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Clifford A. Chanler, State Bar No. 135534
Laralei. S$. Paras, State Bar No. 203319
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THE CHANLER GROUP
op a a ah ELECTRONICALLY
arker Plaza, Suite
Teleohene: (3 10) 248 $880 oe eee
i. 7 County of San Francisco
Facsimile: (510) 848-8118 08/31/2018
clifford@chanler.com Clerk of the Court
laralei@chanler.com BY: VANESSA WU
Deputy Clerk
Attorneys for Plaintiff
ANTHONY HELD, Ph.D., P.E.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
CITY AND COUNTY OF SAN FRANCISCO
UNLIMITED CIVIL JURISDICTION
ANTHONY HELD, Ph.D., P.E.
Plaintiff,
v.
TRACTOR SUPPLY COMPANY, ez al.,
Defendants.
Case No. CGC-18-566691
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
| MOTION TO APPROVE
| PROPOSITION 65 SETTLEMENT
| AND CONSENT JUDGMENT
| Date: October 22, 2018
| Time: 9:30 a.m.
| Dept.: 302
| Judge: Hon. Harold E. Kahn
| Reservation No.: 08311022-02
MPA IN SUPPORT OF MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENT|
|
1 INTRODUCTION |
Plaintiff Anthony Held (“Held”) hereby seeks the Court’s approval of the settlement in the
form of a stipulated judgment (“Consent Judgment” or “Settlement”) entered into with defendant
Tractor Supply Company (“TSC”) in this Health and Safety Code § 25249.6 et seg. (“Proposition
65”) action. The Consent Judgment resolves Held’s allegations that TSC manufactured, imported,
distributed, sold, and/or offered for sale in California, sprayer hoses containing the Proposition 65-
listed chemical lead without first providing the health hazard warning required by Proposition 65. A
true and correct copy of the Consent Judgment is attached as Exhibit A to the supporting declaration
of Laralei S. Paras (“Paras Decl.”) filed herewith.
As discussed more fully herein, the Consent Judgment is the result of arm’s-length
negotiations conducted by the parties’ experienced counsel. The Settlement is fair and reasonable to
the parties, serves the public interest, has been submitted to the California Attorney General for
review, and fully complies with the statutory requirements of Proposition 65. Accordingly, Held
requests that the Court grant this motion to approve the Settlement and enter judgment in accordance
with its terms.
Il. PROCEDURAL HISTORY AND BACKGROUND
Held brought this action pursuant to Health and Safety Code § 25249.7(d) to promote
awareness of exposures to toxic chemicals, and to improve human health by reducing or eliminating |
harmful substances in consumer products. (Paras Decl. ] 2.) Held alleges that TSC’s sprayer hoses |
contain and expose consumers and other individuals to lead. Lead is listed pursuant to Proposition 65
as a chemical known to cause birth defects or other reproductive harm,' Held alleges that TSC
violated Proposition 65 when it failed to warn its customers and consumers in California of the health
hazards associated with exposures to lead from the products. TSC, however, denies Held’s
allegations, and expressly denies any wrongdoing.
fit
! On February 27, 1987, California listed lead as a chemical known to cause birth defects and
reproductive harm. Lead became subject to the “clear and reasonable warning” requirements of Proposition 65
one year after their listing on February 27, 1988. Cal. Code Regs. tit. 27, § 27001(c); Health & Safety Code,
§§ 25249.8 & 25249.10 subd. (b).
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On November 20, 2017, Held served TSC, the California Attorney General, and all other
requisite public enforcement agencies with a 60-Day Notice of Violation (the “Notice”). The Notice
alleges that TSC violated Proposition 65 when it failed to warn its customers and consumers in
California that its products can expose users to lead. (Paras Decl. 5.)
On May 21, 2018, more than sixty days after TSC was given notice by plaintiff, with no
public enforcer having elected to enforce the violations alleged in the Notice, Held filed the instant
action. (Paras Decl. 4 6.)
On or about August 23, 2018, the parties finalized and mutually executed the Consent
Judgment. The Settlement resolves all of the claims alleged in the Notice and Complaint, and
provides appropriately tailored releases. (Paras Decl. 4] 7.) The Settlement meets the requirements of
Proposition 65, is fair and reasonable, and serves the public interest. Among other things, it requires
TSC to pay civil penalties for their alleged past violations and to reformulate its products to reduce or
eliminate the presence of lead or to provide clear and reasonable warnings. Accordingly, Held
respectfully requests that the Court approve the Settlement and enter the proposed judgment.
Ill. BACKGROUND OF PLAINTIFFS’ PROPOSITION 65 ENFORCEMENT
Formally known as the Safe Drinking Water and Toxic Enforcement Act, California voters
overwhelmingly approved the Proposition 65 ballot initiative in 1986. Codified in Health and Safety
Code § 25249.5 et seq., Proposition 65 requires any person in the course of doing business — defined
as individuals or entities with ten or more employees — provide a “clear and reasonable warning”
before “knowingly and intentionally” exposing any individual to a chemical listed as known to cause
cancer, or reproductive harm or birth defects. The Act provides an exemption from the warning
requirement where the alleged violator can show that the exposure would have “no observable effect” |
with regard to reproductive harm, assuming an exposure at one-thousand times the level in question.
