By Ann G. Grimaldi
In a significant victory for the California Chamber of Commerce (“CalChamber”) and the regulated community at large, the Ninth Circuit upheld a preliminary injunction prohibiting the filing of enforcement actions under the California Safe Drinking Water and Toxic Enforcement Act of 1986 (also known as Proposition 65), if those actions allege exposures to the chemical acrylamide in foods and beverages. Noting the considerable scientific controversy regarding acrylamide’s actual role in increasing cancer risk from exposures to the chemical from the diet, the Ninth Circuit opinion reinforced First Amendment principles prohibiting compelled false speech. The preliminary injunction prohibits enforcement not only by public enforcers like the California Attorney General, the defendant in the action, but all persons in privity with the Attorney General including private enforcers.
The Ninth Circuit opinion is not the end of the road, unfortunately, either for CalChamber or for suppliers of foods and beverages seeking certainty about their obligations, if any, to warn for acrylamide. Intervenor Council for Education and Research on Toxics (“CERT”) continues its relentless opposition in this case, which includes tactics such as subpoenaing the lower court’s presiding judge’s husband and his business. Itself a prolific Proposition 65 enforcer and the party that filed the appeal, CERT has filed a petition for rehearing in the Ninth Circuit as well as a motion to vacate the original preliminary injunction in the district court.
What is Proposition 65?
Codified at California Health & Safety Code sections 25249.5 et seq., Proposition 65 requires the State of California to maintain, and regularly update, a list of chemicals known to the State to cause cancer and reproductive harm. Currently there are nearly 1,000 chemicals on the Proposition 65 list.
The law also prohibits “persons in the course of doing business” from knowingly and intentionally exposing individuals to those listed chemicals without a clear and reasonable warning. Warnings are required when exposures to a listed chemical would exceed the regulatory level established by Proposition 65. In a twist specifically intended to promote compliance – and enhance enforcement leverage – Proposition 65 requires the alleged violator to prove the negative, i.e., that no warnings are required for the alleged exposure.
Proposition 65 regulations establish the requirements of a “safe harbor warning,” i.e., a warning that meets the statutory “clear and reasonable” standard. While use of the safe harbor warning is not mandatory, deviations from its requirements present an enforcement risk should a warning be deemed fall short of the statutory standard.
Through the law’s citizen’s suit provision, any person acting in the public interest may sue to enforce Proposition 65. The alleged violator faces civil penalties of up to $2,500 per day of violation, 25% of which is awarded to the successful plaintiff. The successful plaintiff also is separately entitled to attorneys’ fees under the California private attorney general statute.
With these financial incentives, private Proposition 65 enforcement is a robust cottage industry in California. In the most recently available summary of Proposition 65 settlements prepared by the California Attorney General for 2019, 898 settlements resulted in payments of nearly $30 million dollars, 76% of which were attorneys’ fees paid to plaintiff’s attorneys. Last year alone, private enforcers issued 3,185 Notices of Violation – nearly 9 per day, including weekends and holidays.
What is acrylamide?
Acrylamide was listed as a Proposition 65 carcinogen in 1990 based on laboratory studies in rats and mice. The International Agency for Research on Cancer has classified the chemical as a likely human carcinogen. The US Environmental Protection Agency has classified acrylamide as a probable human carcinogen.
Although acrylamide is not naturally found in food, it can form through a natural process when food is cooked. Yet, scientific evidence does not demonstrate that consuming acrylamide in foods and beverages actually increases cancer risk in humans. The National Cancer Institute (“NCI”) has stated that there is no consistent evidence that dietary acrylamide is associated with increased cancer risk. The American Cancer Society (“ACS”) has stated that dietary acrylamide is not likely to be related to cancer. The Food and Drug Administration (“FDA”) has stated that “warning labels based on the presence of acrylamide in food might be misleading.”
Notwithstanding these organizations’ statements, acrylamide in foods and beverages is among the top Proposition 65 enforcement targets, with a total of almost 1,400 Notices of Violations issued to date. These Proposition 65 enforcers allege that the identified foods and beverages must carry warnings stating that the products can expose consumers to a carcinogen. According to surveys undertaken by CalChamber, California consumers understand the Proposition 65 warning to mean that eating foods containing acrylamide would increase their own risk of cancer, contrary to the studies reviewed by NCI, ACS, and the FDA.
