert testimony on the ASRL defense.

The defense argued that the “cooking exception”—where chemicals in food are produced by cooking necessary to render the food palatable or to avoid microbiological contamination—supported a de facto defense, since acrylamide was formed during the roasting process. Roasting is both necessary to render coffee palatable and to destroy microbiological contamination. The defense argued alternatively that substantial epidemiological literature supported the concept that coffee had significant health benefits, justifying a lower risk level, and relied in part on the testimony of former FDA Commissioner David Kessler to support this argument. The defense also introduced testimony about the amount of the exposure based on testing of over 500 samples of coffee performed at Covance Laboratories and analyzed by an expert in exposure assessment. Plaintiff presented no evidence to counter this evidence.

Judge Berle rejected the defense’s assertion that the cooking exception was sufficient to avoid liability without quantifying the amount of the exposure. He also rejected Commissioner Kessler’s testimony about alternative risk levels, and the defense’s exposure assessment evidence, finding that the Covance data was not shown to be reliable because it was a novel technique that the scientific community has not yet generally accepted. He alternatively found that the Covance lab director and the expert were not credible, although he did not explain his reasoning on these findings.

Going forward

The defense will file objections to the proposed statement of decision shortly, although there is no reason to believe that Judge Berle will change his decision. The final phase of the dispute is not yet completed, as there will be a trial for the court to take evidence on the issues of civil penalties and injunctive relief. The potential exposure in this case is astronomical, with millions of units of coffee sold each year, and a maximum penalty of up to $2,500 per violation per day. It is anticipated that plaintiff will move for an injunction requiring the defendants to provide Proposition 65 warnings pending the conclusion of the case and appeal. There is no date yet set for this remedies phase, which could take upwards of two months to complete, based on the number of companies involved in the litigation.