Health & Safety Code §§ 25249.6 and 25249.10(c). The exposure level that would have “no
observable effect,” commonly referred to as the “NOEL,” is defined by regulations as “the maximum
level of exposure at which a chemical has no observable reproductive effect.” Cal. Code Regs. tit. 27,
§ 25801(c). Health & Safety Code § 25249.8; Cal. Code Regs. tit. 27, § 25805.
fiiProposition 65 may be enforced by public prosecutors, including the California Attorney
General, district attorneys, and certain city attorneys, or by private individuals or organizations acting
“in the public interest.” To initiate a Proposition 65 enforcement action in the public interest, a
private enforcer must first give notice to the alleged violator and certain public enforcers, and allow
more than sixty days to pass with no public enforcer having elected to prosecute the alleged
violations. Health & Safety Code § 25249.7(c) and (d). The act provides statutory penalties of up to
twenty-five hundred dollars ($2,500) per day for each violation. The majority, seventy-five percent
(75%) of the penalty is paid to the State of California for deposit in the Safe Drinking Water and
Toxic Enforcement Fund, a fund administered by the California Office of Environmental Health
Hazard Assessment (OEHHA). Health & Safety Code § 25249.12(c)(1). The private enforcer retains
the remaining twenty-five percent (25%) of any penalty paid. Health & Safety Code §§ 25249.7(b) & |
25249.12(d).
IV. LAW AND ARGUMENT
A. The Settlement Complies with the Requirements of Proposition 65
Health and Safety Code § 25249.7(f)(4) requires judicial approval of Proposition settlements
between private parties. To approve the settlement, the Court must find that: (1) the warning or other
injunctive relief required by the settlement complies with Proposition 65; (2) the attorneys’ fees and
costs provided by the settlement are reasonable under California law; and (3) the amount paid in civil
penalties is reasonable based on the criteria set forth in Health and Safety Code § 25249.7(b)(2). As
discussed in more detail below, the terms and conditions of the Consent Judgment support each of
these three findings.
1. The Injunctive Terms of the Settlement Comply with Proposition 65
Proposition 65 states “[n]o person in the course of doing business shall knowingly and
intentionally expose any individual to [a listed chemical] without first giving clear and reasonable
warning to such individual...” Health & Safety Code § 25249.6. To be “clear and reasonable,” the
warning must be placed in such a manner as to render it likely to be read and understood by ordinary
individuals under customary conditions of purchase or use. Cal. Code Regs. tit. 27, § 25601 et seq.
A warning, however, is only required where an exposure to a listed chemical occurs in excess of
IN TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENT
|established “no significant risk” or “no observable effect” levels. Health & Safety Code
§§ 25249,10(c) & 25249.7(f)(4)(A).
The Consent Judgment requires that TSC shall only manufacture for sale, purchase for sale, or
import for sale in California sprayer hoses that carry a Proposition 65-compliant warning or that are
“Reformulated Products,” which (a) contain lead in concentrations that do not exceed 90 parts per
million (ppm), equivalent to 0.009%, when analyzed pursuant to U.S. Environmental Protection
Agency (EPA) testing methodologies 3050B and 6010B; and (b) yield a result of no more than 1.0
micrograms of lead when sampled according to NIOSH 9100 protocol and analyzed according to
EPA 6010B. In addition to the above test methodologies, the Parties may use equivalent
methodologies utilized by a state or federal agency to determine lead content in a solid substance.
(Paras Decl. 9.)
The lead content levels established by the Consent Judgment have been approved by trial
courts throughout the State of California as injunctive terms that comply with Proposition 65, and
which do not require health hazard warnings under the act. The 90 ppm lead level parallels the
federal limits applicable to lead in paint and certain consumer products bearing lead-containing paint.
16 CFR § 1303.1. Moreover, the reformulation standards are significantly lower than the levels of
lead in the Products, for which a warning plausibly is required, reported on the results of laboratory
testing of Products which I have reviewed. (Paras Decl. FJ 10-12.)
The warnings authorized under the Consent Judgment meet Proposition 65’s applicable
regulatory requirements in California Code of Regulations title 27, section 25600 et seq., operative
August 30, 2018, both in terms of the required language and in terms of the method of transmission.
(Paras Decl. { 14; Cal. Code Regs., tit. 27, §§ 25601, 25602 and 25603.) Specifically, the warming
language complies with the content requirements of California Code of Regulations title 27, section
25603. A symbol of a black exclamation point in a yellow equilateral triangle shall be appropriately
placed to the left of the word “WARNING?” printed in all capital letters and in bold font. Cal. Code
Regs. tit. 27, §25603(a)(1)(2), (b)(1)(2). If the packaging does not use the color yellow, then the
symbol may be in black and white. Cal. Code Regs. tit. 27, §25603(a)(1). Where applicable, the text
of the warning language identifies the listed chemical for which the warning is being provided. Cal.
