Six months: how the new Prop 65 regulations have impacted retailer enforcement

It’s been about six months since the new Prop 65 regulations allocated the primary responsibility for providing warnings to suppliers, manufacturers, distributors, and importers, while limiting retailers’ responsibility to limited, specified circumstances. Many wondered what impact these new regulations would have on the enforcement of Prop 65 against retailers. Six months in, the answer still isn’t clear.

No apparent reduction in retailer claims

For the most part, retailers are still being named routinely in 60-day notices despite the new regulations. This includes products that are not sold under the retailer’s private label or a brand or trademark licensed by the retailer. It appears that private enforcers continue the strategy of pressuring suppliers and manufacturers by dragging their retail customers into cases—and we do not see much indication that the private enforcers are undertaking any allocation assessment before naming parties. Private enforcers seem to send out 60-day notices, hoping that one of the retailer responsibility scenarios applies. They appear content to let the defendants sort out the allocation issue after threatening everyone with a lawsuit.

Private label focus

Even before the new regulations, private enforcers often focused on retailers’ private label and licensed brand products. This focus on private label and licensed brand products has not dissipated since the new regulations went into effect. This strategy increases the odds that the lawyers will get paid, since the retailer is on the hook even if the supplier is defunct or unable to pay. The new allocation regulations may have further incentivized private enforcers to pursue private label and licensed brand products. As a result, while retailers may be seeing a decrease in claims for market/national brand products, they may be seeing an equal or greater uptick in direct enforcement of their private label products.

Some positive indicators

A few private enforcers have acknowledged the change in landscape and have refrained from naming retailers in their notices. Other private enforcers have taken the approach of naming retailers in their notices and then immediately requesting that the retailer identify the supplier. A new provision in the regulation requires retailers to “promptly provide” the name and contact information of upstream parties.

But overall, it appears that retailers are not getting a reprieve from the onslaught of 60-day notices that they may have hoped for under the new regulations. This may be because the new regulations have had unexpected results, but it also may simply be due to the ever-growing Prop 65 plaintiffs bar. Despite this, the new regulations do present opportunities and strategies for retailers faced with Prop 65 claims.