Beauty Companies Beware: Natural Ingredients May be Subject to Prop 65

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Personal care product companies are riding the wave of strong consumer interest in “natural” products.  However, going “natural” can come at a cost:  In addition to concerns about drawing consumer claims that the term is being used in a potentially deceptive manner, there are other hidden risks to manufacturers, distributors and resellers of “natural” products. Perhaps surprisingly, a number of chemicals that are commonly found as a natural constituent of plants has been or is about to be classified as “chemicals known to the State of California to cause cancer” under California’s Proposition 65.

Pulegone is among the plant extracts found on the Prop 65 list.  Pulegone is a natural constituent of various plants, including mint and other herbs, and of their essential oils.  Pulegone was added to the Prop 65 list on April 18, 2014 as a chemical known to the state of California to cause cancer, and it became subject to enforcement actions a year later, on April 18, 2015.  Prop 65 bounty hunter Mateel Environmental Justice Foundation wasted no time in sending out a 60-Day Notice of Violation to businesses whose products involve exposure to this chemical.  It only took two days for the first Notice of Violation over exposure to pulegone to be served on businesses around the country.  A Notice of Violation is often a pre-cursor to a lawsuit.  The Notice of Violation claims consumer and occupational exposures to pulegone through use in products of pennyroyal oil.

The requirements of Proposition 65 are deceptively simple – provide a clear and reasonable warning if the use of the product results in an exposure to one or more of the 800+ chemicals on the Prop 65 list of known carcinogens and reproductive toxins.  But the penalties, fees and damage to business reputation for failing to comply can be severe:  Under Proposition 65, the civil penalties for failing to provide a clear and reasonable warning prior to exposure can reach up to $2,500 per violation per day, in addition to payment of an enterprising plaintiff’s attorneys’ fees.  Wherever they are located, manufacturers, distributors and retailers can be liable for Prop 65 violations, and the sale of even one product that may cause an exposure to a Prop 65 chemical is subject to zealous pursuit by Prop 65 plaintiffs.  Businesses are well advised to consult with counsel who are familiar with Prop 65 concerns and can help them proactively get ahead of the Prop 65 curve or successfully resolve claims in the event a Notice of Violation is received.

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The Conkle Firm to Advance Legislative Awareness of Personal Care Product Issues

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On April 22, 2015, Conkle, Kremer & Engel attorney John Conkle will again participate in the Personal Care Products Council California Lobby Day, an annual event organized by the PCPC and held at the California State Capitol in Sacramento.

The ambitious, single-day event puts the spotlight on the personal care industry as a key industry for the California economy.  According to the PCPC, the beauty and personal care products industry positively affects California in at least the following ways:

  • The industry contributes $22 billion to the state’s Gross Domestic Product (GDP)
  • The industry contributes $6 billion to the state in taxes
  • The industry employs over 500,000 workers associated with the manufacture, distribution and sale of cosmetics and personal care products
  • There are over 550,000 licensed beauty professionals in the salon and spa industry

The PCPC’s annual Lobby Day includes a full day of meetings with legislators and state officials, starting with a meeting at the Governor’s Office with top administrative officials.  The meetings are followed by educational briefings for legislative staff.  While the briefings for staff are taken place, PCPC staff and members will visit legislative offices to speak with lawmakers about bills of interest.  The day concludes with a legislative reception for California legislators, the Governor’s Office staff and Administration officials.

Among the legislation that is likely to be addressed with lawmakers at Lobby Day are

  • Assembly Bill (AB) 888 (Bloom), which would prohibit the sale of personal care products containing plastic microbeads after January 1, 2020, and
  • AB 708 (Jones-Sawyer), which would prohibit the manufacture, sale or distribution of certain consumer products unless the manufacturer discloses each ingredient contained in the product by posting that information on the product label and on the manufacturer’s website, and provides the website and web page address on the product label, along with a prescribed statement.

Other bills of interest to PCPC include the Proposition 65 bill AB 543 (Quirk), which would provide that a person in the course of doing business does not knowingly and intentionally expose an individual to a chemical known to the State of California to cause cancer or reproductive toxicity if there exists an exposure assessment that meets specified requirements.  In addition, the PCPC will present its positions on hazardous waste bill AB 1075 (Alejo) and pharmaceutical waste bills AB 901 (Gordon) and AB 45 (Mullin) with legislative officials.  Other key regulatory issues of importance to the personal care industry such as Green Chemistry, Proposition 65, Hazardous Waste, California Organic Products Act and Air Quality are also expected to be addressed at Lobby Day.

CK&E regularly participates in personal care product industry events.  As an active member of the PCPC, CK&E is pleased to support the industry’s efforts to advance the legal and regulatory interests of the PCPC and its member companies and is proud to have been invited to again participate in California Lobby Day.

