Judge Ronald F. Frank, Case Number: 23TRCV01258, Date: 2024-09-09 Tentative Ruling

Judge: Ronald F. Frank, Case: 23TRCV01258, Date: 2024-09-09 Tentative Ruling

Case Number: 23TRCV01258 Hearing Date: September 9, 2024 Dept: 8

Tentative Ruling

HEARING DATE: September 9, 2024¿

CASE NUMBER: 23TRCV01258

CASE NAME: Calsafe Research Center, Inc. v. Vahdam Teas Global, Inc., et al.

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MOVING PARTY: Plaintiff, Calsafe Research Center, Inc.

RESPONDING PARTY: Defendant, Vahdam Teas Global, Inc. a Delaware Stock Corporation (No Opposition)

TRIAL DATE: Not Set.

MOTION:¿ (1) Motion to Approve of Consent Judgment

Tentative Rulings: (1) GRANTED.

I. BACKGROUND¿

A. Factual¿

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On April 21, 2023, Plaintiff, Calsafe Research Center, Inc. (“Plaintiff”) filed a complaint against Defendant, Vahdam Teas Global, Inc., a Delaware Stock Corporation (“Defendant”), and DOES 1 through 10. The complaint alleges one cause of action for Violation of Proposition 65.

Plaintiff now moves for a Motion to Approve Consent Judgment.

B. Procedural

On June 7, 2024, Plaintiff filed this Motion to Approve Consent Judgment. To date, no opposition has been filed.

II. ANALYSIS ¿

A. Legal Standard

The Safe Drinking Water and Toxic Enforcement Act of 1986, colloquially known as Proposition 65, was passed as a ballot initiative by the California voters and was designed to prevent the contamination of drinking water with, and generally protect the public from unknowing exposure to, harmful chemicals. (See generally 12 Witkin, Summary of California Law 10th (2005) Real Property, § 894, p. 1075.) Proposition 65 has both public and private enforcement mechanisms. (See Health & Saf. Code, § 25249.7 subds. (c), (d).) Violations are punishable by injunction and civil penalty. (Health & Saf. Code § 25249.7, subds. (a), (b).) In private enforcement actions, parties may also recover attorney’s fees, pursuant to the provisions in Code of Civil Procedure section 1021.5.

A court may approve a settlement in a Proposition 65 action only if the court makes all of the following findings: (1) the warning that is required by the settlement complies with Proposition 65’s requirements as set forth in section 25249.6; (2) the award of attorney’s fees is reasonable under California law; (3) the penalty amount is reasonable based on the criteria set forth in section 25249.7, subdivision (b)(2). (Health & Saf. Code section 25249.7, subd. (f)(4).) “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.)

B. Discussion

i. Compliancy of Warning

Health & Safety Code section 25249.6 states, in relevant part: “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.” (Health & Saf. Code, § 25249.6.) For a warning to be clear and reasonable, the manner of transmission must be reasonable, and the message employed must be sufficiently clear to communicate the warning. (Environmental Law Foundation v. Wykle Research, Inc. (2005) 134 Cal.App.4th 60, 67, fn. 6.)

Here, Plaintiff has submitted a copy of the proposed consent judgment. (Declaration of Joseph R. Manning (“Manning Decl.”), ¶ 10, Exhibit B.) Pursuant to the Consent Judgment, after the Effective Date, Defendant agrees that it is permanently enjoined from manufacturing for sale in the State of California, “Distributing into the State of California,” or directly selling in the State of California, any Covered Product that exposes a person to a “Daily Lead Exposure Level” of more than 0.5 micrograms of lead per serving size, unless it meets the warning requirements under Section 3.4. Defendant further agrees to provide a warning on all of Defendant’s “Turmeric Matcha Mix” – that either: (1) are not exposed to lead above the 0.5 micrograms threshold set by OEHHA; or (2) are given a clear and reasonable warning that such exposure may occur. Covered products that do not meet the warning exemption set forth in Section 3.3, shall be accompanied by a warning as described in Section 3.4: A clear and reasonable warning for the Covered product shall consist of a warning affixed to the packaging, label, tag, or directly to each Covered Product shipped for sale in California by Vahdam that contains one of the following statements:

(A)

WARNING: Consuming this product can expose you to lead, which is known to the State of California to cause [cancer and ]birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov/food.

(B)

WARNING: [Cancer and ]Reproductive Harm–www.P65Warnings.ca.gov/food.

Plaintiff’s moving papers indicate that this warning requirement shall only be required as to Covered Products that are manufactured, distributed, marketed, sold, or shipped for sale to consumers by Defendant in the State of California, after the Effective Date. Further, no Proposition 6 warning shall be required as to Covered Products already in distribution and the stream of commerce as of the Effective Date. The consent judgment notes that those Covered Products are deemed to be exempt from a Proposition 65 warning with respect to Lead and/or expressly released under the consent judgment.

The Consent Judgment notes that the warning shall be provided through one of the following methods: (1) a product specific warning provided on a posted sign, shelf tag, or shelf sign, for the consumer product at each point of display of the product; or (2) a product-specific warning provided via any electronic device or process that automatically provides the warning to the purchaser prior to or during the purchase of the consumer product, without requiring the purchaser to seek out the warning; or (3) a warning on the label that is securely affixed to or printed upon the label and complies with this Section 3.4.

