In a rare published decision concerning California’s expansive Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as “Prop 65,” the California Court of Appeal on March 17, 2015, dealt companies a victory in providing guidance on permissible methods of calculating exposure to lead in food and beverages. Prop 65 requires businesses to provide reasonable warnings before knowingly exposing individuals to chemicals known to the state of California to cause cancer or reproductive harm. Lead is among the more common constituents at the center of Prop 65 disputes.
In Environmental Law Foundation v. Beech-Nut Corporation et al., an environmental group alleged that baby food, fruit juices and other foods typically consumed by babies and toddlers contained levels of lead sufficient to require manufacturers to label the products with Prop 65 warnings. The Court of Appeal affirmed the trial court’s decision that allowed food and beverage companies to calculate exposure to Prop 65-listed chemicals over time based on actual data concerning how the particular food or beverage is consumed and based on an average of lead levels detected across lots. The plaintiff’s preferred methodology would have based exposure on the product sample with the highest concentration of lead and would have assumed consumption of that product every day.
On September 28, 2011, the Environmental Law Foundation (ELF) filed a lawsuit against 34 food and beverage manufacturers that sell their products in California. The products included grape juice, packaged pears and peaches, fruit cocktail, and baby foods containing carrots, peaches, pears and sweet potatoes. ELF alleged that the products contained amounts of lead that required a warning label under Prop 65.
In the trial court, the defendants argued that their products were not subject to Prop 65 because (1) the concentrations of lead were below the “safe harbor” levels if consumption were averaged over time rather than measured on a daily basis, (2) the warning requirements were preempted by the federal Nutritional Labeling and Education Act and by the federal policy promoting a diet rich in fruits and vegetables, and (3) the lead found in their products was naturally occurring.
The trial court agreed with the defendants’ first argument that the concentrations of lead should be averaged over time rather than measured on a single day. An expert for the defendants calculated exposure by (1) averaging the lead levels detected in tests conducted by both the plaintiff and defendants, (2) using the National Health and Nutrition Examination Survey database (NHANES) to compute average consumption data for the products, (3) using the National Eating Trends (NET) database to determine the frequency with which average users consumed the products in question over a 14-day period, (4) multiplying the results from the first three steps and, finally, (5) comparing the fourth step output to the safe harbor levels for lead.
Ultimately, after 11 trial days and extensive expert testimony, the trial court sided with the defendants, concluding that the safe harbor levels had not been exceeded and therefore warning labels were not necessary on the products. The trial court, however, ruled that there was no express federal preemption that would prevent Prop 65 from applying to the facts in the case. The trial court also rejected the defendants’ “naturally occurring” defense on the basis that the defendants had not proven that lead was present in the products due solely to natural causes, which the court interpreted the applicable regulation to require. Tit. 27, Cal. Code Regs. § 25501(a).
ELF appealed the trial court’s decision in mid-2013 and briefing and argument consumed approximately 18 months. After carefully comparing the competing expert testimony in the trial record under the deferential substantial evidence standard of review, the Court of Appeal agreed with the trial court and the defendants that lead levels fell within the safe harbor and affirmed.
Significantly, the California attorney general submitted an amicus brief supporting ELF. In Prop 65 disputes, the Office of the Attorney General plays an unusually important role, sometimes mediating disputes between defendants and the private plaintiffs who are empowered under the law to sue businesses. In her brief, the attorney general argued (among other things) that the court should show deference to the trial testimony of an employee of the California Office of Environmental Health Hazard Assessment, the state agency with responsibility over maintaining the list of Prop 65-regulated chemicals and rulemakings. The Court of Appeal joined the trial court in refusing to show deference to a state employee’s testimony that failed to rise to an authorized, formal policy of the state agency.
The defendants filed protective cross-appeals concerning the two issues on which they had not prevailed at trial, namely federal preemption of Prop 65 and the “naturally occurring” defense. Because the Court of Appeal affirmed based on safe harbor grounds, however, the appellate court did not reach these two issues. Companies unfortunately will have to await future decisions or rulemakings to obtain more clarity on these two critical issues.
While the duration of the Court of Appeal’s decision will be uncertain until the period for appeal expires, the decision is a significant victory for food, beverage and, potentially, consumer goods manufacturers that sell products in California. Because the vast majority of Prop 65 disputes settle before trial, the case provides a useful precedent and a valuable addition to the small number of Prop 65 reported cases. If the Court of Appeal’s decision stands, businesses that sell food and beverages in California may now incorporate consumption over time and possibly (depending on the chemical) averaging chemical levels across lots when determining if concentrations of Prop 65-listed chemicals exceed safe harbor levels, giving companies an additional advantage in settlement talks or litigation.
McGuireWoods boasts a food and beverage industry team well versed in the challenges that Prop 65 poses to companies. Our California attorneys actively counsel and litigate to help industry navigate Prop 65’s choppy waters.