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Laralei Paras, State Bar No. 203319
THE CHANLER GROUP
2560 Ninth Street
Parker Plaza, Suite 214
Berkeley, CA 94710
Telephone: (510) 848-8880
Facsimile: (510) 848-8118
Attorneys for Plaintiff
ANTHONY E. HELD, PH.D., P.E.
ELECTRONICALLY
FILED
Superior Court of California,
County of San Francisco
09/28/2016
Clerk of the Court
BY-CAROL BALISTRERI
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
CITY AND COUNTY OF SAN FRANCISCO
UNLIMITED CIVIL JURISDICTION
ANTHONY E. HELD, PH.D., P.E.,
Plaintiff,
Vv.
LEHIGH CONSUMER PRODUCTS LLC; and
DOES 1-150, inclusive,
Defendants.
Case No. CGC-16-552602
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
MOTION TO APPROVE
PROPOSITION 65 SETTLEMENT
AND [PROPOSED] CONSENT
JUDGMENT
Date: November 16, 2016
Time: 9:30 a.m.
Courtroom: 302
Judge: Hon. Harold E. Kahn
Reservation No.: 09271116-14
MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN
I. Introduction
Plaintiff, Anthony E. Held, Ph.D., P.E. (“Held”), hereby seeks the Court’s approval of the
[Proposed] Consent Judgment (“Consent Judgment” or “Settlement’”’) with defendant Lehigh
Consumer Products LLC (“Lehigh”) in this Health and Safety Code § 25249.6, et seq. (“Proposition
65”) action. The Settlement resolves Held’s allegations that Lehigh sold certain vinyl/PVC gloves
(defined in the Settlement as the “Products”) without the requisite health-hazard warning for the
Proposition 65-listed chemical diisononyl phthalate (“DINP”). The Settlement is attached as Exhibit
A to the supporting declaration of Laralei Paras (“Paras Decl.”) filed herewith.
As discussed more fully herein, the Consent Judgment was reached following arm’s-length
negotiations between the parties, each of whom was represented by experienced counsel. The
Settlement is fair and reasonable to the parties, is in the interest of, and provides a benefit to, the
general public, has been submitted to the Office of the California Attorney General for review, and
fully complies with the statutory requirements of Proposition 65. Accordingly, Held requests that the
Court enter an order approving the Settlement and judgment in accordance with its terms.
IL. Summary of the Action
Held brought this action pursuant to Health and Safety Code § 25249.7(d) in order that he
might promote awareness of exposures to toxic chemicals and improve human health by reducing or
eliminating hazardous substances contained in consumer products. (Paras Decl. [ 2.) Held alleges
that certain vinyl/PVC gloves sold by Lehigh exposed individuals to DINP, a chemical known to the
State of California to cause cancer,! and that Lehigh violated its duty to warn individuals in California
of the risk of exposure to DINP and the harms associated with such exposure. (Paras Decl. J 4.)
Lehigh denies Held’s material, factual and legal allegations, and expressly denies any wrongdoing.
(Paras Decl., Exh. A, Consent Judgment {[ 1.8.)
On September 24, 2015, Held served Jarden Corporation and various public enforcement
agencies with a document entitled “60-Day Notice of Violation” (“Notice”) alleging that Jarden
' On December 20, 2013, California listed DINP as a chemical known to cause cancer. DINP became
subject to the “clear and reasonable warning” requirements of Proposition 65 one year later on December 20,
2014, (Cal. Code Regs. (“CCR”), tit. 27, § 27001, subd. (c); Health & Saf. Code § 25249.8.)
MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN
Corporation was in violation of California Health & Safety Code § 25249.6 for failing to warn
consumers that its vinyl/PVC gloves, such as Spontex ColorBrite Disposable Gloves, UPC #0 21202
76153 7, exposed users in the State of California to DINP. (Paras Decl. {{ 5.)
On February 25, 2016, Held served Lehigh and various public enforcement agencies with a
document entitled “Supplemental 60-Day Notice of Violation” (“Supplemental Notice”) alleging that
Lehigh was also in violation of California Health & Safety Code § 25249.6 for failing to warn
consumers that vinyl/PVC gloves, such as Spontex ColorBrite Disposable Gloves, UPC #0 21202
76153 7, exposed users in the State of California to DINP. (Paras Decl. { 6.) Lehigh supplied the
Product specifically identified in the Notice. (Id.) The Notice and the Supplemental Notice are
referred to herein collectively as the “Notices.”
