What’s Your Game Plan?
What’s Your Game Plan? Personal Care Products Council Emerging Issues Conference November 2012 John A. Conkle Mark C. Riedel Amy E. Burke Conkle, Kremer & Engel, PLC Santa Monica, California 310 998-9100 www.conklelaw.com
What’s Your Game Plan? Personal Care Products Council Emerging Issues Conference November 2012 John A. Conkle Mark C. Riedel Amy E. Burke Conkle, Kremer & Engel, PLC Santa Monica, California 310 998-9100 www.conklelaw.com
GAME PLAN A strategy for reaching an objective
Your objective: to deal with the threat of civil litigation and regulatory action effectively and efficiently
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Even if you’re careful, you WILL get “The Letter”
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Who might send “The Letter” to you? • Federal agency
• State agency • Competitor • Private party
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Overview of Potential California Claims Proposition 65: Warning and labeling requirements for toxic substances CLRA: Consumer Legal Remedies Act COPA: Organic labeling requirements Unfair Competition: California statute that can be based on any unlawful, unfair or fraudulent act
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Your Product: Hair Magic Organic Hair Cure
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Your Headache: "The Letter" from Attorney Bob Loblaw
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Proposition 65 California’s Safe Drinking Water And Toxic Enforcement Act: CA Health & Safety Code § 25249.5 “No person in the course of doing business shall knowingly discharge or release a chemical known to the state to cause cancer or reproductive toxicity into water or onto or into land where such chemical passes or probably will pass into any source of drinking water, notwithstanding any other provision or authorization of law.”
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Penalties • • •
Injunction Civil penalties up to $2,500 per day Reasonable attorneys’ fees Considerations: • Nature and extent of the violation • Number and severity of the violations • Economic effect of the penalty on the violator • Whether and when the violator took good faith measures to comply with Prop. 65 • The willfulness of the violator’s misconduct
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Your Duty under Proposition 65 Give a “clear and reasonable warning” before the exposure to certain chemicals •
Any exposure that results from a person’s acquisition, purchase, storage, consumption, or other reasonably foreseeable use of a consumer good, or any exposure that results from receiving a consumer service, requires a warning
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The warning may appear on the label if it is prominently placed on a product’s label or other labeling with such conspicuousness, as compared with other words, statements, designs, or devices on the label 16
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Known as a “Bounty Hunter” Statute •
A private action is authorized if the private citizen serves a 60-day notice of violation and a certificate of merit
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The private enforcer gets to keep 25% of the civil penalties collected, and the remaining 75% goes to the Department of Toxic Substances Control
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Proposition 65 Applies to Everyone in the Supply Chain “A person in the course of doing business, who manufactures, produces, assembles, processes, handles, distributes, stores, sells, or otherwise transfers a consumer product which he or she knows to contain a chemical known to the state to cause cancer or reproductive toxicity in an amount that requires a warning shall provide a warning to any person to whom the product is sold or transferred unless the product is packaged or labeled with a clear and reasonable warning.” 27 C.C.R. § 25603(c)
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Summary of Prop. 65 Settlements in 2011 []
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2011 Total Settlements Judgments Total Settlements andand Judgments
Other Lawyers $6,106,583.82 Chanler Group $5,835,335.00 Plaintiffs $354,338.75
State Agency $2,071,611.25 "Other" $2,079,310.50
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The Breakdown Other Lawyers
Chanler Group
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Attorney General Letter
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Preventative Measures •
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If your product contains a chemical that is on the list, ensure you have a clear and reasonable warning • It is very difficult to prove at the demurrer (motion to dismiss) stage that the ingredient contents don’t meet the level of “significant risk” • Proving that you do not have to warn will require costly scientific studies and attorneys’ fees • If you decide to forego the warning for a chemical in the list, make sure you fall within any applicable “safe harbor” Consider getting a “Prop 65” warranty from your suppliers • Purchase Order/Invoice terms • Affirmative Statement of Compliance 26
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Game Plan for Prop. 65 Check your ingredients
Scientific help to verify exposure If the product was supplied by others, send them the letter Position yourself to push the problem upstream
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Consumer Legal Remedies Act
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Consumer Protection Statute Enables a consumer to bring a class action on behalf of himself or herself and other consumers similarly situated if the consumer has suffered “any damage” from the use of an unlawful “method, act, or practice” such as: •
Representing products have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not
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Representing products are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another 29
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What Relief Is Available? •
Actual damages
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Injunctive relief
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Restitution
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Punitive damages
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Prevailing plaintiff’s attorneys’ fees are mandatory
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What could possibly be wrong with our advertising? •
Instantly transform your hair to silky smooth
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The magic potion
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Hair cure
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Permanent Results
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One treatment for perfectly silky hair
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November 15, 2012
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Game Plan for CLRA Fight back
How strong are your claims? What are your defenses? If you face liability, agree to provide an appropriate remedy to avoid damages
Within a “reasonable time”
Act within the 30-day safe harbor
Don’t be fooled by the date given in the letter Don’t admit that proper notice was given or that anything else in the letter is accurate unless you need to do it 34
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California Organic Products Act
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Products “Sold as Organic” CA Health & Safety Code § 110815 “Sold as organic” means any use of the terms “organic,” “organically grown,” or grammatical variations of those terms, whether orally or in writing, in connection with any product grown, handled, processed, sold, or offered for sale in this state, including, but not limited to, any use of these terms in labeling or advertising of any product and any ingredient in a multi-ingredient product.
