Judge: Theresa M. Traber, Case: 23STCV06548, Date: 2023-10-13 Tentative Ruling
Case Number: 23STCV06548 Hearing Date: November 20, 2023 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: November 20, 2023 TRIAL DATE: NOT
SET
CASE: Ecological Alliance LLC v. Quinn Foods,
LLC
CASE NO.: 23STCV06548 
MOTION
TO APPROVE AND ENTER CONSENT JUDGMENT
MOVING PARTY: Plaintiff Ecological Alliance LLC
RESPONDING PARTY(S): No response on
eCourt as of 7/21/23
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiff filed this action on March 24, 2023 alleging that Defendant has
violated Proposition 65 by selling consumer products containing toxic
chemicals.
Plaintiff moves to approve and
enter a consent judgment between the parties.
TENTATIVE RULING:
Plaintiff’s
Motion for Approval of Proposition 65 Consent Judgment is GRANTED.
DISCUSSION:
Plaintiff moves to approve and
enter a consent judgment between the parties.
Missing Proof of Service
Plaintiff
did not file a proof of service with any of the moving papers, and no response
from Defendant was filed with the Court. However, counsel for Defendant was
present at the previous hearing on this motion on July 25, 2023, and thus had
actual notice of this motion and its current hearing date. (July 25, 2023
Minute Order.) The Court will therefore overlook the absence of a proof of
service.
//
Late Supplemental Filings
At a previous
hearing on this motion on July 25, 2023, the Court identified numerous
deficiencies in the proposed consent judgment and in the supporting evidence,
and continued the hearing to September 26, 2023, ordering Plaintiff to file
supplemental materials addressing those deficiencies by September 15, 2023.
(July 25, 2023 Minute Order.) Plaintiff did not comply with the Court’s order,
instead filing and serving supplemental materials five days later, on September
20, 2023. However, in the interest of an expeditious resolution of this matter,
the Court will consider the supplemental materials on their merits.
Legal Standard
California
Health & Safety Code § 25249.7(f)(4) provides:
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) Any warning that is required by the settlement complies
with this chapter.
(B) Any award of attorney's fees is reasonable under
(C) Any penalty amount is reasonable based on the criteria
set forth in paragraph (2) of subdivision (b).
(Health
& Safety Code § 25249.7(f)(4).)
Adequacy of Warning
Whenever a clear and reasonable warning
is required under Section 25249.6 of the Act, the method employed to transmit
the warning must be reasonably calculated, considering the alternative methods
available under the circumstances, to make the warning message available to the
individual prior to exposure. The message must clearly communicate that the
chemical in question is known to the state to cause cancer, or birth defects or
other reproductive harm. Nothing in this section shall be construed to preclude
a person from providing warnings other than those specified in this article
that satisfy the requirements of this article, or to require that warnings be
provided separately to each exposed individual.
(222 CCR § 25601.)
Here,
section 3.1 of the Proposed Consent Judgment provides that any Quinn pretzel
nuggets manufactured, distributed, offered for sale or sold by Defendant in
California after the effective date will have warnings provided on the products
that comply with Proposition 65 unless they meet the reformulation standards
set forth in section 3.2. Under section 3.2, covered products will be
considered exempt from warning requirements if they contain lead in
concentrations no greater than 0.5 micrograms per serving, with serving size
defined as given on the label for the covered product. The warnings for
noncompliant products are to be “displayed in a reasonably conspicuous manner.”
Regulations
now require the following warning language, in relevant part:
(1)
The word “WARNING:” in
all capital letters and bold print.
. . .
(4) For
exposures to a chemical that is listed as both a carcinogen and a reproductive toxicant,
the words, “This product can expose you to chemicals including [name of one or
more chemicals], which is [are] known to the State of California to cause
cancer and birth defects or other reproductive harm. For more information go to
www.Prop65Warnings.ca.gov/.”
(27 CCR § 25603(a).) A warning compliant with this regulation
satisfies the requirement of a clear and reasonable warning. Here, this
requirement is satisfied. (Proposed Consent Judgment ¶ 3.4.)
Reasonableness of Attorney’s
Fees
Under
the Proposed Consent Judgment, Plaintiff is to recover $26,000 for fees and
costs incurred in prosecuting this action. (¶ 4.1.) Plaintiff represents that
this amount is less than the lodestar calculation of $33,600 and is reasonable
given the duration and complexity of this litigation. (Declaration of Vineet
Dubey ¶¶ 5-7, Exh. 1.)
