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May 30 2013

Cheers to Gov. Brown for Tackling Proposition 65

Angela Logomasini

California Governor Edmund G. Brown Jr. has proposed reforming the state’s Proposition 65 law, which requires businesses to disclose the use of chemicals that the state lists as “toxic.”

According to Brown:

Proposition 65 is a good law that’s helped many people, but it’s being abused by unscrupulous lawyers, …This is an effort to improve the law so it can do what it was intended to do–protect Californians from harmful chemicals.

In addition to going after this trial-lawyer-get-rich-quick scheme, the governor also wants to modify the standards under Proposition 65 to make them more scientific.

Cheers to Brown for his attempt to crack down on trial lawyer opportunism and junk science. But ultimately, the law is fatally flawed and should be scrapped altogether. And while he says the law has “helped many people” the only ones who benefit are the trial lawyers and their “citizen” plaintiffs. Everyone else—particularly consumers and small businesses—lose. Before I tell you why, you need to know how the law works. 

I explained in another recent blog post how Proposition 65 directs regulators to place chemicals on a “toxic” substances list, and then forces companies to issue warning labels when the chemicals appear in their products. Places of business must also post warning signs if they sell products that contain any of the chemicals found on the list. It also empowers citizens to sue companies that fail to comply and these plaintiffs can take a share of the winnings and demand that the defendant pay their attorney fees.

As a result, many people act as “bounty hunters”—finding small businesses and others who were not aware that they were out of compliance. These hunters “encourage” the businesses to settle out-of-court rather than pay the heavy expense of going to trial. Among those hurt are small business owners, often located outside the state, who are unaware of the law until they get a letter from one of the bounty hunters.

Big firms—with deeper pockets—can be harmed too as evidenced in a recent case against Wholefoods and Trader Joes for selling candy that contains trace levels of lead, which they purchased from an out-of-state provider. The candy is legal and FDA could pull it off the shelves if it posed any risk, which it hasn’t done. The reality is, kids do not get lead poising from such exposures, but are at risk in old homes with pealing lead paint—particularly when kids eat the peeling paint.

But Proposition 65 isn’t about safety anyway. It’s about unfairly demonizing products and a small group of bounty hunters and legal firms getting rich. A story in the Sacramento Business Journal reported in 2011:

The state of California lists these settlements and the amounts awarded on its website, where anyone can see that a relatively small group of people are getting rich of this law.

The California attorney general’s 2010 summary of Proposition 65 settlements reported that an astounding $7.8 million in Proposition 65 settlements — about 57 percent of the total ­— went to lawyers’ fees. Tom Scott of California Citizens Against Lawsuit Abuse tallied the numbers in the report and found that two of the attorneys, Russell Brimer and Anthony Held, were involved in 83 of the 187 settlements. Bruce Nye, a well-respected trial lawyer, analyzed attorney general reports from 2007 to 2010 and found that Brimer helped himself to $3.4 million of the nearly $4.2 million in Proposition 65 settlements that he won over that period. California’s share was a paltry $733,000. And he’s not alone. Another bounty hunter, the Consumer Advocacy Group, helped itself to 93 percent of $3.3 million it won in settlements.

Indeed, if you take a look at this government summary of Proposition 65 settlements, it’s easy to see how a handful of people are gaming the system to get rich. The Federalist Society has a helpful report on the moneys collected and dispersed over a number of years. Here’s an update from the latest available government report (2011): Click here

You will see that the lion’s share of the winnings—nearly $12 million or 75 percent—went to lawyers and in some cases, the attorneys took nearly 100 percent since they can bring cases and can apparently charge the full or near-total of the winnings as attorney’s fees. And most of the cases were brought by a handful of lawyers and plaintiffs. At the top of the list is the Center For Environmental Health with 107 cases (they also filed as a co-plaintiff on 5 additional cases with the State Attorney General), followed by Russell Brimer (61), John Moore (47), Anthony Held (41), the Consumer Advocacy Group, Inc., (23), Mateel Environmental Justice Foundation (19), and the Environmental Research Center (12).

But does the law at least help moms and others understand risks? Nope. Rather it harms consumers by instilling fear about risks that are too low to measure. You can’t even go to Disneyland without being accosted by a sign explaining: "The Disneyland resort contains chemicals known to cause cancer and birth defects or other reproductive harm."

But the allegedly “toxic” chemicals on the Proposition 65 list don’t pose significant risks to consumers at levels used in consumer products. The trace levels are simply too low to matter and these products have all passed federal and state regulatory tests deeming their current uses safe.  In fact, many chemicals are listed simply because injecting massive, concentrated doses into rodents’ (which are bred to be exceptionally susceptible to cancer) stomachs led them to develop cancer. But massive doses of carrots, celery and dozens of healthy foods do the same thing. Not only is it the dose that makes the poison, these rodent tests are not relevant to humans exposed to trace-level chemicals.

The only people Proposition 65 helps are those who take advantage of the rest of us. It’s courageous for Governor Brown to step up to the plate on this one, but the best way to address the problem is admit failure and scrap this silly law altogether.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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