The panel’s presentation is available here for review. Contact John Conkle to discuss the latest issues affecting the state of the personal care products and cosmetics industries.
The panel’s presentation is available here for review. Contact John Conkle to discuss the latest issues affecting the state of the personal care products and cosmetics industries.
While the main theme of the Conference was solidarity and cooperation between independent craft brewers and their networks, prominent legal and business issues discussed among attendees often focused on the increasingly crowded space of the craft beer market. This increasing competition has resulted in intellectual property conflicts and disputes (for example, regarding trademarks for brewery names or branding for particular beers) that craft brewers need to plan around when starting their business and expanding their portfolios. CK&E has attorneys like Mr. Page and Mr. Pitchford who are experienced in assisting clients in selecting, registering, and enforcing trademarks and trade dress in many consumer product industries.
Another hot business topic concerned distribution models for small breweries. In several states (including California), self-distribution is available for small breweries (California allows for self-distribution regardless of volume), but as our previous blog noted, oftentimes a small brewery reaches a point where it cannot handle its own distribution and must seek out a distributor. And, of course, in many other states, self-distribution is not permitted at all, necessitating the involvement of a distributor when a brewery wishes to sell draught beer or package their products. Many small breweries are concerned not only with the myriad choices of distributors, but also with finding a distributor that is the right fit and will actively promote their portfolio, and with the often restrictive laws that are involved in manufacturer-distribution relationships. Breweries should certainly be choosy about their distributors when possible, and in many jurisdictions there are an array of potential contractual provisions (for example, regarding sales goals, chain vs. independent accounts or other account stratification, marketing, plans for brand growth, audits, etc.) that can help shape a distributor relationship before it starts. It pays to consider and discuss as many contractual parameters as possible before signing a distribution agreement.
Additional hot topics at the Craft Brewers Conference included new Tax and Trade Bureau funding for enforcement, government regulations of taprooms and brewpubs, off-premise sales, and licenses for short-term out-of-state sales (e.g. for festivals or competitions). As the craft brewing industry continues to grow in footprint and sophistication, look for business and legal issues to be pushed even further to the forefront of the discussion.
Contact Conkle, Kremer & Engel for assistance with your brewery business or distribution needs.
States have come to recognize that, with the U.S. Congress largely gridlocked and federal regulatory agencies in a deregulation mood, the path is open for the states to regulate consumer industries in manners that they deem fit. The result is a continuously evolving patchwork of laws and regulations that can be difficult for industry participants to navigate.
Issues to be discussed at the May 9, 2018 panel presentation include California’s infamous Proposition 65, slack fill laws, and labeling and ingredient disclosure regulations that include even public databases disclosing products’ ingredients found by state governments to be detrimental. Further, state regulations can include ingredient phase-out requirements and outright bans, volatile organic compound limitations to protect air quality, and even animal testing regulations that can affect industry participants’ ability to compete in international trade.
A lively discussion is inevitable given the rich and topical subject matter and the vital industry interests affected. The rest of the Legal and Regulatory Conference program should be just as engaging, covering topics such as employment law, cannabis (THC, CBD, marijuana extracts and hemp) in cosmetics and personal care products. The many other topics to be covered in the three-day conference in Savannah, Georgia can be found in the conference program.
Mr. Pitchford and Mr. Page will attend to take meetings and keep abreast of the latest industry trends, including legal developments, craft brewing distribution and business issues, and evolving beer styles. Conkle, Kremer & Engel brings its expertise to bear on a number of beer industry-specific issues, such as brand protection and intellectual property, distribution and vendor relations, regulatory issues, advertising and labeling, employment law, and litigation and alternative dispute resolution in state and federal courts.
If you’re an industry professional or craft beer-related business who will be at the Craft Brewers Conference and would like to connect with Mr. Pitchford and Mr. Page before, during, or after the event, please contact them at firstname.lastname@example.org and email@example.com. They would be happy to arrange initial discussions about particular issues you may be facing.
The PCPC held a luncheon at which it presented its first Legislator of the Year Awards to congresspersons who have been the most effective in advancing the important interests of both business and consumers in relation to personal care products. Legislative staff also received an educational presentation from PCPC’s new Chief Scientist, Alex Kowcz, to help bring to Legislators the most current scientific information about issues affecting personal care products. After a long day of meetings, participants unwound and connected at an informal reception for legislators, the governor’s office and administration officials at Ella, a popular restaurant near the State Capitol.