On June 17, 2016, Held filed a complaint in the instant action against Lehigh for its alleged
violations of Health & Safety Code § 25249.6 subject to the Notices.
On September 26, 2016, the parties finalized and entered into the Consent Judgment, a
settlement that resolves Held’s claims against Lehigh for violations of Proposition 65 with respect to
Lehigh’s Products as alleged in the Notices and Complaint. (Paras Decl. 7, Exh. A.)
The Settlement meets the requirements of Proposition 65, is fair and reasonable, and is in the
public interest. Among other things, it provides that Lehigh shall prospectively sell in California only
Products that are either accompanied by a clear and reasonable warning or reformulated to meet the
stringent standards set forth in the Settlement with an incentive to achieve expedited reformulation of
all Products. Accordingly, Held respectfully requests that the Court approve the Settlement.
Ii. Background of Proposition 65 and Held’s 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. Proposition 65 may be enforced by public prosecutors,
including the Attorney General, district attorneys, and certain city attorneys, or by private individuals
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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).)
1. DISCUSSION
A. The Settlement Should Be Entered as a Judgment Pursuant to Code of Civil
Procedure (“CCP”) § 664.6
This motion is brought, in part, pursuant to CCP § 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. (Jn re
Marriage of Farid (1994) 7 Cal.4" 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.
Board of Medical 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
“[p]ublic policy strongly discourage[s] litigation and encourages settlement.” (Skulnick v. Roberts
Express, Inc. (1992) 2 Cal.App.4" 884, 891.) Case authority in this state also recognizes the
importance of “settlement as part of the litigation process.” (Soliz v. Williams (1999) 74 Cal.App.4"
577, 587.) As such, there is a strong presumption favoring the settlement of litigation. (in re
Marriage of Farid, supra, 7 Cal.4" at 910.)
The Settlement contains no term or condition that is prohibited by law or contrary to public
policy. In fact, all of its terms specifically further the public policy expressed in the preamble to
MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN
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 & Saf. Code (2006 ed.) foll. § 25249.5.) Additionally, the Settlement was
reached after arm’s-length negotiations by experienced counsel who possessed sufficient information
to evaluate the case and the terms of the Settlement. (Paras Decl. | 8; Wershba v. Apple Computer
(2001) 91 Cal.App.4"" 224, 245 [presumption that proposed settlement was fair where the settlement
is reached through arm’ s-length bargaining, parties and the court have sufficient information, counsel
is experienced in similar litigation, and the percentage of objectors is small].) Accordingly, Held
respectfully believes that the Court should enter judgment pursuant to the terms of the Settlement in
accordance with Section 664.6.
B. The Settlement Complies with the Requirements of Proposition 65
Health and Safety Code § 25249.7(f)(4) requires court approval of settlements entered into by
private parties in a Proposition 65 enforcement action. To approve the Settlement, the Court must
make three findings: (1) the injunctive relief required by the settlement complies with Proposition 65;
(2) the attorneys’ fees and costs awarded are reasonable under California law; and (3) the civil
penalty amount 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 these findings.
1. The Injunctive Terms of the Settlement Comply with Proposition 65
Proposition 65 states that “[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, except as provided in § 25249.10.” (Health & Saf. Code § 25249.6.) A
warning, however, is only required where an exposure to a listed chemical occurs in excess of
Proposition 65’s “no significant risk” and “no observable effect” levels. (Health & Saf. Code
§§ 25249.10, subd. (c) & 25249.7, subd. (f)(4)(A).)
The Consent Judgment requires that by October 30, 2016, all Products Lehigh purchases for
sale, manufactures for sale or imports for sale in California shall be “Reformulated” to contain less
than or equal to 1,000 parts per million (“ppm”) DINP (Consent Judgment § 2.1.) This
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reformulation standard is significantly lower than the level of the listed chemical reported on
laboratory results I have reviewed. (Paras Decl. {9.) Any non-Reformulated Products in inventory
prior to October 30, 2016, that Lehigh sells, ships, distributes or offers for sale in California, will bear
aclear and reasonable warning. (Consent Judgment § 2.2.) The 1,000 ppm level, consistent with
state and federal limits for DINP, has been approved by trial courts throughout the State of California
as injunctive terms that comply with Proposition 65. (Paras Decl. 110.) This 1,000 ppm (0.01%)
phthalate level parallels the standard set by California and federal laws applicable to phthalates in
children’s toys and child care articles. (Id.; Health & Saf. Code §108937; 15 U.S.C. §2057c, subd.
