Order: WHITNEY R. LEEMAN VS. STARBUCKS CORPORATION ET AL

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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO

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Case Number: CGC-16-555322
Filing Date: Nov-01-2017 11:33
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Image: 06087694
ORDER

WHITNEY R. LEEMAN VS. STARBUCKS CORPORATION ET AL

001C06087694

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Clifford A. Chanler, State Bar No. 135534
Josh Voorhees, State Bar No. 241436
THE CHANLER GROUP

2560 Ninth Street

Parker Plaza, Suite 214

Berkeley, CA 94710-2565

Telephone: (510) 848-8880

Facsimile: (510) 848-8118
clifford@chanler.com

josh@chanler.com

Attorneys for Plaintiff
WHITNEY R. LEEMAN, PH.D.

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO
UNLIMITED CIVIL JURISDICTION

WHITNEY R. LEEMAN, PH.D.,
Plaintiff,
v.
STARBUCKS CORPORATION; et al.,
Defendants.

Case No. CGC-16-555322

[PR ‘D] ORDER APPROVING

PROPOSITION 65 SETTLEMENT AND
CONSENT JUDGMENT

Date: October 13, 2017
Time: 9:30 a.m.

Dept: 302

Judge: Hon. Harold E. Kahn

Reservation No. 6210807-16

ORDER APPROVING PROPOSITION 65 SETTLEMENT AND CONSENT JUDGMENToe YN A HW PF WN

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Plaintiff Whitney R. Leeman, Ph.D. and defendants: (1) Anhing Corporation; (2)
DavidsTea USA, Inc.; (3) Family Foods International, Inc.; (4) Frontier Cooperative; (5)
Granum, Incorporated; (6) Harris Tea Company, LLC; (7) Hocean Inc.; (8) International Coffee. ,
& Tea, LLC; (9) International Tea Importers Incorporated; (10) Rockman Company(U.S.A.),
Ine.; (11) Starbucks Corporation; (12) Starway Inc.; (13) Ten Ren Tea Co. of San Francisco,
Ltd.; (14) Twinings North America, Inc.; (15) Uncle Lee’s Tea, Inc.; (16) Wei-Chuan U.S.A.,
Inc.; (17) Williams-Sonoma Inc.; (18) Winneram International, Inc; and (19) Yamamoto of
Orient, have agreed that judgment be entered in this Health and Safety Code section 25249.5 et
seq. (Proposition 65) action pursuant to the terms of the stipulated judgment (Consent Judgment)
executed by the parties and attached to the proposed judgment as Exhibit 1.

After consideration of all papers submitted in support of and opposition to Plaintiff's
motion to approve the consent judgment, and the oral arguments presented by counsel of record
for the parties and Deputy Attorney General Pollak for the Office of the Attorney General on
October 13, 2017, the Court finds that the terms of the Consent Judgment meet the criteria
established by Health and Safety Code section 25249.7(£)(4) in that:

1. The warnings that are required by the Consent Judgment comply with
Proposition 65, including the warning threshold;
2. The award of attorneys’ fees under the settlement is reasonable under California
law; and
3. The payment of civil penalties required by the settlement is reasonable based on
the criteria set forth in Health and Safety Code section 25249.7(b)(2).
In addition, the Court finds the Consent Judgment furthers the public interest and provides a
public benefit. The Court’s reasoning and additional findings are more fully set forth in the
hearing transcript, a copy of which is attached as Exhibit A and incorporated herein.
Accordingly, the Motion for Approval of the Proposition 65 Settlement is GRANTED.
IT IS SO ORDERED. :

Dated: ol . Wr

SEE EXHIBIT #-RE
sepia CRC 3.1312

JUDGE OF THE SUPERIOR COURT

ORDER APPROVING PROPOSITION 65:SETTLEMENT AND CONSENT JUDGMENThp
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IN THE SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
HONORABLE HAROLD E. KAHN, JUDGE PRESIDING
DEPARTMENT 302

--000--

WHITNEY R. LEEMAN, COPY

Plaintiff,

vs.
Case No. CGC-16-555322

STARBUCKS CORPORATION, et

al.,

Defendants.

REPORTER'S TRANSCRIPT OF PROCEEDINGS

Friday, October 13, 2017

REPORTED BY:
REYES F. HUNTER
C.S.R. No. 6576APPEARANCES:
FOR THE PLAINTIFF:

FOR THE PLAINTIFF
(via CourtCall):

FOR THE PLAINTIFF
(via CourtCall):

FOR THE DEFENDANTS,
Starbucks International
Coffee and Tea, Twinings
North America, Inc.:

FOR THE DEFENDANT,

Anhing Corporation,
Winneram International,
Inc., Williams-Sonoma,
Inc., Yamamotoyama,
International Tea
Importers, Inc., Family
Foods International, Inc.:

FOR THE DEFENDANTS,

Uncle Lee's Tea, Harris
Tea Company, Ten Ren Tea
Company, and Granum, Inc.,
and DavidsTea

FOR THE DEFENDANTS
(via CourtCali)
Prince of Peace
Enterprises:

FOR THE DEFENDANTS
(via CourtCall)
Frontier Co-op, Hocean,
Inc., Rockman Company,
Starway, Inc. and
Wei-Chaun USA, Inc.:

!

THE CHANLER GROUP

Parker Plaza

2560 Ninth Street

Suite 214

Berkeley, California 94710
BY: JOSH VOORHEES, ESQ.