Some of the highlights of the 2018 PCPC California Lobby Day included a presentation by Meredith Williams, Deputy Director of Department of Toxic Substances Control (DTSC), and Rick Brausch, Chief of DTSC’s Policy and Program Support Division, Hazardous Waste Management. The mission of the DTSC is the Safer Consumer Products (SCP) program, directed toward advancing the design, development and use of products that are chemically safer for people and the environment. The aim is to reduce toxic chemicals in consumer products and create new business opportunities in green chemistry.
Dr. Williams advised the PCPC group that DTSC’s SCP program intends to focus over the next three years on nail salon products, particularly to assure a safe working environment for salon employees as well as customers, such as by assuring adequate ventilation and safety equipment. Dr. Williams also noted that Volatile Organic Compounds (VOCs) are not only within the ambit of California’s Air Resources Board (ARB) as to their effect on the environment, but they are also within the scope of DTSC’s authority when regulation of VOCs can meaningfully enhance protection of human health.
On February 8, 2018, DTSC released a draft 2018-2020 Priority Product Work Plan for public review, in which “Beauty, Personal Care and Hygiene Products” are identified as targets for possible regulation. Of some concern to PCPC, the Priority Product Work Plan includes DTSC’s interest in broad classifications of chemicals without defining exactly which chemicals in what formulations are of concern. For example, DTSC’s Priority Product Work Plan identifies oxybenzone, BPA, DEA, formaldehyde, phthalates, parabens, triclosan, titanium dioxide, tolulene and VOCs as classes chemicals being considered for possible regulation, but there are a great many specific chemicals, formulations and uses within such classes, and not all of them are likely to be of concern to DTSC. PCPC expressed its concern that broad classifications can cause confusion among manufacturers and consumers, and unnecessarily inhibit product development and sales. For example, oxybenzone (aka Benophenone-3) is one of just 16 chemicals approved by the US Food and Drug Administration (FDA) as safe and effective for use as an ultraviolet (UV) filter to achieve broad-spectrum sun protection. The health benefits of effective UV sunscreens are well documented, but the broad suggestion of “endocrine toxicity” or “dermatoxicity” in DTSC’s identification of oxybenzone is on shaky scientific footing. Dr. Williams noted that the 2018-2020 Priority Product Work Plan is only in draft form, and that DTSC recognizes the broad nature of the chemical groups identified and is working on identifying specific chemicals of concern rather than entire classes of chemicals.
DTSC’s Richard Brausch spoke of the hazardous waste logistics issues facing the personal care product industry, affecting the entire supply chain from manufacturers to retailers. The issue often occurs when products are returned from retailers, and questions arise as to whether they may be regarded as hazardous waste if they are no longer considered fit for regular sale, such as when new product labeling is introduced. Issues can arise as to who has responsibility for proper transportation and disposal of the products, whether by sale in secondary markets, repair or refurbishment, donation to charities or recycling. It is notable here that improper transportation and disposal has led some local authorities to sue retailers and wholesalers for failing to use hazardous waste transporters. That in turn has caused retailers to impose anticipatory disposal charges on manufacturers and wholesalers for a wide range of products. PCPC therefore supports Assembly Member Bill Quirk’s introduction of new legislation, AB 2660, which places the onus on the disposal company to determine the correct method of transportation, as that is not within the expertise expected of retailers.
The overriding hazardous waste concern is that California uses an “aquatic toxicity” (aka “fish kill”) test that is grossly out of alignment with federal law, and which results in most cosmetic products being characterized as hazardous under California law. The “fish kill” test is exactly like it sounds – it tests only whether quantities of the subject product added to a water tank will kill fathead minnows. The test is not regarded as especially accurate, notably because high viscosity products that are otherwise harmless can kill the fish by clogging their gills. Further, the test presents a significant problem for the personal care products industry, which has taken a strong stand against animal testing, so manufacturers generally do not conduct this “fish kill” test on finished products. PCPC therefore advocates a more modern approach to accomplish the same goal, by use of a more recently developed fish embryo test (FET), in which live fish are not killed.
An interesting side note is that SB 1249 was introduced by Senator Cathleen Galgiani to prohibit importation or retail sale of any cosmetic that was developed or manufactured using animal testing after January 1, 2020. While PCPC takes a strong stand against animal testing, it could not support the bill as written because it included no exception for products marketed in countries (notably China) which require that products be subject to animal testing. Rather, the PCPC has been working to obtain an amendment of the proposed legislation to make it conform to that of the European Union, which has strong anti-animal testing regulations but allows for accommodations to make products acceptable for sale in China.