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MPA ISO MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENTCode Regs. tit. 27, §25603(a)(2)(B). The warning is reasonable in that it shall be either affixed to the
packaging, labeling or directly on any Products, other than Reformulated Products. (Consent
Judgment §§ 2.3-2.5; Paras Decl. { 13; Cal. Code Regs. tit. 27, § 25602.)
Proposition 65 contemplates “[r]eformulation of a product .. . in lieu of the provision of a
warning.” The California Attorney General’s guidelines suggest that such injunctive relief obtained
by a successful plaintiff, “are presumed to confer a significant benefit on the public” to justify an
award of attorneys’ fees. 11 Cal. Code Regs. § 3201(b)(2). Similarly, regulations provide that “a
settlement that provides for . . . a clear and reasonable warning, where there had been no warning
provided prior to the sixty-day notice . . . is presumed to confer a significant public benefit.” 11 Cal. |
Code Regs. § 3201(b)(1). Thus, the warning provisions and lead levels applicable to Reformulated
Products that do not require warnings provides a recognized public benefit.
Accordingly, the Court should find that the injunctive relief provided by the Settlement,
including the reformulation standard agreed to for Proposition 65-compliant, Reformulated Products,
complies with Proposition 65. Health & Safety Code § 25249.7(f)\(4).
2. The Civil Penalty Amount Is Reasonable
Pursuant to the Consent Judgment, TSC will pay $11,750 in civil penalties. The parties’
negotiations considered the facts and circumstances of this case and each of the statutory factors
provided by the Health and Safety Code. The settlement discussions included numerous e-mails and
telephone calls between counsel during which the parties exchanged product sales data, laboratory
results, and other relevant information pursuant to the confidentiality agreement between the parties.
(Paras Decl. 98.) As a result of these negotiations, and in order to facilitate the settlement of this
case, the parties agreed to the $11,750 civil penalty amount. (Paras Decl. { 14.) The following
statutory factors support a finding that the civil penalty is appropriate. (Paras Decl. { 15.)
(a) The economic effect of the penalty on the violator. The amount of the penalty is
sufficient to remind TSC and its management to remain aware of and comply with Proposition 65
requirements. While the penalty is not designed to unduly impede TSC’s business, it will serve to
raise compliance to the attention of management.
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MPA ISO MOTION TO APPROVE TION 65 SETTLEMENT & CONSENT JUDGMENT{b) Whether the violator took good faith measures to comply. Pursuant to Section 2 of the
Consent Judgment, TSC will ensure that all sprayer hoses it sells going forward are Reformulated
Products which do not require a warning under Proposition 65, or, if not reformulated, a clear and
reasonable warning will be provided with products.
(c) The willfulness of the violator’s misconduct. TSC maintains that it did not
intentionally ignore, disregard, or violate Proposition 65. Once TSC learned of its obligations and
alleged violations, it maintains that it took immediate action to ensure its compliance with Proposition
65 and resolution of the allegations in the Notice and Complaint.
(d) Severity. Held considers the sale of products containing lead without the requisite
warnings to be a severe violation of Proposition 65.
(e) The deterrent effects. TSC’s payment of the civil penalty will provide an incentive for
it to continue to comply with Proposition 65, Further, by word-of-mouth in the industry and the fact
that the Consent Judgment, if approved, will be a matter of public record, it is reasonably likely that
other companies selling lead-containing products in California will become aware of this action.
Such awareness can be expected to induce those other companies to comply with Proposition 65, in
order that they might avoid similar payments. Health & Safety Code § 25249.7(b)(2).
3. The Fee/Cost Recovery is Reasonable under California Law
As part of the Settlement, TSC will reimburse Held $38,250 for the attorneys’ fees and
litigation costs incurred in this action. The parties reached this agreement in accordance with general |
contract principles and the private attorney general doctrine codified at Code of Civil Procedure
201021.5. The negotiated reimbursement is significantly less than the approximately $46,500 in fees
and costs incurred by the investigation, litigation, and other enforcement related activity required by
this case. (Paras Decl. { 17.) Given Held’s compromise on the fees to be reimbursed, the time and
resources invested, and the public benefit achieved, both in terms of the civil penalties collected and
the injunctive relief obtained, the negotiated fee recovery in this case is reasonable under California
law, and more efficient in terms of party and judicial resources than a contested fee application.