THE CHANLER .GROUP

Parker Plaza

2560 Ninth Street

Suite 214

Berkeley, California 94710
BY: CLIFFORD A. CHANLER, ESQ.

THE CHANLER GROUP

71 Elm Street

Suite 8

New Canaan, Connecticut 06840
BY: TROY C. BAILEY, ESQ.

MORRISON & FOERSTER

425 Market Street

San Francisco, California 94105
BY: MICHELE B. CORASH, ESQ.

and NAVI S. DHILLON, ESQ.

ROGERS JOSEPH O'DONNELL, PC

311 California Street

10th Floor

San Francisco, California 94104
BY: JAMES ROBERT MAXWELL, ESQ.

GREENBERG TRAURIG, LLP

1201 K Street

Suite 1100

Sacramento, California 95814
BY: GREG SPERLA, ESQ.

G&P | SCHICK

99 Almaden Boulevard

Suite 740

San Jose, California 95113
BY: ANNALISA S. ZULUETA, ESQ.

PEG CAREW TOLEDO, LAW
CORPORATION

3001 Douglas Boulevard
Suite 340

Roseville, California 95661
BY: PEG CAREW TOLEDO, ESQ.APPEARANCES:

FOR THE OBJECTOR:

STATE OF CALIFORNIA
DEPARTMENT OF JUSTICE

OFFICE OF THE ATTORNEY GENERAL
1515 Clay Street

20th Floor

P.O. Box 70550

Oakland, California 94612

BY: HARRISON M. POLLAK,

DEPUTY ATTORNEY GENERAL

--000--In oO ® WH EB

October 13, 2017 9:38 A.M.
PROCEEDINGS
---000---

THE COURT: Let's go on the record. Line 7.
Leeman vs. Starbucks.

MR. VOORHEES: Good morning, Your Honor. Josh
Voorhees appearing on behalf of the plaintiff,

Dr. Leeman.

MR. SPERLA: Craig Sperla for defendants, Uncle
Lee's Tea, Harris Tea Company, Ten Ren Tea Company, and
Save Mart.

MR. MAXWELL: Good morning, Your Honor. © James
Robert Maxwell with Rogers Joseph O'Donnell, appearing
on behalf of defendants, Williams-Sonoma, Winneram,

Anhing, International Tea Importers, Yamamotoyama, and

Family Foods.

MS. CORASH: Good morning, Your Honor. Michelle
Corash and Navi Dhillon of Morrison & Foerster,
appearing on behalf of Starbucks International Coffee
and Tea, Twinings, and any of the other settling
defendants who are not separately identified by counsel
in today's hearing. Thank you.

MR. POLLAK: Good morning, Your Honor. Harrison
Pollak for the Office of the Attorney General.

I do havea question. Is it okay that I have a
bottle of water at counsel table?

THE COURT: The comment, if that is the right word,

from me is as long as it doesn't have a covered chemicalby Proposition 65.

MR. POLLAK: It is in a plastic bottle.

THE COURT: The answer is: Of course.

MR. POLLAK: Thank you.

THE COURT: First, I want to say, "Thank you" to
counsel for Dr. Leeman and Morrison & Foerster firm for
providing me with extra copies of the paperwork; and
particularly, Dr. Leeman's counsel for putting them all
together in such a lovely binder. Would that I had all
of my cases put together so easily as that. So I really
appreciated that.

And I very much appreciate the Attorney General's
office's appearance here. I welcome you. Now that you
know the way, please come back often.

MR. POLLAK: It will all depend on how you rule, I
suppose.

THE COURT: JI think that that should have no impact
on this.

So it seems to me that the parties are talking past
each other. Let me read some sentences from the
attorney general's supplemental brief and see if anybody
disagrees with that.

Top of Page 7, Lines 2 and 3, "Requiring companies
to comply with the standards that they already meet does
not confer a public benefit and does not merit Court
approval of a consent judgment under Proposition 65."

Anybody wants to jump in, tell me whether you agree

or disagree with that? I would like to hear.NS

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MR. VOORHEES: Well, Your Honor -- Josh Voorhees
appearing on behalf of Dr. Leeman.

All the evidence presented, which is undisputed, is
that a portion of tea sold and the declaration is five
percent.

THE COURT: You're drilling down. ‘You're applying
it to this case. I'm not. I'm simply taking this very
general statement made by the attorney general and
wanting to know whether as a general proposition -- we
can talk about its application later -- but as a general
proposition, do the -- Dr. Leeman or the defendants who
are willing to speak agree, disagree, or not have an
opinion.

And I'll read it again. "Requiring companies to

comply with a standard that they already meet does not

confer a public benefit and does not merit a Court
approval of a consent judgment under Proposition 65."

MS. CORASH: Your Honor, as stated, I think that
sentence is overly broad. if the sentence said, "Does
not necessarily confer public benefit," I don't think I
could disagree with it. But there are plenty of
circumstances, and this is one of them, where there is
-- where two conditions exist that make the current
facts not --

THE COURT: You're doing what I --

MS. CORASH: I'm not going to talk about this case.
I'm just going to explain my sentence.

THE COURT: So your answer is: It depends.ss

MS. CORASH: My answer is: As stated, I disagree
with it. It's too rigid. It's overly broad.

THE COURT: What if the sentence was -- take out
the words, "does not confer a public benefit" and just
says, "requiring companies to comply with the standard
that they already meet does not merit Court approval of
a consent judgment under Proposition 65."