Dr. Michael Benjamin, Air Resources Board Chief of Air Quality Planning and Science spoke about the substantial product data that ARB had collected from product manufacturers selling in California, through extensive annual surveys conducted over the past three years. From that data, ARB is working to identify trends in emissions of VOCs. Of particular interest is a February 15, 2018 publication in the academic journal Science of a study of VOC emissions from consumer products. The Science publication (Volatile Chemical Products Emerging as Largest Petrochemical Source of Urban Organic Emissions, by Brian C. McDonald, Joost A. de Gouw, Jessica B. Gilman and others), Science Vol. 35, Issue 6377, pp. 760-764 (Feb. 16, 2018)) caught popular attention and some popular press because it found that vehicle emissions had become so much cleaner over the past decades that they were now responsible for less than half of VOC emissions. Overall, the total volume of VOCs had diminished greatly. Further, while the Science article authors made many assumptions on which they based their assessment of VOC contributions of consumer products, Mr. Benjamin pointed out that ARB has the actual data from its industry surveys to determine whether the author’s assumptions and conclusions are well founded. ARB therefore intends to do its own assessment of the points made in the Science article to determine what further action is appropriate.
PCPC’s first Legislator of the Year Awards were presented to Senator Ed Hernandez, Assembly Member Bill Quirk and Senator Galgiani. In his comments to PCPC members, Senator Hernandez emphasized, “We want business to stay here in California, we want businesses to be successful. There’s a lot of people here that purchase your products.” Assemblyman Quirk addressed the need for common sense limitations on legislation such as Proposition 65, remarking that “[Someone] sent me a package of Coors beer with a Prop 65 warning on it. We now have cases in court where people want Prop 65 warnings on coffee. * * * One study after another shows it’s not a health risk. * * * We’ve got to do something about this. I’m definitely going to be working as time goes on in the legislature so that we don’t end up with things that are harmless being labeled.” Finally, Senator Galgiani observed that good legislative policy is not a zero sum game: “It’s not about having a proposal that’s just good for the environment or just good for business but we can meet in the middle and have regulations and policies that work for both sides and help everybody involved. It’s just harder to get there – it takes more work, it takes more time and it takes patience, and all of you [at PCPC] have done a great job.”
See the Beauty Industry Report article on the PCPC California Lobby Day here.
However, a chief new feature of the ABC Act that will have state-wide impact is the Responsible Beverage Service (RBS) Training Program Act of 2017 (California Business and Professions Code § 25680 et seq.). The RBS Act provides that the California ABC will develop a best-practices training program by 2020 that all on-premises servers of alcohol (and their managers) throughout the state will need to complete in order to be certified to serve alcohol. Servers employed prior to July 1, 2021 must complete the program by August 31, 2021, and all servers hired after July 1, 2021 must complete the program within 60 days of being hired. ABC advisories indicate that food servers, bartenders, cashiers, doormen, and bouncers all may be considered “servers” for purposes of the RBS Act.
The RBS law appears to encompass a wide manner of licensees that operate on premises – bars, restaurants, brewpubs, tasting rooms, clubs. For non-profit special events/temporary licenses, the licensee is required to designate one certified server who must remain on site for the entire event. Covered licensees are required to maintain records of their various certifications, and violators are subject to unspecified “disciplinary action.”
The 2018 ABC Act also permits for the first time beer manufacturers to provide free or discounted ground transportation rides for consumers (i.e. from the brewery taproom to local hotels, etc.) for purposes of public safety. (California Business and Professions Code § 25600.) This harmonizes the treatment of beer manufacturers with winegrowers and distillers. The manufacturer cannot, however, make the transportation contingent on the purchase of an alcoholic beverage, and beer wholesalers cannot have any interest in the transportation arrangement.
In instances where small beer manufacturers (License Type 23) and winegrowers have adjacent production facilities, the 2018 revisions also permit a common-licensed area in which consumers can drink both wine and beer. (California Business and Professions Code § 25607.) This is a new exception to the general prohibition of anyone possessing alcoholic beverages on a manufacturer’s premises other than the types that manufacturer is licensed to produce.