The supporting declaration filed herewith provides evidence to support the finding that the
negotiated fee and cost reimbursement is reasonable. It shows that the fees and costs incurred in thismatter are consistent with $38,250 in reimbursement after counsel’s exercise and application of
billing judgment. (Paras Decl. 19, Exh. B.) It details the expenses incurred throughout
investigation Held commissioned into TSC’s products and the litigation of this action. All such
activity was initiated and resolved in the public interest. It is noteworthy that the fees presented for
approval are only those incurred prior to the filing of this motion. Future amounts incurred,
appearing at the hearing, and fully concluding this matter with the parties, the Court, and the
California Attorney General’s Office will not be recovered, and are not included among the tabulated
fee and cost summary amounts submitted. |
As set forth in the California Attorney General’s guidelines for evaluating the reasonableness |
of an award of attorneys’ fees provided by a Proposition 65 settlement, a party may be deemed
successful so as to permit an award “if the plaintiff’s action was the cause or ‘catalyst’ of the change
in conduct.” Cal. Code Regs. tit. 11, § 3201(a). Specifically, “[rleformulation of a product ... in licu
of the provision of a warning, are presumed to confer a significant benefit on the public” to justify the
award of attorneys’ fees. Cal. Code Regs. tit. 11, § 3201(b)(2). Further, “a settlement that provides
for .. .a clear and reasonable warning, where there had been no warning provided prior to the sixty-
day notice . . . is also presumed to confer a significant public benefit.” 11 Cal. Code Regs.
§ 3201(b)(1). Here, Held procured TSC’s commitment to reformulate the products to comply with
the standard provided by the Settlement, or provide Proposition 65-compliant warnings. In obtaining
TSC’s commitment to reformulate the products, or provide Proposition 65-compliant warnings, Held
operated as the catalyst creating a change in the seller’s behavior, and, thereby, the marketplace,
which constitutes a significant public benefit.
While the California Attorney General’s regulations are not binding, they are instructive as to |
the level of scrutiny the Court should apply in determining the reasonableness of a negotiated
reimbursement of fees and costs. California Code of Regulations title 11, section 3201 states:
[T]he fact that the defendant agreed to pay the fee does not automatically
render the fee reasonable. The fact that the fee award is part of a
settlement, however, may justify applying a somewhat less exacting
review of cach element of the fee claim than would be applied in a
contested fee application.
© MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENTw
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(Emphasis added.) Based on this standard of review, the number of attomey and staff hours invested
in the case and, in light of the declaration and other evidence supporting actual fees and costs that
exceed the negotiated amount, plaintiff respectfully requests that the Court find that the fees and costs |
provided by the Settlement are reasonable under California law.
B. The Settlement Should Be Entered as a Judgment
This motion is brought in part pursuant to Code of Civil Procedure § 664.6, which provides:
If parties to pending litigation stipulate in a writing signed by the parties
outside the presence of the court . . . for settlement of the case, or part
thereof, the court, upon motion, may enter judgment pursuant to the
terms of the settlement.
Section 664.6 gives expression to a strong policy favoring settlement of pending litigation. In re
Marriage of Assemi (1994) 7 Cal. 4th 896, 910. A court may approve a settlement provided the terms
of the settlement are not contrary to law or violative of public policy. Rich Vision Centers, Inc. v. Bd.
of Med. Examiners (1983)144 Cal. App. 3d 110, 115-116. “Settlements can produce peace and
goodwill in the community while reducing the expense and persistency of litigation,” and “[pJublic
policy strongly discourage[s] litigation and encourages settlement.” Skulnick v. Roberts Express, Inc.
(1992) 2 Cal. App. 4th 884, 891. California courts also recognize the importance of “settlement as
part of the litigation process.” Soliz v. Williams (1999) 74 Cal. App. 4th 577, 587. As such, there is a
strong presumption favoring the settlement of litigation. Assemi, 7 Cal. 4th at 910.
Here, the Settlement contains no term or condition prohibited by law or contrary to public
policy. In fact, all of the terms specifically further the public policy expressed in the preamble to
Proposition 65, namely, protecting the public against, and enforcing its right to know about,
chemicals that cause cancer, birth defects, or other reproductive harm. Historical and Statutory
Notes, West’s Ann. Health & Safety Code foll. § 25249.5 (2006 ed.). Additionally, the Consent
Judgment is a product of arm’s-length negotiations conducted by experienced counsel who possessed
sufficient information to evaluate the case and the terms of the settlement. (Paras Decl. 9);
Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224, 245 [presumption that proposed
settlement was fair where the settlement is reached through arm’s-length bargaining, the parties and
the court have sufficient information, counsel is experienced in similar litigation, and the percentage
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MPA ISO MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENTof objectors is small]. In the instant action, the parties’ settlement discussions continued for several
months, were conducted by experienced attorneys in possession of sufficient information to evaluate
the proposed terms, and, at the time of the filing of this motion, there has been no objection to the
Settlement. Accordingly, plaintiff respectfully requests that the Court enter the Settlement as a
judgment pursuant Section 664.6.
Vv. CONCLUSION
The parties expended considerable time and resources to reach a settlement that meets all of
the criteria established by Proposition 65, serves the public interest, and is consistent with and
complementary to prior Proposition 65 settlements approved by superior courts in California,
including this Court. For the foregoing reasons, Held respectfully requests that the Court approve the
Settlement and enter the [Proposed] Judgment.
