​What Your Company Needs to Know About the New Prop 65 Regulations

By now, you may have heard that California has issued new Proposition 65 regulations that will go into effect on August 30, 2018. Your company has seven months left to prepare. Because complying with Prop 65 can be a complex process, it makes sense to develop a compliance plan now. The price of non-compliance may be a lawsuit by a private enforcer. The new regulations make a number of changes to the existing warning requirements. This post will highlight the most important changes and explain how those changes apply to manufacturers, distributors, and retailers.

Current Regulations

As a refresher, Prop 65 requires businesses with ten or more employees to provide a “clear and reasonable” warning before exposing individuals in California to any chemical listed by the state for its potential to cause cancer or reproductive toxicity. Very small amounts of any of these chemicals are enough to support a claim against your company. The best way to protect your company from such a claim is to provide warnings that fall within the Prop 65 regulations’ “safe harbor” provisions, which set forth specific warning language and methods of transmission that the state has deemed “clear and reasonable.”

The New Regulations at a High Level

The new Proposition 65 regulations provide two different types of safe harbor warnings: a regular warning and an abbreviated “short-form” warning. The regular warning, which may be placed on the product or its packaging, or on a sign or tag at the point of sale, must:

1. name at least one of the chemicals for which the warning is being provided;
2. specify whether the chemical(s) is known to cause cancer or reproductive harm, or both;
3. include a triangular symbol [available at https://www.p65warnings.ca.gov/warning-symbol] to the left of the warning and the word “WARNING” in all capital letters and bold type.

The difficulty in using the regular warning is that the seller must specify one of the Proposition 65 chemicals present in the product. Where a seller sells hundreds or thousands of products, this means customizing the warning for each product or class of products. Simply warning that “this product contains a chemical that is known to the State of California to cause cancer or reproductive toxicity” will no longer be sufficient.

The abbreviated short-form warning, however, does not require that the seller include the name of a chemical. This type of warning must be placed directly on the product or its immediate container or wrapper. The short-form warning must contain the triangular warning symbol and the word “WARNING,” but the text need only state:  “Cancer [and/or “Reproductive Harm”]—www.P65Warnings.ca.gov,” depending on whether the use of the product may lead to exposure to a listed carcinogen, a reproductive toxicant, or both. Although the State adopted the short-form warning because of concerns about fitting a full warning on a  small product,  the regulations do not prohibit the use of the short-form warning on any product, even a very large one.

Note that with the short-form warning, the seller must still determine whether the product contains a carcinogen or a reproductive toxicant (or both), but that may present much less of a burden than identifying a specific listed chemical in each product.

What Manufacturers and Distributors Need to Know

For internet and catalog sales, the new regulations require that the warning be displayed “prior to or during the purchase of the consumer product, without requiring the purchaser to seek out the warning.” The requirement that the warning reach a consumer before or during purchase may be especially difficult for manufacturers and distributors who do not sell their products directly to consumers or who may not have contractual relationships with those who do. The new regulations state that a manufacturer or distributor may comply with its warning obligations by providing a warning label on the product or its labeling, but if the manufacturer provides such a warning and an internet retailer does nothing, then the warning probably will not reach the consumer “prior to or during the purchase.”  If a prospective plaintiff purchases the product online without receiving the warning prior to purchase and sues the retailer, the retailer will likely look to the manufacturer and/or distributor for indemnification under the terms of their contracts. In other words, providing a label without controlling the warnings provided by internet resellers may leave a manufacturer or distributor vulnerable to a lawsuit, even if the manufacturer or distributor has complied with Proposition 65.

The new regulations provide another compliance path for manufacturers and distributors, which involves sending warning materials to their retailers, but many will find this method of compliance to be burdensome and impractical, especially if the products in question are sold to many retailers. The company must provide notice of the warning requirement and compliant warning materials to the retail seller’s authorized agent, obtain and retain confirmation of receipt, and issue annual renewal notices. Although providing such notices will provide a defense to Prop 65 liability, it will be burdensome and unwieldy when there are many retailers involved.

Short of providing annual notices to retailers, manufacturers may find it worthwhile to reach out to known retailers of their products to remind them that all covered products sold by the retailer must have a compliant warning, and to ensure that the retailer understands that Prop 65 requires them to provide a warning for any online sale to a California consumer.

What Retailers Need to Know

The new regulations limit a retailer’s responsibility to provide warnings to specific situations in which they have obscured or removed a warning label, been notified of a warning obligation but have failed to provide the warnings, and a few other limited circumstances. However, the Prop 65 regulations also require, for internet and catalog purchases, warnings that can only be provided by the retailer. As a practical matter, a retailer will remain vulnerable to a Prop 65 claim if it sells a covered product on its website without providing an online warning—even if there is a compliant warning label on the product. To fall within the law’s safe harbor, a product sold online must include a product-specific warning on the retailer’s website. The online warnings may be provided: (1) on the product’s display page, (2) via a hyperlink using the word “WARNING” on the product display page, or (3) before the purchase is completed, so long as the product(s) to which the warning applies is clear.

Compliance with these rules may require redesign or re-coding of a retailer’s website, so retailers may be hesitant to make such changes without a clear obligation to do so. However, the costs associated with making the necessary changes are likely to be minimal compared to the cost of defending a Prop 65 claim. A retailer’s risk under Prop 65 depends on whether it is protected from Prop 65 liability by its contracts with the manufacturers and distributors of the products it sells. If it is not, an online retailer that does not provide its own compliant internet warnings could find itself defending a Prop 65 claim—even if there are warning labels on the products it sells.

Takeaways

Compliance with Prop 65 is increasingly challenging given the complexity of the new rules and the realities of supply chain management. The best way to manage your company’s Prop 65 liability is to minimize the risk of being sued in the first place. The question is not whether a court would consider your warning to be clear and reasonable but whether a plaintiff’s lawyer would find good reasons to pursue a claim. There is an ever growing bar of plaintiffs’ lawyers searching for companies that fail to keep up.

- Julia Graeser, Dave Metres, and Morgan Gilhuly

For more information, contact Julia Graeser at (415) 228-5481 or [email protected], Dave Metres at (415) 228-5488 or [email protected], and Morgan Gilhuly at (415) 228-5460 or [email protected].