If we just eliminated this public benefit stuff
that I understand the plaintiff and defendants believe
is adding a requirement that doesn't exist for
settlement.

MS. CORASH: I would disagree with it, particularly
if you're talking about Proposition 65 cases.

THE COURT: How about the sentence? Do you agree,
or disagree, or have no view as to the accuracy of,
"requiring the companies to comply with the standard
they already meet does not merit Court approval of a
consent judgment under Proposition 65"?

MS. CORASH: It's not a sentence I would agree
with.

THE COURT: And why not?

MS. CORASH: First of all, I'm trying to live by
your rule that we not talk about this case.

THE COURT: I'll lift the rule. Say anything that
you wish.

MS. CORASH: What constitutes meeting a standard
when you're talking about this statute is itself a

subject of considerable dispute, as our friend, the lateSB WN

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Judge Brick, could have explained in great detail.

Where a standard is articulated, and explained, and
identified for the first time as is true in this
settlement and has been true in other Prop 65
settlements, that confers a real benefit to those who
have to comply with the law, to those -- ‘to the public.
And to those who use the products or live in the
environment that is created by those who comply with the
law --

THE COURT: The attorney general's position, to the
extent I understand it correctly, is that's not the rule
of a citizen enforcer to establish the law. That's a
regulatory function that others have. The role of a
citizen enforcer is to find violations and go out and
having them remedied.

And if what the standard that is going to be set is
one that is high -- sufficiently high that, in this
case, the assertion that I don't think I've heard
anybody disagree with, that 15 of the 19 defendants who
are subject to the settlement that's sought to be
approved today,. there's no testing that indicates that
they have ever exceeded the standard that that -- that
there's no reason why that should be a live controversy.

Why are you setting a standard above what 15
companies have ever done? Am I capturing the flavor of
your position?

MR. POLLAK: You are.

MS. CORASH: .So two things about that; one is theww N

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-- the --

MR. CHANLER: I didn't hear the --

THE COURT: Could you talk a little louder for
those on CourtCall?

MS. CORASH: Yes. Sorry.

The data the Court referred to are the data in the
record. We don't know what other data there might be.

THE COURT: Even that's problematic on a separate
reason. The attorney general says that they've asked
for information and Dr. Leeman has refused to provide

it, which does concern me. I don't see that that is a

basis for the attorney general to -- or is not -- the
attorney general is not arguing that that, in and of
itself, is grounds to deny approval of settlement.

But I'm troubled by that. I don't really
understand why Dr. Leeman wouldn't empty her pockets and
show everything she's got with regard to testing that's
germane to the settling defendants, but we can talk
about that later.

MS. CORASH: Well, may I go back --

MR. CHANLER: Your Honor, this is Cliff Chanler.

We don't agree with that --

THE COURT: One second, Mr. Chanler.

MR. CHANLER: That's not at issue at the moment.

So I just wanted to make sure the Court either allows us
-- if it is concerned about that representation, and now
our response, as put forth by the AG's office, that we

be able to have the opportunity to enlighten the Court

PoMe,

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on that issue.

THE COURT: You will. But you also filed a brief
after the attorney general's supplemental objection, and
I didn't see anything in that brief that disputed the
assertions in the attorney general's brief on that
point. But we'll get to that ina minute. Ms. Corash
has more to say.

MS. CORASH: I'd like to go back to the Court's
larger point on who sets standards. In the 30-year
history of Proposition 65, the practice has evolved with
the participation and concurrence of the office of the
attorney general and of the regulatory agency charged
with Prop 65 regulation writing and standard setting of
standards for particular products set almost entirely,
almost entirely by settlements or litigation. The vast
majority of those are settlements.

THE COURT: So the common law of Proposition 65 is
that settlements do serve the function of regulation?

MS. CORASH: That's probably further than I would
go, but that's not an inaccurate description. And, of
course, there are lots of safeguards because all of
those settlements are submitted to the attorney general
who can weigh in on everything, including the
appropriateness of the standard, whether the standard in
the attorney general's view does or does not comply with
the law.

And as the Court is aware, in this instance when

the settlement was first filed with the Court and witheo OY WD TO FW DH PB

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the attorney general, the attorney general's office did
object to the warning threshold, warning standard, what
everyone wants to call it, did object to that standard.

The parties met with the attorney general, provided
more information, changed the standard in the
settlement, and the attorney general has now withdrawn
its objections to the standard.

THE COURT: But there's nothing inconsistent with
withdrawing objections to the standard and saying, "As
to the 15 defendants, for whom there is no evidence that
they have ever exceeded that standard, they really
shouldn't be in the case and should be dismissed rather
than settled out."

That's what I understand the attorney general to
say, although they didn't put it in so many words.

MR. VOORHEES: Your Honor, Josh Voorhees to respond
to that point. I think that the plaintiff and the
defendants have a different view of what the triable
issue would be. And Your Honor just said, "If they
don't meet the standard, perhaps’ it should be
dismissed."

Plaintiff's position for trial is documented in the
supplemental declaration of Cliff Chanler and is far
below ten. And defendant's position starting out was
far above ten. So there's a difference that I think we
should all be aware of, of what the position at trial
would be versus the mediated compromise of ten.

So certainly, Dr. Leeman believes there's ats

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violation as to every single defendant that is standing
up here and all the other defendants in the action. And
Dr. Leeman has produced to the attorney general lab
results in support of every single individual notice
that supports the position that they have lead in excess
of that trial position. And.I believe that's what

Mr. Chanler was alluding to earlier.