Respectfully submitted,
Dated: August 31, 2018 THE CHANLER GROUP
“lei §. Paras
Attorneys for Plaintiff
ANTHONY HELD
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Clifford A. Chanler, State Bar No. 135534 Laralei. S$. Paras, State Bar No. 203319 om Ww DH A \° 10 1 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 THE CHANLER GROUP op a a ah ELECTRONICALLY arker Plaza, Suite Teleohene: (3 10) 248 $880 oe eee i. 7 County of San Francisco Facsimile: (510) 848-8118 08/31/2018 clifford@chanler.com Clerk of the Court laralei@chanler.com BY: VANESSA WU Deputy Clerk Attorneys for Plaintiff ANTHONY HELD, Ph.D., P.E. SUPERIOR COURT OF THE STATE OF CALIFORNIA CITY AND COUNTY OF SAN FRANCISCO UNLIMITED CIVIL JURISDICTION ANTHONY HELD, Ph.D., P.E. Plaintiff, v. TRACTOR SUPPLY COMPANY, ez al., Defendants. Case No. CGC-18-566691 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF | MOTION TO APPROVE | PROPOSITION 65 SETTLEMENT | AND CONSENT JUDGMENT | Date: October 22, 2018 | Time: 9:30 a.m. | Dept.: 302 | Judge: Hon. Harold E. Kahn | Reservation No.: 08311022-02 MPA IN SUPPORT OF MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENT| | 1 INTRODUCTION | Plaintiff Anthony Held (“Held”) hereby seeks the Court’s approval of the settlement in the form of a stipulated judgment (“Consent Judgment” or “Settlement”) entered into with defendant Tractor Supply Company (“TSC”) in this Health and Safety Code § 25249.6 et seg. (“Proposition 65”) action. The Consent Judgment resolves Held’s allegations that TSC manufactured, imported, distributed, sold, and/or offered for sale in California, sprayer hoses containing the Proposition 65- listed chemical lead without first providing the health hazard warning required by Proposition 65. A true and correct copy of the Consent Judgment is attached as Exhibit A to the supporting declaration of Laralei S. Paras (“Paras Decl.”) filed herewith. As discussed more fully herein, the Consent Judgment is the result of arm’s-length negotiations conducted by the parties’ experienced counsel. The Settlement is fair and reasonable to the parties, serves the public interest, has been submitted to the California Attorney General for review, and fully complies with the statutory requirements of Proposition 65. Accordingly, Held requests that the Court grant this motion to approve the Settlement and enter judgment in accordance with its terms. Il. PROCEDURAL HISTORY AND BACKGROUND Held brought this action pursuant to Health and Safety Code § 25249.7(d) to promote awareness of exposures to toxic chemicals, and to improve human health by reducing or eliminating | harmful substances in consumer products. (Paras Decl. ] 2.) Held alleges that TSC’s sprayer hoses | contain and expose consumers and other individuals to lead. Lead is listed pursuant to Proposition 65 as a chemical known to cause birth defects or other reproductive harm,' Held alleges that TSC violated Proposition 65 when it failed to warn its customers and consumers in California of the health hazards associated with exposures to lead from the products. TSC, however, denies Held’s allegations, and expressly denies any wrongdoing. fit ! On February 27, 1987, California listed lead as a chemical known to cause birth defects and reproductive harm. Lead became subject to the “clear and reasonable warning” requirements of Proposition 65 one year after their listing on February 27, 1988. Cal. Code Regs. tit. 27, § 27001(c); Health & Safety Code, §§ 25249.8 & 25249.10 subd. (b). 1Cm Nn Aw 10 ul 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 On November 20, 2017, Held served TSC, the California Attorney General, and all other requisite public enforcement agencies with a 60-Day Notice of Violation (the “Notice”). The Notice alleges that TSC violated Proposition 65 when it failed to warn its customers and consumers in California that its products can expose users to lead. (Paras Decl. 5.) On May 21, 2018, more than sixty days after TSC was given notice by plaintiff, with no public enforcer having elected to enforce the violations alleged in the Notice, Held filed the instant action. (Paras Decl. 4 6.) On or about August 23, 2018, the parties finalized and mutually executed the Consent Judgment. The Settlement resolves all of the claims alleged in the Notice and Complaint, and provides appropriately tailored releases. (Paras Decl. 4] 7.) The Settlement meets the requirements of Proposition 65, is fair and reasonable, and serves the public interest. Among other things, it requires TSC to pay civil penalties for their alleged past violations and to reformulate its products to reduce or eliminate the presence of lead or to provide clear and reasonable warnings. Accordingly, Held respectfully requests that the Court approve the Settlement and enter the proposed judgment. Ill. BACKGROUND OF PLAINTIFFS’ PROPOSITION 65 ENFORCEMENT Formally known as the Safe Drinking Water and Toxic Enforcement Act, California voters overwhelmingly approved the Proposition 65 ballot initiative in 1986. Codified in Health and Safety Code § 25249.5 et seq., Proposition 65 requires any person in the course of doing business — defined as individuals or entities with ten or more employees — provide a “clear and reasonable warning” before “knowingly and intentionally” exposing any individual to a chemical listed as known to cause cancer, or reproductive harm or birth defects. The Act provides an exemption from the warning requirement where the alleged violator can show that the exposure would have “no observable effect” | with regard to reproductive harm, assuming an