Additionally, Plaintiff notes that for any Covered Product sold over the internet by Defendant, the Warning shall appear prior to check-out on the primary product page, or as a pop-up when a California address is input into the shipping instructions, or on the checkout page when a California delivery address is indicated for any purchase of any Covered Product. The Consent Judgment further notes that the Warning may be provided with a conspicuous hyperlink stating "WARNING" in all capital and bold letters so long as the hyperlink goes directly to a page prominently displaying the Warning without content that detracts from the Warning. Given Defendant's lack of control over third-party websites, Plaintiff notes that the online warning requirements expressed in this Section apply only to Covered Products sold through Defendant's website. However, Plaintiff further notes that Defendant will instruct any third-party website sellers to which it supplies the Cover Product to provide the Warnings, if applicable, as a condition of selling the Covered Product. Further, the Consent Judgment contends that if subsequently enacted changes to Proposition 65 or its implementing regulations require the use of additional or different information on any warning specifically applicable to the Covered Products (the "New Safe Harbor Warning"), the Parties agree that the New Safe Harbor warning may be utilized in place of or in addition to, as applicable, the warnings set forth in this Section.

The Consent Judgment also notes that the warning shall use the phrase “cancer and” in the warning statement if the Target Level is greater than 15 micrograms of lead or if another Proposition 65 chemical is present which may require a cancer warning. It also clarifies that the warning shall be offset in a box with a black outline and in the event a warning under 3.4(B) is used it must be in a type size no smaller than the largest type size used for other consumer information on the Covered Product and in no case appear in a type size smaller than six (6) point font. Moreover, it states that “Consumer information” does not include the brand name, product name, company name, location of manufacture, or product advertising. The Consent Judgment further requires that the warning shall also comply with 27 C.C.R. § 25607.1(c). Specifically, the Consent Judgment notes that where the product sign, label, or shelf tag used to provide a warning includes consumer information in a language other than English, the warning must also be provided in that language in addition to English.

ii. Reasonableness of Attorney’s Fees

The fees setting inquiry in California ordinarily begins with the “lodestar” method, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. The lodestar figure may then be adjusted, based on consideration of factors specific to the case, to fix the fee at the fair market value of the legal services provided. (Serrano v. Priest (1977) 20 Cal.3d 25, 49.) After the court has performed the lodestar calculations, it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the award so that it is a reasonable figure. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095-1096.)

Pursuant to Consent Judgment, Defendant has agreed to pay attorneys’ fees in the amount of $18,000 to Plaintiff and its counsel of record for the reasonable costs and fees incurred in prosecuting the matter. This is less than the $31,925 Plaintiff’s counsel has claimed the three attorneys listed in his declaration accrued over the course of the litigation and settlement at counsels’ rates of $550 or $600 hourly rate. (Manning Decl., ¶¶ 15-21.) Plaintiff’s counsel also notes that multipliers have ranged from 1.25 to 1.75 in similar cases, but notes that while they believe a multiplier would be appropriate, they are not seeking one in this case. (Manning Decl., ¶ 22.)

This court finds that the amount of $18,000 represents reasonable attorneys’ fees for the work performed as set forth in the detailed summary of actions undertaken in investigation, litigating, and settling this action. Based on this, the Court finds that the amount of attorney fees and costs provided to Plaintiff in the settlement is reasonable.

iii. Reasonableness of Civil Penalty

The civil penalty is not to exceed $2,500 per day for each violation. (Health & Saf. Code § 25249.7, subd. (b)(1).) In assessing the amount of a civil penalty, the court must consider (1) the nature and extent of the violation, (2) the number and severity of the violations, (3) the economic effect of the penalty on the violator, (4) whether and when the violator took good faith measure to comply with regulations, (5) the willfulness of the violator’s misconduct, (6) the deterrent effect on the violator and the regulated community as a whole, and (7) “[a]ny other factor that justice may require.” (Health & Saf. Code § 25249.7, subd. (b)(2).)

Here, Defendant has agreed to pay $2,000 to be allocated according to Health & Safety Code §§ 25249.7(b) with seventy-five percent (75%) of the Penalty amount earmarked for the State of California’s Office of Environmental Health Hazard Assessment (“OEHHA”), and the remaining twenty-five (25%) of the Penalty amount earmarked for Plaintiff’s portion of the Penalty.

The Court finds the civil penalty of $2,000 in civil penalties to be reasonable. This release is specifically limited to Defendant’s Covered Products and claims presented in this lawsuit. The scope of this release is thus proper.

iv. Release Provisions

Plaintiff purports to release all claims arising from actual or alleged violations of Proposition 65 regarding the Covered Products through the effective date. The release states that Plaintiff is releasing said claims on behalf of itself and its respective officers, directors, principals, shareholders, employees, agents, parent companies, subsidiaries, divisions, and affiliates and on behalf of the public interest fully releases and discharges Released Parties from any and all claims, actions, causes of action, suits, demands, liabilities, damages, penalties, fees costs, and expenses asserted, or that could have been asserted based on or related to the handling, use, sale, distribution, or consumption of the Covered Products in California, as to any alleged violation of Proposition 65 or implementing regulations up through the Effective Date, based on a failure to provide Proposition 65 warning on the Cover Products with respect to lead as set forth in the notice and complaint. This is appropriate as the release does not purport to release claims on behalf of the public. Thus, the release provision is permissible.

III. CONCLUSION¿

Based on the foregoing, Plaintiff’s Motion for Approval of Consent Judgment is GRANTED.

Plaintiff is ordered to give notice.