California Trade Regulations – Conkle, Kremer & Engel, PLC

The Conkle Firm Participates in PCPC California Lobby Day to Educate Lawmakers About Personal Care Products Industry Concerns

Conkle, Kremer & Engel attorney John Conkle recently participated in the Personal Care Products Council’s California Lobby Day, an annual PCPC event held at the Capitol in Sacramento, California. The Personal Care Products Council (PCPC) represents the personal care and cosmetic industry at the federal, state and local level on issues of interest to the industry.
California Lobby Day represents a unique opportunity for industry leaders to meet with legislators, state officials, and their staff members and engage in open discussions about legislative and regulatory issues affecting the personal care industry.

The whirlwind day included briefings in the Governor’s Office by the executive department personnel and meetings with staff in the offices of members of the State Legislature, as well as a reception for members of the California Legislature, personnel from the Office of Governor Brown, and PCPC members and staff. Among those in attendance were Martha Guzman-Aceves (Deputy Legislative Secretary); Grant Cope (Deputy Secretary for Environmental Policy, California Environmental Protection Agency (Cal EPA)); Meredith Williams (Deputy Director of Safer Products and Workplaces Program, Department of Toxic Substances Control (DTSC)); Jacqueline Shea (United States Environmental Protection

In addition to meeting with PCPC personnel and other PCPC member representatives, the day provided a solid overview of California’s current regulatory scheme and upcoming legislation and regulations.Agency (US EPA)); and Rick Brausch (Legislative and Policy Director, DTSC). In addition, a number of staff members from the offices of California Senators Loni Hancock and Kevin De Leon and California Assemblymembers Brian Nestande and Susan Bonilla spoke with PCPC members. The proposed pieces of legislation of most interest to the PCPC were the prohibition on the use of plastic microbeads in cosmetics, legislation to allow county weights and measure officials to regulate the information that is required to be disclosed in the sale of cosmetics, the characterization of cosmetics as unsalable hazardous waste at the retailer level, and prohibitions on animal testing.

Conkle, Kremer & Engel is proud to be an active member of the Personal Care Products Council. Over the years, CK&E has provided legal expertise to the PCPC and its member companies by presenting at conferences organized by the PCPC on legal and regulatory matters, as well as representing many PCPC member companies. CK&E has also been a frequent sponsor of conferences organized by the PCPC and has participated in numerous events hosted by the PCPC.

22
JUL

Beauty Industry, California Trade Regulations, Personal Care Products, Regulatory Compliance

PCPC, Personal Care Products Council

California Attorney General Kamala Harris Promises to Scrutinize Prop 65 Settlements

Posted by: H. Kim Sim

As reported on the Conklelaw blog, the California Attorney General’s Office recently released its long-awaited 2013 report of Proposition 65 settlements. The report reveals that private Proposition 65 bounty hunters collected nearly $17 million in civil penalties, payments in lieu of penalties and attorneys’ fees and costs from businesses during 2013.

Concurrently with the report, the Attorney General’s Office took the unusual step of releasing a letter directed to the Proposition 65 plaintiffs’ bar – a small group of attorneys and law firms who specialize in representing private enforcers.

The letter from the Attorney General’s Office letter characterizes the 2013 report as shining “a light on some of the aspects of private enforcement of Proposition 65 that result in unnecessary burdens for businesses and are cause for public concern.”

The letter expresses particular concern over Proposition 65 plaintiffs’ practice of collecting “Payments in Lieu of Penalties” (also known as PILPs). PILPs are supposed to offset civil penalties in Proposition 65 cases, and are intended to fund activities that have some nexus to the basis for the Prop 65 enforcement action. Proposition 65 bounty hunters have broadly interpreted such PILP-funded activities to include funding additional Proposition 65 litigation. Unlike civil penalties, of which California’s Office of Environmental Health Hazard Assessment (OEHHA) is entitled to 75 percent, the state does not receive any portion of PILPs. In 2013, 21% of the money collected in private settlements was paid as PILPs.