The underlying lawsuit
This disconnect between the wording of the Proposition 65 warning and available scientific evidence created the controversy leading to CalChamber’s First Amendment challenge. In 2019, CalChamber brought suit in the US District Court of the Eastern District of California (Case No. 2:19-cv-02019-KJM-JDP) for declaratory and injunctive relief against the California Attorney General, seeking to stop the tidal wave of enforcement actions alleging exposures to acrylamide in foods and beverages, and asserting its members’ right not to be compelled to provide false and misleading warnings for their food products. CERT, having issued several Notices of Violation for acrylamide in foods and targeting dozens of companies (including in a lawsuit alleging exposure to acrylamide in coffee), intervened as a defendant, arguing that the lawsuit would impose an unconstitutional prior restraint on its own First Amendment rights.
In March 2021, CalChamber secured a preliminary injunction prohibiting the filing of new Proposition 65 enforcement lawsuits by public and private enforcers. (529 F.Supp.3d 1099.) In a lengthy opinion and order, Judge Kimberly Mueller first addressed CERT’s argument that an injunction would constitute an unlawful prior restraint of speech. Judge Mueller noted that CalChamber was not seeking to prohibit pre-suit demand letters, settlement negotiations, or Notices of Violations, which could be considered “communications” to be protected under the First Amendment. Rather, CalChamber sought a prohibition on future lawsuits, a matter squarely within the court’s authority. Although an injunction would indeed prevent CERT from filing a lawsuit, Judge Mueller observed, “The court is aware of no authority interpreting the First Amendment as preserving a person’s right to enforce a state law that contradicts the Constitution, which is the effect of CERT’s argument here.”
Turning next to CalChamber’s request for a preliminary injunction and its likelihood of success on the merits, Judge Mueller applied the standard articulated in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985). Under that standard, the court must evaluate whether the warning – which the parties agreed constitutes compelled speech – (1) requires the disclosure of purely factual and uncontroversial information only, (2) is justified and not unduly burdensome, and (3) is reasonably related to a substantial government interest.
The court undertook its evaluation in the context of the Proposition 65 safe harbor warning set forth in the regulations, which for acrylamide in foods would state: “Consuming this product can expose you to acrylamide, which is known to the State of California to cause cancer. For more information go to www.P65warnings.ca.gov/food.” Given the substantial scientific controversy regarding acrylamide’s actual role in increasing cancer risk, the warning could not be considered “purely factual and uncontroversial” and therefore is properly considered unconstitutional. The same outcome would result using the “intermediate” level of scrutiny under Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980), according to the court.
In analyzing the balance of harms and the public interest, Judge Mueller further observed that, notwithstanding the strong state interest in enforcing its own laws, there is a “significant public interest in upholding First Amendment principles.” This significant interest outweighed the other considerations presented by the Attorney General. The court also noted that the use of alternative warning language, as the Attorney General suggested, would not eliminate enforcement risk and actually contravened the safe harbor warning regulations.
On balance, all the relevant factors weighed in favor of issuing the preliminary injunction. CalChamber won. The preliminary injunction stated:
While this action is pending and until a further order of this court, no person may file or prosecute a new lawsuit to enforce the Proposition 65 warning requirement for cancer as applied to acrylamide in food and beverage products. This injunction applies to the requirement that any “person in the course of doing business” provide a “clear and reasonable warning” for cancer before “expos[ing] any individual to” acrylamide in food and beverage products under California Health & Safety Code § 25249.6. It applies to the Attorney General and his officers, employees, or agents, and all those in privity or acting in concert with those entities or individuals, including private enforcers under section 25249.7(d) of the California Health & Safety Code. This order does not alter any existing consent decrees, settlements, or other agreements related to Proposition 65 warning requirements.
But CERT did not let the matter rest. Several months after the preliminary injunction issued, CERT filed a motion demanding that Judge Mueller recuse herself based alleged financial conflicts of interest. The motion included extensive amounts of Judge Mueller’s personal information, some of which was incorrect according to Judge Mueller. CERT even subpoenaed Judge Mueller’s husband and his business. Citing these “scorched earth” tactics, Judge Mueller did recuse herself, stating:
In sum, I do not believe CERT’s motion to recuse provides a legitimate reason for my recusal. I am very concerned that CERT and [proposed intervenor] HLF are motivated not by a fear I might be swayed by prejudice or bias, but rather by a hope they will have greater success before a different judge. At this stage, however, I could not be faithful to the oath I took if I continued presiding over this action.
Notably, all other judges in the Sacramento Division of the Eastern District also recused themselves, and the case was transferred to the Fresno Division.
The appeal
CERT, not the California Attorney General, appealed the preliminary injunction order. CERT sought, and obtained, a stay on the preliminary injunction while the appeal was pending. Ultimately, the Ninth Circuit affirmed in March 2022, finding, after reviewing the record, that the district court had not abused its discretion in issuing the prohibition on Proposition 65 enforcement.