Dr. Leeman has given the attorney general, as part
of every notice, evidence of a violation. So in terms
of where this case would go, I don't believe the
position is if they don't get the standard they'd be
dismissed. I think the position is we each go back to
our trial positions. The compromise of ten is gone. So
I just wanted to make that distinction clear.

THE COURT: And I understand that. ‘But I think the ,
logic of the attorney general's position is you can't or
shouldn't be able to logically compromise at a standard
which, as to some settling defendants, they've never
exceeded. Correct?

MR. POLLAK: Yes.

THE COURT: Sure that that works for those who have
exceeded it. And that sure you can compromise as to the
standard because settlements are encouraged, and it's a
good deal for everybody to have a standard where there
hasn't been one before.

But your discretion on picking a standard, the
floor is, as to any particular settling defendant, what

the settling defendant has shown to have exceeded atoY DW oO BR WN PB

13

some time in the past. And if you can't come up with a
standard that's like that, that's ‘supportable
scientifically, then the defendant shouldn't be in the
case. And that's where-the dismissal comes in. That's
how I understand the attorney general's position.

I'm not’ saying that that's right. I'm just trying
to flush it out and to hear each side's view of it.
Because my reading of the last three briefs, the one by
the attorney general and the one by Starbucks and the
one by Dr. Leeman felt like they were talking past each
other.

MS. CORASH: Your Honor, if the Court were to say

‘to the parties here that it is the Court's position that

it will dismiss those defendants for whom there is not
evidence that they've exceeded the standard, but will
keep in the case those that have exceeded the standard,

Starbucks, for which a test result has been submitted,

_that purports to be in exceedance of the standard, would

ask the Court for the right to put on evidence to
demonstrate that in its view that test result is
incorrect and not representative. And we would end up
doing in the context of settlement exactly what we're

trying to avoid by settling the case; which is, having

; an evidentiary argument.

That is just one of many types of evidence that
would be the subject of extensive litigation and expense
if the case isn't settled.

But it's a -- it's a curious and novel notion thatmB Ww NY PB

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where the parties agree on a compromise standard and
that some of them or that some of their products may not
exceed that standard, that's a -- an alternative is
dismissal.

THE COURT: Let me tell you why I don't think it's
so curious. Because I'm going to look at it froma
different way. I don't purport to know one part per
billion about Proposition 65 of what all of you'do. But
I do know a little bit about injunctions, and that's
effectively what this consent judgement is.

You can't normally get an injunction unless you
show that the party who is enjoined has either violated
the law, violated what they're being enjoined against,
or that they are threatening to do so.

And the logic of the attorney general's position
is, sure, the ten-part-per-billion standard makes a lot
of sense or it doesn't make so much lack of sense that
the attorney general's going to object on that ground.
But for those who assume there is no showing that
they've ever violated -- or ever threatened, violated,
why should there be any settlement? Why should there be
an injunction?

MS. CORASH: Because Proposition 65 is not the
norm. And what makes it unusual is directly relevant to
your question. And I apologize for repeating what -- in
part, what's in our brief.

THE COURT: No, this is all new to me, so I

appreciate any help I can get.

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MS. CORASH: Under Proposition 65, the plaintiff's

only burden is to show knowing and intentional exposure

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“to a detected amount of a listed chemical.

The plaintiff has done that here. As in many, many
cases, the defendants have not contested it. It's
pretty easy to detect it in lots of things. Presumably
that information was provided to the attorney general in
the confidential certificate of merit that the plaintiff

is obligated to provide to the attorney general at the

time.

It puts defendants on notice that it intends to
file enforcement action. And that point when -- once
the plaintiff has made that very minimal showing -- not
necessary here because it's -- it is admitted by

defendants -- at that point, the burden shifts to the

_ defendants.

If they fail to meet that burden, either because
they choose not to or they can't because they can't
afford to, or they fail to, they try, and the Court
rules against them. At that point, the plaintiff's
entitled to injunctive relief, and the Court will issue
it.

Now, presumably, I assume, although I'm not aware
of any cases where this has occurred, defendants would
be entitled to come in and address appropriate remedies
and, at that point, to make a showing to the Court of

what the level is above which a warning must be

provided.

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And here, you have products which change all the
time. The place where tea is grown changes. The
sourcing changes. The makeup of tea changes. There's
been lots of changes over the last decade as people have
moved into exotic and herbal teas. So that this
standard not only has life in terms of looking
backwards, but not only has life in looking forward.

This settlement, unlike prior settlements approved
by the Court in this case, covers all of the tea
products by these companies. Some of them are large
companies: They have dozens. In some instances, even

hundreds of different tea products. And they probably

have had new products come on since this case started.

So this standard, as I said, it's not only a
question of whether there's evidence it was violated in
the past, but it is going to apply prospectively.
Without it, we're going to continue having arguments
about whether a detectable amount of tea does or does
not require a warning, because that determination is one
that involves defining and determining a host of very
complicated scientific issues on which these parties
disagree.

And parties, generally, in Prop 65 cases disagree.
They're fact based, not law based. They're expensive to
litigate. And everyone benefits, including the public,
from having an appropriate standard. And by
"appropriate," the question is: Does it satisfy the

safety standards in the statute, not is it a standard

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the defendants for trying to enter into this settlement.
We understand that if they have this standard, it will
benefit them to have a standard. So we certainly don't
mean to cast my blame.