The Attorney General’s Office also criticized the enormous attorneys’ fees routinely collected by private enforcers as part of Proposition 65 settlements, and promised to “redouble” efforts to evaluate attorney’s fees awards. In 2013, nearly 75 percent of all of the Proposition 65 settlement money, or an astonishing $12.5 million, went straight to the plaintiffs’ lawyers. Attorney General Harris concluded, “Clearly, the high transaction costs for resolving Proposition 65 cases continue to be cause for concern. They are the reasons we have been redoubling our efforts to evaluate attorney’s fees awards in the private party settlements submitted to us. . . .”

Attorney General Harris’ pledge to actively scrutinize Proposition 65 settlements is consistent with her “hands-on” approach to attempting to curb private enforcement efforts. In 2011, for example, the Attorney General filed an opposition to a motion to approve settlement in Held v. Aldo, challenging an attorney’s fee request for more than $5 million by the Chanler Group – one of the most active Proposition 65 plaintiff’s firms – as unreasonable. Let’s hope Attorney General Harris backs her pledge with more direct and effective oversight to curb abuses of Proposition 65 by private enforcers.

Conkle, Kremer & Engel attorneys are committed to guiding clients through the constantly changing landscape of Proposition 65 compliance and enforcement.

2
JUL

Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Proposition 65, Regulatory Compliance, Unfair Competition

Kamala Harris, OEHHA, Office of Environmental Health Hazard Assessment, PILP, Prop 65, Proposition 65, Proposition 65 Reform

California Attorney General Reports Businesses Paid $17 Million to Settle Private Prop 65 Cases in 2013

Posted by: H. Kim Sim

And that’s the “good news” – in 2012 it was $20 million.

The California Attorney General’s Office recently released its annual report of Proposition 65 settlements. The report confirms what most businesses are already painfully aware: Proposition 65 continues to be a thriving business for private Proposition 65 plaintiffs and their lawyers, who make millions of dollars in the name of the “public interest.”

While private plaintiffs did not reap as much in 2013 as they did in 2012 ($20 million), they did manage to collect $17 million. That represents the third largest haul for bounty hunters since 2000, when the Attorney General’s Office began collecting the data and publishing annual reports.net

The summary reveals that in 2013 alone, private Proposition 65 plaintiffs acting in the “public interest” and their lawyers entered into a whopping 350 private settlements or consent judgments with businesses alleged to be in violation of Proposition 65, and collected $16,812,396. In contrast, the Attorney General and local District Attorney each filed a single action.

Proposition 65 requires the State of California to publish a list of chemicals known to cause cancer, birth defects or other reproductive harm. Businesses are required to warn consumers before exposing them to any one of more than 800 listed chemicals, by either labeling or posting a notice. If a business does not comply, it can be liable for substantial civil penalties of up to $2,500 per day.

Proposition 65 has become a disturbingly lucrative operation for private enforcers, frequently called “bounty hunters,” who serve dozens if not hundreds of Notices of Violation on unsuspecting businesses. These bounty hunters threaten to sue unless they are paid off in private settlements. If a private settlement cannot be reached, they proceed with a lawsuit and try to force a settlement to avoid the cost of defense.

Proposition 65 allows private enforcers to keep 25 percent of all civil penalties collected, with the remaining 75 percent going to the California Office of Environmental Health Hazard Assessment (OEHHA). In addition, private enforcers pocket 100% of so-called payments in lieu of penalties, or PILPs. Whereas OEHHA would receive 75% of monies designated as civil penalties, OEHHA does not receive any portion of monies designated as PILPs. Finally and most significantly, private enforcers’ lawyers are entitled to reasonable attorneys’ fees and costs under the State’s private attorney general doctrine.

The 2013 report shows that only one-tenth of all monies collected by private enforcers went to the State of California. The rest of the money went to the bounty hunters and their lawyers:

$12,426,052, or 74%, went directly to the private enforcers’ lawyers as attorneys’ fees and costs
$596,977.25, or 3.6%, went directly to private-enforcer plaintiffs
$1,998,435, or 12%, went indirectly to private-enforcer plaintiffs as a payment in lieu of penalty
$1,790,931.75, or 11%, went to OEHHA.

