Litigation

Proposition 65: Finality of Consent Judgments and Protection From Multiple Bounty-Hunters

By Bruce Nye

   Regular readers (all five of you) and California practitioners by now know the Proposition 65 enforcement drill:  a private-party enforcer, or "bounty hunter," uses a lead-seeking gun to find lead-containing products without warnings on a retail shelf, or buys products at retail that contain listed chemicals and no warnings.  The bounty hunter sends a "sixty day notice" to the offending manufacturer, importer or other business, and then sues for injunctive relief, penalties, and, oh yes, attorneys' fees.  Introduction to the subject appears here, here and here.

    Although the world of Prop 65 has a certain "Through the Looking Glass" quality to it for newcomers, there is, in fact, a set of rules established by the statutes themselves, by the accompanying regulations, and by court decisions.  And one of them that I have assumed for some time was confirmed by the Court of Appeal last Thursday.

    One of the first questions I usually get from clients who are newcomers to the Prop 65 world is this one:  "OK, so we settle with these guys, what's to keep the next bounty hunter, or the Attorney General, from bringing another case against us for the same thing?"  My answer has always been that the first settlement is incorporated into a consent judgment, that the consent judgment is entered by the court only after notice to the State of California and the public via the Attorney General's web site, and that the consent judgment ought to be res judicata. 

    And now there's a case that says so:  Consumer Advocacy Group, Inc. v. ExxonMobil Corp. (November 20, 2008) ___Cal.App.4th___ (Second Dist., B201245).  The case holds unambiguously "... we conclude claim preclusion applies to private enforcement actions, as long as due process and the traditional elements of res judicata are satisfied."  And there is due process in the Prop 65 context if the settlement of the first claim adequately represents the interests of the general public.

    Incidentally, there are some bounty-hunters who propose settlements without consent judgments -- i.e., without any court involvement.  This decision means, in my view, that settlement without a consent judgment is almost never a good idea for the defense, because a settlement without a consent judgment will not provide res judicata protection.

Full post as published by CalBizLit on November 24, 2008 (boomark / email).