Judge: Michelle Williams Court, Case: 20STCV21985, Date: 2022-08-08 Tentative Ruling
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Case Number: 20STCV21985 Hearing Date: August 8, 2022 Dept: 74
20STCV21985 CONSUMER
ADVOCACY GROUP, INC vs GW SUPERMARKET OF ROSEMEAD, INC
Plaintiff’s Motion to Approve and Enter Consent Judgment
Between Plaintiff Consumer Advocacy Group, Inc., and Defendant Richin Trading,
Inc.
TENTATIVE RULING:
The motion is GRANTED.
Background
On June 10, 2020, Plaintiff Consumer Advocacy Group,
Inc. filed this action against GW Supermarket of Rosemead, Inc., GW Supermarket
of CA, Inc., Kim Seng Company, Inc. Dba IHA Beverage, Richin Trading, Inc., Wei-Chuan
U.S.A, Inc., GW Supermarket of Rowland Heights, Inc., and GW Supermarket of
Monterey Park, Inc. The complaint alleges violations of the Health and Safety
Code related to the sale of products containing anchovies, dried shrimp, and
dried kelp.
On April 14, 2021, the GW Supermarket entities filed
a cross-complaint for indemnification against Kim Seng Company Inc. Dba IHA Beverage,
Richin Trading, Inc., Wei-Chuan U.S.A, Inc., and Kowa Trading Company.
On April 19, 2022, Plaintiff filed a Notice of
Settlement of Entire Case.
Motion
Plaintiff moves the Court to approve the settlement and
Consent Judgment with Defendant Richin Trading, Inc. pursuant to Health and
Safety Code section 25249.7.
The motion is unopposed.
Approval of Proposition 65 Consent
Judgment
Standard
If
there is a settlement of an action brought by a person in the public interest
under subdivision (d), the plaintiff shall submit the settlement, other than a
voluntary dismissal in which no consideration is received from the
defendant, to the court for approval upon noticed motion, and the court may
approve the settlement only if the court makes all of the following findings:
(a)
The warning that is required by the settlement complies with this chapter.
(b)
The award of attorney’s fees is reasonable under California law.
(c)
The penalty amount is reasonable based on the criteria set forth in paragraph
(2) of subdivision (b).
“The
plaintiff subject to paragraph (4) has the burden of producing evidence
sufficient to sustain each required finding. The plaintiff shall serve the
motion and all supporting papers on the Attorney General, who may appear and
participate in a proceeding without intervening in the case.” (Health &
Saf. Code § 25249.7(f)(5).) “To stamp a consent agreement with the judicial
imprimatur, the court must determine the proposed settlement is just….In the
context of Proposition 65 litigation, necessarily brought to vindicate the
public interest, the trial court also must ensure that its judgment serves the
public interest.” (Consumer Advocacy Group, Inc. v. Kintetsu
Enterprises of America (2006)141 Cal.App.4th 46, 61.)
Injunctive Relief and Warnings
The Consent Judgment defines
Covered Products as “Dried Anchovies and Black Fungus sold or supplied by
Defendant.” (Consent Judgment § 2.1.) The Consent Judgment provides “Defendant
shall not sell in California, offer for sale in California, or ship for sale in
California any Dried Anchovies unless the level of Lead does not exceed 20
parts per billion (“ppb”) and the level of Cadmium does not exceed 85 ppb”
after the effective date of the settlement. (Consent Judgment § 3.1.) The
Consent Judgment further provides “Defendant shall not sell in California,
offer for sale in California, or ship for sale in California any Black Fungus
unless the level of Lead does not exceed 20 ppb after the effective date of the
settlement. (Consent Judgment § 3.2.) These levels are significantly less than
the amounts shown by Plaintiff’s testing. (Yeroushalmi Decl. ¶ 7, Ex. D.)