(a); 16 CER. §1199.1.)
Where required, the warnings authorized under the Consent Judgment meet Proposition 65’s
applicable regulatory requirements, both in terms of the required language and in terms of the method
of transmission. (Paras Decl. { 11; 27 CCR §§ 25601, 25603, 25603.1, and 25603.2.)
Proposition 65 contemplates “[rJeformulation of a product . . . in lieu of the provision of a
warning.” The Attorney General’s settlement guidelines suggest that such injunctive terms, obtained
by a successful Proposition 65 plaintiff, may “constitute a sufficient showing of public benefit” to
justify an award of attorneys’ fees. (CCR, tit. 11, § 3201, subd. (b)(2).) Reformulation of products to
virtually eliminate carcinogens provides a recognized public benefit. In furtherance of this
recognized public benefit, the final civil penalty in Section 3.1.2 of the Settlement will be waived, on
or before September 30, 2016, if Lehigh timely certifies to its expedited implementation of product
reformulation to include all Products distributed, shipped, sold and offered for sale in California,
thereby obviating the need for the requisite warning. (Paras Decl. 12.) As such, Lehigh is
incentivized to certify to its successful implementation of product reformulation to receive the final
civil penalty waiver.
Based on the foregoing, Held believes that the Court should find that the injunctive relief of
interim warnings and ultimate product reformulation negotiated by the parties to the Settlement
complies with Proposition 65 pursuant to Health & Safety Code § 25249.7(f)(4).
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2. The Civil Penalty Amount Is Reasonable
Pursuant to the Consent Judgment, Lehigh has agreed to pay an initial civil penalty of
$14,000. (Consent Judgment § 3.1.1.) Thereafter, on or before September 30, 2016, Lehigh shall pay
a final civil penalty of $28,000. (Consent Judgment § 3.1.2.) The final portion of the $42,000
penalty, however, will be waived in its entirety if, by September 30, 2016, Lehigh provides Held’s
counsel with a written statement certifying that it has met, and will continue to meet, the
reformulation standard specified in Section 2.1 of the Consent Judgment for all Products distributed,
shipped, sold and offered for sale in California. (Paras Decl. {12.) The subsequent monetary penalty
provides an important incentive to ensure Lehigh’s total compliance with the reformulation standard
established by the Settlement. Pursuant to Health and Safety Code § 25249.12, subds. (c)(1) and (d),
seventy-five percent (75%) of any penalty paid will be remitted to OEHHA, and the remaining
twenty-five percent (25%) retained by Held.
The penalty amounts were agreed to after arm’s-length negotiations, and are based on the
facts and circumstances of this case. The settlement discussions included e-mails and telephone calls
between counsel during which the parties confidentially exchanged product sales data and other
information relevant to settlement, both orally and in writing. (Paras Decl. {ff 8, 13.) The
confidential sales information that Lehigh provided to Held pursuant to the confidentiality agreement
between the parties in negotiating the Consent Judgment was a material factor upon which Held
relied to determine the amount of civil penalties assessed pursuant to Health & Safety Code
§ 25249.7. (Paras Decl. { 13.) The following statutory factors support a finding that the civil penalty
is appropriate. (Paras Decl. J 13.)
(a) The economic effect of the penalty on the violator. The amount of the penalty is
sufficient to remind Lehigh and its management that they must remain aware of, and consistently
attend to implementing, Proposition 65 requirements. While the penalty is not designed to unduly
impede Lehigh’s business, it will serve to raise these issues to the attention of its management.
(b) Whether the violator took good faith measures to comply. Pursuant to Section 3.1.2 of
the Consent Judgment, Lehigh may qualify for a partial waiver of the $42,000 civil penalty by
certifying that, in addition to its commitment to purchase, manufacture or import for sale in California
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Products reformulated pursuant to Section 2.1 of the Consent Judgment, Lehigh has met this
reformulation standard for all Products distributed, shipped, sold and offered for sale in California.
