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The be-all, catch-all

A 16-year-old law has become a haven for bounty hunters out to get the cash rather than save lives

BY DANIEL BLACKBURN

Here’s a quiz: Which San Luis Obispo county business enterprises are not being sued for causing cancer?

It’s a tough question to answer, partly because of the sheer number of lawsuits, and partly because owners of local businesses avoid discussing their plight like the plague. The question is like when people once skirted talking about cancer itself.

But take a look around. It’s virtually certain that the next business establishment you patronize will either be enduring a lawsuit, or carrying products made by manufacturers who are being sued–under the umbrella of California’s unique, all-ensnaring, "cancer-preventing" Safe Drinking Water and Toxic Enforcement Act of 1986, popularly known as Prop. 65.

It is an innocuous, accommodating statute, this darling of the Golden State’s environmental movement. Its key provision reads like this:

"No person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual."

Those words may seem clear, but they have proved to be anything but. The law’s inherent vagueness has contributed to a host of businesses falling prey to its muddy requirements, as sharp lawyers zero in on the unwary and pluck their pockets with admirable aplomb.

San Luis Obispo County businesses certainly have not escaped unwanted attention. A current, abbreviated list of local and easily recognizable Prop. 65 defendants reads like a who’s who of business and industry:

San Luis Golf and Country Club; Food4Less; Ralphs Grocers Inc; United Rentals; Discovery Channel; Ace Hardware; Best Western Hotels Inc. and virtually every individually owned hotel in the chain; Embassy Suites Inc.; Days Inn; EconoLodge; Quality Inn and Suites; PetSmart; 99 Cents Only Stores; Vons Companies Inc.; 7-Eleven Inc.; Rite-Aid Corp.; Target; Wal-Mart; Sears, Roebuck Inc.; Cost Plus; Aaron Bros. Inc.; Coleman Inc.; Panasonic; May Co.; Alltrade Power Tools; Ingersoll-Rand; Mac Frugals; Lowe’s; Snap-On Tools; Nordstrom’s; Herbalife Inc.; Pep Boys; Subaru; Saturn; Ford Motor Company; Chrysler Plymouth; Pier One Imports; Office Depot; Staples; Radio Shack; Laidlaw Transportation; Motel 6; Super 8; Travelodge; Federated Stores Inc; Orchard Supply Hardware; Rubbermaid; Home Depot; Home Base Inc.; Bristol Meyers Squibb; Albertson’s; Walt Disney Productions; IKEA; Bumblebee Seafoods; HJ Heinz Inc.

Add to that list nearly every dentist, medical supplier, new and used car dealer, paint store, and mom-and-pop bait shop in the county.

Products targeted are as varied as the businesses that make or stock them: lead foil on wine bottle caps; fishing sinkers; cement; electrical tape; light bulbs; brass darts; tooth fillings; herbal products; room deodorizers; tobacco products; power tools; nail polish; lead crystal; fuels; nicotine gum; adhesives; anti-diarrhea products; stained glass; picture frames; ethyl alcohol; brass irrigation products; tick collars; firelogs and firewood; Christmas lights and decorations; exercise weights; fish aquariums and terrariums; brass hammers and screwdriver sets; anabolic steroids; grinding wheels; treated wood products; vinyl repair kits; cosmetics; pool cue chalk; Slim Fast dietary foods; mineral oil; canned tuna.

Only government entities and public water suppliers are exempt from the entangling tentacles of this wide-ranging law.

A MONEY HARVEST

The gaggle of lawsuits against private concerns represents a mere fraction of the number of actions filed statewide just within the last 12 months, according to data provided by the state attorney general’s office. Literally thousands of similar cases are awaiting court action, or settlement.

Most of the actions have been initiated by a handful of aggressive, entrepreneurial individuals who have richly earned the designation of "bounty hunters." Their lawyers hail from as far away as the East Coast.

Bounty hunters file notices which inform business owners that they intend to sue within 60 days for non-compliance with the mandate. But with $2,500 per violation fines accruing daily, most businesses end up with potential liabilities, and plaintiffs usually gain easy, and fast, settlements. Only a third of all notices filed culminate in a lawsuit.