But I think the answer to that question, sort of
big policy answer, is that if plaintiffs could bring a
case and defendants could pay their fees, maybe even pay
a civil penalty in order to get a standard that is above
what they already met, that the plaintiff couldn't prove
a violation of that standard, it would encourage this
type of -- I don't mean "this type of." It would
encourage meritless litigation we think.

And that's why it is important that the Court --
that the Court, in our case that the attorney general,
look at these settlements and say, "It's not enough that
this makes sense to the defendants to enter into this
settlement. It's not enough that it makes sense to the
plaintiffs. You have to look at the public interest."

THE COURT: You just said something different than
I think your brief said. I hear you. Maybe it wasn't
intentional as actually pulling back from a more
bright-line position.

The way I read your brief was, Judge, while it's
okay to go ahead and approve the settlement of the four
of the 19 for which there is data that they've exceeded
the ten parts per billion, the other 15 don't approve
it. If it's all one deal, require them to go back to

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Here, now, I'm hearing you say something more like
this should be a presumption, that if the settlement
standard is low enough -- excuse me, high enough that
some or all of the settling defendants have ever
exceeded, then it's -- the duty is on them to explain
why there should be this standard rather than a -
categorical prohibition. And if that's-the case, and
that seems, to me, more in keeping with flexible rules
instead of in-flexible hard and fast guidelines, or hard
and fast obligations that aren't in the statute, then
why isn't it -- why haven't the defendants shown that
here -- the parties shown that here when four of the
settling defendants have tested in what is arguably
something of a fungible product above the settlement
product?

MR. POLLAK: If it sounded like I backtracked, I
did not mean to. Because, in fact, we do believe
there's a bright-line rule that should be observed. For
a company where it's not shown that there's no evidence
that they violated the standard, we don't think the
settlement should be approved, can be approved. And
that's true of fifteen of these companies.

As to the four companies where there is a single
test result that's above the standard, we actually
disagree that a violation of the standard has been
shown. And that's because the standard is being set by
the consent judgment. The consent judgment is what the

Court, were it to approve it, would -- it would become

19BW NY

the Court's decree.

And you cannot look at the standard alone. You
have to look at Section 3 --

THE COURT: The averaging.

MR. POLLAK: -- which is the enforcement provision,
the averaging. And just to illustrate that, if the
plaintiff -- let's say the Court approves this and now
becomes the law, this ten parts per billion.

If the plaintiff were to show up with a single test
result showing a violation, the defendants could go out
and do as much testing as they want or need in order to
bring an average level down.

So we actually don't even agree that for the four
defendants you have evidence of a violation, but,
certainly, for the fifteen where there's not a single
result --

THE COURT: But we have evidence of a threatened
violation for them.

MR. POLLAK: Potentially.

THE COURT: There can't be any violation until the
consent judgment is entered.

MR. POLLAK: That is true. That is true.

THE COURT: I mean, what you're basically saying is
there shouldn't be an averaging. It should just be any
result stands on its own.

MR. POLLAK: Well, no, we're not saying, “should.”
But we're saying that it would; that is the standard

that is being set, and so the plaintiff's evidence

20© OI Dn HO BF Ww NY PB

NN NY NN NN NN BPP BP BB BP Pp
2 IF OF BF WH FP Co WAI Do eB wWNH HE OD

should be measured against that standard.

One other thing I want to go back on --

THE COURT: But the way you've just described it,
potentially, any time you have averaging that allows the
defendants to take multiple tests, you never know
whether there's going to be a violation.

MR. POLLAK: That's exactly right. So the question
is then: What would be enough? What could the
plaintiff have done? And what we would say there is
that this, ultimately, it's up to the Court to look at
the evidence and decide, does this evidence support the
findings that the Court needs to make? And there's
nothing in the record to support these individual
results being reliable. They could be lab errors for
all we know. We just don't know. It is incredible to
us that the plaintiffs didn't do duplicate testing when
they got these outlier results. And yet, apparently,
they didn't. We don't think they did it. We haven't
seen that they have.

So the idea that they could rely on a single -- oh,
the other thing I was going to say is what the evidence
shows is that those -~ probably those results are
outliers with no real explanation. Defendant said if
allowed to go to trial, they would show they're not
accurate.

What we do know about the plaintiff's testing is
that they tested hundreds of teas, and they got, at

most, nine results that were above ten. And so, of

21oY Dn oO ® WH PB

course, the plaintiff is not going to be able to come in
and prove that, you know, if averaged every time, a
violation will be a violation, but it needs something.

THE COURT: So -- but your position effectively
mandates lengthy and costly litigation because there's
no out, at least as far as the defendants are able to
discern. If they could find an out, presumably that is
cheaper than the settlement, they would have done it.
Because I'm sure that they're -- at least, I suspect
they're rational actors.

MR. POLLAK: Your Honor, that goes to the question
of what should happen were the Court to dismiss this
case. And there are several different possible
outcomes, not to dismiss the case -- there are several
outcomes.

MR. CHANLER: This is Cliff Chanler. Every time
someone mentions dismissing the case, I don't know if
that's a term of art that people are using --

THE COURT: Mr. Chanler, I'm going to ask that you
wait until people are finished. You've chosen to appear
by telephone, and you do have counsel here. I'm glad to
hear from you, but we do need to go in a bit of an
orderly fashion. And it's much easier to do that with
the people who are in the courtroom here.

