Alert: California Supreme Court Addresses "Dangers of Overwarning" and Federal Preemption of Proposition 65
May 03, 2004
The California Supreme Court has issued its much anticipated opinion in Dowhal v. SmithKline Beecham Consumer Healthcare, holding that when a Proposition 65 warning directly conflicts with requirements under federal law, the federal requirement prevails. In so ruling, the court recognized the "dangers of overwarning" and noted that Proposition 65's "single-minded goal" can be "misleading" to consumers and "frustrate the purpose" of federal law and policy.
In Dowhal, a manufacturer of nicotine replacement therapy (NRT) products, such as gum and skin patches intended to help people quit smoking, asked the federal Food and Drug Administration (FDA) for permission to include Proposition 65 warnings with such products sold in California. The 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 Proposition 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 Proposition 65 warning, expressing concern that it would be confusing and might discourage pregnant women from using NRT products to quit smoking. A California consumer activist subsequently filed suit against manufacturers and distributors of NRT products for alleged violations of Proposition 65. The Superior Court found that FDA requirements preempted Proposition 65, but the California Court of Appeal reversed, concluding that a 1997 amendment to the FDCA exempted Proposition 65 even when state and federal standards conflict. The ruling left NRT manufacturers and distributors on the horns of a dilemma: When requirements conflict, should a business violate federal law or state law?
The California Supreme Court's ruling in Dowhal takes a pragmatic approach to resolving this dilemma. Although it acknowledged that Proposition 65 warnings could be permissible even where they differ from FDA requirements, the court held that the FDA could prohibit such warnings where they were misleading or frustrate federal objectives. The ruling will provide a basis for companies doing business in California to seek relief from Proposition 65 warning requirements that conflict with those provided under FDCA and other federal laws.
Background on Proposition 65
California's Safe Drinking Water and Toxic Exposure Act, popularly known as Proposition 65, was enacted by the voters in 1986.1 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.
Actions for alleged violations of Proposition 65 may be brought by government enforcement agencies, or by "private attorneys general" following notice to the businesses and to the government. Most Proposition 65 litigation is brought 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 attorney’s fees under California law. Proposition 65 plaintiffs are also allowed to retain 25 percent of civil penalties that are imposed, the so-called "bounty hunter" provision.
Proposition 65 actions frequently include claims of "unfair competition" under California Business & Professions Code § 17200. In such claims, plaintiffs contend that businesses that fail to comply with Proposition 65 obtain an unfair competitive advantage over compliant businesses. The Business & Professions Code provides additional remedies to a prevailing party, including restitution, injunctive relief and recovery of legal fees and costs.
Preemption of Proposition 65
Like other state statutes intended to protect health and safety, the warning requirements of Proposition 65 are also addressed by federal statutes. In such circumstances, the doctrine of preemption may apply: Federal law may override state law based on (1) explicit congressional statutory preemption; (2) implicit preemption, where the federal government occupies the entire field of regulation; and (3) conflicts between state and federal laws.
In Dowhal, the California First District Court of Appeal acknowledged these principles, as well as the dilemma posed for NRT manufacturers and distributors: To violate federal law by proceeding with a Proposition 65 warning, or to violate state law by proceeding without one. Nevertheless, the Court of Appeal concluded that its decision was governed by an amendment to the FDCA purporting to exclude from preemption state requirements adopted by voters and enacted prior to September 1, 1997 – like Proposition 65. As to the dilemma posed by the conflict, the Court of Appeal simply observed that although compliance with federal law might result in a Proposition 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 California Supreme Court acknowledged that the 1997 amendment permits Proposition 65 warnings even where they differ from some FDA requirements. However, the court observed that in this "unusual case," a Proposition 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. The court observed:
"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 NRT 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."
The refusal of the California Supreme Court in Dowhal to be governed inflexibly by the 1997 FDCA amendment is consistent with the United States Supreme Court's ruling in Geier v. American Honda Motor Company (2000), concluding that such "savings clauses" were not meant to "bar the ordinary working of conflict preemption principles."
Prospects for Preemption in Other Cases
In the past, most courts in California have declined to find Proposition 65 warnings preempted by federal statutes, including the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), the Federal Hazardous Substances Act (FHSA), and the Medical Device Amendments (MDA) under the FDCA. As a result, a broad range of products have been the subject of both federal labeling requirements and sometimes conflicting Proposition 65 warnings. These rulings may be revisited in light of Dowhal.
By contrast, even before Dowhal, some state and federal courts found Proposition 65 to be preempted by federal law. For example, in Industrial Truck Association v. Henry (1997), the federal Ninth Circuit Court of Appeals held Proposition 65 to be preempted by Cal-OSHA and federal OSHA as to exposure warning requirements in the workplace; and in Nilsen v. City of Long Beach (2002), the Los Angeles Superior Court found Proposition 65 to be preempted by the federal Hazardous Materials Transportation Act (HMTA). 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 also provide preemption arguments in response to Proposition 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 the highest court in California has addressed federal preemption of Proposition 65. The opinion provides companies doing business in California with an opportunity for much-needed relief from the dilemma posed when Proposition 65 warnings directly conflict with and frustrate the purpose of federal requirements.
The Environmental Law Department and Product Law Group of Farella Braun + Martel LLP are among the largest and most experienced in the nation, with more than thirty attorneys specializing in environmental and product-related compliance counseling, regulatory representation and litigation, including counseling and representation concerning Proposition 65. Please contact any of our environmental and product law specialists for more information.