Case Number: BC515012 Hearing Date: June 09, 2014 Dept: 34

Moving Party: Plaintiff AFS Enterprises, LLC (“plaintiff”) and defendant Westinghouse Lighting Corporation (“defendant”)

Resp. Party: None

The motion for approval and entry of the proposed consent judgment is DENIED. Plaintiff fails to establish that the proposed warnings will be “clear and reasonable,” 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 is one of two Motions for Approval of Consent Judgment filed by plaintiff’s attorney in two similar cases. The other case is entitled AFS Enterprises LLC vs. Lava Propane, BC 508073. Both motions were originally heard on January 29, 2014 at which time the court denied both motions without prejudice. The declarations and exhibits attached to both motions are substantively similar, down to the fact that the footer on the “Affidavit of Compliance with 11 CCR § 3003” both contain the same spelling error.

BACKGROUND:

Plaintiff commenced this action on 7/12/13 against defendant for penalty and injunctive relief pursuant to Proposition 65. Plaintiff filed a first amended complaint on 9/10/13. Plaintiff alleges that defendant manufactured, distributed, and marketed hardware products which could expose customers to lead. Defendant allegedly failed to provide clear and reliable warnings that the use of the products could result in exposure to lead.

The 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.

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 a copy of the notice, which includes a proof of service stating that it was served on defendants and public entities on 3/10/13. (See Greenbaum Decl., Exh. 2.)

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 11, 2014.

The attorney general has not filed any papers in support of or opposition to this motion. However pursuant to 11 CCR § 3003, “the failure of the attorney general’s office to comment on settlement shall not be construed to be an endorsement of or concurrence in the settlement.” (See Affidavit of Compliance, p. 2:10-12.)

Substantive Analysis

The judgment contains a total monetary payment of $12,000.00, including civil penalties of $2,000.00 and reimbursement of plaintiff’s attorney’s fees and costs totaling $10,000.00. (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: This product contains lead, a chemical known to the State of California to cause cancer, and birth defects or other reproductive harm.” (Proposed Consent Judgment, § 4.) The proposed consent judgment fails to explain the manner in which the warnings are to be displayed; therefore, it cannot be determined whether they will be “clear and reasonable.”

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 $2,000.00. (Proposed Consent Judgment, § 5, ¶ 5.1.)

Plaintiff still fails to sufficiently show that the penalties amount is reasonable. Plaintiff provides no evidence as to the nature and extent of the violation, and instead merely states that defendant manufactures and sells brass lamp finials to consumers in California and that it has arranged to take steps to put warning labels on the products. (Greenbaum Decl., ¶ 60(a).) Plaintiff’s counsel makes the conclusory declaration that the penalty amount is sufficient, but fails to provide any facts as to defendant’s size or business such that the Court could determine the effect, if any, of the $2,000.00 penalty. (Id., ¶ 60(c).)

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 $10,000.00 for attorney’s fees and costs. (Proposed Consent Judgment, § 5, ¶ 5.2.)

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., ¶¶ 73-94.) Counsel discusses and supports the hourly rates of the attorneys who worked on the case. (See id., ¶¶ 95-137.)

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.) Moreover, there is evidence which suggests that plaintiff’s counsel’s description of actions performed by plaintiff’s attorneys was taken nearly verbatim from a declaration filed by a different attorney in a different action. (See Greenbaum Decl., ¶ 91 and the Court’s Minute Order dated 5/29/14 in AFS Enterprises LLC vs. Lava Propane, BC 508073.)

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.

Accordingly, the motion is DENIED because plaintiff fails to establish that the proposed warnings will be “clear and reasonable,” 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 Court DISMISSES the case with prejudice.