(c) The willfulness of the violator’s misconduct. Lehigh maintains that it did not
intentionally ignore, disregard, or violate Proposition 65, Once Lehigh 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 Notices and Complaint.
(d) Severity. Held considers the sale of Products containing DINP without the requisite
warnings to violate a California consumer’s right, codified by Proposition 65, to be informed of
Products containing DINP prior to exposure to the carcinogen.
(e) The deterrent effects. Lehigh’s payment of the civil penalty and a portion of Held’s
attorneys’ fees and costs provides an incentive for Lehigh to continue to comply with Proposition 65.
Further, by virtue of 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
products containing DINP in California will be made 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 of fees and costs. (Health & Saf. Code § 25249.7, subd. (b)(2).)
3. The Fee/Cost Recovery Is Reasonable Under California Law
As part of the Settlement, Lehigh will reimburse $36,000 of Held’s attorneys’ fees,
investigation fees and costs, expert and consultant fees, and litigation costs incurred in this case.
(Paras Decl. 15.) The parties reached this agreement in accordance with general contract principles
and the private attorney general doctrine codified at Code of Civil Procedure § 1021.5. (Id.) The
amount of reimbursement is consistent, although less than the approximate amount of $44,771.23 in
fees and costs Held incurred during his investigation into the underlying allegations, informal
exchange of information pursuant to the parties’ confidentiality agreement in lieu of formal
discovery, negotiating the Settlement terms and other ongoing enforcement related activity to bring
about entry of judgment in this matter. (Id.)
The Declaration of Laralei Paras submitted herewith supports a finding that the negotiated fee
and cost reimbursement is reasonable. (Paras Decl. {{[ 15-25 and Exh. B.) It shows that the fees and
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costs already incurred by Held in this matter exceed the amount to be paid by Lehigh. It details the
fees incurred during the investigation Held commissioned into Lehigh’s Products which resulted in
the issuance of the Notices. Legal fees and costs expended in order to issue the Notices are detailed
in Exhibit B to the Declaration of Laralei Paras. (Paras Decl. { 17.1, Exh. B.) All such activity was
initiated and resolved in the public interest. Given the effort invested in this case, and the public
benefit achieved, both in civil penalties collected and injunctive relief obtained, the negotiated
reimbursement of a portion of Held’s attorneys’ fees and costs is reasonable.
As set forth in the Attorney General’s guidelines for evaluating the reasonableness of an
award of fees under Proposition 65, a party may be deemed successful so as to permit such an award
“if the plaintiffs action was the cause or ‘catalyst’ of the change in conduct.” (11 CCR § 3201(a);
CCP § 1021.5.) Specifically, “[r]eformulation of a product ... in lieu of the provision of a warning,
constitute[s] a sufficient showing of public benefit” to justify the award of attorneys’ fees. (11 CCR
§ 3201(b)(2): CCP § 1021.5(a).) Here, Lehigh has agreed to provide Products to California
consumers that are only accompanied by the clear and reasonable warning language of Section 2.2 of
the Consent Judgment or reformulated to virtually eliminate DINP. Once Lehigh timely certifies that,
in addition to its commitment to purchase, manufacture or import for sale in California only Products
reformulated pursuant to Section 2.1 of the Consent Judgment, it has met the 1000 ppm (0.01%)
reformulation standard for DINP for all Products distributed, shipped, sold and offered for sale in
California, it will receive a waiver of the final civil penalty. Accordingly, Held maintains that he
operated as the catalyst in achieving these results in the public interest.
While the 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 settlement of
fees and costs. Specifically, CCR, tit. 11, § 3201 states:
[T]he fact that the defendant[s] 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 each
element of the fee claim than would be applied in a contested fee application.
(Emphasis added.) Based on this standard of review, and in light of the declaration and other
evidence provided, supporting actual fees and costs in an amount greater than the negotiated figure,
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Held believes that the Court should find that the fees and costs provided by the Settlement are
reasonable under California law.
Iv. 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 judgments approved and entered by California courts,
including this Court. Based on the foregoing, Held respectfully requests that the Court approve the
Settlement and enter the [Proposed] Judgment.
