California Green Chemistry Initiative: Are You Manufacturing or Selling a “Priority Product”?

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The new Safer Consumer Products (SCP) regulations require the California Department of Toxic Substances Control (DTSC) to initially identify up to five proposed “Priority Products” or categories of products containing what DTSC regards as “Chemicals of Concern.”  By April 1, 2014, DTSC will publish a list of Priority Products selected because of their use of one or more of 164 “Priority Chemicals” listed on the “Initial Candidate Chemicals” list.  Scroll to the bottom of this post for the full list of the 164 Priority Chemicals.

There will be a public review and comment period following publication of the Priority Products list.  It has been widely speculated that nail polish, formaldehyde-based hair straighteners, carpet adhesives and furniture seating foam are among the possible Priority Products that may be identified first by DTSC.

Once a product is identified as a Priority Product, manufacturers or other responsible entities (including importers, assemblers and even retailers) will be required to notify DTSC that their product is a priority product.  The manufacturer or other responsible entity then has some unpleasant options:  It can remove the product from sale, reformulate to remove or replace the chemical of concern in the product, or perform a complex “Alternatives Analysis” to retain the chemical in the product.  The Alternatives Analysis report must be submitted to DTCS for evaluation to determine if there are adverse environmental or public health impacts associated with the product that can be remedied by regulatory responses.  The regulatory responses could require product warnings to consumers, restrictions on the use of the chemical during manufacture, place of sale restrictions, administrative controls, further research regarding alternative ingredients, end-of-life disposal requirements, or even a ban on sales of the product in California.

Manufacturers, retailers, importers and assemblers of consumer products for sale or distribution in California should diligently keep informed about developments in the DTSC’s “Candidate Chemicals” list (currently 1,060 chemicals),  as well as the development of the Priority Products list.  Manufacturers should also consider whether reformulation of their products to exclude the priority chemicals from the “Initial Candidate Chemicals” list is possible.  In addition, it is important that businesses establish clear agreements among manufacturers, importers, distributors, retailers and others in the supply chain specifying who will be responsible for complying with California’s tough new regulatory program, including responding to DTSC if a product is identified as a priority product.  Conkle, Kremer & Engel’s lawyers stay current on the latest developments, and guide the firm’s clients through the thicket of expanding regulatory issues affecting their businesses.

The 164 chemicals found on the “Initial Candidate Chemicals” list, from which the Priority Products will be identified by DTSC, are:

1,1,1,2-Tetrachloroethane 1,1,1-Trichloroethane; Methyl chloroform
1,1,2,2-Tetrachloroethane 1,1,2-Trichloroethane
1,1-Dichloroethane 1,2,3-Trichloropropane
1,2-Diphenylhydrazine; Hydrazobenzene 1,2-Epoxybutane
1,3-Butadiene 1,3-Propane sultone; 1,2-Oxathiolane 2,2-dioxide
1,4-Dioxane 2,2-Bis(bromomethyl)propane-1,3-diol
2,4,6-Trinitro-1,3-dimethyl-5-tert-butylbenzene; musk xylene 2,4,6-Tri-tert-butylphenol
2,4.6-Trinitrotoluene (TNT) 2?Acetylaminofluorene
2-Methylaziridine (Propyleneimine) 2-Methylphenol, o-Cresol
2-Nitropropane 3-Methylphenol; m-Cresol
4,4′-Methylenedianiline; 4,4’-Diaminodiphenylmethane (MDA) 4-Bromophenyl phenyl ether, Bromophenyl Phenyl Ether
4-Nitrobiphenyl 4-Tert-Octylphenol; 1,1,3,3-Tetramethyl-4-butylphenol
Acetaldehyde Acetamide
Acrylamide Acrylonitrile
Allyl chloride Aluminum
Aniline Aromatic amines
Aromatic Azo Compounds Arsenic and inorganic arsenic compounds
Asbestos (all forms, including actinolite, amosite, anthophyllite, chrysotile, crocidolite, tremolite) Benzene
Benzene, Halogenated derivatives Benzotrichloride
Benzyl chloride Beryllium and Beryllium compounds
Biphenyl-3,3′,4,4′-tetrayltetraamine; Diaminobenzidine Bisphenol A
Bisphenol A diglycidyl ether polymer; [2,2′-bis(2-(2,3-epoxypropoxy)phenyl)-propane] Bisphenol B;  (2,2-Bis(4-hydroxyphenyl)-n-butan)
Bromate Butylbenzyl phthalate and metabolite
Cadmium and cadmium compounds Captan
Carbon monoxide Carbon tetrachloride; CCl4
Catechol Chlorendic acid
Chlorinated Paraffins Chlorine dioxide
Chlorite Chloroalkyl ethers
Chloroethane; ethyl chloride Chloroprene; 2-chlorobuta-1,3-diene
Chromium hexavalent compounds (Cr (VI) Chromium trioxide
Cobalt metal without tungsten carbide (including dust and cobalt compounds) Cresols, Cresol mixtures
Cumene, [ isopropylbenzene] Cyanide and Cyanide compounds
Cyclotetrasiloxane; Octamethylcyclotetrasiloxane (D4) Diazomethane
Dibromoacetic acid Dibutyl phthalate and metabolites
Dichloroacetic acid Dichloroethylenes
Dichloromethane; methylene chloride Dicyclohexyl phthalate and metabolite
Diesel engine exhaust Diethanolamine
Diethyl hexyl phthalate and metabolites Diethyl phthalate and metabolite
Diisobutyl phthalate and metabolite Di-isodecyl phthalate and metabolite
Di-isononyl phthalate and metabolites Dimethyl sulfate
Dimethylcarbamoyl chloride Dinitrotoluenes
Di-n-Octyl Phthalate and metabolites Dodecamethylcyclohexasiloxane (D6)
Emissions, Cokeoven Epichlorohydrin; 1-Chloro-2,3-epoxypropane
Ethyl acrylate Ethylbenzene
Ethylene dichloride; 1,2-Dichloroethane Ethylene Glycol
Ethylene oxide; oxirane Ethylene Thiourea
Ethyleneimine, Aziridine Ethyl-tert-butyl ether
Formaldehyde Fuel oils, high-sulfur; Heavy Fuel oil; (and other residual oils)
Gasoline (automotive, refined, processed, recovered, and other unspecified fractions) Glutaraldehyde
Glycol ethers Glycol ethers acetate
Hexabromocyclododecane (HBCD), and mixed isomers Hexachlorobuta1,3-diene
Hexachloroethane Hexamethylene-1,6-diisocyanate
Hexamethylphosphoramide HMX
Hydrazine, Hydrazine compounds and salts Hydrogen sulfide
Jet Fuels, JP-4, JP-5, JP-7 and JP-8 Lead and Lead Compounds
Maleic anhydride Manganese and manganese compounds
Mercury and mercury compounds Methanol
Methyl chloride Methyl isobutyl ketone, Isopropyl acetone; (MIBK)
Methyl isocyanate Methylene diphenyl diisocyanates
Methylhydrazine and its salts Methylnaphthalene; 2-Methylnaphthalene
Mineral Oils: Untreated and Mildly Treated N,N-dimethylformamide; dimethyl formamide
N,N-Dimethylhydrazine Naphthalene
n-Hexane Nickel and Nickel Compounds; Nickel refinery dust from the pyrometallurgical process
Nickel oxides Nickel, metallic and alloys
Nitrate+Nitrite Nitrobenzene
Nitrosamines Nonylphenol, nonylphenol ethoxylates (NP/NPEs) (and related substances)
Parabens Pentabromophenol
Perfluorochemicals Petroleum; Crude oil
Phthalic anhydride Polybrominated diphenyl ethers (PBDEs) congeners
Polychlorinated biphenyl (PCB) congeners Polychlorinated dibenzo-p-dioxins (PCDDs)
Polychlorinated dibenzo-p-furans (PCDFs) and Furan Compounds Polycyclic Aromatic Hydrocarbons (PAHs)
Propylene oxide Quinoline and its strong acid salts
Silica, Crystalline (Respirable Size) Stoddard solvent; Low boiling point naphtha – unspecified;
Strong Inorganic Acid Mists Containing Sulfuric Acid Styrene and derrivatives
Sulfur dioxide Tetrabromobisphenol A (TBBPA)
Tetrachloroethylene; Perchloroethylene; (PERC) Thallium
Toluene Toluene Diisocyanates
Trichloroethene (TCE) Trihalomethanes
Tris(1,3-dichloro-2-propyl) phosphate (TDCPP) Tris(2,3-dibromopropyl) phosphate
Tris(2-chloroethyl)phosphate (TCEP) Vanadium pentoxide
Vinyl acetate Vinyl Bromide, Bromoethylene
Vinyl chloride; chloroethylene Xylenes; [o-xylene (95-47-6), m-xylene(108-38-3)and p-xylene (106-42-3)]