Bounty hunters receive 25 percent of settlement amounts and fines from actions they initiate. The state of California gets the rest.

Since 1988, more than 17,000 60-day notices have been served and more than 1,000 lawsuits have been brought against the makers of more than 260 different consumer products.

A relative handful of people are making most of the claims. In a press release distributed 14 months ago, Oakland attorney Hudson Bair touted his client, Michael DiPirro, as collecting more in civil penalties under Prop. 65 than any other public or private bounty hunter during fiscal year 1999-2000. DiPirro collected more than $200,000, according to state figures, over and above legal costs and shares.

Many millions of dollars in settlements, and millions more in unreported "ransoms," have been paid.

Morse Mehrban, an Encino lawyer who has crafted Prop. 65 litigation into a symphony, has filed frequently. In just the past three months Mehrban has initiated 65 lawsuits.

"I am a bounty hunter, but that’s exactly what the law allows," Mehrban puffed to Forbes Magazine recently. Merhban fishes for plaintiffs through his Internet site, telling them to bring him an example of businesses exposing "at least one person" to listed carcinogens. That’s about all it takes to get an action started.

Business representatives claim that lawyers like Mehrban and others have "hijacked" Prop. 65 and have created virtual cottage industries on the backs of beleaguered business owners.

Last year, California’s legislature passed several measures designed to soften the impact of Prop. 65 on businesses, and to diminish the ability of bounty hunters to implicate defendants without clear evidence of malfeasance. Plaintiffs are now required to attest that their claims are factually accurate and "reasonable."

In December alone, more than 3,000 of these 60-day notices were filed with the state attorney general’s office, plaintiffs hustling to bring their cases before the new filing requirements took effect Jan. 1.

That flurry of suspicious activity prompted Attorney General Bill Lockyer to send a notice to lawyers filing the bulk of those notices, ordering them to explain their actions:

"Unfortunately, some groups have not always performed sufficient investigation before providing these notices," Lockyer wrote. "You have provided a large volume of notices very shortly before the effective date of the new certificate of merit requirements. We hope that this was not done in an effort to avoid conducting the type of investigation that would be necessary to provide an adequate certificate of merit, but the timing and volume of your notices could support that inference."

Deputy Attorney General Ed Weil, who oversees citizen enforcement claims, said the flood of legal actions is eroding the intent of the law.

"A lot of people who traditionally supported the law are starting to really wonder about some of these cases," he said. "Too many of the private cases aren’t being handled in a way that promotes the goals of the law."

Consumer awareness suffers, too, he added. "I think everybody realizes that, if there’s a warning on everything, then when you really need to warn people about something, they won’t pay attention."

Even the co-author of the voter initiative that birthed Prop. 65 agrees that the law is ready for reform. David Roe, a lawyer for Environmental Defense, concedes that "there have been cases brought on very thin factual ground."

A RELUCTANCE TO TALK

Prop. 65 is a little like the cancer it professes to address–it’s pretty hard to get a handle on it, and once you think you’ve got it cornered, it takes off in a brand-new direction.

But while the law’s intent may be clear and even appealing–identifying man-made carcinogens and labeling products which contain them–its results have proven enormously confusing and expensive for California businesses. And financially rewarding for the so-called bounty hunters.

Yet despite the apparent abuse of the law (the attorney general has formed a task force to deal with industry complaints), most business people contacted by New Times for this article vigorously declined comment on Prop. 65 lawsuits or notices filed against them.

"Why would anyone want to talk about it?" asked Paul Wallace, general manager of the Paso Robles Inn. "No one wants people out there to know they can sue."

It’s a head-in-the-sand attitude that has considerable merit. After all, who wants to stay at a hotel, or shop at a store, or play golf on a course which knowingly conceals from its guests an increased threat of cancer?

The proposition with the appealing title won easy passage–by more than a 2-1 margin–by California voters 16 years ago, and has proved to be a panacea for plaintiff lawyers since its very first day.

The law requires companies with more than 10 employees to give "clear and reasonable warning" whenever they somehow expose people to cancer-causing chemicals or substances toxic to the reproductive system in amounts above levels set by the state. Unlike most laws, Prop. 65 places the burden for determining if any warning is required on the person or business being sued. This circumstance assumes that the eventual defendant in litigation is actually responsible for creating an exposure to a suspect chemical, and forces him or her to prove otherwise.