Dated: September 28, 2016 THE CHANLER GROUP
By:
Laralei Paras
Attomeys for Plaintiff
ANTHONY E. HELD, Ph.D., P.E.
MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENT
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Bw YN Laralei Paras, State Bar No. 203319 THE CHANLER GROUP 2560 Ninth Street Parker Plaza, Suite 214 Berkeley, CA 94710 Telephone: (510) 848-8880 Facsimile: (510) 848-8118 Attorneys for Plaintiff ANTHONY E. HELD, PH.D., P.E. ELECTRONICALLY FILED Superior Court of California, County of San Francisco 09/28/2016 Clerk of the Court BY-CAROL BALISTRERI Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA CITY AND COUNTY OF SAN FRANCISCO UNLIMITED CIVIL JURISDICTION ANTHONY E. HELD, PH.D., P.E., Plaintiff, Vv. LEHIGH CONSUMER PRODUCTS LLC; and DOES 1-150, inclusive, Defendants. Case No. CGC-16-552602 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO APPROVE PROPOSITION 65 SETTLEMENT AND [PROPOSED] CONSENT JUDGMENT Date: November 16, 2016 Time: 9:30 a.m. Courtroom: 302 Judge: Hon. Harold E. Kahn Reservation No.: 09271116-14 MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN I. Introduction Plaintiff, Anthony E. Held, Ph.D., P.E. (“Held”), hereby seeks the Court’s approval of the [Proposed] Consent Judgment (“Consent Judgment” or “Settlement’”’) with defendant Lehigh Consumer Products LLC (“Lehigh”) in this Health and Safety Code § 25249.6, et seq. (“Proposition 65”) action. The Settlement resolves Held’s allegations that Lehigh sold certain vinyl/PVC gloves (defined in the Settlement as the “Products”) without the requisite health-hazard warning for the Proposition 65-listed chemical diisononyl phthalate (“DINP”). The Settlement is attached as Exhibit A to the supporting declaration of Laralei Paras (“Paras Decl.”) filed herewith. As discussed more fully herein, the Consent Judgment was reached following arm’s-length negotiations between the parties, each of whom was represented by experienced counsel. The Settlement is fair and reasonable to the parties, is in the interest of, and provides a benefit to, the general public, has been submitted to the Office of the California Attorney General for review, and fully complies with the statutory requirements of Proposition 65. Accordingly, Held requests that the Court enter an order approving the Settlement and judgment in accordance with its terms. IL. Summary of the Action Held brought this action pursuant to Health and Safety Code § 25249.7(d) in order that he might promote awareness of exposures to toxic chemicals and improve human health by reducing or eliminating hazardous substances contained in consumer products. (Paras Decl. [ 2.) Held alleges that certain vinyl/PVC gloves sold by Lehigh exposed individuals to DINP, a chemical known to the State of California to cause cancer,! and that Lehigh violated its duty to warn individuals in California of the risk of exposure to DINP and the harms associated with such exposure. (Paras Decl. J 4.) Lehigh denies Held’s material, factual and legal allegations, and expressly denies any wrongdoing. (Paras Decl., Exh. A, Consent Judgment {[ 1.8.) On September 24, 2015, Held served Jarden Corporation and various public enforcement agencies with a document entitled “60-Day Notice of Violation” (“Notice”) alleging that Jarden ' On December 20, 2013, California listed DINP as a chemical known to cause cancer. DINP became subject to the “clear and reasonable warning” requirements of Proposition 65 one year later on December 20, 2014, (Cal. Code Regs. (“CCR”), tit. 27, § 27001, subd. (c); Health & Saf. Code § 25249.8.) MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN Corporation was in violation of California Health & Safety Code § 25249.6 for failing to warn consumers that its vinyl/PVC gloves, such as Spontex ColorBrite Disposable Gloves, UPC #0 21202 76153 7, exposed users in the State of California to DINP. (Paras Decl. {{ 5.) On February 25, 2016, Held served Lehigh and various public enforcement agencies with a document entitled “Supplemental 60-Day Notice of Violation” (“Supplemental Notice”) alleging that Lehigh was also in violation of California Health & Safety Code § 25249.6 for failing to warn consumers that vinyl/PVC gloves, such as Spontex ColorBrite Disposable Gloves, UPC #0 21202 76153 7, exposed users in the State of California to DINP. (Paras Decl. { 6.) Lehigh supplied the Product specifically identified in the Notice. (Id.) The Notice and the Supplemental Notice are referred to herein collectively as the “Notices.” On June 17, 2016, Held filed a complaint in the instant action against Lehigh for its alleged violations of Health & Safety Code § 25249.6 subject to the Notices. On September 26, 2016, the parties finalized and entered into the Consent Judgment, a settlement that resolves Held’s claims against Lehigh for