The report also shows continued aggressive activity by a handful of Proposition 65 private enforcers. At the top of the list are:

Center for Environmental Health (represented by Lexington Law Group) with 62 settlements or consent judgments totaling more than $3.3 million
Russell Brimer (represented by Chanler Group) with 60 settlements or consent judgments totaling more than $2.4 million
Peter Englander (represented by Chanler Group) with 46 settlements or consent judgments totaling more than $1.6 million
John Moore (represented by Chanler Group) with 41 settlements or consent judgments totaling more than $2 million
Environmental Research Center (represented by various law firms including Law Office of Karen A. Evans and Michael Freund & Associates) with 34 settlements or consent judgments totaling more than $2.8 million
Consumer Advocacy Group (represented by Yeroushalmi & Associates) with 25 settlements or consent judgments totaling more than $1.3 million

The Prop 65 outlook for businesses in 2014 does not look much better. In particular, the June 2013 listing of cocamide DEA, a common ingredient in beauty and personal care products, such as liquid soaps and shampoos, has spawned dozens of lawsuits and hundreds of businesses have been named as defendants. Numerous settlements have already been approved by the Alameda Superior Court this year, leading to speculation that the total settlements in 2014 will likely exceed the total settlements in 2013.

Conkle, Kremer & Engel routinely represents businesses against Proposition 65 claims and lawsuits brought by private enforcers, as well as counsels businesses on compliance with Proposition 65 in order to avoid becoming a future target of private enforcers.

30
JUN

Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Proposition 65, Regulatory Compliance, Unfair Competition

PILP, Prop 65, Proposition 65, Proposition 65 Reform

The Conkle Firm Teaches International Entrepreneurs in BIMA Program

Posted by: Conklelaw

Conkle, Kremer & Engel attorney Mark Kremer has been honored to participate in and contribute to the revolutionary Beauty Industry Market Access (BIMA) program through the Center for International Trade Development (CITD). The BIMA program was developed and is led by beauty industry guru Patty Schmucker and international trade expert Cesar Arellanes, the Director of CITD in Long Beach. BIMA is a five week intensive international trade and business education program taught by leading health and beauty industry experts. BIMA participants focus on key program principles distinct to conducting business overseas, receive bi-monthly objectives for assessing their business, and ultimately produce an export growth plan exclusive to their business. Participants also have access to upcoming trade missions to the world’s largest emerging market beauty trade shows – effective venues for executing learned principles and business plans.

Mark contributes to the BIMA educational program by teaching modules on domestic and foreign intellectual property protection, domestic regulatory compliance, and international distribution agreements. Participants are particularly interested in cost-effective methods of protecting their intellectual property internationally, such as international trademark registrations through the Madrid System. The Madrid System offers a centralized application process for trademark registration in over 90 countries based on a brand owner’s domestic application or registration. Participants are also interested in CK&E’s practical approach to domestic regulatory compliance, including California’s evolving green chemistry initiative, Safe Cosmetics Act and Proposition 65. Participants have also benefited from CK&E’s tips for forging fruitful business relationships with distributors, based on decades of experience representing clients in the personal care products industry.

CK&E will join Patty Schmucker and several graduates of the BIMA educational program to Cosmoprof Worldwide in Bologna in April 2014. Mark looks forward to the next BIMA session, which begins on June 26, 2014. Click for further information about joining the BIMA program: BIMA_Summer-Fall_2014

22
MAR

Beauty Industry, Brand Protection, California Organic Products Act, California Trade Regulations, Copyrights, Intellectual Property, International Trade, Personal Care Products, Proposition 65, Regulatory Compliance, Safe Cosmetics Act, Safer Consumer Products Regulations, Trademarks, Unfair Competition

Beauty Industry Market Access, BIMA, Center for International Trade Development, CITD, Cosmoprof Bologna, Madrid System

DTSC Announces Proposed Priority Products Subject to California Green Chemistry Initiative

Posted by: H. Kim Sim

The California Department of Toxic Substances Control (DTSC) has identified the first three groups of products that may become “Priority Products” subject to reporting and alternatives assessments requirements under California’s strict new Safer Consumer Products (SCP) Regulations.