Prop. 65, which established for the first time a government-sanctioned list of 800 or so synthetic carcinogens, empowers individuals to take action. Anyone can pursue legal action against any business they believe is not posting the appropriate signs warning customers against the effects of cancer-causing ingredients.

Hotels, for example, are being sued for allowing smoking in rooms and common grounds, even if signs are posted and no-smoking rooms and areas have been established.

Paso Robles Inn’s Wallace said his establishment does not allow smoking, but acknowledges that his hotel, like other non-smoking facilities, is still vulnerable to Prop. 65 vigilantes.

"There would have to be a situation where a smoker was in the parking lot and another guest, a nonsmoker, went by and was exposed to the smoke. Also, there would have to be absolutely no sign on my property that lists clearly the problems," he said.

At the other end of the spectrum, bait shop operators are being sued for carrying lead products, like sinkers and jig heads.

In specific cases, a single lawyer and his bounty-hunter client have filed hundreds of actions simultaneously, hoping for quick cash settlements. More often than not, settlements are expeditiously reached as insurers hope to avoid costly litigation.

Admittedly, some cases are not filed for apparent financial reward. County resident Philip Steiner sued San Luis Golf and Country Club for allowing chemicals to leach from the grounds into water sources. In a settlement now awaiting sanction from the court, club officials agreed to post appropriate warning signs and take steps to end the exposure. Steiner's attorney, Alexander T. Henson of Carmel, said his client declined to ask for monetary damages. Henson got $10,000 in legal fees.

The California Chamber of Commerce has formed a special unit to deal with member concerns about Prop. 65, said chamber official Cher Gonzalez.•••

"When our members call after being served with a [Prop. 65] notice, they are generally very upset," she said. "They really just want to know what is happening." The state chamber also has organized a coalition of industry and business associations to address Prop. 65 excesses, and create reasonable solutions for its membership, said Gonzales.•••

W. Kip Viscusi, a professor at Harvard Law School, spent several years studying the law and eventually concluded that it probably did more harm than good, by giving people a false impression of the real risks.

‘REGULATION BY SHAMING’

California amounts to 15 percent of the national market for many goods. Thus, many manufacturers often changed their products nationwide to eliminate "questionable ingredients."

"Why did these companies make expensive–and, they believed, unnecessary–changes?" asks Jeff Stier of the American Council on Science and Health in Washington, D.C. "They were bowing to a newly potent political force: regulation by shaming."

James Dufour, an environmental consultant in Sacramento who works with many statewide business organizations, said the hotel business "has been wrestling with this thing for years now. We go on and on with this stuff, and it’s enough to drive you crazy. It’s really a mess."

Dufour said a settlement involving 25,000 California dentists–virtually every one in the state–is about to be approved.

"This may finally get them [dentists] off the hook once and for all," said Dufour.

Jim Abrams, executive director of the California Hotel and Lodging Association in Sacramento, said that Prop. 65 bounty hunters, until recently, have concentrated hotel-related lawsuits on issues regarding second-hand tobacco smoke.

"Recently, however, they have branched out," said Abrams of the Prop. 65 enforcers. "Now they are going after hotel owners for such things as fireplaces, candles, spas, even the sale of cigars. It’s really gotten bad lately."

Some hotels that have settled with bounty hunters in the past "are now being hit again by the same people, with a different list of alleged violations," said Abrams. He said his association is presently coordinating a "global settlement that would provide any innkeeper who wants to participate [with] a court judgment that will protect them from any and all Prop. 65 claims."

Abrams said the settlement plan, which he declined to detail fully because of its pending nature, is being embraced by organizations.

"Businesses are welcoming it. It’s exactly what is needed, they think, to meet the spirit of compliance with Prop. 65," Abrams said. "We all want to comply. Just tell us how to do it."

Such information, however, could greatly increase the risk of cancer. Æ

Paso Robles writer and regular ‘New Times’ contributor Daniel Blackburn can be reached for comments or story ideas through the editor at [email protected].




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