violations of Proposition 65 with respect to Lehigh’s Products as alleged in the Notices and Complaint. (Paras Decl. 7, Exh. A.) The Settlement meets the requirements of Proposition 65, is fair and reasonable, and is in the public interest. Among other things, it provides that Lehigh shall prospectively sell in California only Products that are either accompanied by a clear and reasonable warning or reformulated to meet the stringent standards set forth in the Settlement with an incentive to achieve expedited reformulation of all Products. Accordingly, Held respectfully requests that the Court approve the Settlement. Ii. Background of Proposition 65 and Held’s 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. Proposition 65 may be enforced by public prosecutors, including the Attorney General, district attorneys, and certain city attorneys, or by private individuals 2 MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN 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).) 1. DISCUSSION A. The Settlement Should Be Entered as a Judgment Pursuant to Code of Civil Procedure (“CCP”) § 664.6 This motion is brought, in part, pursuant to CCP § 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. (Jn re Marriage of Farid (1994) 7 Cal.4" 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. Board of Medical 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 “[p]ublic policy strongly discourage[s] litigation and encourages settlement.” (Skulnick v. Roberts Express, Inc. (1992) 2 Cal.App.4" 884, 891.) Case authority in this state also recognizes the importance of “settlement as part of the litigation process.” (Soliz v. Williams (1999) 74 Cal.App.4" 577, 587.) As such, there is a strong presumption favoring the settlement of litigation. (in re Marriage of Farid, supra, 7 Cal.4" at 910.) The Settlement contains no term or condition that is prohibited by law or contrary to public policy. In fact, all of its terms specifically further the public policy expressed in the preamble to MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN 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 & Saf. Code (2006 ed.) foll. § 25249.5.) Additionally, the Settlement was reached after arm’s-length negotiations by experienced counsel who possessed sufficient information to evaluate the case and the terms of the Settlement. (Paras Decl. | 8; Wershba v. Apple Computer (2001) 91 Cal.App.4"" 224, 245 [presumption that proposed settlement was fair where the settlement is reached through arm’ s-length bargaining, parties and the court have sufficient information, counsel is experienced in similar litigation, and the percentage of objectors is small].) Accordingly, Held respectfully believes that the Court should enter judgment pursuant to the terms of the Settlement in accordance with Section 664.6. B. The Settlement Complies with the Requirements of Proposition 65 Health and Safety Code § 25249.7(f)(4) requires court approval of settlements entered into by private parties in a Proposition 65 enforcement action. To approve the Settlement, the Court must make three findings: (1) the injunctive relief required by the settlement complies with Proposition 65; (2) the attorneys’ fees and costs awarded are reasonable under California law; and (3) the civil penalty amount 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 these findings. 1. The Injunctive Terms of the Settlement Comply with Proposition 65 Proposition 65 states that “[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, except as provided in § 25249.10.” (Health & Saf. Code § 25249.6.) A warning, however, is only required where an exposure to a listed chemical occurs in excess of Proposition 65’s “no significant risk” and “no observable effect” levels. (Health & Saf. Code §§ 25249.10, subd. (c) & 25249.7, subd. (f)(4)(A).) The Consent Judgment requires that by October 30, 2016, all Products Lehigh purchases for sale, manufactures for sale or imports for sale in California shall be “Reformulated” to contain less than or equal to 1,000 parts per million (“ppm”) DINP (Consent Judgment § 2.1.) This MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN reformulation standard is significantly lower than the level of the listed chemical reported on laboratory results I have reviewed. (Paras Decl. {9.) Any non-Reformulated Products in inventory prior to October 30, 2016, that Lehigh sells, ships, distributes or offers for sale in California, will bear aclear and reasonable warning. (Consent Judgment § 2.2.) The 1,000 ppm level, consistent with state and federal limits for DINP, has been approved by trial courts throughout the State of California as injunctive terms that comply with Proposition 65. (Paras Decl. 110.) This 1,000 ppm (0.01%) phthalate level parallels the standard set by California and federal