 

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California Green Chemistry Initiative: Does Your Product Contain a "Candidate Chemical” that Could Become a “Chemical of Concern” to the California Department of Toxic Substances Control?

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Effective October 1, 2013, companies doing business in California will have to navigate and comply with yet another system of complex regulations:  The Safer Consumer Products (SCP) regulations adopted by the California Department of Toxic Substances Control (DTSC) will require manufacturers, importers, assemblers and retailers to seek safer alternatives to certain harmful chemical ingredients in widely used products.

The SCP regulations are the first step in implementing California’s Green Chemistry Initiative. The goal of the SCP regulations is to accelerate the manufacture and use of safer versions of products in California by:  (1) establishing a process to identify and prioritize chemical ingredients in consumer products that may be considered “chemicals of concern,” and (2) establishing a process for evaluating chemicals of concern and their potential alternatives, to determine how best to limit exposure to or to reduce the level of hazard posed by chemicals of concern.

The SCP regulations apply to all consumer products that contain a “Candidate Chemical” and are sold, offered for sale, distributed, supplied, or manufactured in California.  The regulations do not apply to food, pesticides, dangerous prescription drugs and devices, dental restorative materials or medical devices.  There are currently 1,060 “Candidate Chemicals” that DTSC believes have hazard traits or environmental or toxicological effects.

The DTSC has already released its list of  “Initial Candidate Chemicals” that will receive DTSC’s priority attention.  Toluene, formaldehyde and bisphenol A are among the 164 “Initial Candidate Chemicals” that DTSC will consider to identify the “priority products” that DTSC will address first.

Conkle, Kremer & Engel’s lawyers stay current on the latest developments, and guide the firm’s clients through the thicket of expanding regulatory issues affecting their businesses.  Watch for our next post on Green Chemistry, identifying the chemicals that can make your product a candidate to be a “priority product” for the DTSC.

 

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CK&E Attorneys attend ERA Golf Tournament for Operation Homefront & Wounded Warriors

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On August 12, 2013, Conkle, Kremer & Engel attorneys John Conkle, Eric Engel and Kim Sim participated in the First Annual Electronics Representatives Association (ERA), Southern California Chapter, Charity Golf Tournament.  The tournament was held at the beautiful Aliso Viejo Country Club.

The proceeds from this event benefited Operation Homefront, California.  Through generous and widespread public support, and a collaborative team of exceptional staff and volunteers, Operation Homefront aspires to be the provider of choice for emergency financial aid, support and other assistance to the families of our service members and wounded warriors.  For more information, and to help support to this very worthwhile cause, visit Operation Homefront California.

The Golf Tournament was a great day and fantastic event benefiting an important cause.  It also gave CK&E an opportunity to connect with our friends in the Electronics sales community.

ERA is a trade association of professional manufacturers’ representative firms serving the high tech industry.  Members include independent businesses selling products for multiple manufacturers, with several hundred sales engineers from more than one hundred sales offices throughout Southern California.  CK&E is an ERA-SoCal Chapter associate member.  For more information visit ERA-SoCal.