Staying up to date on laws and regulations affecting the industry is vital to successfully protecting and growing alcoholic beverage businesses. For assistance navigating beer-industry specific legal issues, contact Conkle, Kremer & Engel.
Proposition 65 provides for private enforcement actions, which enable individuals or groups to enforce the statutes against consumer products companies, property owners and others. Prop 65 is a “right to know” law intended to help consumers make informed decisions about their purchases. The combination of a growing list of substances, difficulty in determining exposure levels with scientific certainty, sparse judicial and government oversight, and a right to attorneys’ fee awards under the statute, have transformed Prop 65 into a lucrative business model for a handful of law firms and closely-related consumer groups. Hundreds of Prop 65 actions are settled each year, with about 70% of the settlement money paid being allocated to attorneys’ fees for the plaintiffs’ lawyers.
California’s published statistics from 2013-2017 show an accelerating trend of more Notices of Violations filed each year. In 2016 alone, for example, 1,576 Notices of Violation were sent to businesses selling products in California, while 2,710 Notices of Violation were sent in 2017. The attorneys’ fee provisions of Prop 65 undoubtedly have much to do with that trend. In 2016, 760 judgments or settlements were reached totaling $30,150,111, of which $20,062,247 was paid as attorneys’ fees to plaintiffs’ lawyers. In 2017, 688 judgments or settlements were reached totaling $25,767,500, of which $19,486,362 was paid as attorneys’ fees to plaintiffs’ lawyers.
With that kind of monetary motivation, it is easy to see why some law firms make a practice of filing and serving Prop 65 Notices of Violations. This effectively creates a small industry of lawyers who pursue Prop 65 claims, often for a small group of repeat-plaintiffs who appear again and again with the same lawyers. Public records identify at least the following law firms, attorneys and their associated plaintiff clients, who pursue multiple Prop 65 claims:
If you are unfortunate enough to receive a Prop 65 Notice of Violation from one of these lawyers or plaintiffs, or from any others, don’t ignore it. The problem will probably not go away by ignoring it, and prompt action can help keep the matter from getting far worse. Handling it yourself is also usually not a great plan. Remember that the plaintiffs who sent the Notice of Violation are almost always represented by counsel experienced in Prop 65 matters. You should contact experienced counsel to help you respond promptly and handle the matter with minimum disruption to your business.
Conkle, Kremer & Engel attorneys have many years of experience advising clients about how to avoid regulatory compliance issues, and we regularly defend clients against Notices of Violations of Proposition 65 and other California regulations. CK&E uses its extensive experience to help clients who are accused of regulatory violations quickly and effectively resolve claims, so clients can focus on growing their business.
Exhibitors showed strong cross-cultural influences, with many products and flavors from around the world, all emphasizing the trend toward fewer and more recognizable ingredients in simple formulations. Businesses clearly demonstrated they are responding and catering to the adventurous interests and palates of health-conscious, worldly, and informed consumers. Countless product lines were customized for consumers committed to paleo, vegan, and gluten-free diets. Another popular trend is toward products and businesses that are dedicated to championing charitable causes, so consumers can use their purchases to support causes they are passionate about and can feel loyal to brands that are as committed as they are.
Mirroring recent cultural trends, women-owned and managed businesses were very notable throughout the Expo. Many entrepreneurs proudly advertised their Women’s Business Enterprise National Council (WBENC) certifications. The WBENC certification “validates that the business is 51 percent owned, controlled, operated, and managed by a woman or women.”
In the beauty arena, there were a refreshing number of brands actively encouraging women to maintain an open dialogue with the product manufacturer to address issues they regularly face. The trend of businesses expending great effort to establish dialogue and long-term relationships with their consumers through social media and direct contacts has become clear. These overlapping trends resulted in prominent presentation of many products “made for women, by women,” ranging from beautifully packaged feminine hygiene products to natural pre-natal and post-natal products promoted as safe for use by pregnant women and around infants.
CK&E attorneys provide full service to businesses in the beauty, food, and beverage industries. They regularly attend important trade shows to help their clients stay abreast of trends, new regulations, and developments in the law and the marketplace affecting these industries.
While the Institute for European Environmental Policy (IEEP) and organizations such as Beat the Microbead and Plastic Soup Foundation have pushed for an EU-wide ban on the sale of plastic microbeads, it does not appear that such a ban is being developed at the moment. However, European countries are trending toward microbead bans: Sweden’s ban on the sale of rinse-off cosmetics with microbeads takes effect on July 1, 2018 (although sellers who obtain such products before that date may continue to sell them until January 1, 2019); Ireland plans to introduce a microbead ban by the end of 2018; and several other countries in the European Union are reportedly in the process of developing their own microbead bans.