The Consent Judgment also
requires Defendant provide warnings on Covered Products in two forms. (Consent
Judgment §§ 3.3-3.4.) A warning is required by Health and Safety Code section 25249.6,
which states: “[n]o 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.” The Consent Judgment requires the warning
to be affixed to the packaging of, or directly on, the Covered Products in a clear
and conspicuous manner. (Consent Judgment § 3.2.) The proposed warnings include
the language required by 27 CCR § 25607.2 and are to be located on the
packaging of the product or the product itself in compliance with 27 CCR §
25602 and 27 CCR § 25607.1. Therefore, the Court finds the warnings
are compliant with the Health and Safety Code.
Attorneys’ Fees
“Upon
motion, a court may award attorneys' fees to a successful party against one or
more opposing parties in any action which has resulted in the enforcement of an
important right affecting the public interest if: (a) a significant benefit,
whether pecuniary or nonpecuniary, has been conferred on the general public or
a large class of persons, (b) the necessity and financial burden of private
enforcement, or of enforcement by one public entity against another public
entity, are such as to make the award appropriate, and (c) such fees should not
in the interest of justice be paid out of the recovery, if any. (Code Civ. Proc
§ 1021.5.) Attorneys’ fees for Proposition 65 litigation are guided by 11 CCR §
3201. The Consent Judgment requires Defendant to pay $131,250.00 in attorneys’
fees and costs. (Consent Judgment § 4.1.3) “The fact that the fee award is part
of a settlement . . . may justify applying a somewhat less exacting review of
each element of the fee claim than would be applied in a contested fee
application.” (11 CCR § 3201(a).) There is no contest to the fee amount.
Here,
a significant benefit has been conferred on the general public by the
settlement because it requires Defendant to stop selling products containing
lead and cadmium above certain thresholds without a warning. (Consent Judgment
§ 3.) Pursuant to 11 CCR § 3201(b)(1-2), there is a presumption of significant
public benefit when a settlement provides for either a warning or reformation.
The Court finds the Consent Judgment serves the public interest.
In
determining whether attorneys’ fees are reasonable, they must “be reasonable
for an attorney of similar skill and experience in the relevant market area.
Once a lodestar fee is a calculated, a multiplier of that amount is not
reasonable unless a showing is made that the case involved a substantial
investment of time and resources with a high risk of an adverse result, and
obtained a substantial public benefit. No fees should be awarded based on
additional time spent in response to the Attorney General's inquiries or
participation in the case, unless specifically identified and approved by the
court.” (11 CCR § 3201(d).) “All attorney's fees and any investigation costs
sought to be recouped in a Settlement should be justified by contemporaneously
kept records of actual time spent or costs incurred, which describe the nature
of the work performed. Declarations relying on memory or recreated,
non-contemporaneously kept records may raise an issue concerning the accuracy
of the time estimate.” (11 CCR § 3201(e).)
“To
establish necessity of private enforcement, the plaintiff should establish that
its continued prosecution of the action was necessary to obtain the relief in
the settlement. For example, where a defendant proposed in writing to provide
certain relief, and the settlement or judgment does not provide any significant
additional relief, additional fees incurred after the time that the offer was
rejected may not be reasonable or necessary.” (11 CCR § 3201(c).) The
declaration of Reuben Yeroushalmi adequately attests that continued prosecution
was necessary as the parties were unable to reach a pre-litigation settlement.
(Yeroushalmi Decl. ¶¶ 5-9.) Additionally, Yeroushalmi attests that the lodestar
attorneys’ fees were $189,688.50, which is more than the $180,000.00 provided
in the Consent Judgment. (Id. ¶¶ 11-31.) The Court finds the attorneys’ fees
and costs are reasonable under the circumstances and under California law.
Civil Penalty
“In
assessing the amount of a civil penalty for a violation of this chapter, the
court shall consider all of the following: (A) The nature and extent of the
violation; (B) The number of, and severity of, the violations; (C) The economic
effect of the penalty on the violator; (D) Whether the violator took good faith
measures to comply with this chapter and the time these measures were taken;
(E) The willfulness of the violator's misconduct; (F) The deterrent effect that
the imposition of the penalty would have on both the violator and the regulated
community as a whole; (G) Any other factor that justice may require.” (Health
& Safety Code § 25249.7(b)(2).) “The reasonableness of civil penalties in a
settlement will be evaluated based on the factors set forth in the Health and
Safety Code section 25249.7(b)(2). The following factors are “[other factors]
that justice may require” to be considered within the meaning of Health and
Safety Code section 25249.7(b)(2)(G):
(a) A settlement with
little or no penalty may be entirely appropriate or not, based on the facts or
circumstances of a particular case.
