Judge Monica Bachner, Case 22STCV20457 2023-03-22 Tentative Ruling

Plaintiff Consumer Advocacy Group’s motion to approve and enter consent judgment is granted.

Plaintiff Consumer Advocacy Group (“CAG”) (“Plaintiff”) moves for an order approving and entering the [Proposed] Consent Judgment between Plaintiff and Defendant Urban Expressions, Inc. (“Urban Expressions”) (“Defendant”) in the instant Proposition 65 action pursuant to Health & Safety Code §§25249.5, et seq. (Notice of Motion, pg. 2.) Plaintiff seeks the Court’s approval of the settlement reached in an action involving alleged violations of Proposition 65 by Defendant regarding Defendant’s (1) Handbag with Plastic Components; (2) Shoulder Bag with PVC Components; (3) Totebag with Polymer Components; (4) Purse with PVC Components; (5) Handbag; and (6) Wristlet (“Covered Products”) and exposure to Di(2-Ethylhexyl)phthalate (“DEHP”) in Shoulder Bag with PVC Components, Purse with PVC Components, and Wristlet in Handbag with Plastic Components, and Diisononyl phthalate (“DINP”) in Totebag with Polymer Components, and Handbag. (Motion, pg. 5; [Proposed] Consent Judgment §§1.2.1, 1.2.2, 2.1, 2.3, 2.4, 2.5.)

Health & Safety Code §25249.6 provides, as follows: “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, except as provided in Section 25249.10.”

“Reformulation of a product, . . . or other changes in the defendant’s practices that reduce or eliminate the exposure to a listed chemical, in lieu of the provision of a warning, are presumed to confer a significant benefit on the public.” (11 CCR § 3201(b)(2).)

Health & Safety Code §25249.7(a) provides, as follows: “A person who violates or threatens to violate Section 25249.5 or 25249.6 may be enjoined in any court of competent jurisdiction.”

“A person who has violated Section 25249.5 or 25249.6 is liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) per day for each violation in addition to any other penalty established by law. That civil penalty may be assessed and recovered in a civil action brought in any court of competent jurisdiction.” (Health & Safety Code §25249.7(b)(1).)

“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).)

Actions pursuant to Health & Safety Code §25249.7 may be brought by a person in the public interest if both of the following requirements are met:

(1) The private action is commenced more than 60 days from the date that the person has given notice of an alleged violation of Section 25249.5 or 25249.6 that is the subject of the private action to the Attorney General and the district attorney, city attorney, or prosecutor in whose jurisdiction the violation is alleged to have occurred, and to the alleged violator. If the notice alleges a violation of Section 25249.6, the notice of the alleged violation shall include a certificate of merit executed by the attorney for the noticing party, or by the noticing party, if the noticing party is not represented by an attorney. The certificate of merit shall state that the person executing the certificate has consulted with one or more persons with relevant and appropriate experience or expertise who has reviewed facts, studies, or other data regarding the exposure to the listed chemical that is the subject of the action, and that, based on that information, the person executing the certificate believes there is a reasonable and meritorious case for the private action. Factual information sufficient to establish the basis of the certificate of merit, including the information identified in paragraph (2) of subdivision (h), shall be attached to the certificate of merit that is served on the Attorney General.

(2) Neither the Attorney General, a district attorney, a city attorney, nor a prosecutor has commenced and is diligently prosecuting an action against the violation.

“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).” (Health & Safety Code §25249.7(f)(4).)

“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 & Safety Code §25249.7(f)(5).) Plaintiff provided proof that the motion and supporting papers were served on the Attorney General. (Proof of Service.)

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.

Plaintiff submitted evidence showing the [Proposed] Consent Judgment complies with Health & Safety Code §25249.7(f)(4)(A). Plaintiff submitted evidence that Diethyl Hexyl Phthalate and Bis (2-ehtylhexyl) phthalate (“DEHP”) and Inorganic Arsenic Oxides (“Arsenic”) are known to cause developmental toxicity as identified and listed by California Environmental Protection Agency’s Office of Environmental Health Hazard Assessment (“OEHHA”) on October 24, 2003, and May 1, 1997, respectively, and are subject to Proposition 65 warning requirements and discharge prohibitions as chemicals known to cause development toxicity, and DEHP and Diisononyl Phthalate (“DINP”) are known carcinogens as identified and listed by the OEHHA on January 1, 1988, and December 20, 2013, respectively, and are subject to Proposition 65 warning requirements and discharge prohibitions as carcinogens. (Complaint ¶¶15-18; Motion, pg. 4; see 27 CCR §§27001(b), 27001(c); see also [Proposed] Consent Judgment §§1.2.1, 1.2.2.) Plaintiff submitted evidence a certified laboratory tested the Covered Products and found they contained high levels of DEHP and/or DINP, higher than the levels prescribed under Proposition 65 law. (Decl. of Yeroushalmi ¶11; Exh. H.)