So I know you want to speak, and you will have that
opportunity. But let the attorney general's
representative continue right now.

MR. POLLAK: The point I was trying to make, Your

22

PooY Dn UV BR WN

Honor, if the Court were to reject the settlement and
put the parties back into litigation, our office is not
taking a position on what should happen next. Would
there be a lengthy trial? Would the plaintiff dismiss
defendants? We don't know. We haven't taken a
position.

What I can tell you, though, is that our office, if
we had brought a case and agreed to-a standard and gone
before the Court and defended the standard as complying
with the law, I think -- and the Court did not accept
that settlement, in the exercise of prosecutorial
discretion, it would be very difficult for our office
to, then, stand up and argue for a lower standard,
because we're representing the public interest. And by
being here the suggestion is that this is in the public
interest.

So speaking for us, I. don't think we would go on
and litigate. That said, we have not: asked the Court to
dismiss the case. We're simply -- what's before the
Court now is a motion to approve the settlement. And
our view is that it can't be approved.

THE COURT: So running through the briefs of the
plaintiffs and Starbucks, although not said exactly this
way, is that there's an unfairness about the attorney
general's position that the attorney general has --
issues settlement guidelines, there's regulations that
need to be adhered to, but nowhere in the guidelines or

regulations is there anything about the position thatB WN PR

od Dn Ww

you're taking here today, that you -- that parties
cannot agree to a settlement which has a standard ina
disputed litigation as to what would be the appropriate
standard that is higher than one or more settling ,
defendants, for which there's evidence of one or more
settling defendants have exceeded.

So you're adding to the settlement rules when you
have had a full opportunity, through regulation or
guidelines, to make that clear. It's kind of a due
process issue. They didn't put it this way, but that's
how I interpret their comments.

Now, they may not be happy with that, because then
the reaction might be, well, you'll go back and you'll
put it in your guidelines, you'll put it in your
regulations, but at least you won't have to deal with it
in a future case. Not this one.

MR. POLLAK: Your Honor, I actually don't think
they're making that argument, because that is in our
regulations. In fact, we recently amended our
regulations. And counsel on both sides of the table
commented on this specific provision.

THE COURT: So tell me the regulations that
addresses this point.

MR. POLLAK: So Title 11, Section 3201 of the
attorney general's guidelines for Proposition 65
settlements, which are not binding on the court, but
they do disclose the attorney general's views for

settlement for the benefits of Court. And what it says

24

oeord FD oO F WN BK

in subdivision B2 --

THE COURT: Do you quote this in your paper?

MR. POLLAK: Yes, we certainly cite it -- yeah, we

also quote it. So it's Section 3201(b) (2). It might be

in our original objection. Do you want me to find where

we --

THE COURT: I would, so I can read along with you.

MR. POLLAK: Okay.
THE COURT:

The reason I asked that is I thought

the position of

Dr. Leeman and Starbucks was that there
is no regulation or settlement guidelines along the
lines of what you're using to contest’ the settlement
here.

MR. POLLAK: So, your Honor, in our original

objection, dated July 27th -- do you know what tab it is

in your binder?

MR. VOORHEES: Which document?
MR. POLLAK: It's our original objection, the
July 27th objection.
THE COURT: I think it's Tab 8 in this wonderful
binder provided by Dr. Leeman's counsel.
MR. POLLAK: Page 5 of that brief.
THE COURT: Yep.
MR. POLLAK: And this is quoting from our

regulation: "Where a settlement sets forth a standard

or formula for reformulation, supporting evidence should

show that at least some of the products in controversy

in the action either are, or at some time, relevant towon UR

27
28

26

the litigation were above the agreed upon reformulation
standard or formula, or else the mere agreement to a
reformulation standard or formula may not establish the-
existence of a significant public benefit."

THE COURT: So I guess the position of Dr. Leeman
and Starbucks and the other defendant is the existence
of a significant public benefit is not a requirement to
approve a settlement?

MR. POLLAK: Yeah. And if I could respond to that,
Your Honor. There's two bases of a requirement for
showing a public benefit. First, you have an express
finding that the Court has to make that's in the statute
that the attorneys' fees are reasonable under California
law.

What defendants are arguing now -- I've never heard
this argument in the hundreds of motions, including this
one -- is that really the Court is only supposed to look
at the amount of the fees, not look at whether the
plaintiff is entitled to the fees in the first place.

And if you look at the different cases that

construe what was the legislature's purpose in requiring

judicial settlement of requirements, it's clear that the

legislature wanted to make sure, with respect to the
attorney's fees, that the plaintiffs earned them and
that they deserved them, that there was some public
benefit that justified the award. That's a statutory
basis. .

You also have -- independent of the Court'sw NY BR

n

statutory findings, you have this independent
requirement that the Court find that the settlement is
in the public interest, and the cases -- we cited the
Kintetsu case for that proposition. There's also the
CDG vs. Rental Housing Industry, 137 Cal.App.4th 1185
discusses that.

THE COURT: And you believe conferring a
significant public benefit is the same thing as the
settlement being in the public interest?

MR. POLLAK: Your Honor, we, perhaps, blurred that
a little bit. I think there are two separate
requirements. Is a significant public benefit more of a
public benefit or less than being in the public
interest? I don't know. And we could have probably
done a better job of separating those two. But we do

think there are two separate.sources of requiring a

“public benefit.

