Case Number: BC482740 Hearing Date: June 24, 2014 Dept: 34

Moving Party: Plaintiff Consumer Advocacy Group, Inc. (“plaintiff”)

Resp. Party: None

Plaintiff’s motion is GRANTED.

BACKGROUND:

Plaintiff commenced this action on 4/12/12 against several defendants for penalty, injunctive relief, and restitution pursuant to Proposition 65. Plaintiff filed a first amended complaint on 11/15/12. Plaintiff alleges that defendants manufactured, distributed, and marketed Beach Basics Kids Flip Flops Size 11/12, a product designed for children to wear as footwear. Plaintiff alleges that the flip flops contained DBP, which has been identified as a chemical known to cause reproductive toxicity and therefore were subject to the Proposition 65 warning requirements. Plaintiff alleges that defendants knowingly exposed employees and consumers to DBP without first providing any type of clear and reasonable warning..

Defendants Food 4 Less and The Kroger Co. were dismissed on 8/29/12. Defendant Triple T Footwear was dismissed on 2/28/13. Defendant Ralphs Grocery Company was dismissed on 1/23/14. Defendant Triple T Trading Ltd (“defendant”) is the only remaining defendant in this action.

On 2/4/14, the Court granted defendant’s motion for summary adjudication in part and denied it in part. The Court granted the motion as to the first issue (occupational exposure), and denied it as to the remaining issues.

The parties filed a notice of settlement on 3/14/14.

The instant motion was originally set for hearing on 5/29/14, but was continued due to the unavailability of the Court on that date. Prior to the May 29th hearing date, the Court issued a tentative decision which concluded:

“Accordingly, plaintiff’s motion is DENIED because plaintiff fails to establish that it complied with Health & Safety Code section 25249.7(d) prior to bringing this action, that the penalties amount is reasonable, that the attorney’s fees amount is reasonable, or that the settlement is just. This denial is without prejudice to counsel re-submitting a motion with declarations or other evidence addressing these issues.”

On 6/12/14, plaintiff filed supplemental documents.

ANALYSIS:

Procedural Analysis

An action pursuant to California Health and Safety Code section 25249 et seq.

may be brought by any person in the public interest if both of the following requirements are met: [¶] The private action is commenced more than 60 days from the date that the person has given notice of an alleged violation of Section 25249.5 or 25249.6 that is the subject of the private action to the Attorney General and the district attorney, city attorney, or prosecutor in whose jurisdiction the violation is alleged to have occurred, and to the alleged violator . . . [and] . . . [¶] (2) Neither the Attorney General, any district attorney, any city attorney, nor any prosecutor has commenced and is diligently prosecuting an action against the violation.

(Health & Safety Code §§ 25249.7(d)(1)-(2).)

Plaintiff now provides sufficient evidence that it gave notice of the violations to all relevant entities more than 60 days before filing this action. (See Supp. Yeroushalmi Decl., ¶¶ 4-6, Exhs. B-C.)

Additionally, under California Code of Regulations, title 11, section 3003, “[t]he private enforcer shall serve the Settlement on the Attorney General with a Report of Settlement in the form set forth in Appendix B within five days after the action is Subject to a Settlement, or concurrently with service of the motion for judicial approval of settlement pursuant to Health and Safety Codes section 25249.7(f)(4), whichever is sooner.” (11 CCR § 3003(a).) Further, “[t]he motion and all supporting papers and exhibits shall be served on the Attorney General no later than forty-five days prior to the date of the hearing on the motion.” (Ibid.) Here, the proof of service states that the Attorney General was served with the instant motion and the proposed consent judgment on April 9, 2014.

Therefore, the motion is procedurally proper.

Substantive Analysis

The judgment contains a total monetary payment of $170,000.00, including civil penalties of $10,000.00 and reimbursement of plaintiff’s attorney’s fees and costs totaling $160,000.00. (Proposed Consent Judgment [PCJ], § 4.)

Health and Safety Code section 25249.7, subd. (f)(4) provides, in relevant part:

If there is a settlement of an action brought by a person in the public interest under subdivision (d), the plaintiff shall submit the settlement . . . to the court for approval upon noticed motion, and the court may approve the settlement only if the court makes all of the following findings: [¶] (A) The warning that is required by the settlement complies with this chapter. [¶] (B) The award of attorney’s fees is reasonable under California law. [¶] (C) The penalty amount is reasonable based on the criteria set forth in paragraph (2) of subdivision (b).

(Health & Safety Code § 25249.7(f)(4).)

“In the context of Proposition 65 litigation, necessarily brought to vindicate the public interest, the trial court also must ensure that its judgment serves the public interest.” (Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2006) 141 Cal.App.4th 46, 62.) In order “[t]o stamp a consent agreement with the judicial imprimatur, the court must determine that the proposed settlement is just.” (Id. at p. 61.) Health and Safety code section 25249.7 explicitly states that “the court may approve the settlement”; thus, the court “is not relegated to assessing only the warnings, penalties, and fees.” (Health & Safety Code § 25249.7(f)(4); Consumer Advocacy Group, Inc., 141 Cal.App.4th at p. 62.)

Accordingly, in addition to the requirements of Health and Safety Code section 25249.7(f)(4), the Court must also determine that the consent judgment serves the public interest and its terms are fair. (See Consumer Advocacy Group, Inc., at p. 62, n.11 [ “In contexts similar to Proposition 65 litigation, where judicial review is required, the trial court is required to ensure that its judgment is fair.”].)