We look forward to future events and participation with both ERA-SoCal and Operation Homefront.

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CKE’s L.A. Daily Journal Article: Treble Damages for Breach of Oral Contract

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The article “Breach of Oral Contract, Treble Damages,” was published in the Los Angeles Daily Journal on August 13, 2013.  The article discusses the importance for manufacturers, distributors and sales representatives of the published decision of Reilly v. Inquest Technology, Inc., 2013 DJDAR 10164 (Cal. App. 4th Dist. July 31, 2013).  The Reilly decision is the first precedent in California to uphold a jury verdict and judgment of treble damages and attorney fees against a manufacturer who failed to pay all sales commissions owed to an independent sales representative.  Eric S. Engel and H. Kim Sim represented Peter Reilly, the sales representative, at trial in Orange County Superior Court.  They obtained a unanimous jury verdict awarding Reilly $2.1 million in unpaid commissions.  Using the Independent Wholesale Sales Representatives Contractual Relations Act, CK&E then obtained an order from Judge Frederick Horn multiplying the jury’s award by a factor of three, for a judgment of $6.2 million plus attorney’s fees and interest.  That judgment was fully upheld by the California Court of Appeal in its July 31, 2013 decision.  The decision provides a template for future cases seeking treble damages for breach of commission contracts made with independent sales representatives, and can serve as a guide to manufacturers and distributors who want to avoid exposure to such liability.

Click here for the full text of the article, “Breach of oral contract, treble damages”:  Reilly v Inquest Daily Journal Article

Click here for the full copy of the California Court of Appeal decision:  Reilly v Inquest Court of Appeal Decision, Case No. G046291 (July 31, 2013)

 

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Naked Juice Labels to be Stripped of "All Natural" and "Non-GMO" Claims in False Advertising Settlement

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PepsiCo has agreed to pay $9 million to settle a class action battle over its use of the words “All Natural” and “Non-GMO” (non-Genetically Modified Organism) on its Naked Juice drink products.  As part of the settlement, PepsiCo agreed to change its labeling.

If approved by the district court, the settlement would resolve five separate class action lawsuits, which were consolidated with the lead case Pappas v. Naked Juice Co. of Glendora, Inc., in March 2012.

The case against PepsiCo stems from allegations that statements on the Naked Juice labels constitute false advertising.  The plaintiffs sued for violation of a number of California statutes – the Consumer Legal Remedies Act (CLRA) and False Advertising and Unfair Competition Laws.

According to the plaintiffs, independent testing revealed genetically modified soy protein in some Naked Juice products.  The plaintiffs also alleged that several ingredients in the Naked Juice products are non-natural, including ingredients like beta carotene and biotin which do occur naturally but are produced synthetically when added as supplements to foods, and a fiber ingredient that is produced by chemically rearranging corn starch molecules.  All of these ingredients are listed in the ingredient panel, but according to the plaintiffs, a reasonable consumer wouldn’t scrutinize the ingredient list for information contradicting the plain, conspicuous statements “All Natural” and “Non-GMO.”

The settlement in the PepsiCo case is likely to lead to many more class action lawsuits against businesses that advertise their products as “natural” or “all natural.”  Unlike use of the word “organic,” use of the word “natural” is not explicitly regulated by federal or state law, leaving the door open for claims of false or misleading advertising by consumers.

What’s the moral of this story?  An ounce of prevention is worth a pound of cure.  It is important to scrutinize health-related language used in advertising, especially on food products, and ensure there is documentation to back up claims.  CK&E routinely works with clients to evaluate the language on product packaging and in advertising as part of a comprehensive risk analysis so they can make informed choices for their businesses.  CK&E also has extensive experience defending clients against consumer false advertising claims.

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CK&E’s Judgment of $6.2 million for Unpaid Sales Commissions Upheld on Appeal

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The California Court of Appeal has unanimously upheld the $6.2 million judgment that Conkle, Kremer & Engel won at trial for a sales representative who had been deprived of $2 million in commissions he had earned.