The three groups of products on this initial list of proposed “Priority Products” are:

Children’s foam padded sleeping products containing the flame retardant Tris(1,3-dichloro-2-propyl) phosphate (TDCPP or Tris)
Spray polyurethane foam (SPF) systems containing unreacted diisocyanates
Paint and varnish strippers and surface cleaners containing methylene chloride

Rulemaking on the proposed “Priority Products” list is expected to begin in late June 2014, with the final “Priority Products” list to be finalized by the following year by adoption of regulations.

If the product-chemical combinations announced by DTSC end up on the list of final “Priority Products,” manufacturers and other responsible entities (including importers, assemblers and even retailers) of these products will be required to notify DTSC and either 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.

As widely expected, the initial “Priority Products” list targets children’s foam padded sleeping products containing the flame retardant Tris(1,3-dichloro-2-propyl) phosphate (TDCPP or Tris), such as nap mats and pads in soft-sided portable cribs, infant travel beds, portable infant sleepers, playards, play pens, bassinets and nap cots.

In addition, the initial “Priority Products” list targets all paint and varnish removers, paint and varnish strippers and surface cleaners that contain methylene chloride. Spray polyurethane foam systems containing diisocyanates, both professional and consumer grade, are also proposed to be subject to regulation. Such products are used for insulation, roofing, sealing and filling of voids and gaps.

TDCPP, methylene chloride, and toluene diisocynate are known carcinogens and exposures to the chemical to Californians above the no significant risk level require a warning under Proposition 65. TDCPP was recently listed in October 2011 as a chemical regulated by Proposition 65.

The announcement of these three product groups as proposed “Priority Products” does not trigger any duty on product manufacturers until the DTSC finalizes the list of priority products by adopting regulations. However, manufacturers of children’s foam padded sleeping products containing TDCPP, spray polyurethane foam systems containing diisocyanates, and paint and varnish strippers and surface cleaners containing methylene chloride are well advised to be proactive and take steps to determine whether the chemical can be removed from their products or replaced with a safer alternative chemical.

Conkle, Kremer & Engel regularly assists businesses to develop plans to ensure compliance with California’s ever-changing regulations, including the Safer Consumer Products Regulations and Green Chemistry Initiative.

14
MAR

Beauty Industry, California Trade Regulations, Green Chemistry Initiative, Manufacturing, Personal Care Products, Proposition 65, Regulatory Compliance, Safer Consumer Products Regulations

diisocynate, DTSC, methylene chloride, paint stripper, Priority Products, SCP, spray polyurethane foam, TDCPP, toluene, Tris, varnish stripper

Organic products? Really?

Posted by: Conklelaw

Are your personal care products really organic? There is no federal regulation of cosmetics sold as “organic,” other than a voluntary USDA certification process, but California takes use of the term “organic” seriously.

The California Organic Products Act (COPA), requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients. The Center for Environmental Health (CEH) sued 40 cosmetics manufacturers in 2011 and 2012 in Alameda County for violating COPA. One of the defendants in CEH’s first lawsuit was Todd Christopher International, dba Vogue International, (Vogue) the manufacturer of Organix brand products. While the Organix products contained less than 10% organic ingredients, Vogue contended that the “active” ingredients in its products were organic. Vogue argued that COPA did not apply to its Organix hair care products because hair care products are not “cosmetics” and that “Organix” is not a grammatical variation of the term “organic.” The court rejected Vogue’s arguments. In September 2012, Vogue agreed to either change its packaging and stop using “Organix,” or change the ingredients of its products to comply with COPA.