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Chemical Peel Ingredient Trichloroacetic Acid (TCA) Requires a Proposition 65 Warning

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Trichloroacetic acid (TCA), a chemical that is commonly used in cosmetic treatments such as chemical peels and for the removal of tattoos and treatment of skin tags, warts and moles, is now subject to Proposition 65’s warning requirement.  This means that any exposure to the chemical in California requires a warning that the chemical is “known to the State of California to cause cancer.”  The penalties for failing to provide the warning as required by Proposition 65 can be substantial:  The law authorizes civil penalties of up to $2,500 per day per violation.  In addition, attorney fees are authorized by California’s private attorney general statute – creating incentive for private Proposition 65 “bounty hunters” and their lawyers to target businesses who fail to comply.

Under Proposition 65, no legal action is authorized by the Attorney General, district attorneys or private enforcers until 12 months after the listing of that chemical.  TCA (CAS No. 76-03-9) was added to the list of chemicals known to the state of California to cause cancer on September 13, 2013.  As a result, Proposition 65 private enforcers were allowed to start sending out Notices of Violation over alleged exposure to TCA without a warning beginning on September 14, 2014.  The law permits such private enforcers to file a lawsuit 60 days after the Notice of Violation is served.

In addition to TCA, the following chemicals became subject to Prop 65 enforcement action on September 14, 2014:  chloral (CAS No. 75-87-6), chloral hydrate (CAS No. 302-17-0) and 1,1,1,2-tetrachloroethane (CAS No. 630-20-6).

Conkle, Kremer & Engel has significant experience in helping businesses understand and comply with the requirements of Proposition 65 and other regulations to avoid exposure to liability.  In addition to working with businesses to develop an effective compliance strategy, CK&E handles all aspects of Proposition 65 defense, including responding efficiently if a Notice of Violation is received.

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The Conkle Firm Attends the International Congress of Esthetics and Spa

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On Sept. 7 Conkle, Kremer & Engel lawyer Eric Engel visited the annual ICES skin care and spa trade show in Long Beach, California. The event, held each year at the Long Beach Convention Center, is one of the country’s premier shows for the professional beauty, skincare and spa and wellness industries.  It features more than 200 exhibitors, including manufacturers, distributors, spas and wellness centers, and thousands of professionals from the national and international spa and wellness market.  ICES offers a unique opportunity for CK&E to meet and interact with clients and other professionals in the beauty industry, and stay on the inside track about the industry’s latest developments and trends.

Speaking of industry trends, if you still think Proposition 65 is not a big issue for the beauty industry, take a look at this ICES booth display for Mineralogie:

Long Beach International Congress of Esthetics and Spa

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California Attorney General Kamala Harris Promises to Scrutinize Prop 65 Settlements

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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.

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

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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.

 

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The Conkle Firm Presents Hot California Regulatory Compliance Issues in New York

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Conkle, Kremer & Engel attorney John A. Conkle was the featured speaker at a special presentation given on February 11, 2014 in New York, New York to business executives and lawyers.

The presentation, entitled “Are Your Products California-Bound?  Dealing With California’s Unique Regulatory Schemes,” provided valuable information about and insight into such California regulatory laws and initiatives as:

  • Proposition 65 (California’s Safe Drinking Water and Toxic Enforcement Act of 1986)
  • California Safe Cosmetics Act
  • California Green Chemistry Initiative (the Safer Consumer Products Regulations)
  • California Volatile Organic Compounds (VOC) Regulations
  • California Organic Products Act (COPA)
  • California Consumer Legal Remedies Act (CLRA)

California’s vast and ever-changing regulations pose a challenge for businesses no matter where they may be located.  Any business manufacturing, distributing or selling products into California needs to comply with California’s regulatory schemes to stay out of difficulty with the California Attorney General, regulatory agencies, non-governmental organizations (NGOs), bounty hunters, putative class action plaintiffs and even competitors.

CK&E was honored to team with the New York-based law firm Gottlieb, Rackman & Reisman, P.C., which specializes in intellectual property, to provide this presentation. CK&E has worked with the Gottlieb firm for nearly 25 years on matters of common interest to our clients. CK&E’s active regulatory compliance practice has helped clients in numerous industries – including  such diverse areas as personal care products, alcoholic beverages, construction and recreational equipment.

 

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Happy Anniversary: 1,3-Dinitropyrene Becomes Subject to Prop 65 Enforcement on November 2, 2013

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Starting November 2, 2013, Proposition 65 enforcement actions may be taken against businesses for exposure to the chemical 1,3-dinitropyrene without a clear and reasonable warning.  1,3-dinitropyrene was added to the Prop 65 list of chemicals on November 2, 2012 as a chemical known to the state of California to cause cancer.  Under Prop 65, enforcement actions may not be taken for one year after the listing, so as the anniversary arrives on November 2, 2013 this chemical will become subject to enforcement actions.  1,3-dinitropyrene is an environmental contaminant that has been measured in engine exhaust and emissions from kerosene heaters and gas burners.