The Court
finds that the amount of attorney’s fees and costs is reasonable under the
circumstances. Accordingly, this requirement is satisfied.
Reasonableness of Penalty
In assessing the reasonableness of
a civil penalty for a Prop 65 violation, the Court must 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).)
Under the Act, the amount of the
penalty is not compensatory and is not based on any harm suffered by consumers.
Rather, it is designed to deter misconduct and harm:
The Act is informational and
preventative rather than compensatory in its nature and function. The statutory damages available under the
Act in the nature of civil penalties do not grow out of a claim for moneys due
and owing or for personal harm or property damages that have resulted from
discharge of pollutants or other toxic chemicals, which are actions triable
by a jury at common law. . . . Rather, Proposition
65 is distinguishable in its fundamentally equitable purpose and remedy: to
facilitate the notification of the
public of potentially harmful substances, so informed decisions may
be made by consumers on the basis of disclosure. “Citizens bringing
[Proposition 65] suits need not plead a private injury and instead are deemed
to sue ‘in the public interest.’ [Citation.]” . . . An award of civil penalties under the Act is a statutory punitive
exaction determined on the basis of equitable principles, designed to deter
misconduct and harm, not to compensate the plaintiff for actual damages
sustained. (Citations omitted.) The primary right to bring an action
for civil penalties pursuant to the Act is also given to the state rather than
individuals seeking compensation. (§ 25249.7, subd. (c).) Moreover, the Act
does not have a standing requirement; a plaintiff need not allege or prove
damages to maintain an action under Proposition 65. As such, the statutory
remedies afforded by the Act, including civil penalties, are not damages at
law, but instead constitute equitable relief appropriate and incidental to
enforcement of the Act, which do not entitle the plaintiff to a jury trial.
(Citations omitted.) The “incidental award of monetary damages by a court in
the exercise of its equitable jurisdiction does not convert the proceeding into
a legal action.”
(DiPirro
v. Bondo Corp. (2007) 153 Cal.App.4th 150, 182-184, bold emphasis
and underlining added). Thus, the
purpose of the civil penalty is to deter misconduct and harm in the
future. The amount of the penalty should
be aimed at serving these purposes based on equitable principles.
Here, under the Amended Proposed
Consent Judgment, Defendant will pay a total civil penalty of $10,000 to be
apportioned in accordance with Health and Safety Code § 25249.12(c). According
to the proposed consent judgment, the allocation is to be made 75% to the State
of California Office of Environmental Health Hazard Assessment (“OEHHA”) and
the remaining 25% paid to Plaintiff. (Amended Proposed Consent Judgment 4.1.)
The penalty therefore satisfies the requirements of section 25249.12(c).
1. Nature and extent of the violation.
Plaintiff’s
initial moving papers did not adequately describe the nature and the extent of
the violation. Plaintiff only stated that “consuming one serving of the Covered
Products results in consumers exceeding the daily safe harbor limit for Lead.”
(Dubey Decl. ¶ 3.) The supplemental declaration of Plaintiff’s counsel explains
that the safe harbor limit for lead, as determined by the Office of
Environmental Health Hazard Assessment is 0.5 micrograms per day. (Supplemental
Declaration of Vineet Dubey ISO Mot. ¶ 3.) Although Plaintiff’s counsel does
not provide a proper citation to the appropriate regulation, the Court
independently takes judicial notice of section 25805, subdivision (b) of Title
27 of the California Code of Regulations, which describes this safe harbor limit.
(27 Code Cal. Regs. § 25805(b).) According to the declaration of Al Matulis filed
on September 20, 2023 with this Court, a single serving of the product contains
23 parts per billion of lead, and consuming a single serving per day of the
contaminated product would result in an exposure of 0.672 micrograms of lead
per day. (Declaration of Al Matulis p.3.) Plaintiff also does not directly
state that the risk of exposure to lead is foreseeable, but, as the covered
product is a food item, a foreseeable risk of exposure is apparent from the
record. (See Dubey Decl. ¶ 3.)