The [Proposed] Consent Judgment provides that after the “Effective Date” (the date this Consent Judgment is approved by the Court), Defendant shall not order any Covered Products for sale into California, without any component that contains DEHP and/or DINP (“Listed Chemical(s)”) in excess of 0.1% (1,000 ppm) by weight. ([Proposed] Consent Judgment §3.1.)[1] Any Covered Products that Defendant sells, distributes, or ships into California after the Effective Date that were ordered prior to the Effective Date, must contain a clear and reasonable warning, consistent with 27 CCR §25600 et seq., unless it contains no more than 0.1% by weight of the Listed Chemical(s). ([Proposed] Consent Judgment §3.2.) Any warnings provided pursuant to §3.2 shall be affixed to the packaging of, or directly on, or attached to the Covered Products, and be prominently placed with such conspicuousness as compared with other words, statements, designs, or devices as to render it likely to be read and understood by an ordinary individual under customary conditions before purchase or use. ([Proposed] Consent Judgment §3.2.) Should Defendant sell or distribute any Covered Product through the internet, the warning will be posted in the manner provided for with respect to internet sales, as provided for in 27 CCR sections 25601 and 25602, as they may be subsequently amended. (Notice of Errata, Exh. 1 §3.2.) Covered Products already distributed to Downstream Releasees prior to the Effective Date may continue to be sold through as is. ([Proposed] Consent Judgment §3.3.)

Plaintiff also submitted evidence showing the [Proposed] Consent Judgment complies with Health & Safety Code §25249.7(f)(4)(B). The [Proposed] Consent Judgment provides that Defendant will pay $80,000.00 to “Yeroushalmi & Yeroushalmi,” attorneys of record for Plaintiff, as complete reimbursement for any and all reasonable investigation fees and costs, attorneys’ fees, expert fees, and any and all other costs and expenses incurred as a result of investigating, bringing this matter to Defendant’s attention, litigating, negotiating a settlement in the public interest, and seeking and obtaining court approval of this Consent Judgment. ([Proposed] Consent Judgment §4.1.3.) The Court finds the amount of attorneys’ fees and costs is reasonable and supported. (Decl. of Yeroushalmi ¶¶15-21, 22-28, Exh. I; see 11 CCR §3201.) Plaintiff submitted a fees and costs summary demonstrating that Reuben Yeroushalmi billed at an hourly rate of $875.00, Alexandra Purcell billed at an hourly rate of $413.00, Heidi Suh billed at an hourly rate of $95.00, Mike Liao billed at an hourly rate of $413.00, Kendall Klyczek billed at an hourly rate of $95.00, Shohini Sengupta billed at an hourly rate of $250.00, Shannon E. Royster billed at an hourly rate of $460.00, and Talia Nimmer billed at an hourly rate of $413.00. (Decl. of Yeroushalmi ¶26.) Plaintiff’s counsel declares Reuben Yeroushalmi billed 48.4 hours for a total lodestar of $42,350.00, Alexandra Purcell billed 17.8 hours for a total lodestar of $7,351.40, Heidi Suh 6.1 hours for a total lodestar of $579.50, Mike Liao billed 34.9 hours for a total lodestar of $14,413.70, Kendall Klyczek billed 4.7 hours for a total lodestar of $446.50, Shohini Sengupta billed 20.5 hours for a total lodestar of $5,125.00, Shannon E. Royster billed 16.2 hours for a total lodestar of $7,452.00, and Talia Nimmer billed 19.6 hours for a total lodestar of $8,094.80. (Decl. of Yeroushalmi ¶26.) The combined lodestar of $85,812.90 for 168.2 of Plaintiff’s counsels’ hours exceeds the proposed $80,000 in attorney’s fees, and Plaintiff is not currently claiming the costs (not including the costs of investigations, consultant’s fees, experts’ fees, etc.), which include copying and other costs related to bringing this litigation, and likely are in the multiple thousands of dollars, as part of its lodestar. (Decl. of Yeroushalmi ¶¶27-28; [Proposed] Consent Judgment §4.1.3.)