exposure at one-thousand times the level in question. Health & Safety Code §§ 25249.6 and 25249.10(c). The exposure level that would have “no observable effect,” commonly referred to as the “NOEL,” is defined by regulations as “the maximum level of exposure at which a chemical has no observable reproductive effect.” Cal. Code Regs. tit. 27, § 25801(c). Health & Safety Code § 25249.8; Cal. Code Regs. tit. 27, § 25805. fiiProposition 65 may be enforced by public prosecutors, including the California Attorney General, district attorneys, and certain city attorneys, or by private individuals or organizations acting “in the public interest.” To initiate a Proposition 65 enforcement action in the public interest, a private enforcer must first give notice to the alleged violator and certain public enforcers, and allow more than sixty days to pass with no public enforcer having elected to prosecute the alleged violations. Health & Safety Code § 25249.7(c) and (d). The act provides statutory penalties of up to twenty-five hundred dollars ($2,500) per day for each violation. The majority, seventy-five percent (75%) of the penalty is paid to the State of California for deposit in the Safe Drinking Water and Toxic Enforcement Fund, a fund administered by the California Office of Environmental Health Hazard Assessment (OEHHA). Health & Safety Code § 25249.12(c)(1). The private enforcer retains the remaining twenty-five percent (25%) of any penalty paid. Health & Safety Code §§ 25249.7(b) & | 25249.12(d). IV. LAW AND ARGUMENT A. The Settlement Complies with the Requirements of Proposition 65 Health and Safety Code § 25249.7(f)(4) requires judicial approval of Proposition settlements between private parties. To approve the settlement, the Court must find that: (1) the warning or other injunctive relief required by the settlement complies with Proposition 65; (2) the attorneys’ fees and costs provided by the settlement are reasonable under California law; and (3) the amount paid in civil penalties is reasonable based on the criteria set forth in Health and Safety Code § 25249.7(b)(2). As discussed in more detail below, the terms and conditions of the Consent Judgment support each of these three findings. 1. The Injunctive Terms of the Settlement Comply with Proposition 65 Proposition 65 states “[n]o person in the course of doing business shall knowingly and intentionally expose any individual to [a listed chemical] without first giving clear and reasonable warning to such individual...” Health & Safety Code § 25249.6. To be “clear and reasonable,” the warning must be placed in such a manner as to render it likely to be read and understood by ordinary individuals under customary conditions of purchase or use. Cal. Code Regs. tit. 27, § 25601 et seq. A warning, however, is only required where an exposure to a listed chemical occurs in excess of IN TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENT |established “no significant risk” or “no observable effect” levels. Health & Safety Code §§ 25249,10(c) & 25249.7(f)(4)(A). The Consent Judgment requires that TSC shall only manufacture for sale, purchase for sale, or import for sale in California sprayer hoses that carry a Proposition 65-compliant warning or that are “Reformulated Products,” which (a) contain lead in concentrations that do not exceed 90 parts per million (ppm), equivalent to 0.009%, when analyzed pursuant to U.S. Environmental Protection Agency (EPA) testing methodologies 3050B and 6010B; and (b) yield a result of no more than 1.0 micrograms of lead when sampled according to NIOSH 9100 protocol and analyzed according to EPA 6010B. In addition to the above test methodologies, the Parties may use equivalent methodologies utilized by a state or federal agency to determine lead content in a solid substance. (Paras Decl. 9.) The lead content levels established by the Consent Judgment have been approved by trial courts throughout the State of California as injunctive terms that comply with Proposition 65, and which do not require health hazard warnings under the act. The 90 ppm lead level parallels the federal limits applicable to lead in paint and certain consumer products bearing lead-containing paint. 16 CFR § 1303.1. Moreover, the reformulation standards are significantly lower than the levels of lead in the Products, for which a warning plausibly is required, reported on the results of laboratory testing of Products which I have reviewed. (Paras Decl. FJ 10-12.) The warnings authorized under the Consent Judgment meet Proposition 65’s applicable regulatory requirements in California Code of Regulations title 27, section 25600 et seq., operative August 30, 2018, both in terms of the required language and in terms of the method of transmission. (Paras Decl. { 14; Cal. Code Regs., tit. 27, §§ 25601, 25602 and 25603.) Specifically, the warming language complies with the content requirements of California Code of Regulations title 27, section 25603. A symbol of a black exclamation point in a yellow equilateral triangle shall be appropriately placed to the left of the word “WARNING?” printed in all capital letters and in bold font. Cal. Code Regs. tit. 27, §25603(a)(1)(2), (b)(1)(2). If the packaging does not use the color yellow, then the symbol may be in black and white. Cal. Code Regs. tit. 27, §25603(a)(1). Where applicable, the text of the warning language identifies the listed chemical for which the warning is being provided. Cal. A MPA ISO MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENTCode Regs. tit. 27, §25603(a)(2)(B). The warning is reasonable in that it shall be either affixed to the packaging, labeling or directly on any Products, other than Reformulated Products. (Consent Judgment §§ 2.3-2.5; Paras Decl. { 13; Cal. Code Regs. tit. 27, § 25602.) Proposition 65 contemplates “[r]eformulation of a product .. . in lieu of the provision of a warning.” The California Attorney General’s guidelines suggest that such injunctive relief obtained by a successful plaintiff, “are presumed to confer a significant benefit on the public” to justify an award of attorneys’ fees. 11 Cal. Code Regs. § 3201(b)(2). Similarly, regulations provide that “a settlement that provides for . . . a clear and reasonable warning, where there had been no warning provided prior to the sixty-day notice . . . is presumed to confer a significant public benefit.” 