For decades, plastic microbeads have been used in facial cleansers, soaps and toothpastes for their exfoliating properties. However, in response to growing concerns about the environmental impact of plastic microbeads in recent years, many companies have reformulated their products to use other non-plastic exfoliants, such as walnut shells, salt, seeds and jojoba beads, among others.
Plastic microbeads make their way from our sinks and showers, to the sewage systems, and into the marine environment. One scientific study found that in the United States alone as many as eight trillion microbeads end up in our lakes, rivers and oceans every day. The microbeads absorb toxins and are ingested by marine animals who transport them to other creatures up the food-chain.
The “tough” UK ban follows in the footsteps of the Microbead-Free Waters Act of 2015 in the United States banning both non-biodegradable and biodegradable plastic microbeads, which was signed into law by President Obama on December 28, 2015. Prior to the federal ban, however, eight of the nine states to pass legislation banning plastic microbeads in personal care products exempted biodegradable plastic beads from the ban. California was the only state with a plastic microbead ban that included both biodegradable and non-biodegradable plastics within its scope, as studies showed that even the biodegradable microbeads disintegrate quite slowly and create a negative environmental impact. For more history about the introduction of state-level microbead legislation, see CK&E’s earlier post regarding New York’s Microbead-Free Waters Act and the proposed laws in other states.
While the scopes of the UK and US bans are substantially similar, a violation of the UK ban could come with a much steeper monetary penalty. While the fine for violating the US ban generally does not exceed $1,000 (assuming that there was no intent to defraud or mislead), a violation of the UK ban could cost the violator up to 10% of its annual revenue in England.
If you are a manufacturer, it is important that you stay up to date with the industry regulations in every territory where you manufacture or distribute your products. CK&E has decades of experience helping clients adapt their businesses and products to comply with changing regulations all over the world, in a cost-effective and efficient manner.
The Cleaning Product Right to Know Act requires manufacturers of certain cleaning products sold in California to disclose on the product label and on the product’s Internet web site certain information related to known hazardous chemicals contained in the product. Manufacturers will have until January 1, 2020 to comply with the online disclosure requirements, and until January 1, 2021 to comply with the product label disclosure requirements. However, any intentionally added ingredient that is regulated by California’s Safe Drinking Water and Toxic Enforcement Act (commonly known as Proposition 65) will not have to be listed until January 1, 2023.
The new law applies to so-called “designated products”, which are defined as a finished product that is an air care product, automotive product, general cleaning product, or a polish or floor maintenance product used primarily for janitorial, domestic or institutional cleaning purposes. It does not apply to foods, drugs and cosmetics, trial samples, or industrial products specifically manufactured for certain industrial manufacturing processes.
The product label will be required to disclose each intentionally added ingredient contained in the product that is included on any of 22 specified designated chemical lists – including chemicals listed pursuant to Proposition 65. Alternatively, manufacturers may list all intentionally added ingredients contained in the product unless it is confidential business information. The Act also requires the disclosure of fragrance allergens greater than 0.01 percent (100 ppm). Additional requirements include the manufacturer’s toll-free telephone number and Internet web site address on the product label.
As for the online disclosure requirements, manufacturers must list all intentionally added ingredients and state their functional purpose. All nonfunctional constituents present at above 0.01 percent (100 ppm) must also be listed. The website must include electronic links for designated lists and a link to the hazard communication safety data sheet for the product. In addition, specific requirements apply for the disclosure of fragrance allergens online.
The Act also adds a section to the California Labor Code imposing an obligation on employers who are required to provide employees with Safety Data Sheets (SDS). Those employers must similarly make the printable information from the online disclosure available in the workplace.
Although it is a state law, the effect of the Cleaning Product Right to Know Act is certain to be felt by manufacturers across the country who sell their products into California, as is true of many of California’s other regulatory schemes, including Proposition 65, and will most likely result in a nationwide relabeling of covered products.
Given the Act’s numerous and in some cases highly technical requirements, manufacturers of cleaning products would be well advised to determine whether any of their products are subject to the Act, and take steps now to ensure compliance by 2020. Conkle, Kremer & Engel attorneys stand ready to help manufacturers handle all that is coming their way.