(b) Recovery of civil
penalties (75% of which must be provided to the Office of Environmental Health
Hazard Assessment) serves the purpose and intent of Proposition 65.
Accordingly, civil penalties shall not be “traded” for payments of attorney's
fees.
(c) Where a
settlement provides that certain civil penalties are assessed, but may be
waived in exchange for certain conduct by the defendant, such as, for example,
reformulating products to reduce or eliminate the listed chemical, the conduct
must be related to the purposes of the litigation, provide environmental and
public health benefits within California, and provide a clear mechanism for
verification that the qualifying conditions have been satisfied.
(d) Where a
settlement requires the alleged violator to make any Additional Settlement
Payments to the plaintiff or to a third party, such Additional Settlement
Payments are viewed as an “offset” to the civil penalty. The plaintiff must
demonstrate to the satisfaction of the court that it is in the public interest
to offset the civil penalty required by statute.
(11
CCR § 3203.)
The
Consent Judgment requires Defendant to pay a civil penalty totaling $11,440.00,
which will be apportioned 75% to the State of California Office of
Environmental Health Hazard Assessment and 25% to Plaintiff. (Consent Judgment
§ 4.1.1.) This apportionment complies with Health and Safety Code section
25249.12. Plaintiff’s counsel attests to facts demonstrating the penalty amount
is reasonable, in light of the considerations required by Health and Safety
Code § 25249.7(b)(2). (Yeroushalmi Decl. ¶¶ 6-10; Mot. at 14:14-16:22.)
Defendant sold anchovy and black fungus products containing impermissible
levels of toxic lead and cadmium, which were ingested by consumers. The parties
negotiated the civil penalty to ensure it would have a sufficient economic
effect upon Defendant and Defendant has agreed to comply with the Consent
Judgment immediately upon approval. The penalties and fees in the Consent
Judgment become public record and are therefore a sufficient deterrent.
Plaintiff
is to receive an additional $8,560.00 as an additional settlement payment for
use in further investigations. (Consent Judgment § 4.1.2; 11 CCR § 3203(d).)
The additional settlement payment is reasonable and complies with 11 CCR §
3204. (Marcus Decl. ¶¶ 2-13; Mot. at 17:2-19:14.) The Court finds it is in the
public interest to offset the penalty with the additional penalty payment to
enable Plaintiff to continue its work. The additional penalty does not exceed
the penalty paid to the Office of Environmental Health Hazard Assessment.
Other
Provisions and Requirements
The proof of service demonstrates
compliance with 11 CCR § 3003, which requires a Private Enforcer to present the
motion and all supporting papers to the Attorney General at least 45 days prior
to hearing on the motion.
“[T]he court must consider (1) justiciability
as discussed in Johnson & Johnson, supra, 132 Cal.App.4th
1175, 34 Cal.Rptr.3d 258; (2) notice as discussed in Consumer Defense Group,
supra, 137 Cal.App.4th 1185, 40 Cal.Rptr.3d 832; and (3) the statutory
requirements of adequate warnings, reasonable fees, and reasonable penalties.”
(Kintetsu, supra, 141 Cal.App.4th at 65.) This case does not present any
justiciability issues under Consumer Cause, Inc. v. Johnson & Johnson (2005)
132 Cal.App.4th 1175 because Plaintiff’s testing confirmed the presence of the
listed chemicals. Unlike in Consumer
Defense Group v. Rental Housing Industry Members (2006) 137 Cal.App.4th
1185, Plaintiff provided adequate pre-suit notice. (Yeroushalmi Decl. Ex. B-C.)
Finally, the release is appropriately limited and does not contain any of the impermissible
terms identified by the court in Kintetsu.
The Court finds the settlement
reasonable and has made the necessary findings pursuant to the Health and
Safety Code.