11 Cal. | Code Regs. § 3201(b)(1). Thus, the warning provisions and lead levels applicable to Reformulated Products that do not require warnings provides a recognized public benefit. Accordingly, the Court should find that the injunctive relief provided by the Settlement, including the reformulation standard agreed to for Proposition 65-compliant, Reformulated Products, complies with Proposition 65. Health & Safety Code § 25249.7(f)\(4). 2. The Civil Penalty Amount Is Reasonable Pursuant to the Consent Judgment, TSC will pay $11,750 in civil penalties. The parties’ negotiations considered the facts and circumstances of this case and each of the statutory factors provided by the Health and Safety Code. The settlement discussions included numerous e-mails and telephone calls between counsel during which the parties exchanged product sales data, laboratory results, and other relevant information pursuant to the confidentiality agreement between the parties. (Paras Decl. 98.) As a result of these negotiations, and in order to facilitate the settlement of this case, the parties agreed to the $11,750 civil penalty amount. (Paras Decl. { 14.) The following statutory factors support a finding that the civil penalty is appropriate. (Paras Decl. { 15.) (a) The economic effect of the penalty on the violator. The amount of the penalty is sufficient to remind TSC and its management to remain aware of and comply with Proposition 65 requirements. While the penalty is not designed to unduly impede TSC’s business, it will serve to raise compliance to the attention of management. fil MPA ISO MOTION TO APPROVE TION 65 SETTLEMENT & CONSENT JUDGMENT{b) Whether the violator took good faith measures to comply. Pursuant to Section 2 of the Consent Judgment, TSC will ensure that all sprayer hoses it sells going forward are Reformulated Products which do not require a warning under Proposition 65, or, if not reformulated, a clear and reasonable warning will be provided with products. (c) The willfulness of the violator’s misconduct. TSC maintains that it did not intentionally ignore, disregard, or violate Proposition 65. Once TSC learned of its obligations and alleged violations, it maintains that it took immediate action to ensure its compliance with Proposition 65 and resolution of the allegations in the Notice and Complaint. (d) Severity. Held considers the sale of products containing lead without the requisite warnings to be a severe violation of Proposition 65. (e) The deterrent effects. TSC’s payment of the civil penalty will provide an incentive for it to continue to comply with Proposition 65, Further, by word-of-mouth in the industry and the fact that the Consent Judgment, if approved, will be a matter of public record, it is reasonably likely that other companies selling lead-containing products in California will become aware of this action. Such awareness can be expected to induce those other companies to comply with Proposition 65, in order that they might avoid similar payments. Health & Safety Code § 25249.7(b)(2). 3. The Fee/Cost Recovery is Reasonable under California Law As part of the Settlement, TSC will reimburse Held $38,250 for the attorneys’ fees and litigation costs incurred in this action. The parties reached this agreement in accordance with general | contract principles and the private attorney general doctrine codified at Code of Civil Procedure 201021.5. The negotiated reimbursement is significantly less than the approximately $46,500 in fees and costs incurred by the investigation, litigation, and other enforcement related activity required by this case. (Paras Decl. { 17.) Given Held’s compromise on the fees to be reimbursed, the time and resources invested, and the public benefit achieved, both in terms of the civil penalties collected and the injunctive relief obtained, the negotiated fee recovery in this case is reasonable under California law, and more efficient in terms of party and judicial resources than a contested fee application. The supporting declaration filed herewith provides evidence to support the finding that the negotiated fee and cost reimbursement is reasonable. It shows that the fees and costs incurred in thismatter are consistent with $38,250 in reimbursement after counsel’s exercise and application of billing judgment. (Paras Decl. 19, Exh. B.) It details the expenses incurred throughout investigation Held commissioned into TSC’s products and the litigation of this action. All such activity was initiated and resolved in the public interest. It is noteworthy that the fees presented for approval are only those incurred prior to the filing of this motion. Future amounts incurred, appearing at the hearing, and fully concluding this matter with the parties, the Court, and the California Attorney General’s Office