Los Angeles Business Journal

Bill Curbing Prop. 65 Lawsuit Threats Clears Assembly

By Howard Fine Friday, May 24, 2013

The Assembly on Friday passed a bill aimed at blocking shakedown letters to businesses alleging violations of the state’s toxic chemical notification law.

The bill, AB 227, by Assemblyman Mike Gatto, D-Los Angeles, would allow small business owners receiving these letters from attorneys to post the required signs within 14 days and pay a small civil fine without fear of lawsuits. It passed the Assembly on a 71-0 vote and now heads to the state Senate. The Business Journal reported on the bill in the May 13 issue.

“This is a common sense bill that will help California businesses avoid costly litigation, while ensuring that the public has prompt and proper warnings about potentially dangerous chemicals,” Gatto said in a statement.

The Business Journal reported that hundreds of small businesses have received letters – most from a small group of attorneys – alleging they failed to post signs warning of toxic chemicals, as required under Proposition 65, a 1986 law. Local restaurants have been specifically targeted over their sale of alcoholic beverages and the presence of certain chemicals emerging from the grilling process.

The letters invite the restaurant and other small business owners to contact the lawyers’ offices to discuss settlement terms. Often the business owners choose to pay a $5,000 or $10,000 fee to an attorney in exchange for a promise not to sue.

AB 227 is part of a larger package of reforms that Gov. Jerry Brown introduced earlier this month to curb abuses of Proposition 65. Other bills in the package would cap attorney fees and force plaintiffs to submit more proof of violations.