Your Honor, I want to quote from the plaintiff's
memorandum of point and authorities in support of the
settlement at Page 8, their original brief. Because
now, what I read the response to be saying is that they
don't have to show a public benefit. The Court just has
to determine that the settlements are not illegal,
unjust, or ignored the public interest. The Court has
to make sure that the settlement does not ignore the
public interest. That's not the standard.

On Page 8 of: the plaintiff's opening brief --

THE COURT: Tab 2 of the binder that was given meeB WN

oY HD Ww

by Dr. Leeman's counsel.

MR. POLLAK: They write, "A Proposition 65
settlement should serve the public interest. -A
settlement that does not serve the public interest or
offer a public benefit should be denied by the Court."
And they cite the same case that we've cited, which is
contested.

So this idea that their office somehow did not have
any support in the law for this idea that the Court
needs to ensure a Prop 65 settlement in advance of the
public interest is in the public interest, that came out
of left field. That's simply not the case. The case
law in the statute show that the Court does need to find
public benefit.

THE COURT: Play it out. I deny approval here.
What's the decision tree? What's going to happen?

MR. POLLAK: Your Honor, I really don't -- I'm not
sure I'm the one to ask that question to.

THE COURT: Isn't it obvious? There's only a few
possibilities; one is the parties could renegotiate the
settlement and raise the settlement standard so that
there is evidence that each of the settling defendants
-- excuse me, lower the settlement standards so that
each of the settling defendants has at one time in the
past either exceeded, or in the case that it would be
threatening to exceed, the standard, or they litigate.
Right? Those are the only two.

MR. POLLAK: Well, there are three.

28oY FD OW F Wry BB

29

THE COURT: What's the other option?

MR. POLLAK: The plaintiff dismisses defendants and
either dismisses the entire case -~

THE COURT: What world do you live in? That may be
the world of the attorney general and public lawyers;
and I'm not disparaging private lawyers, but that's not
what they do.

MR. POLLAK: I mean —-

THE COURT: Isn't that right?

MR. POLLAK: You're asking what the three possible
scenarios, Your Honor. I do think that is a possible
scenario.

THE COURT: I can ask Mr. Chanler right now what's
the possibility of them dismissing this case if this
isn't approved. I bet he'll say, "Zero."

MR. CHANLER: Zero.

THE COURT: Okay.

MR. POLLAK: As far as the first idea that the
defendants could agree to a stricter standard, that is
what other defendants in this case have done. You know,
and those defendants -- it's interesting, all of the
consent judgements the Court already has approved. I'm
not sure if you approved the Peerless one. There's one
exception, but most of them. Those defendants agree to
a .8 parts-per-billion standard instead of the ten parts
per billion.

However, if the Court approves this standard, those

automatically bump up to ten. But you do have companiesoY Dn oO BF WN PB

that have agreed to that lower standard. So perhaps,

that would happen. We just don't know.

THE COURT: .So they have a choice. Agree to a

standard which they, the defendants, that they think is
scientifically wrong and is contrary to their best
information, or spend lots of money and -- for
litigation which has an uncertain outcome.

MR. POLLAK: It's an unfortunate choice, but yes,
that's the choice. Because a third -- I'll say a fourth
choice, because I'm still putting the choice out there
that the plaintiffs dismiss.

But the fourth choice that this get approved, what
you end up having is you have more and more cases like
this, and that's not a good choice either.

THE COURT: (No, there's another choice, but not for
this case, that the statute could be amended so that
plaintiff can't bring a case, or that would exceed this,
or that they would have to satisfy the attorney general
in some way, or that there would be a motion to dismiss
that might be comparable to an anti-SLAPP motion to
dismiss, but we don't have that now. And effectively,
you would be importing that to the detriment of the
defendants, but not to the detriment of the plaintiff.

Now, with your standard ~- because the defendants
don't have any kind of magic bullet to get out of the
case. You're not telling me. They're not telling me.
In fact, they're telling me the opposite. The only way

to get out of this case is through a settlement, whichoY nD Ww

they may not think is great, but it's better than the
alternative.
MR. POLLAK: It's a decision they have to make. I

don't know what more I can say. I don't think -- again,

we get why the defendants want to enter into the

settlement, but that's not what we look at. And it's
not what the Court should be looking at in determining
whether the public is getting anything out of the
settlement.

THE COURT: Okay. Mr. Chanler, I said you'd have
an opportunity to speak. Now is your time.

MR. CHANLER: Your Honor, I -- I've been a lifelong
asthmatic. From what I understand, today's the worst
day to be outdoors. So there's actually a medical

reason that I'm not sitting in the courtroom at the

Imoment, but Mr. Voorhees is there.

Josh, would you like to respond or would you like
me to raise a few points that have been discussed
already? It's up to you.

MR. VOORHEES: I just have a couple of responses.
Then I can turn it back to you.

One, with respect to plaintiff arguing both that
she believes the settlement is in the public interest
and that she believes it confers a public benefit, I see
no problem with that. That's Dr. Leeman's position.

Legally, what is required is that it meet the
public interest. So the fact that she believes this is

a settlement that accomplishes both doesn't change themB WN

od vn Ow

32

legal standard that both the parties briefed.

It's a minor issue, but I believe the guideline
that should have been cited is Bl. B2 is fora
settlement that has a brief formulation standard only.
Bl addresses a situation where there is no warning
provided, and that a reasonable threshold is, then,
established. And there's no dispute of that here. And
then, the test is that at least some of the products in
the action be above that warning threshold.

THE COURT: You got to help me out here. Is there
a material difference?