laws applicable to phthalates in children’s toys and child care articles. (Id.; Health & Saf. Code §108937; 15 U.S.C. §2057c, subd. (a); 16 CER. §1199.1.) Where required, the warnings authorized under the Consent Judgment meet Proposition 65’s applicable regulatory requirements, both in terms of the required language and in terms of the method of transmission. (Paras Decl. { 11; 27 CCR §§ 25601, 25603, 25603.1, and 25603.2.) Proposition 65 contemplates “[rJeformulation of a product . . . in lieu of the provision of a warning.” The Attorney General’s settlement guidelines suggest that such injunctive terms, obtained by a successful Proposition 65 plaintiff, may “constitute a sufficient showing of public benefit” to justify an award of attorneys’ fees. (CCR, tit. 11, § 3201, subd. (b)(2).) Reformulation of products to virtually eliminate carcinogens provides a recognized public benefit. In furtherance of this recognized public benefit, the final civil penalty in Section 3.1.2 of the Settlement will be waived, on or before September 30, 2016, if Lehigh timely certifies to its expedited implementation of product reformulation to include all Products distributed, shipped, sold and offered for sale in California, thereby obviating the need for the requisite warning. (Paras Decl. 12.) As such, Lehigh is incentivized to certify to its successful implementation of product reformulation to receive the final civil penalty waiver. Based on the foregoing, Held believes that the Court should find that the injunctive relief of interim warnings and ultimate product reformulation negotiated by the parties to the Settlement complies with Proposition 65 pursuant to Health & Safety Code § 25249.7(f)(4). M11 M1 MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN 2. The Civil Penalty Amount Is Reasonable Pursuant to the Consent Judgment, Lehigh has agreed to pay an initial civil penalty of $14,000. (Consent Judgment § 3.1.1.) Thereafter, on or before September 30, 2016, Lehigh shall pay a final civil penalty of $28,000. (Consent Judgment § 3.1.2.) The final portion of the $42,000 penalty, however, will be waived in its entirety if, by September 30, 2016, Lehigh provides Held’s counsel with a written statement certifying that it has met, and will continue to meet, the reformulation standard specified in Section 2.1 of the Consent Judgment for all Products distributed, shipped, sold and offered for sale in California. (Paras Decl. {12.) The subsequent monetary penalty provides an important incentive to ensure Lehigh’s total compliance with the reformulation standard established by the Settlement. Pursuant to Health and Safety Code § 25249.12, subds. (c)(1) and (d), seventy-five percent (75%) of any penalty paid will be remitted to OEHHA, and the remaining twenty-five percent (25%) retained by Held. The penalty amounts were agreed to after arm’s-length negotiations, and are based on the facts and circumstances of this case. The settlement discussions included e-mails and telephone calls between counsel during which the parties confidentially exchanged product sales data and other information relevant to settlement, both orally and in writing. (Paras Decl. {ff 8, 13.) The confidential sales information that Lehigh provided to Held pursuant to the confidentiality agreement between the parties in negotiating the Consent Judgment was a material factor upon which Held relied to determine the amount of civil penalties assessed pursuant to Health & Safety Code § 25249.7. (Paras Decl. { 13.) The following statutory factors support a finding that the civil penalty is appropriate. (Paras Decl. J 13.) (a) The economic effect of the penalty on the violator. The amount of the penalty is sufficient to remind Lehigh and its management that they must remain aware of, and consistently attend to implementing, Proposition 65 requirements. While the penalty is not designed to unduly impede Lehigh’s business, it will serve to raise these issues to the attention of its management. (b) Whether the violator took good faith measures to comply. Pursuant to Section 3.1.2 of the Consent Judgment, Lehigh may qualify for a partial waiver of the $42,000 civil penalty by certifying that, in addition to its commitment to purchase, manufacture or import for sale in California 6 MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN Products reformulated pursuant to Section 2.1 of the Consent Judgment, Lehigh has met this reformulation standard for all Products distributed, shipped, sold and offered for sale in California. (c) The willfulness of the violator’s misconduct. Lehigh maintains that it did not intentionally ignore, disregard, or violate Proposition 65, Once Lehigh 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 Notices and Complaint. (d) Severity. Held considers the sale of Products containing DINP without the requisite warnings to violate a California consumer’s right, codified by Proposition 65, to be informed of Products containing DINP prior to exposure to the carcinogen. (e) The deterrent effects. Lehigh’s payment of the civil penalty and a portion of Held’s attorneys’ fees and costs provides an incentive for Lehigh to continue to comply with Proposition 65. Further, by virtue of 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 products containing DINP in California will be made 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 of fees and costs. (Health & Saf. Code § 25249.7, subd. (b)(2).) 