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Cosmetics Labeling Requirements CA Health & Safety Code § 110838
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Cosmetics that are “sold as organic” must contain at least 70% organically produced ingredients
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COPA defines “organically produced” by reference to the USDA’s National Organic Program (“NOP”) regulations
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Enforcement Overview •
Who can file the lawsuit? • Any person • Bounty Hunters • NGOs • Attorney General or district attorneys
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Available Remedies • Injunctive relief • Fines up to $1000 per day • Attorneys’ Fees
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Organic, the adjective •
“Organic” used as a modifier on the product package
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Product is USDA certified organic
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, the trademark •
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What if it is a registered trademark? •
Owner has exclusive right to use the mark in the United States with organic hair care products
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Federal registration does not trump COPA
Is misspelling a “grammatical variation”? •
“Organix” is not in the dictionary 37
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Game Plan for COPA Review all packaging and advertising for the word “organic” in any form Do the products meet COPA’s standards?
Consider independent expert review
Get organic certification documents from suppliers
If not, develop a strategy for change
Spend money on reformulating or rebranding, not on linguistics experts and litigation
Use the statute to your advantage
Stop competitors from making false organic claims 45
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Unfair Competition California Business & Professions Code §§ 17200 and 17500
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Unfair Competition Defined Proscribes any unlawful, unfair or fraudulent business act or practice •
Unlawful: any statutory violation
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Unfair for consumers: offends an established public policy or is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers
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Unfair for competitors: threatens a violation of antitrust laws or the spirit of antitrust laws
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Fraudulent: false representations or representations that, while true, tend to mislead or deceive
Also proscribes unfair, deceptive, untrue or misleading advertising 47
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When Do These Claims Arise? •
Litigants are likely to claim violation of unfair competition law in addition to violations of COPA, Prop. 65 and CLRA
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A violation of almost any law may serve as a basis for an unfair competition claim
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False or misleading statements under the CLRA may also violate false advertising law
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May serve to expand period for which restitution is available beyond the CLRA
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Who Could Bring an Unfair Competition Claim? • Private actors
• Your competitors • Governmental regulatory agencies
• Attorney general or any district attorney, county or city counsel, city attorney or city prosecutor
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Your Game Plan Deal with the threat of civil litigation or regulatory action effectively and efficiently
Prop. 65: Warn and hold suppliers responsible CLRA: Stay within the 30-day safe harbor COPA: Analyze and make necessary changes before you get “The Letter”; use it to your advantage
CA Unfair Competition: Carefully examine the underlying wrong Regulatory Action: Question the “science”; respond quickly and work with the agency 54
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For more information and helpful resources, visit: www.conklelaw.com/gameplan
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www.conklelaw.com/gameplan John A. Conkle Mark C. Riedel Amy E. Burke Santa Monica, California
Conkle, Kremer & Engel, PLC www.conklelaw.com 310 998-9100
This presentation does not contain legal advice, but is intended for general information purposes only. The facts and law of each individual situation must be separately analyzed. No confidential or attorney-client relationship can be created through reference to this presentation. Conkle, Kremer and Engel provides legal advice only to clients of the firm who have signed agreements for legal services.
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