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In its April 15 opinion in Dowhal v. SmithKline Beacham Healthcare, 04 C.D.O.S. 3259, the California Supreme Court ruled 7-0 that warning requirements under Proposition 65 must give way when they conflict with federal requirements. After finding that Prop 65 warnings can at times “frustrate the purpose” of federal law and policy, the court recognized the “dangers of over-warning” and noted that Prop 65′s “single-minded” goal can result in warnings that are “misleading.”

Although the court acknowledged the “unusual” circumstances present in the case and that Prop 65 warnings could be permissible even where they differ from federal requirements, the language of the opinion provides opportunities for much-needed relief for companies that do business in California and that are faced with conflicting federal and state requirements. Perhaps even more significantly, the justices weighed in on the longstanding debate concerning “over-warning” under Prop 65.

Prop 65, formally known as the Safe Drinking Water and Toxic Exposure Act, was approved by the voters in 1986 and codified as Health & Safety § § 25249.5, et seq. The statute requires businesses with 10 or more employees to provide a warning of exposure to any chemical “known to the state of California” to cause cancer or birth defects (commonly referred to as “listed chemicals”) and prohibits discharge of any such chemical to a source of drinking water. Most cases brought under Prop 65 are filed by private attorneys, environmental groups and consumer groups. Courts are authorized by the statute to impose injunctive relief, order civil penalties of up to $2,500 per day of each violation and award attorneys fees. Plaintiffs are also allowed to retain 25 percent of civil penalties that are imposed under the terms of a so-called “bounty hunter” provision.

The court’s opinion in Dowhal, authored by Justice Joyce Kennard, observed that even a “truthful warning can be misleading or fail to communicate the facts necessary for the protection of users” and that warnings of “remote” or “tentative” risks may dilute the force of “specific” and “necessary” warnings. When coupled with the financial incentives for private plaintiffs and counsel to bring claims under Prop 65 whether or not consumers are already provided with product-specific information under other federal or state laws, the overwarning presents a real danger to California businesses and consumers.

In Dowhal, a manufacturer of nicotine-replacement products such as gum and skin patches that are intended to help people quit smoking asked the federal Food and Drug Administration for permission to include Prop 65 warnings with such products sold in California. These products are regulated under the federal Food, Drug and Cosmetic Act (FDCA) and are sold nationally with warnings specified by the FDA. Nicotine is a listed chemical under Prop 65, which requires a different, specified warning of exposure to listed chemicals for sales in California.

The FDA refused to permit the addition of a Prop 65 warning, expressing concern that it would be confusing and might discourage pregnant women from using nicotine-replacement products to quit smoking. A California consumer activist subsequently filed suit against the manufacturers and distributors of such products for alleged violations of Prop 65. The San Francisco Superior Court granted summary judgment for defendants, finding that FDA requirements pre-empted Prop 65.

On appeal, the First District Court of Appeal acknowledged that, under the doctrine of pre-emption, federal law may override state law based on (1) explicit congressional statutory pre-emption; (2) implicit pre-emption, where the federal government occupies the entire field of regulation; and (3) conflicts between state and federal laws, as the Superior Court found in Dowhal. However, the Court of Appeal concluded that its decision was governed by an amendment to the FDCA purporting to exclude from pre-emption state requirements adopted by voters and enacted prior to September 1, 1997 — like Prop 65 — and vacated the ruling of the Superior Court. Thus, in the Court of Appeal’s view, Prop 65 warnings would be required even when in direct conflict with the warnings and directives of the FDA.

The Court of Appeal acknowledged the dilemma that this result posed for manufacturers and distributors of nicotine-replacement products: whether to violate federal law by proceeding with a Prop 65 warning or state law by going without one. As to this dilemma, the Court of Appeal simply observed that although compliance with federal law might result in a Prop 65 violation, any penalties would be mitigated by the circumstances, such as good faith efforts of the business to comply with law.