will not be recovered, and are not included among the tabulated fee and cost summary amounts submitted. | As set forth in the California Attorney General’s guidelines for evaluating the reasonableness | of an award of attorneys’ fees provided by a Proposition 65 settlement, a party may be deemed successful so as to permit an award “if the plaintiff’s action was the cause or ‘catalyst’ of the change in conduct.” Cal. Code Regs. tit. 11, § 3201(a). Specifically, “[rleformulation of a product ... in licu of the provision of a warning, are presumed to confer a significant benefit on the public” to justify the award of attorneys’ fees. Cal. Code Regs. tit. 11, § 3201(b)(2). Further, “a settlement that provides for .. .a clear and reasonable warning, where there had been no warning provided prior to the sixty- day notice . . . is also presumed to confer a significant public benefit.” 11 Cal. Code Regs. § 3201(b)(1). Here, Held procured TSC’s commitment to reformulate the products to comply with the standard provided by the Settlement, or provide Proposition 65-compliant warnings. In obtaining TSC’s commitment to reformulate the products, or provide Proposition 65-compliant warnings, Held operated as the catalyst creating a change in the seller’s behavior, and, thereby, the marketplace, which constitutes a significant public benefit. While the California Attorney General’s regulations are not binding, they are instructive as to | the level of scrutiny the Court should apply in determining the reasonableness of a negotiated reimbursement of fees and costs. California Code of Regulations title 11, section 3201 states: [T]he fact that the defendant agreed to pay the fee does not automatically render the fee reasonable. The fact that the fee award is part of a settlement, however, may justify applying a somewhat less exacting review of cach element of the fee claim than would be applied in a contested fee application. © MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENTw xa a (Emphasis added.) Based on this standard of review, the number of attomey and staff hours invested in the case and, in light of the declaration and other evidence supporting actual fees and costs that exceed the negotiated amount, plaintiff respectfully requests that the Court find that the fees and costs | provided by the Settlement are reasonable under California law. B. The Settlement Should Be Entered as a Judgment This motion is brought in part pursuant to Code of Civil Procedure § 664.6, which provides: If parties to pending litigation stipulate in a writing signed by the parties outside the presence of the court . . . for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. Section 664.6 gives expression to a strong policy favoring settlement of pending litigation. In re Marriage of Assemi (1994) 7 Cal. 4th 896, 910. A court may approve a settlement provided the terms of the settlement are not contrary to law or violative of public policy. Rich Vision Centers, Inc. v. Bd. of Med. Examiners (1983)144 Cal. App. 3d 110, 115-116. “Settlements can produce peace and goodwill in the community while reducing the expense and persistency of litigation,” and “[pJublic policy strongly discourage[s] litigation and encourages settlement.” Skulnick v. Roberts Express, Inc. (1992) 2 Cal. App. 4th 884, 891. California courts also recognize the importance of “settlement as part of the litigation process.” Soliz v. Williams (1999) 74 Cal. App. 4th 577, 587. As such, there is a strong presumption favoring the settlement of litigation. Assemi, 7 Cal. 4th at 910. Here, the Settlement contains no term or condition prohibited by law or contrary to public policy. In fact, all of the terms specifically further the public policy expressed in the preamble to Proposition 65, namely, protecting the public against, and enforcing its right to know about, chemicals that cause cancer, birth defects, or other reproductive harm. Historical and Statutory Notes, West’s Ann. Health & Safety Code foll. § 25249.5 (2006 ed.). Additionally, the Consent Judgment is a product of arm’s-length negotiations conducted by experienced counsel who possessed sufficient information to evaluate the case and the terms of the settlement. (Paras Decl. 9); Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224, 245 [presumption that proposed settlement was fair where the settlement is reached through arm’s-length bargaining, the parties and the court have sufficient information, counsel is experienced in similar litigation, and the percentage 8 MPA ISO MOTION TO APPROVE PROPOSITION 65 SETTLEMENT & CONSENT JUDGMENTof objectors is small]. In the instant action, the parties’ settlement discussions continued for several months, were conducted by experienced attorneys in possession of sufficient information to evaluate the proposed terms, and, at the time of the filing of this motion, there has been no objection to the Settlement. Accordingly, plaintiff respectfully requests that the Court enter the Settlement as a judgment pursuant Section 664.6. Vv. CONCLUSION The parties expended considerable time and resources to reach a settlement that meets all of the criteria established by Proposition 65, serves the public interest, and is consistent with and complementary to prior Proposition 65 settlements approved by superior courts in California, including this Court. For the foregoing reasons, Held respectfully requests that the Court approve the Settlement and enter the [Proposed] Judgment. Respectfully submitted, Dated: August 31, 2018 THE CHANLER GROUP “lei §. Paras Attorneys for Plaintiff ANTHONY HELD