Case Number: BC508073 Hearing Date: June 09, 2014 Dept: 34

Moving Party: Plaintiff AFS Enterprises, LLC (“plaintiff”) and defendant Lava Propane, LLC (“defendant” )

Resp. Party: Kamala D. Harris, Attorney General of California (“Attorney General”)

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 warning described in the proposed consent judgment is sufficient, that the penalties amount is reasonable, that the attorney’s fees amount is reasonable, or that the settlement is in the public interest and is just.

PRELIMINARY COMMENTS:

This motion was originally heard on 1/29/14. The Court denied the motion because plaintiff failed to establish that it complied with Health & Safety Code section 25249.7(d) prior to bringing the action, that the penalties amount is reasonable, that the attorney’s fees is reasonable and necessary, or that the settlement is in the public interest and is just. The denial was without prejudice to plaintiff bringing the motion again at a future date.

The only significant factor that has changed in this reiteration of the motion is that now the Attorney General of California opposes the Motion for Approval of Consent Judgment.

BACKGROUND:

Plaintiff commenced this action on 5/9/13 against defendant for penalty and injunctive relief pursuant to Proposition 65. Plaintiff alleges that defendant manufactured, distributed, and marketed propane cylinders for use by individuals and that those who purchased the cylinders were exposed to benzene, carbon monoxide, and carbon black. Defendant allegedly failed to provide clear and reasonable warnings that the use of the cylinders could result in exposer to the chemicals.

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 purports to provide a copy of the “60 Day Notice of Violation” letter. (See Greenbaum Decl., Exh. 2.) The Court notes that the document in exhibit 2 to the Greenbaum declaration is greatly zoomed in. Plaintiff’s counsel declares that the document is a “true and correct” copy of the notice sent to defendant and public enforcement agencies. (Ibid.) The Court has two choices:

· The Court can assume that Greenbaum’s declaration is accurate, and that this functionally illegible document was served on the defendant and public entities. If so, this document is not sufficient to provide notice because one can only read a portion of the language in the document, and cannot ascertain several crucial facts, including: (1) to whom the document was addressed; (2) what subjects are addressed in the document; (3) whether the document actually pertains to this action; and (4) whether the document contained a valid proof of service.

· Alternatively, the Court can assume that the facts attested to by attorney Greenbaum under penalty of perjury in his Declaration are not true.

Either way, plaintiff has not shown that it complied with Health & Safety Code section 25249.7(d) prior to bringing this action, and hence the instant motion is not procedurally proper

Substantive Analysis

The judgment contains a total monetary payment of $5,500.00, including civil penalties of $250.00 and reimbursement of plaintiff’s attorney’s fees and costs totaling $5,250.00. (Proposed Consent Judgment, § 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 proposed consent judgment provides that defendant shall, within 90 days after entry of the consent judgment by the Court, provide warnings which state: “Warning: Chemicals known to the State of California to cause cancer, birth defects, or other reproductive harm are created by the combustion of propane.” (Proposed Consent Judgment, § 2, ¶¶ 2.1-2.3.) The proposed consent judgment provides that the warning is to be posted at defendant’s cylinder exchange stations – either on the station, on the fence (if any) surrounding the cylinders, or “in such other manner so as to be readable by a customer either purchasing or exchanging a propane cylinder.” (Id., § 2, ¶ 2.4.)

The Attorney General accurately points out that Greenbaum misrepresents that defendant is to put the warning on its propane tanks. (See Greenbaum Decl., ¶¶ 35, 36, 66, 67, 69.) The proposed consent judgment only requires defendant to post warnings on the cylinder exchange station, on the fence surrounding the cylinders, or in another manner so as to be readable by customers purchasing or exchanging the cylinders. (Proposed Consent Judgment, § 2, ¶ 2.4.)

The Attorney General also points out that the proposed consent judgment does not clearly require defendant to change the format of its inadequate warnings. Greenbaum declares that defendant violated Proposition 65 because the size and font of defendant’s previous warnings did not comply with Proposition 65. (Greenbaum Decl., ¶ 61(a).) Plaintiff provides no evidence as to what the previous size and font were, or how the warning was inadequate. More importantly, there is no language in the proposed consent judgment which requires defendant to change the size or font of the warning. (See Proposed Consent Judgment, § 2.)

