Prop 65 Settlement Opt-In Details Grow Less Murky

The day after publishing  “Wine Producers Now On Hook For Prop 65 Health Warnings.” Wine Industry Insight’s email box lit up like a penny slot machine jackpot … mostly with anger and outrage:

“Reason #999 to get the hell out of California,” said one small vintner.

“Makes my blood boil!” Said another.

“Overturn Prop 65!”

And then came the questions, mostly about two issues not addressed in the settlement opt-in notification from the California Wine Institute (WI) or in the WII article:

1. LESS THAN 10 EMPLOYEES: “There is one very key fact that neither you nor Wendell Lee mention. From the State’s website on Prop 65: ‘Businesses with less than 10 employees and government agencies are exempt from Proposition 65’s warning requirements and prohibition on discharges into drinking water sources.’ Many of California’s wineries have less than 10 employees.”
2. PROP 65 ON LABEL: “One thing I didn’t see mentioned is that this was for wineries who do not have the warning printed on their label. Funny, I was invited to opt in, but I’m sure as most producers who print this on their bottle it took me about 2 sec. to decide that paying $2k + wasn’t going to happen!”

WII went looking for answers that day and found that its usual legal sources, who usually respond quickly, were about as reluctant to touch the issue as they would a Starbucks Ebola  Mocha.

However, Vineet Dubey, of Custodio & Dubey, the Pasadena attorney who filed the case, did respond to our questions, as well as one brave lawyer not associated with the case willing to go on the record.

Less Than 10 Employees

“That is correct that companies with fewer than 10 employees (http://oehha.ca.gov/prop65/p65faq.html) are exempt from Prop 65,” Dubey said. “But it’s important to remember that some companies do grow. And the deadline for opting into the settlement is January 15, 2015. If you grow after that, it will be too late to opt in.

“And remember,” he continued, “the approval of this settlement by the court and the California Attorney General prevents any other plaintiff from litigating this issue ever again.  If you are an opt-in Defendant and 8 years from now a retailer does not have a warning sign posted and sells your product, you will be protected from liability.”

NOTE: WII has late word that Prop 65 was amended, effective January 1, 2014, to raise that number to 25. That is not confirmed. We are still checking.

 Prop 65 Warning On The Label

California Code – Section 25249.11 states that the producer is responsible for Prop 65 notifications and mentions several ways that warning can be posted including on consumer product labels.

“Consider this,” Dubey said. “If you opt-in and the retailer screws up and fails to properly post the warning sign, then you are protected from further litigation.”

“In addition, if they fail to properly post the warning that and they’re pouring your wine by the glass or from a keg, then you could run into trouble, but not if you opt in,” said Dubey.

A Caveat

“Wineries created after 1/15/2015 will seemingly be subject to new suits since they cannot opt in later, and will have no choice but to put the warning on the label and rely upon the good faith of retailers for posting for wines by the glass and keg sales. ” said  Attorney K.C. Branch. “Of course, the latter will also be an issue for current wineries who don’t opt into the settlement, as Mr. Dubey points out.”

Settlement Court Documents, Law and Prop 65 Explanation

• The full court settlement document can be accessed at this link by Wine Executive News Premium Subscribers.
• Prop 65 (in plain language) can be found here: http://oehha.ca.gov/prop65/background/p65plain.html
• And for the language of the actual law here: http://codes.lp.findlaw.com/cacode/HSC/1/d20/6.6/s25249.11
  

A Final Footnote On What “Employee” Means

Attorney Branch offered the following Kafkaesque thought experiment (known as “the law”) which has been forced on employers by a variety of lard-bottomed bureaucrats whose ultra-secure jobs and lavish benefits at the expense of taxpayers are far richer and more secure than most business owners and their employees. [NOTE: That was an editorial comment in case you missed it.]

The 9 employee and under Prop 65 exception:

“Employee —

California Code 25249.11. Definitions. For purposes of this chapter:
(a) “Person” means an individual, trust, firm, joint stock company,
corporation, company, partnership, limited liability company, and
association.

(b) “Person in the course of doing business” does not include any
person employing fewer than 10 employees in his or her business; any
city, county, or district or any department or agency thereof or the
state or any department or agency thereof or the federal government or
any department or agency thereof; or any entity in its operation of a
public water system as defined in Section 116275.”

From K.C. Branch:

Notice that it uses the phrase “employing fewer than 10
employees” — for wineries who may rely upon this exception to avoid
compliance, it will be important for wineries to analyze carefully
whether they have (or will have as Mr. Dubey points out!) 9 or fewer
“employees” interpreted most broadly in favor of the definition of
“employees,” consistent with California Labor law including the
employee/independent contractor dichotomy, and whether there is any
potential that, for purposes of Prop 65, this phrase somehow includes
“owners/shareholders/llc members/partners,” “loaned/leased workers,”
“family members,” “part time workers,” “independent contractors,”
“vendors” and/or even “volunteers.” It is also a bit vague as to
time, i.e. whether a winery can get by if they “employ” 9 or less at
any one time, or whether its over the course of some period of time.

By analogy, the United States Court of Appeals, for the First Circuit
in THURBER, v JACK REILLY’S, INC (17 F.2d 633) in 1983 decided this
question with regard to the Civil Rights Act of 1964, § 701(b), as
amended, 42 U.S.C.A. § 2000e(b) that part time employees are included
in that statute.

On the other hand, in Equal Employment Opportunity
Commission v. Garden and Associates, Ltd., 956 F.2d 842 (8th
Cir.1992), a case involving an age discrimination claim under the Age
Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621–634, the
court took a more business friendly approach to the rules allowing for
counting only those employees working at a particular time.

Most notably both the ADEA definition, and the definition under § 2000e, of
employees, have significantly more detail as to qualification than
does Proposition 65.