2. The number of, and severity of, the violations.
Plaintiff
has provided supplemental materials showing that the contaminated product
contained 23 parts per billion of lead, such that a consuming single serving of
the product per day would result in a daily lead exposure of 0.672 micrograms, more
than 1.25 times the safe harbor limit. (See Matulis Decl. p. 3.) Further, the
Matulis Declaration provides information, submitted under seal, about how many
units were sold and the total revenue for those sales. (Matulis Decl. ¶ 3.) Plaintiff does not state
how many servings were in each unit. However, the Court is satisfied that
Plaintiff has demonstrated the extent of and severity of the violation by
providing proportional contamination levels, rough sales figures, and total
revenue.
3. The economic effect of the penalty on the violator.
Plaintiff’s motion states that the
amount of the civil penalty “is sufficient to remind Defendant that it
must remain aware of and consistently attend to implementing the requirements
of Proposition 65.” Plaintiff has also provided evidence, submitted under seal,
about how many units were sold and the total revenue for those sales. (Matulis Decl. ¶ 3.) In a supplemental
declaration filed on November 2, 2023, Mr. Matulis states under penalty of
perjury that Defendant operated at a loss in 2022, and projects to operate at
further loss in 2023, notwithstanding the revenue earned on the covered
product. (Supplemental Declaration of Al Matulis ¶ 3.) Thus, it appears that a
penalty of $10,000 plus $26,000 in attorney’s fees, which would further
aggravate Defendant’s financial condition, is “sufficient to remind Defendant
that it must remain aware of and consistently attend to implementing the
requirements of Proposition 65.”
4. Whether the violator took good faith measures to
comply with this chapter and the time these measures were taken.
The supplemental Matulis
Declaration states that Defendant retained legal counsel and initiated an
investigation to evaluate its product line once the Notice of Violation was
received. (Matulis Supp. Decl. ¶ 4.) The parties thus contend that Defendant
took good faith measures to comply with its statutory obligations after the
Notice of Violation was received.
5. The willfulness of the violator's misconduct.
Defendant maintains that the lead
in the covered products is naturally occurring and within the statutory limits.
(Matulis Supp. Decl. ¶ 4.) The parties thus contend that Defendant’s violation
was not willful.
6. The deterrent effect that the imposition of the
penalty would have on both the violator and the regulated community as a whole.
Given the sworn testimony of
Defendant’s relatively dire financial condition, the Court is persuaded that
imposition of this penalty would have a substantial deterrent effect on Defendant.
The Court is also persuaded that penalizing a violator in such condition will
have a deterrent effect on the regulated community as a whole.
7. Any
other factor that justice may require.
The
following factors are considered “[other factors] that justice may require”
within the meaning of Health and Safety Code § 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.)
In
light of the new evidence presented above, the Court is persuaded that the
penalty is sufficient. Even if Defendant’s conduct was willful, a small penalty
may nonetheless aggravate Defendant’s poor financial condition and effectively
deter future misconduct. Moreover, it is not clear that a larger penalty would
or could be paid, given Defendant’s financial state.
The Court
has not found evidence of “trading” penalties for attorney’s fees, as would be
relevant under subdivision (b). Here, Defendant is to pay a penalty of $10,000,
in addition to $26,000 in attorney’s fees to Plaintiff’s counsel. The proposed
judgment also includes both reformulation standards and imposes requirements
for serious warnings on non-compliant covered products, beyond the monetary
penalty. Furthermore, the Court finds that $26,000 in attorney’s fees is
reasonable in the context of a Proposition 65 action at this stage of
litigation.
The
proposed consent judgment does not provide for waiver of penalties, so
subdivision (c) is not applicable, nor is there any additional payment to
Plaintiff to which subdivision (d) would be applicable.
Based
on the information provided by Plaintiff, the Court concludes that the penalty
is reasonable.
Release Provision
The Court must also consider
whether the release provision in the proposed consent judgment is appropriately
limited such that it will not deter future public litigation. Consumer
Advocacy Group, Inc. v. Kintetsu Enterprises of America (2006) 141 Cal.App.4th 46, provides some
guidance on this issue:
[Plaintiff]
purports to act on behalf of the public
and the settlement potentially has broad implications as [Plaintiff] describes
it as a “standard for the industry as a whole.” More significantly, unlike in a
settlement between two parties, the Legislature expressly required judicial
review of a Proposition 65 settlement brought by a private plaintiff in
order to safeguard the rights of the public. The parties' agreement to a
mutually beneficial set of terms does not ensure that the policies underlying
Proposition 65 or the public's interest in the litigation were considered. In
contrast to Neary, where the court made clear that “[c]ollateral
estoppel [was] not an issue … .” ( Neary, supra, 3 Cal.4th at p. 284),
respondents seek to use the doctrine of collateral estoppel and refer to it
expressly in each consent judgment.