The Ninth Circuit agreed with the district court’s application of the Zauderer standard, and concluded that the safe harbor warning is controversial because of the “robust disagreement by reputable scientific sources” about the actual cancer risk presented by dietary acrylamide. The appellate court also agreed that the warning is misleading: The word “known” as used in a Proposition 65 safe harbor warning “carries a complex legal meaning that consumers would not glean from the warning without context.” CalChamber’s own survey demonstrated that consumers read the warning to mean that consuming the food products create a risk of cancer in humans, even though acrylamide was listed as a carcinogen solely on the basis of animal studies.
The Ninth Circuit also agreed with the district court that the Proposition 65 enforcement mechanism “creates a heavy litigation burden on manufacturers who use alternative warnings” and that “’only the safe harbor warning is actually useable in practice’” – meaning that using alternative wording that would provide appropriate context likely would be considered to run afoul of the statutory “clear and reasonable” standard. The appellate court noted the legal, business and financial risks that businesses face upon receipt of a Notice of Violation, finding that the compelled disclosure appeared unduly burdensome. On balance, the equities weighed in favor of CalChamber, especially here, where the Ninth Circuit has “consistently recognized the significant public interest in upholding First Amendment principles.”
Then the appellate court addressed CERT’s prior restraint argument. While enjoining a lawsuit could be considered prior restraint of speech, the doctrine does not apply where the lawsuit itself has an illegal objective. Ultimately, the Ninth Circuit concluded that CERT was precluded from claiming protection under this doctrine because Proposition 65 acrylamide-in-food claims are, at this preliminary injunction stage, likely unconstitutional. As the court put it, “Thus, we hold that the preliminary injunction against likely unconstitutional litigation is not an unconstitutional or otherwise impermissible prior restraint.” (Emphasis in original.)
Ironically, CERT also argued that the scope of the preliminary injunction, by including private enforcers, was so overbroad that CERT could not be bound by it. The Ninth Circuit put the kibosh on that in these two sentences: “As an intervenor…CERT brought itself into active concert and participation with the Attorney General in the context of this litigation. It would defy logic to now hold that the injunction as applied to CERT as a private enforcer is overly broad.”
What’s next?
Before the broader regulated community could fully celebrate this victory, CERT filed a petition for rehearing en banc. It also has filed a motion in the lower court to vacate the preliminary injunction based on Judge Mueller’s alleged “unwaivable conflict of interest.” That motion is set to be heard on May 17, 2022. Seeking multiple bites at the apple, CERT’s motion requests that CalChamber’s original motion for preliminary injunction be scheduled for a new hearing. Given CERT’s aggressive positioning to date, it is not difficult to imagine that it would file a petition for certiorari to the US Supreme Court if things do not go its way.
This complicated litigation dance, whose steps CERT appears to be dictating, reinforces what businesses face when confronted with a Proposition 65 claim. Fees and costs for a full defense on the merits can reach into the seven figures. The average Proposition 65 settlement lives south of $50,000. It is no wonder that the vast majority of Proposition 65 cases settle, and it is no wonder that consumer product warnings are so prevalent, for warnings are the only way to prevent enforcement actions, however unmeritorious, from being filed.
In the meantime, the regulated community affected by these particular proceedings is being whipsawed. There is little incentive to undertake the substantial costs of re-tooling packaging to remove acrylamide warnings until this matter is resolved for good. As victories emerge and then recede, nor can most food suppliers so quickly pivot from removing warnings to replacing them on labels even if cost otherwise were not an obstacle. The true casualties here, however, are the consumers who are being misled by unnecessary – and unconstitutional – acrylamide cancer warnings on their foods and beverages.
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Ann G. Grimaldi maintains a diverse practice centered on chemical regulation, with primary focus on Proposition 65, the federal Toxic Substances Control Act (TSCA), the California and federal Hazard Communication Standards, and other state and federal chemical regulations. Her client base consists of entities operating at every point across supply chains, from chemical manufacturers to consumer product retailers, and in a variety of industries including pesticides, life sciences, art materials, furniture, plumbing products and more.
Ann is a frequent speaker and writer on chemical and product regulation topics, and has been named a Northern California Super Lawyer, a rating service of outstanding lawyers, since 2004. Prior to opening Grimaldi Law Offices, Ann was a partner at McKenna Long & Aldridge LLP (now Dentons), where she advised clients on compliance with chemical and product laws and defended them in enforcement actions.
