Episode 26: From Coffee to Roasted Asparagus—How Prop. 65 Is Leading to Excessive Product Warnings

Welcome to the Workplace, a podcast by Cal Chamber. I'm Erica Frank, Cal Chamber's Executive Vice President and General Counsel, and with me today is Cal Chamber's policy advocate, Adam Reglay. Adam, what do coffee, French fries, breakfast cereals, grilled or roasted asparagus all have in common?

Probably the chemical acrylamide, which is a Prop 65 listed chemical.

And Prop 65 is one of your specialized areas over at the Capitol. And can you tell us a little bit about what Prop 65 is?

Sure. So Proposition 65, also known as the Safe Drinking Water and Toxic Enforcement act, was a voter initiative passed in 1986 and it is arguably the most far reaching consumer right to know law in the entire nation.

So Adam, as you know, this podcast is aimed at employers and designed to provide employers information. Why are we talking about Prop 65 today?

Well, Prop 65 was unique in that it was framed to the voters as really a right to know about chemicals in their drinking water and the right to know whether their drinking water was safe. But it had this little small component also in the ballot initiative about the right to know what's in your products or your consumer products. What ultimately was a small portion of the bill has now become the most pervasive and problematic part of Prop 65 for businesses. It's specifically because the issue with Prop 65 and whether you need to provide what is known as a Prop 65 warning to your consumer, whether that chemical is in your product is not about the concentration of that chemical in your product, but about whether you are exposing the reasonable consumer to that chemical. And what is reasonable and what the average consumer consumes is a very difficult assessment and ripe for litigation. Specifically, as Prop 65 contains a private right of action so that there are individuals suing companies on behalf of the public interest, and so your exposure liability is not just to the Attorney General, but it's to any bounty hunter out there or who basically finds that that chemical is present.

Let me summarize for a second here with Prop 65. One of the big issues with Prop 65 is it requires employers and manufacturers to put warnings on products that are known to the state of California to cause cancer.

The issue is it's not that the product themselves are known to cause cancer, but there could be a chemical present in that product. And, and the Prop 65 is extremely conservative in terms of what the exposure levels must be because what they do is they basically force feed animals that chemical until they see an exposure physically present in that animal and then they take that level of chemical and divide it by 1,000. And so it's extremely conservative. And so even a small trace amount in your product arguably could trigger the need to warn.

Going back to some of the most wonderful things in life, Coffee being one of them, French fries being another. I had to throw that healthy grilled or roasted asparagus in there. You had told me that all of these products have one commonality, and that's acrylamide. That's a scary word. Makes me think, okay, yeah, I know French fries probably aren't the best thing for me, but asparagus. Are you telling me now that I haven't seen a warning on asparagus yet? I know when I've gone to the coffee shops, I've seen these warnings, but I'm still drinking my coffee and I'm still eating my french fries. Tell me a little bit about how something as healthy as asparagus could have this chemical and whether a warning is required.

So acrylamide is a Proposition 65 listed chemical precisely because there were cancer studies back in the 1980s where they were force feeding rats acrylamide.

And.

And in the high doses that they force fed these rats, There was thyroid and testicular cancer shown. The issue is, acrylamide also is a naturally occurring substance as a byproduct of the roasting of these different food products. For example, when you roast asparagus, when you bake bread, and when you roast coffee beans, Acrylamide is not a chemical added by the manufacturer or the employer. It's a byproduct of that roasting process. So you can't remove it from the product. The issue is, Again, under Proposition 65, the bounty hunters only need to show that the chemical is present and that you're selling a product that has that chemical. Then the burden shifts to the employer to show that that level of exposure is far below the Proposition 65, what's called the safe harbor level. And if you're under that safe harbor level, you, as an employer do not have to warn. The problem is, if you don't warn and get sued, the cost to defend is still significant. And the issue with coffee as a staple of pretty much everyone's diet, or the majority of us, at least for myself, coffee has never been considered a cancerous product. But because of Proposition 65's burden on the defendant, there were bounty hunters out there who sued to force warning labels on coffee. And there was a lower court decision last year which mandated that Proposition 65 did trigger warnings for coffee.

Okay. And I think coffee's a really good example because it's not just the manufacturer of the coffee bean or the grounded bean, and we know that there's all sorts of brands out there, but it's also the supplier. Correct. Of the coffee. So if you go to coffee houses, the warning had to be present at the coffee house.

That's exactly right. So the actual retailer selling the coffee, your Starbucks, or any other company that's actually providing the cup of coffee to the consumer is required to provide the warning at the point where the consumer is exposed. You might have seen this black placard or whatever color at individual coffee retail locations stating that coffee could cause cancer. The issue for the employer to be weary about is there is an up to $2,500 per violation per day in the coffee context. That's an individual cup of coffee sold for every cup of coffee. That's $2,500 liability. In the cert versus Starbucks case, we were talking billions of dollars due to just the number of coffee cups sold.

It's understandable why many employers out there, if not all, should at least be aware of Prop 65's requirements and obligations and the impact that it can have if they are sued by what we've been describing as bounty hunters. And perhaps part of. Part of that issue is the enforcement mechanism in Prop 65 is through the private right of action process, which means attorneys can go out there, look to see if a product has the unacceptable threshold, and then start filing a lawsuit if there isn't a warning.