Where the rights of the public are
implicated, the additional safeguard of judicial review, though more cumbersome
to the settlement process, serves a salutatory purpose. It reminds the parties that, in addition to their own interests, the
public interest is also relevant. It also reinforces the rule that the
“strong public policy favoring the settlement of litigation … does not excuse a
contractual clause that is otherwise illegal or unjust.” (Timney v. Lin
(2003) 106 Cal.App.4th 1121, 1127 [131
D. Application of the Correct
Test Compels Reversal
Some of the provisions of each
judgment are so contrary to the public interest that standing alone, they
require the reversal of the judgments. The broad release purports to preclude the public from future litigation
of both known claims and additionally
discovered ones. Under the terms of the release, any member of the public loses the right to pursue a claim regardless
of whether [Plaintiff] had knowledge of
the claim and regardless of whether relevant scientific knowledge has changed.
The judgments determine that “[t]he provision of said warnings shall be deemed
to satisfy any and all obligations under Proposition 65 by any and all
person(s) or entity(ies) with respect to any and all environmental and
occupational exposures to Noticed Chemicals” and therefore do not cover only past conduct as respondents argue. The provision
allowing defendants to unilaterally opt out arguably renders each judgment
illusory. Similarly, the no force and effect provision not only grants
the parties unusual powers to, on their own, invalidate a judgment, but it also
renders precarious any benefit received by the public from the judgment.
Because these provisions require reversal, we need not evaluate each
provision in the six judgments. Our silence regarding the remaining provisions
should not be interpreted as approval of them.
(Id., at pp. 63-65, bold emphasis added.)
Here, the release provision appears to be
appropriately limited to preserve future litigation. The release refers to those claims which “could have
been asserted from the handling or consumption of the Covered Products, as to
any alleged violations of Proposition 65 or its implementing regulations up
through the Compliance Date based on exposure to Lead from the Covered products
as set forth in the Notices of Violation, the Complaint, and herein.” (Proposed
Consent Judgment ¶ 5.2.) The “compliance date” is 120 days after the effective
date of the consent judgment. (¶ 2.1.) Plaintiff agrees to waive future claims
on her own behalf and not in her representative capacity. (¶ 5.3) The
agreement also expressly provides that the Court will retain jurisdiction to
implement, modify, or enforce the Consent judgment, including as to any future
violations. (¶¶ 11.1-11.2.)
Based on
this showing, the Court is satisfied that the release provision is
appropriately limited so as not to deter future litigation. The Court therefore
finds this release provision permissible.
Consent Judgment Must Serve The
Public Interest
Although the “fair, reasonable,
and adequate” test does not apply, the prerequisites for approving a
Proposition 65 consent judgment are similar. To stamp a consent agreement with the judicial imprimatur, the court
must determine the proposed settlement is just. Respondents' contrary view
ignores the general rule that a trial court should not approve an agreement
contrary to law or to public policy. . . .
* * *
n11 In contexts similar to
Proposition 65 litigation, where judicial review is required, the trial court
is required to ensure that its judgment is fair. . . .
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. Health and Safety Code section 25249.7, subdivision
(f)(4) provides: “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 … to the court for approval … and the court may approve the
settlement only if the court makes all of the following findings: [¶] (A) Any
warning that is required by the settlement complies with this chapter. [¶] (B)
Any award of attorney's fees is reasonable under
(Kintetsu,
supra, 141 Cal.App.4th at 61-62, bold emphasis added.)
Here, in consideration
of the evidence presented above, the Court concludes that the proposed consent
judgment satisfies the public interest.
Conclusion
As the
Court finds that the proposed consent judgment satisfies the public interest,
the Plaintiff’s motion should be granted and the consent judgment approved.
CONCLUSION:
Accordingly,
Plaintiff’s Motion for Approval of Proposition 65 Consent Judgment is GRANTED.
Moving
Party to give notice.
IT IS SO ORDERED.
Dated: November 20,
2023 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
before the hearing. All interested parties must be copied on the email. It
should be noted that if you submit on a tentative ruling the court will still
conduct a hearing if any party appears. By submitting on the tentative you
have, in essence, waived your right to be present at the hearing, and you
should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.