California is known for its special protections and warnings designed to benefit consumers. In fact, throughout the state, residents and visitors will notice signs in public places and businesses warning of exposure to chemicals that could cause cancer. The notifications are part of a 1986 mandate that puts establishments at risk of business litigation if they fail to warn consumers about potential carcinogens. Although many advocates say that the notification laws have been hugely successful in the state, business owners are plagued with ongoing litigation that threatens their financial viability.
The labeling law, known as Proposition 65, now includes warning requirements for hundreds of chemicals that could be present in businesses from dry cleaners to hotels and restaurants. Even though the provision is designed to help residents, it ultimately ends up hurting businesses because it gives "victims" more of an incentive to sue. Further, it appears that such litigation disproportionately targets small businesses. In 2012 alone, about $22.5 million was doled out in Prop 65 settlements. That is nearly double the amount distributed in 2007. Sadly, it appears as though the plaintiffs in many of the cases are not even receiving the money they get during the awards; more than half of the settlement money simply goes to pay for legal fees.
Ultimately, business leaders say that the California business litigation structure is harmful for the state's economy. In California, the responsibility for disclosing the presence of toxic chemicals falls squarely on the shoulders of small-business owners, who may not be able to keep track of the growing list of potentially dangerous substances. Business advocates say that the provision is too costly and should be discontinued, even though it ostensibly protects some consumers from limited exposure to toxic substances.
Unfair business litigation burdens should not be continuously inflicted upon corporate entities in California. Business owners who are unsure about the effects of Prop 65 on their establishment's operation may benefit from consulting with a business dispute attorney, who can help them learn more about their legal rights and options in the face of such frivolous litigation.
Source: National Public Radio, "Calif. Toxin Law Warns Consumers, But Can Burden Businesses" No author given, Jan. 05, 2014