Also starting November 2, 2013, alpha-methyl styrene is actionable as a chemical known to the state of California to cause cancer, based on its November 2, 2012 listing.  Alpha-methyl styrene is used in the manufacture of plasticizers, resins and polymers.  However, for all practical purposes, the addition should not affect businesses’ obligations to warn about exposure to alpha-methyl styrene, as it was already listed in 2011 as a chemical known to cause reproductive toxicity.

The Office of Environmental Health Hazard Assessment (OEHHA) has not established any specific safe harbor levels for either 1,3-dinitropyrene or alpha-methyl styrene.

Conkle, Kremer & Engel routinely counsels clients on regulatory compliance, including compliance with Proposition 65.  We monitor the latest developments to Prop 65 in order to provide expert guidance to companies doing business in California.

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California Safe Cosmetics Act of 2005: A Sleeper That May Awake in 2014

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California has a well deserved reputation for extraordinary efforts to protect consumers.  While the goals behind the regulations may be laudable, California’s many requirements impose enormous burdens on companies doing business in the state, often with questionable public benefit.  Proposition 65 is a familiar example of a regulation that requires elaborate warnings, but does not actually regulate the use of any chemicals.

There are many other examples, including a “sleeper” called the Safe Cosmetics Act.  Enacted in 2005, the Safe Cosmetics Act was heralded by its supporters as a landmark law that would protect the health of millions of Californians who use cosmetics.  In reality, the Safe Cosmetics Act is just another glorified reporting statute, requiring manufacturers of cosmetic products sold in California to file with the California Department of Public Health (CDPH) reports of information that is already on product ingredient labels.

But the Safe Cosmetics Act takes the idea of the consumers’ “right to know” to an extreme by imposing a precautionary rather than risk-based approach.  Unlike Prop 65, the Safe Cosmetics Act requires manufacturers to report use of chemicals that are not just “known” to cause cancer or reproductive harm, but also chemicals that are “suspected” to cause cancer or reproductive harm.  In addition, the Safe Cosmetics Act does not recognize any “safe harbor” levels for reporting – any amount of a “suspect” chemical must be reported.  Finally, cosmetic products that contain a reportable chemical must be reported regardless of whether the likely mode of exposure to the chemical by use of the product differs from the route of exposure identified by the authoritative scientific body as a pathway likely to cause cancer or reproductive harm.  For example, a chemical that has only been identified as “suspected” of causing cancer or reproductive harm when ingested must be reported even if it is contained in a skincare product.

In future blog posts, we’ll address why the Safe Cosmetics Act could become much more significant to personal care products manufacturers beginning in 2014, the risks of liability to manufacturers posed by the Safe Cosmetics Act, and how manufacturers can know if their products contain the regulated  chemicals.  At Conkle, Kremer & Engel, we help our clients meet compliance requirements, despite constantly changing state and federal laws.  With proper counseling, clients can avoid potential liability and minimize disruption to their businesses.

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Navigating Civil Regulatory Issues: CK&E Presentation Highlights Key Regulations for Beauty Companies Doing Business in California

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Conkle, Kremer & Engel attorneys were featured speakers at the Beauty Industry West presentation “Navigating in Challenging Regulatory Waters:  Updates on California and Federal Compliance.”  About 150 entrepreneurs, consultants, executives and beauty industry professionals attended the event at the Crowne Plaza Hotel LAX in Los Angeles on October 15, 2013, which included a valuable networking session and a post-presentation Q&A.

CK&E’s presentation about legal regulatory issues for personal care product companies doing business in California included an overview of the California Organic Products Act (COPA), Proposition 65 (California’s Safe Drinking Water and Toxic Enforcement Act) and California’s Green Chemistry Initiative including the new Safer Consumer Products Regulations.  Conkle, Kremer & Engel’s materials from the BIW event, including the “Navigating Civil Regulatory Issues” presentation and its “Resource Guide for Regulatory Compliance,” are available for download on CK&E’s Regulatory Compliance web page.

Co-presenter Donald Frey, an industry veteran, regulatory expert and product development and innovation consultant, presented on key regulatory issues from the business perspective, including how to effectively deal with regulators. Mr. Frey has generously agreed to share his presentation, available for download here.

Among the questions and answers covered after the presentation were the addition of titanium dioxide (airborne, unbound particles of respirable size) to the Proposition 65 list of chemicals, responsible entities for purposes of compliance with the Safer Consumer Products Regulations, and the determination of organic ingredients under the National Organic Program standards.

Conkle, Kremer & Engel attorneys are frequent speakers at events of interest to the beauty industry due to their expertise in representing manufacturers, distributors, suppliers, retailers and salons in all aspects of their business, including the challenges of regulatory compliance.

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