Peter Reilly was a retired electronics industry executive who agreed to use his extensive contacts in the industry to bring new business to a growing manufacturing company, Inquest Technology, Inc.  After Reilly was not paid commissions for the contacts that he brought to Inquest, he asked Conkle, Kremer & Engel for help.

Reilly-Inquest_Team

Reilly v. Inquest – Plaintiff’s Trial and Appeal Team

CK&E’s Eric S. Engel and H. Kim Sim were the trial lawyers who devised the case strategy.  Key to the strategy was establishing by discovery and summary judgment motion the intricate requirements to impose liability against Inquest under a rarely-used law called the Independent Wholesale Sales Representatives Contractual Relations Act of 1990, California Civil Code section 1738.10 (“the Act”).  The main attraction of the Act is that jury awards for willful violations are trebled by the court and attorneys’ fees are awarded to a successful plaintiff.  Few laws in commercial litigation impose a penalty of three-times actual damages – that is a greater multiplier than most permissible punitive damages awards.

CK&E was able to prove that the sales representative relationship that Reilly had with Inquest met the particular requirements of the Act.  At trial, a unanimous jury found that Reilly procured sales for which he should have been paid $2,065,702 in commissions, based on the testimony of Reilly’s damages expert Thomas Neches.  The trial court then applied the Act’s penalty of treble damages to award Reilly a $6.2 million judgment, plus attorneys’ fees and interest, to enter the Judgment for Peter Reilly against Inquest Technology on Jury Verdict.

Of course, the Defendants appealed the judgment.  On July 31, 2013, the Reilly v. Inquest Technology case led to the first published decision of a California Court of Appeal to uphold a judgment trebling damages and awarding attorneys’ fees under the Act.  Anthony Kornarens was the appellate lawyer for Reilly, with assistance by CK&E.  In a unanimous decision, the Court of Appeal determined that Reilly’s judgment of $6.2 million was well supported by the evidence presented at trial, and that Reilly’s claims for unpaid sales commissions were within the special protections of the Act.

Click here for the full copy of the California Court of Appeal decision:  Reilly v Inquest Court of Appeal Decision, Case No. G046291 (July 31, 2013)

Watch for our future posts about the Act, including how CK&E proved that Inquest’s owners were also liable for the full amount of the $6.2 million judgment even though they were not subject to the Act.

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2012: A Bountiful Year for Prop 65 Plaintiffs and Their Lawyers

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Proposition 65 requires that businesses warn about the presence of chemicals believed by the State of California to cause cancer or reproductive harm.  Private citizens may file lawsuits “in the public interest” against businesses alleging a failure to provide the required warning.  Such lawsuits are often filed by private law firms (sometimes called “bounty hunters”), in the names of repeat-plaintiffs like “Center for Environmental Health,”  after sending Notices of Violation. The apparent primary purpose is to obtain quick cash settlements from bewildered, unsuspecting businesses.

2012 Prop 65 Settlements Bar Chart by Year2012 was a particularly “bountiful” year for Prop 65 private plaintiffs, according to data recently released by the California Attorney General’s Office. In 2012, private plaintiffs settled 397 cases.  The settlements totaled nearly $20.5 million. When combined with the additional settlements by District Attorneys and the Attorney General’s Office, there were 437 Prop 65 settlements during 2012, totaling over $22.5 million.  2012 was the second-highest annual dollar total for Prop 65 settlements since 2000, and shows a clear upward trend in the settlements extracted from businesses that receive Prop 65 Notices of Violation.

It should surprise no one who studies Prop 65 issues that the bulk of the $22.5 million paid in Prop 65 settlements during 2012 went to the plaintiffs’ attorneys:  Attorneys’ fees made up more than $14.5 million, or 71.34% of all private settlements.  Private plaintiffs can also take 25% of any civil penalty assessed as a “bounty”.  In 2012, the civil penalties retained by plaintiffs represented an additional $755,000 or 3.7% of all private settlements.