Therefore, plaintiff has not established that the warnings described in the proposed consent judgment will significantly increase the warning’s visibility or effectiveness.

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 Proposed Consent Judgment, the parties agree to a civil penalty of $250.00. (Proposed Consent Judgment, § 4, ¶ 4.1.)

It cannot be determined whether this amount is reasonable. As stated above, plaintiff’s counsel vaguely states that the previous warnings had inadequate size and font, but fails to provide any facts to support this assertion. (See Greenbaum Decl., ¶ 61(a).) Counsel states that defendant distributed hundreds of the products throughout California, but fails to provide the number of inadequate warnings (which were allegedly on the cylinder cages, not the products) or the severity of the violation. (See id., ¶ 61(a), (b).) Counsel asserts that the penalty is de minimis because defendant is a “very small company,” but Counsel fails to establish any personal knowledge of this fact and provides no facts as to the size of defendant. (See id., ¶ 61(c).) Moreover, Counsel’s argument that a smaller payment is warranted so as to avoid impeding defendant’s business is undermined by the fact that Counsel is seeking 21 times as much money in attorney’s fees. Because plaintiff fails to provide relevant evidence, plaintiff has not sufficiently shown that the civil penalties are reasonable.

Moreover, the Attorney General argues that a reduced penalty is sometimes taken as an incentive for a defendant to take additional steps that benefit the public beyond what is required by the statute. The proposed consent judgment does not appear to require any additional steps beyond simply providing a better warning.

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 states: “Settling Defendant shall pay to AFS the sum of $5,250 for attorney fees and costs pursuant to Health and Safety Code section 25249.7.” (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 an explanation of its compensable time spent on this case. (See Greenbaum Decl., ¶¶ 79-145.) Counsel discusses and supports the hourly rates of the attorneys who worked on the case. (See id., ¶¶ 100-146.)

Paragraph 97 of the declaration spans 5 pages, and “represent[s] a general composite of tasks associated with each stage of investigation, litigation and settlement.” (Declaration, ¶ 97, p. 14:5-6.) The Attorney General provides evidence which suggests that plaintiff’s counsel’s description of actions performed was taken nearly verbatim from a declaration filed by a different attorney in a different action. (See Greenbaum Decl., ¶ 97; Pollock Decl., Exh. 2, ¶ 25.) The implications of such a cut-and-paste declarations is of serious concern to the Court.

Further, Plaintiff’s counsel, fails to provide information or evidence as to the factors discussed in Consumer Defense Group. It cannot be determined if plaintiff’s requested fees and costs accurately reflect the novelty and difficulty of the questions involved in the instant action, or whether the requested amount specifically “inure[s] not to the individual benefit of the attorneys involved but the organizations by which they are employed.” (Consumer Defense Group, 137 Cal.App.4th at 1220.)

Accordingly, plaintiff fails to establish that the requested attorney’s 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.)

Plaintiff fails to provide sufficient information to establish that the settlement serves the public interest and is just. As discussed above, it cannot be determined whether the penalties amount or attorney’s fees amount is reasonable and there is no showing that the proposed consent judgment will significantly increase the warning’s visibility or effectiveness.

Plaintiff’s reply does not change the court’s analysis. Much of the reply is argument, but argument is not evidence. For instance, in response to the AG’s concern that plaintiff has submitted insufficient evidence about defendant Lava’s size, plaintiff states, “plaintiff and its counsel have researched the common practice of Proposition 65 matters, and have never found direct evidence of a company’s size submitted as an exhibit to a declaration in support of a settlement.” (Reply, p. 6:15-17.) If the court had evidence of such research, it might be able to weigh the import of such evidence. However, the court only has plaintiff’s counsel’s argument in an MPA; as stated above, argument does not substitute for evidence.

Accordingly, the 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 warning described in the proposed consent judgment is sufficient, that the penalties amount is reasonable, that the attorney’s fees amount is reasonable, or that the settlement is in the public interest and is just.

This is the second time that counsel has submitted the same motion. Both times, the Court has denied the motion for the same reason. The Attorney General opposes this Motion, and has provided the Court evidence that plaintiff’s counsel’s declaration contains what might, at the very least, be called “inaccuracies.”

The Court DISMISSES the case with prejudice.