MR. VOORHEES: There is none. But I just wanted it
for the record. It's material in one respect, that this
is a warning threshold.

And looking forward, if there are teas for any of
the settling defendants that are above the threshold,
the obligation is to apply clear, reasonable warning,
and nobody disputes that. It was just a different
section.

The language that Mr. Pollak quoted is essentially
the same, but it applies somewhat differently.

THE COURT: How do you get around the language
that's quoted?

MR. VOORHEES: We've briefed that, Your Honor. The
language, we think, speaks for itself. A, it's a
guideline. And, B, there's evidence. And the only
evidence presented, is that there are some products in

this action above the standard.oY FD HO F WHY BB

33

THE COURT: So you can sue 500 defendants of the
same product and have only three of them for which there
was evidence that they exceeded whatever settlement
standard there is.

MR. VOORHEES: Your Honor, I believe all the
evidence indicates that there's a threatened exposure
here. And I think it's important to note that the
standard, should this issue be tried, is different than
the evidentiary standard for approval.

Right now, we do not have any of the defendants’
own test results in front of the Court. We do not have
the attorney general, if they choose to do any testing,
their results. So it is just plaintiff's evidence.

And in a couple of the Court's hypotheticals, the
hypothetical was expressed in terms of a defendant where
that defendant has no violation of the standard.

And I think, right now, what we have is the

plaintiff putting forth a lot of evidence that there are
teas above the standard. And the question for approval
is: Is that enough? And plaintiff submits it is.

The hypothetical, I believe, were positioned more
towards a triable issue. If you go to trial, you get
all the defendants' results in. You test a multitude of
these teas. At that point, after all those hours have
been spent, how.many are above or below the standard?
It's two different points in time.

So we're trying to avoid the latter very costly,

lengthy process now.an on ® WN PR

34

THE COURT: So I'm going to read another portion of
the attorney general's recent submission, and you tell
me whether you agree or disagree with it.

It says, Page 3, Line 16 and 17, "The attorney
general repeatedly asked plaintiff to provide this
office in confidence all of the test data that underlies
the consent judgment. Plaintiff refused."

MR. VOORHEES: Well, in one respect, we've already
responded. For every single --

MR. CHANLER: Hold --

THE COURT: Mr. Chanler, please proceed. You
should be given the opportunity to respond to that.

MR. CHANLER: I'm sorry, Your Honor?

THE COURT: Please. Did you hear the question?

MR. CHANLER: I heard it. I just wasn't sure,
because of the delay, whether or not Mr. Voorhees was
going to respond.

THE COURT: I think his body language is deferring
to you.

MR. CHANLER: Okay. For the court reporter, Cliff
Chanler.

I believe there are a couple of other people maybe
on CourtCall. So if the court reporter's okay, I won't
keep identifying myself.

Trying to think of the question. Whether or not
there's a violation? Oh, whether or not we provided the
attorney -- we have provided -- there are a few things

that the Court should consider. If it wasn't mentionedoY DO BF WH PB

in one or more of our papers, it certainly should have
been.

Number one, we have selected Judge Warren, who is
an experienced mediator, is very familiar with Prop 65,
the various scientific variables, the various burdens of
proof.

He was the mediator, as it turned out,
unsuccessfully, in the Beech-Nut decision that came out.
It was affirmed on the Court of Appeal two or
three years ago. He's also been a mediator ina
multi-defendant case.

My firm -- our firm was not involved in the
Beech-Nut case. But we were involved in a sunscreen
case two years ago dealing with a listed chemical called
benzophenone.

THE COURT: Would you spell that, counsel, please,
for the court reporter?

MR. CHANLER: Sure. I'll slow down for the court
reporter. I apologize. It's one word. It's
b-e-n-z-o-p-h-e-n-o-n-e.

THE COURT: Mr. Chanler, I'm going to remind you of
my question, which is: Does Dr. Leeman's counsel agree
or disagree with the statement in the attorney general's
recent submission on Lines 16 and 17 on Page 3.

Quote --
MR. CHANLER: Absolutely disagree.
THE COURT: Disagree?

MR. CHANLER: Absolutely.

35BR

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36

THE COURT: Mr. Pollak, how can there been a
disagreement on this?

MR. CHANLER: I'm sorry?

THE COURT: I'm asking Mr. Pollak where the -- why

do you say the plaintiff refused when the plaintiff says
the plaintiff didn't refuse?

MR. POLLAK: Your Honor, the plaintiff provided
data to us that they did not submit as part of the
record, so we don't deny that. But what we asked for
was all of the infusion results that support -- let's go
back.

When Bernice Dea submitted a declaration in support
of this settlement, that's the plaintiff's chief
investigator, and she testified about results, but she
just described them.

And so we said, "We would like to see the
underlying data. We would like to see the data that
Ms. Dea's relying on."

' Plaintiffs told us, "We are not going to provide
you with all of that data." They showed some data, but
not all the data. ,

And as an example, in Ms. Dea's declaration --

MR. CHANLER: Now --

MR. POLLAK: Hold on. I am almost done.

Paragraph 3 she says, "For example, for all
infusion tests commissioned by Dr. Leeman across the
entire industry where lead was detected, the percentage

results above ten micrograms per liter was 5.3 percent."

boWw NY PR

We said, "Okay. Show us those results," so we
could see what the levels were. We were told they would
not provide all the results.

THE COURT: Mr. Chanler.

MR. CHANLER: May