2012 Prop 65 Settlement Pie ChartA lesser-known fact is that private plaintiffs and their attorneys can and do make even more money from Prop 65 settlements.  A portion of each Prop. 65 settlement is supposed to go toward causes or activities that further the purpose of Prop 65, so Prop 65 allows parties to structure some of their civil penalty allocation as a “Payment in Lieu of Penalties” (aka “PILP”).  Some Prop 65 plaintiffs have kept such PILP recoveries to support vaguely stated causes; some Prop 65 plaintiffs have even argued that funding more private litigation itself is activity that furthers the purpose of Prop 65, justifying PILP recoveries from settlements.  In 2012, PILP money made up 13.88% of all private settlements.  That means almost $3 million landed in the hands of private plaintiffs and their attorneys, in addition to the attorneys’ fees and civil penalty bounties they received.

Statewide, there are only a few active Prop 65 plaintiffs.  Aggregated settlement data can be useful in achieving cost-effective resolutions of Prop 65 claims.  CK&E routinely defends businesses who have received Prop 65 Notices of Violation.  CK&E also works with businesses to develop compliance strategies to minimize the risk that they will be future targets of Prop 65 plaintiffs.

This Blog Post was Co-Authored by Jackson McNeill, Law Clerk, UCLA School of Law, Class of 2014

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Kirtsaeng Holds Copyright First Sale Doctrine Trumps Importation Rights

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The Copyright Act gives a copyright owner the exclusive right to sell copies of the copyrighted work. But once a genuine copy is sold, a lawful owner of that particular copy can resell or transfer what he bought without infringing the copyright – the copyright owner can no longer use the copyright to control the resale of that particular copy.  This copyright limitation has become known as the “First Sale Doctrine.”

A quirk in copyright law arose because the Copyright Act has a provision that prevents importation of a copyrighted work into the U.S. without the copyright owner’s permission.  (17 U.S.C. 602(a)(1)).  This ability of the copyright owner to prohibit importation seemed to conflict with the First Sale Doctrine when a copy is first sold outside of the United States.

In the 1998 decision Quality King Distributors, Inc. v. L’Anza Research, Int’l, Inc., the Supreme Court held that a copyrighted product manufactured in the U.S., but first sold in a foreign country, was subject to the First Sale Doctrine.  The result was that the copyright owner could not prohibit importation of the copyrighted product into the U.S.  But the question remained whether the First Sale Doctrine also applied to copyrighted works that were both manufactured and first sold outside the U.S.

In March 2013 the Supreme Court answered the question by applying the First Sale Doctrine regardless of where the copyrighted work is manufactured or first sold.  In Kirtsaeng dba Bluechristine99 v. John Wiley & Sons, Inc., the products involved were textbooks manufactured and first sold in Thailand by the copyright owner, then later imported into the U.S. for resale without the copyright owner’s permission.   In a split decision, the Supreme Court held that the Copyright Act requires that the First Sale Doctrine applies to authentic, unaltered products that were lawfully manufactured and first sold by the copyright owner in a foreign country as well as in the U.S.

The Kirtsaeng decision provides no protection for sale of modified, adulterated, pirated or counterfeit copies, regardless of where they were made or sold.  Nor does it insulate parties from participation in fraud, breach of contract, unfair competition or other wrongful acts that are independent of copyright protections.  Conkle, Kremer & Engel has long recommended that its clients take a multi-faceted approach to preventing and remedying product diversion and counterfeiting, so they are able to effectively address the problem no matter where and how the misconduct occurs.

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Starting a Fire: "Tris" Listing Increases Risks of Prop 65 Claims

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Tris / TDCPP is a common flame retardant additive used in the manufacture of polyurethane foam, resins, plastics, textile coatings and rubber. Tris / TDCPP is found in a wide variety of common products such as upholstered furniture and padding. California’s Office of Environmental Health Hazard Assessment (OEHHA) recently added the chemical Tris(1,3-dichloro-2-propyl) phosphate (chlorinated Tris or TDCPP) to its ever-growing list of chemicals “known to the State of California to cause cancer or reproductive toxicity.” As a result, Tris / TDCPP is now subject to Proposition 65, California’s Safe Drinking Water and Toxic Enforcement Act of 1986.