3. The Fee/Cost Recovery Is Reasonable Under California Law As part of the Settlement, Lehigh will reimburse $36,000 of Held’s attorneys’ fees, investigation fees and costs, expert and consultant fees, and litigation costs incurred in this case. (Paras Decl. 15.) The parties reached this agreement in accordance with general contract principles and the private attorney general doctrine codified at Code of Civil Procedure § 1021.5. (Id.) The amount of reimbursement is consistent, although less than the approximate amount of $44,771.23 in fees and costs Held incurred during his investigation into the underlying allegations, informal exchange of information pursuant to the parties’ confidentiality agreement in lieu of formal discovery, negotiating the Settlement terms and other ongoing enforcement related activity to bring about entry of judgment in this matter. (Id.) The Declaration of Laralei Paras submitted herewith supports a finding that the negotiated fee and cost reimbursement is reasonable. (Paras Decl. {{[ 15-25 and Exh. B.) It shows that the fees and 7 MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN costs already incurred by Held in this matter exceed the amount to be paid by Lehigh. It details the fees incurred during the investigation Held commissioned into Lehigh’s Products which resulted in the issuance of the Notices. Legal fees and costs expended in order to issue the Notices are detailed in Exhibit B to the Declaration of Laralei Paras. (Paras Decl. { 17.1, Exh. B.) All such activity was initiated and resolved in the public interest. Given the effort invested in this case, and the public benefit achieved, both in civil penalties collected and injunctive relief obtained, the negotiated reimbursement of a portion of Held’s attorneys’ fees and costs is reasonable. As set forth in the Attorney General’s guidelines for evaluating the reasonableness of an award of fees under Proposition 65, a party may be deemed successful so as to permit such an award “if the plaintiffs action was the cause or ‘catalyst’ of the change in conduct.” (11 CCR § 3201(a); CCP § 1021.5.) Specifically, “[r]eformulation of a product ... in lieu of the provision of a warning, constitute[s] a sufficient showing of public benefit” to justify the award of attorneys’ fees. (11 CCR § 3201(b)(2): CCP § 1021.5(a).) Here, Lehigh has agreed to provide Products to California consumers that are only accompanied by the clear and reasonable warning language of Section 2.2 of the Consent Judgment or reformulated to virtually eliminate DINP. Once Lehigh timely certifies that, in addition to its commitment to purchase, manufacture or import for sale in California only Products reformulated pursuant to Section 2.1 of the Consent Judgment, it has met the 1000 ppm (0.01%) reformulation standard for DINP for all Products distributed, shipped, sold and offered for sale in California, it will receive a waiver of the final civil penalty. Accordingly, Held maintains that he operated as the catalyst in achieving these results in the public interest. While the 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 settlement of fees and costs. Specifically, CCR, tit. 11, § 3201 states: [T]he fact that the defendant[s] 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 each element of the fee claim than would be applied in a contested fee application. (Emphasis added.) Based on this standard of review, and in light of the declaration and other evidence provided, supporting actual fees and costs in an amount greater than the negotiated figure, 8 MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENTBw YN Held believes that the Court should find that the fees and costs provided by the Settlement are reasonable under California law. Iv. 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 judgments approved and entered by California courts, including this Court. Based on the foregoing, Held respectfully requests that the Court approve the Settlement and enter the [Proposed] Judgment. Dated: September 28, 2016 THE CHANLER GROUP By: Laralei Paras Attomeys for Plaintiff ANTHONY E. HELD, Ph.D., P.E. MPA IN SUPPORT OF MOTION TO APPROVE PROP. 65 SETTLEMENT AND CONSENT JUDGMENT