Right. Proposition 65 is enforced both by the Attorney General and a cottage industry of bounty hunters. It's where the AG does not enforce that these bounty hunters then can come in and operate. And in a lot of cases where the AG is not enforcing is precisely because they don't see an issue. But this cottage industry is specifically out there to go after these companies, these manufacturers, to shift the burden, because again, they don't have to show even that the threshold was exceeded, just that the chemical is present and that you sold it to a consumer. And then you have to go get experts and figure out your chemical concentration and also what the average consumer would consume of your product, because it's again, not the concentration alone in the product, but what the average consumer consumes. And that calculation is extremely difficult to make. A lot of assumptions are made and it's ripe for litigation and what we call the battle of the experts. What really happens as a prudent business decision maker is that it's cheaper to settle the problem Is do you want to settle even though you know you could win, or do you want to litigate it and spend thousands and thousands of dollars to ultimately win a case that would have been cheaper to settle? And that's really the issue with Prop 65.

Well said, well said. Now, I think you had mentioned Prop 65 was passed 1986 in 1986. So that's quite a bit of time from today. Are there still efforts to strengthen Prop 65's warning requirements? In other words, broaden the base by which different products need to have a warning attached to them?

There have been a number of attempts by the Office of Environmental Health Hazard Assessment, also known as OEHA, the agency responsible for promulgating Prop 65, to make Prop 65 even less business friendly, so to speak. Most recently, they proposed two regulations back in October of this last year, 2018. One would have basically forced you to redo how you calculate your chemical concentrations in your product. And not to get into the statistical analyses, but ultimately it would have required you to provide ultimately more warnings. The other amendment would basically prohibit you from averaging your concentrations across different facilities. And the reason why that's problematic is you might be making the same can of peaches out of three different facilities, and you all source that peach from the same farm. And so you would expect averaging across your facilities would be no issue. The agency is currently proposing, and we are in the formal rulemaking process right now providing comments back to the agency that averaging across facilities should not be prohibited, nor should it be mandated. So we've argued, when you as a business make that determination, you have to prove that that was a fair assessment in a court of law if you were sued. But to prohibit it outright will run an extreme risk of basically forcing employers to defend the entire state of California across all their facilities for any Prop 6560 day notice from a bounty hunter.

Adam, when we talk about warnings, it seems to me that we're getting to that point, or maybe we're already there where we're over warning. What I mean by that is where consumers are becoming so accustomed to seeing these warnings that they're really not paying attention to them and they are essentially becoming meaningless. Have we gotten to that point?

I would definitely say we've gotten to that point, and I wouldn't blame the businesses for that problem. The issue with Prop 65 is if you provide the warning, regardless of whether you actually truly believe you should warn, you are now safe as an employer from any litigation risk. You have to balance whether you provide that warning. And scare your customers or risk that one off bounty hunter who wants to make a quick buck. The issue again with Prop 65 and some of the regulations being proposed is it's really incentivizing manufacturers to avoid the entire bounty hunter situation and scare customers at the front. Because if you slap that warning label on your product, you're pretty much exempt from Proposition 65. It doesn't punish you for over warning. For a lot of businesses, it makes sense to just throw that Proposition 65 warning label on. I would caveat that in the food context, where consumers are much more conscious about what they ingest, Proposition 65 warnings for the food landscape is very different and over warning is a big concern for those manufacturers. You saw that precisely with coffee, which again, millions and millions of Americans drink it with no cancer risks at all. That was precisely why OEHA saw just how absurd the warning issue was becoming, such that consumers were starting to ignore warning labels because they were everywhere and they were becoming background noise. Nobody was stopping their Starbucks purchase precisely because of a Prop 65 warning. They just finalized this year new regulations that exempt coffee from Proposition 65 despite having acrylamide. Unfortunately, they didn't exempt other food products. Again, acrylamide is naturally occurring byproduct of roasting. But the big issue I think was the agency saw just how absurd Prop 65 was becoming with coffee warnings.

Okay, I am now breathing a huge sigh of relief because if you were going to tell me that I needed to cut back on my coffee consumption and if I would have had to tell my kids that they can no longer have French fries, I think there would be some serious problems in my life.

Exactly.

Coffee is safe, correct?

Coffee has been and always will be safe for consumption. The lawsuit on Prop 65 in Coffee is still ongoing, raising the question, is the old coffee somehow dangerous, but not the new coffee? It's still absurd, but the plaintiff in that case really sees the dollar signs and wants to keep moving forward. But I think the writing's on the wall that the agency does not want to see Proposition 65 undermined by more warnings on products that consumers are starting to just ignore the warnings.

I'm going to end on a good note, and that is that I might need to go get another cup of coffee. But I really want to thank you for coming on our podcast today and talking to us about this important issue. And one that sounds like this issue is going to continue to be at the forefront of employers minds.

It really should be and will continue to work on behalf of businesses to protect their interests. But Proposition 65 is probably here for a while.

All right, well, thank you for joining us at the podcast.

Thank you, Erica.

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