In reversing the lower appellate court, the California Supreme Court acknowledged that the 1997 amendment permits Prop 65 warnings even where they differ from some FDA requirements. However, the court noted that it was not required to be governed inflexibly by the 1997 FDCA amendment, citing the U.S. Supreme Court’s 2000 ruling in Geier v. American Honda Motor Company, which concluded that such “savings clauses” were not meant to “bar the ordinary working of conflict preemption principles.”

The California Supreme Court observed that Dowhal was an unusual case in which a Prop 65 warning would be “misleading” and would frustrate the purpose of the FDA warning, which was intended to encourage pregnant women and others to quit smoking: “In most cases FDA warnings and Proposition 65 warnings would serve the same purpose — informing the consumer of the risks involved in use of the product — and differences in wording would not call for federal preemption. Here, however, the FDA warning serves a nuanced goal — to inform pregnant women of the risks of [nicotine-replacement] products, but in a way that will not lead some women, overly concerned about those risks, to continue smoking. This creates a conflict with the state’s more single-minded goal of informing consumers of the risks. That policy conflict justifies federal preemption here.”

A key factor in the California Supreme Court’s ruling was the public policy concern — advanced by the FDA and adopted by the court — that Prop 65 warnings would dilute the effect or frustrate the purpose of FDA-approved, product-specific warnings and package insert information. The court recognized that the such warnings and information were adopted following detailed analysis of risks and benefits, dose/response and potential health effects. The listing of a chemical under Prop 65 involves no such analysis, and the rote “Warning: This product contains chemicals known to the State of California to cause cancer or reproductive harm” provides no such information.

Justice Kennard relied on her own concurring and dissenting opinion in Carlin v. Superior Court (1996) to observe that “even if scientific evidence supports the existence of a risk, a warning is not necessarily appropriate: ‘The problems of over-warning are exacerbated if warnings must be given even as to very remote risks . . . . Against the benefits that may be gained by a warning must be balanced the dangers of over-warning and of less meaningful warnings crowding out necessary warnings, the problems of remote risks and the seriousness of the of the possible harm to the consumer.’”

The California Supreme Court’s ruling provides important recognition of the dangers of over-warning under Prop 65, especially where such warnings conflict with product-specific, meaningful information provided by federal statutes, regulations and agency directives.

Even before Dowhal, some courts found Prop 65 to be pre-empted by federal law. In Industrial Truck Association v. Henry (1997), for example, the Ninth Circuit U.S. Court of Appeals found Prop 65 to be pre-empted by Cal-OSHA and federal OSHA as to exposure warning requirements in the workplace. Similarly, in Nilsen v. City of Long Beach (2002) the Los Angeles Superior Court concluded that Prop 65 was pre-empted by the Hazardous Materials Transportation Act.

Prior to Dowhal, however, most courts in California had declined to find Prop 65 warnings pre-empted by federal statutes. Unsuccessful pre-emption challenges have been brought based on the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Hazardous Substances Act and the Medical Device Amendments under the FDCA. As a result, a broad range of products have been the subject of both federal labeling requirements and sometimes conflicting Prop 65 warnings. These rulings may be revisited in light of Dowhal. Requirements of other federal statutes, such as the Federal Aviation Act, the Federal Boat Safety Act and the National Manufactured Housing Construction and Safety Standards Act, may provide additional pre-emption arguments in response to Prop 65 claims.

The California Supreme Court’s decision provides guidance and authority that goes beyond the FDA-regulated products at issue in Dowhal. This is the first time in the 17-year history of the statute that California’s highest court has addressed federal pre-emption of Prop 65. The opinion provides companies doing business in California with a strong basis to seek relief from the dilemma of Prop 65 warnings that directly conflict with federal requirements and protection from over-warning that can mislead consumers and frustrate the purpose of product-specific warnings, labels and information.

Chris Locke is a partner in the environmental law department at Farella Braun & Martel in San Francisco. Star Lightner is an environmental law associate at the firm.

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