Warning Compliance

Proposition 65 provides that “[n]o person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual . . . .” (Health & Safety Code § 25249.6.) Further, to be “clear and reasonable,” the warning must be displayed “with such conspicuousness, as compared with words, statements, designs, or devices in the label, labeling or display as to render it likely to be read and understood by ordinary individual under customary conditions of purchase or use.” (27 CCR § 25601(b)(3).) “The message must clearly communicate that the chemical in question is known to the state to cause cancer, or birth defects or other reproductive harm.” (Ibid.)

The PCJ does not require defendant to provide a warning on the flip flops. Instead, it provides that, within 30 days of the effective date, defendant “shall only import, distribute, or sell Covered Products that have PVC Components containing less than 0.1% DBP (1,000 parts per million) by weight” and that defendant “shall randomly test the PVC Components of Covered Products sold or offered for sale in California to ensure compliance” with the requirement that the products contain less than 0.1% DBP by weight. (PCJ, § 3.) “Reformulation of a product, changes in air emissions, or other changes in the defendant’s practices which reduce or eliminate the exposure to a listed chemical, in lieu of the provision of a warning, constitute a sufficient showing of public benefit.” (11 Cal. Code. Regs., tit. 11, § 3201(b)(2).) Therefore, the requirements of the PCJ sufficiently comply with Proposition 65.

Reasonableness of Penalties

After ensuring that the Consent Judgment complies with Proposition 65’s terms, the Court must determine whether the assessed penalty is reasonable. Health and Safety Code section 25249.7(b)(2) provides:

In assessing the amount of a civil penalty for a violation of this chapter, the court shall consider all of the following: [¶] (A) The nature and extent of the violation. [¶] (B) The number of, and severity of, the violations. [¶] (C) The economic effect of the penalty on the violator. [¶] (D) Whether the violator took good faith measures to comply with this chapter and the time these measures were taken. [¶] (E) The willfulness of the violator’s misconduct. [¶] (F) The deterrent effect that the imposition of the penalty would have on both the violator and the regulated community as a whole. [¶] (G) Any other factor that justice may require.

Under the terms of the PCJ, the parties agree to a civil penalty of $6,000.00 and an additional payment of $4,000.00 to plaintiff in lieu of further civil penalties to be used to further the purposes of the statute. (PCJ, § 4, ¶¶ 4.3, 4.4.)

Plaintiff provides information and evidence as to the nature, extent, number, and severity of the violations. (See Supp. Yeroushalmi Decl., D-I, M.) Plaintiff acknowledges that the economic effect on defendant is minimal, but points out that the settlement requires defendant to reformulate the product. (See id., ¶¶ 23-24; Supp. Memo., pp. 4-5.) Plaintiff discusses the measures taken by defendant after it received plaintiff’s first notice of its claim. (See Supp. Yeroushalmi Decl., Exh. J, pp. 14-15.) Plaintiff points to the Court’s ruling on defendant’s summary judgment motion which noted that defendant should have known of the violation. (See id., Exh. J, pp. 11-12.) Plaintiff sufficiently explains the $4,000.00 payment in lieu of further penalties. (See Supp. Memo., p. 9.)

Therefore, plaintiff has established that the penalties are reasonable.

Reasonableness of Attorney’s Fees and Costs

Next, the Court must decide whether the proposed consent judgment’s award of attorney’s fees is reasonable under California law. (Health & Safety Code § 25249.7(f)(4)(B).) The proposed consent judgment provides that defendant will pay $160,000.00 for attorney’s fees and costs. (Proposed Consent Judgment, § 4, ¶ 4.2.)

In Consumer Defense Group v. Rental House Industry Members (2006) 137 Cal.App.4th 1185, the court reversed the trial court’s approval of consent judgments, finding the requested attorney’s fees objectively unconscionable. (Id. at pp. 1219-1220 [holding that the trial court’s award of fees totaling nearly $540,000 objectively unconscionable].) The court considered the “traditional factors used to gauge attorney fee awards in private attorney general cases in making its determination.” (Id. at p. 1219.) Specifically, the court considered such factors as: (1) the novelty and difficulty of the questions involved; (2) the extent to which the litigation precludes other employment by the attorneys; (3) the contingent nature of the fee award; (4) the fact that an award might ultimately fall on the taxpayers; and (5) the fact that the monies awarded would inure not to the individual benefit of the attorneys involved but the organizations by which they are employed. (Id. at p. 1220.)

Plaintiff’s counsel provides a detailed explanation of its compensable time spent on this case. (See Yeroushalmi Decl., ¶¶ 27-46, 49-50.) Yeroushalmi discusses and supports the hourly rates of the attorneys who worked on the case and provides the number of hours that each attorney worked. (See id., ¶¶ 17-26.) Yeroushalmi summarizes the attorney’s fees in a following chart accompanying his Declaration.

Plaintiff’s counsel now provides timesheets to support the requested fees. (See Supp. Yeroushalmi Decl., Exh. L.) The Court notes that the amount of fees requested is less than half of what plaintiff’s counsel claims was expected.

Accordingly, plaintiff sufficiently shows that the requested fees are reasonable.

Whether the Settlement Serves the Public Interest and is Just

As noted above, if “Proposition 65 litigation . . . [is] necessarily brought to vindicate the public interest, the trial court almost must ensure that its judgment serves the public interest.” (Consumer Advocacy Group, Inc., 141 Cal.App.4th at 62.) In order for the Court “[t]o stamp a consent agreement with the judicial imprimatur, the court must determine that the proposed settlement is just.” (Id. at p. 61.)

Because the PCJ requires defendant to reformulate the product to reduce or eliminate the exposure to DBP, it likely serves the public interest. (See 11 Cal. Code. Regs., tit. 11, § 3201(b)(2).). Because the penalties amount is reasonable in light of the agreed-upon reformulation, it is likely that the settlement is just.

Accordingly, plaintiff’s motion is GRANTED.