Prop 65 has a well-earned reputation as a “bounty hunter” statute, and is presently the subject of reform legislation, AB 227. This notorious “right to know” law does not ban any particular chemical from being used in products. In most cases it simply requires a generic warning label if a product contains chemicals found on the OEHHA’s Prop 65 list.

Because of the recent addition of Tris / TDCPP, products containing that chemical now must have a warning label in order to comply with Prop 65. Manufacturers and distributors who use outdated labeling and inadvertently fail to include the required warning are likely to be targeted by lawyers and claimants looking for violations on which they can capitalize. The penalties imposed by Prop 65 include fines as well as liability for the plaintiff’s attorney’s fees and costs.

Prospective Prop 65 plaintiffs are required to serve a “Notice of Violation” and wait at least 60 days before they can file a lawsuit. (California Health and Safety Code section 25249.7(d)) A review of the 159 Notices of Violation with respect to Tris / TDCPP served in the past 6 months reveals that just two law firms are actually behind the onslaught of Prop 65 notices regarding Tris / TDCPP:

  • The Chanler Group of Berkeley, California, through attorney Josh Voorhees and the firm’s “usual plaintiffs” (Peter Englander, Laurence Vinocur, Russell Brimer and John Moore) – 146 of the 159 Notices (92%).
  • Lexington Law Group of San Francisco, California, through attorney Mark N. Todzo and the firm’s plaintiff, Center for Environmental Health – 13 of the 159 Notices (8%).

The products identified in these notices have included foam-cushioned upholstered furniture, such as chairs, ottomans, stools and benches, foam-cushioned mattress toppers, back and seat cushions, car seats, and foam mats and pads for children and infants.

Manufacturers and distributors should promptly assess whether their products contain Tris / TDCPP. CK&E’s lawyers are experienced in helping clients take action to protect themselves from Prop 65 liability, and to help put out the fire if a Notice of Violation is delivered.

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Deal done? Maybe Not, if it’s a Copyright Sale

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Copyright ownership sales are generally controlled by ordinary state contract laws, but there are some limits when dealing with an agent of the copyright owner. In the recent case of MVP Entertainment v. Frost, a film producer offered to purchase the movie rights to author Mark Frost’s book, “The Match: The Day the Game of Golf Changed Forever.” The purchaser dealt with the attorney for the owner. In response to an email by the purchaser offering purchase terms, the attorney replied by email, “done . . . thanks!” Under many state laws that might have been enough to transfer ownership, but not so under copyright law.

The Copyright Act (17 U.S.C. § 204(a)) says that “transfer of copyright ownership . . . is not valid unless . . . a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” An attorney is an agent, so the attorney’s email saying the deal is “done” should be enough, shouldn’t it? Not quite, said the California Court of Appeal in MVP, because the owner disputed that his attorney had the owner’s actual authority to sell the copyright. In other words, the attorney was not the “owner’s duly authorized agent” for that purpose.

But the purchaser claimed it was led to believe that the attorney had authority, which is a theory known as “ostensible agency.” Under California law, a property owner can be bound by the acts of another person (the “ostensible agent”) whom the owner “intentionally or by want of ordinary care, causes or allows” another (the purchaser) to believe had the owner’s authority. Contracts can be created by “ostensible agents” in many circumstances. But the MVP decision held that copyright transfers cannot be done by “ostensible agents.” Copyright law requires that the purchaser deal directly with the owner, or with an agent expressly and “duly authorized” to act on behalf of the owner, with the goal that copyright interests are not inadvertently given and there is no uncertainty about what rights were transferred.

The takeaway from MVP is, when buying copyrights it’s wise to get the owner’s signature.  CK&E lawyers routinely guide clients through transfers and licensing of intellectual property including copyrights, trademarks and patent rights. As well, when a client’s rights in intellectual property are threatened, CK&E lawyers respond with effective enforcement.

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