In addition, Plaintiff submitted evidence showing the [Proposed] Consent Judgment complies with Health & Safety Code §25249.7(f)(4)(C). The Proposed Consent Judgment provides for a civil penalty of $14,300.00, to be apportioned in accordance with California Health & Safety Code §25192, with 75% of these funds remitted to OEHHA and the remaining 25% of the Civil Penalty remitted to Plaintiff, as provided by California Health & Safety Code §25249.12(d). ([Proposed] Consent Judgment §4.1.1.) Defendant agreed to issue two separate checks totaling $14,300.00, one made payable to OEHHA in the amount of $10,725.00, representing 75% of the total civil penalty, and issue a second check to Plaintiff in the amount of $3,575.00, representing 25% of the total civil penalty. ([Proposed] Consent Judgment §§4.1.1(a)-(b); see 11 CCR 3203(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.”].) Defendant shall also issue one check for $10,700.00 to Plaintiff pursuant to Health & Safety Code §25249.7(b) and 11 CCR 3203(d). ([Proposed] Consent Judgment §4.1.2.) This additional settlement payment to Plaintiff will be used as follows: eighty percent (80%) for fees of investigation, purchasing and testing for the Proposition 65 Listed Chemical in various products, and for expert fees for evaluating exposures through various mediums, including but not limited to consumer product, occupational, and environmental exposures to the Proposition 65 Listed Chemical, and the cost of hiring consulting and retaining experts who assist with the extensive scientific analysis necessary for those files in litigation and to offset the costs of future litigation enforcing Proposition 65 but excluding attorney fees; and twenty percent (20%) for administrative costs incurred during investigation and litigation to reduce the public’s exposure to the Proposition 65 Listed Chemicals by notifying those persons and/or entities believed to be responsible for such exposures and attempting to persuade those persons and/or entities to reformulate their products or the source of exposure to completely eliminate or lower the level of the Proposition 65 Listed Chemicals including but not limited to costs of documentation and tracking of products investigated, storage of products, website enhancement and maintenance, computer and software maintenance, investigative equipment, Plaintiff’s members’ time for work done on investigations, office supplies, mailing supplies, and postage. ([Proposed] Consent Judgment §4.1.2.) The Court finds the civil penalty amount is reasonable based on the amount of the chemicals found in the Covered Products, the extent of the exposures to the Listed Chemicals through distribution and retail sales throughout California, the severity of the violations based on the multiple adverse health effects of the Listed Chemicals and multiple locations where consumer product exposures occurred, the economic effect of the penalty on Defendant, Defendant’s good faith and swift measures to comply under Proposition 65, and the deterrent effect the imposition of the penalty on both Defendant and the regulated community as a whole. (Motion, pgs. 14-15; Decl. of Yeroushalmi ¶¶11, 13-14, Exh. H; ([Proposed] Consent Judgment §3.1.)

The Parties have stipulated that upon entry of an order approving the Proposed Consent Judgment, the present Complaint shall be deemed to include all the claims raised in the Notices outlined in §1.3 of the Proposed Consent Judgment, including the claims in Notice dated August 18, 2020. ([Proposed] Consent Judgment §1.3.4.) This notice initially formed the basis of Case No. 20STCV46166 filed against the retailer of the product in that case, TJX Companies, Inc. (Decl. of Purcell ¶4.) Urban Expressions, Inc., the party to the instant [Proposed] Consent Judgment, was not a Defendant in that action. (Decl. of Purcell ¶5.) The claim was dismissed against the retailer, without prejudice, subject to the present Consent Judgment. (Decl. of Purcell ¶5, Exh. A.) The claim has not been resolved outside of the present [Proposed] Consent Judgment. (Decl. of Purcell ¶6.) This Court has jurisdiction over the claims that were initially included in Case No. 20STCV46166, as the claim was dismissed without prejudice and Parties have agreed to amend the claims from the notice dated August 18, 2020. ([Proposed] Consent Judgment §1.5.) Additionally, Parties have also stipulated to the jurisdiction of this Court to resolve all claims for the Covered Products containing DEHP and DINP between the Parties. ([Proposed] Consent Judgment §1.5.)

The [Proposed] Consent Judgment indicates that upon entry of the consent judgment, Plaintiff shall file requests for dismissal of the following claims: (1) the third cause of action in Complaint 1, Los Angeles County Superior Court, Case No. 19STCV38857; (2) the third cause of action in Complaint 2, Los Angeles County Superior Court, Case No. 22STCV20457; and (3) the third cause of action in Complaint 3, Los Angeles County Superior Court, Case No. 20STCV46166. ([Proposed] Consent Judgment §§6.2-6.3.3.) The ([Proposed] Consent Judgment provides that this Court shall retain jurisdiction of this matter to implement and enforce the terms of this Consent Judgment under C.C.P. §664.6. ([Proposed] Consent Judgment §9.1.)

Based on the foregoing, Plaintiff’s motion to approve and enter consent judgment is granted.

[1] The Court refers to the [Proposed] Consent Judgment, although a revised version of the consent judgment is included in Notice of Errata, Exh. 1, to include an omission to §3.2. The documents are substantively identical except for the noted omission. (See Notice of Errata.)