CEH then brought another lawsuit against Vogue. This time, it was a class action aimed at stopping Vogue’s use of “Organix” nationwide – not just in California. CEH claimed that Vogue’s labeling is unfair and deceptive under each state’s consumer protection laws because Vogue’s Organix products are not composed of predominately organic ingredients. In October 2013, the federal court for the Northern District of California preliminarily approved a settlement of the class action in which Vogue would pay $6.5 million and stop using “Organix” for cosmetics that did not contain at least 70% organic ingredients. The final approval hearing is set for April 3, 2014. Vogue has already begun to transition its packaging and advertising to the more defensible “Ogx”.

Conkle, Kremer & Engel stays current on federal and state regulatory issues and helps its clients avoid the kind of labeling problem that befell Vogue.

10
FEB

Advertising and Labeling, Beauty Industry, California Organic Products Act, California Trade Regulations, Class Actions, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Personal Care Products, Sales, Unfair Competition

CEH, Center for Environmental Health, Organic, Organix, Todd Christopher International, Vogue International

Safe Cosmetics Act Database to Go Public in 2014: Watch for More Lawsuits

Posted by: H. Kim Sim

In a previous blog post, we referred to the Safe Cosmetics Act as a “sleeper” because it has been in existence for several years but has been little noticed and seldom used. That is likely to change in 2014.

The Safe Cosmetics Act was enacted in 2005 and became effective January 1, 2007. Businesses manufacturing cosmetics sold in California were required to make their initial report to the California Department of Public Health by December 15, 2009. Reporting must be made on a continuous basis, such as when formulation changes add a “suspect” chemical to an existing cosmetic product. The Safe Cosmetics Act is so little-known that many manufacturers may have missed the reporting requirements, or complied as to some products but failed to update their reporting as product formulations changed. So far, those omissions have rarely had any significant impact on manufacturers, but that is likely to start changing now.

The relative quietude may change in 2014 because by December 31, 2013 the CDPH must make a publicly accessible database available on its website containing all of the information collected pursuant to the Safe Cosmetics Act. The information included in the database could be used by enterprising Prop 65 bounty hunters searching for products that contain chemicals that are subject to the warning requirements of Prop 65. And the failure to report required information timely or accurately may be the basis for future unfair competition lawsuits by private parties, including consumers and competitors.

As a harbinger of the potential consequences for manufacturers, in January 2012 the California Attorney General’s Office announced the first law enforcement action taken under the Safe Cosmetics Act against a manufacturer of “Brazilian Blowout” products. But the manufacturer’s failure comply with the Safe Cosmetics Act’s reporting requirement was only one of many business acts and practices alleged to violate California’s Unfair Competition Law. The Attorney General also alleged violations of California’s False Advertising Law and Proposition 65. The end result was a consent judgment that required the manufacturer to pay $300,000 in attorneys’ fees and costs and an additional $300,000 civil penalty for violation of Prop 65. The manufacturer was also subject to numerous injunctions, including a requirement that it report in compliance with the Safe Cosmetics Act. Private claimants such as Prop 65 bounty hunters are likely to take notice of the newly available information and any failures to comply.

Conkle, Kremer & Engel stays up to date on regulatory compliance matters to provide continued expert legal guidance to clients. Conkle, Kremer & Engel has decades of experience representing clients in the personal care products and cosmetics industry, and understand the unique regulatory compliance concerns facing manufacturers, distributors and retailers.

28
DEC

Advertising and Labeling, Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Proposition 65, Safe Cosmetics Act, Unfair Competition

Beauty Industry, California Department of Public Health, CDPH, Cosmetics, personal care products

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?

Posted by: H. Kim Sim

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.

2
OCT

Beauty Industry, California Trade Regulations, Green Chemistry Initiative, Manufacturing, Regulatory Compliance, Safer Consumer Products Regulations, Sales, Technology

Alternatives Analysis, bisphenol A, chemicals, Chemicals of Concern, formaldehyde, Initial Candidate Chemicals, nail polish, personal care products, Priority Product, toluene

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