BILL ANALYSIS Ó
SB 899
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Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
SB
899 (Hueso) - As Amended June 13, 2016
As Proposed to be Amended
SENATE VOTE: 22-12
SUBJECT: Gender discrimination: pricing
KEY ISSUE: should a business be prohibited from charging
different prices for substantialLy similar products based on the
assumed gender of the consumer of that product?
SYNOPSIS
The Unruh Civil Rights Act prohibits a business establishment
from discriminating against a person based on a number of
protected characteristics, including but not limited to a
person's sex. Although the Unruh Civil Rights Act apparently
already prohibited price discrimination in goods and services
based on a person's gender, the Gender Tax Repeal Act of 1995
nonetheless expressly stated that a business could not
discriminate with respect to the price charged for services of a
like or similar kind based on a person's gender. In particular,
this Act had in mind differential pricing for women's dry
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cleaning and haircuts, as well as other personal services. This
bill would amend the Gender Tax Repeal Act to prohibit
gender-based price discrimination in the sale of goods as well
as services. Studies suggest that products targeted toward
women and girls are priced substantially higher than
functionally similar products for men and boys. The author,
sponsor, and supporters of this bill contend that for products
that do not differ in terms of labor, materials, or related
production or marketing costs, it is unfair to charge more based
on the gender of the intended consumer. Opponents, on the other
hand, contend that this bill ignores other market factors that
determine prices and will force retailers to make an arbitrary
determination as to which gender a particular product is
targeted. In some cases, where products are clearly labeled as
"men's" or "women's" products, it may be easy enough for the
retailer to make this distinction. In most other cases,
however, retailers may only be able to distinguish goods as
men's or women's products by engaging in the very forms of
sexual stereotyping that the bills seeks to combat. Opponents
also contend that it will be difficult for retailers to
determine when two goods are "of a substantially similar or like
kind." Recent amendments that attempt to define this phrase
with greater specificity have not assuaged the opposition's
concerns, in part because the bill still does not offer any
guidance on what makes a good gender-specific. The author will
take an amendment in this Committee to clarify that a retailer's
decision to lower the price of a gender-specific product for
purposes of inventory management (i.e. to move non-moving goods)
will be considered a "gender-neutral" reason and therefore not a
violation of the bill's provisions. The summary and analysis
below reflects that amendment.
SUMMARY: Prohibits a business establishment from
discriminating, with respect to the price charged for goods of a
substantially similar or like kind, against a person because of
the person's gender. Specifically, this bill:
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1)Provides that no business establishment of any kind whatsoever
may discriminate, with respect to the price charged for goods
of a substantially similar or like kind, against a person
because of the person's gender. Specifies, however, that this
provision does not prohibit price differences based on
gender-neutral factors including, but not limited to, labor,
materials, tariffs, or inventory management.
2)Provides, for purposes of the above, that goods are of a
"substantially similar or like kind" if they do all of the
following:
a) Share the same brand.
b) Share the same functional components.
c) Share 90% of the same materials or ingredients.
3)Provides that nothing in the provisions of this bill shall
prohibit a retail establishment from passing through a price
to the consumer that is set by a manufacturer, distributer, or
other entity that the retailer cannot control.
4)Specifies that for purposes of this bill "goods" shall not
include food, as defined in Section 12503 of the Food and
Agriculture Code, or goods sold by a "new motor vehicle
dealer," as defined in the Section 426 of the Vehicle Code.
EXISTING LAW:
1)Provides, under the Unruh Civil Rights Act, that all persons
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within this state are free and equal, and no matter what their
sex, race, color, religion, ancestry, national origin,
disability, medical condition, genetic information, marital
status, sexual orientation, citizenship, primary language, or
immigration status are entitled to the full and equal
accommodations, advantages, facilities, privileges, or
services in all business establishments of any kind whatsover.
(Civil Code Section 51.)
2)Provides, under the Gender Tax Repeal Act of 1995, that no
business establishment of any kind whatsover may discriminate,
with respect to the price charged for services of similar or
like kind, against a person because of the person's gender.
However, nothing in this provision prohibits price differences
based specifically on the amount of time, difficulty, or cost
of providing the services. (Civil Code Section 51.6.)
3)Provides that any person who violates either of the above
provisions is liable for each offense for actual damages, and
any amount that may be determined by a judge or jury, up to a
maximum of three times the amount of actual damage but in no
case no less than $4,000, and any attorney's fees determined
by the court. (Civil Code Section 52.)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: The Unruh Civil Rights Act prohibits a business
establishment from discriminating against a person based on a
number of protected characteristics, including but not limited
to a person's sex or gender. Although the Unruh Civil Rights
Act arguably already prohibited price discrimination in goods
and services based on a person's gender, the Gender Tax Repeal
Act of 1995 nonetheless expressly stated that a business could
not discriminate with respect to the price charged for
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"services" of a like or similar kind based on a person's gender.
In particular, this Act had in mind differential pricing for
women's dry cleaning and haircuts, among other personal
services. This bill would amend the Gender Tax Repeal Act to
prohibit gender-based price discrimination in the sale of goods
as well as services.
Studies on Gender-Based Pricing Discrimination: In the past
three decades a number of studies have documented examples of
sharp differences between the prices of comparable goods
depending upon whether the goods are designed for, or marketed
to, men or women. A 1992 study by the New York City Department
of Consumer Affairs, found that when women bought used cars,
they were twice as likely to be quoted a higher price as men.
The same study, based on a survey of 80 hair salons in New York
City, found that, on average, women paid 25 percent more for the
same haircuts as men and 27 percent more for the identical
service of laundering a basic white cotton shirt. More
recently, the New York City Department of Consumer Affairs
issued a report in December of 2015 and found that little had
changed since 1992. The study examined 800 products, with
purportedly male and female versions, that were offered both
online and in stores. The report concluded that 42% of the time
women's products cost more than similar products for men and on
average cost 7% more. The products include children's toys and
clothing, adult clothing, personal care products, and health
care products.
Closer to home, in the 1990s the California Legislature held
hearings and conducted a survey that found results similar to
the New York studies. For example, a survey of five California
cities conducted by the Assembly Office of Research found that
40% of haircutting establishments surveyed charged women, on
average, five dollars more than men for a haircut, and 64% of
dry cleaning and laundry establishments charged women, on
average, $1.71 more to clean a simple white shirt. The
California Senate Judiciary Committee analysis for AB 1100,
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which enacted the Gender Tax Repeal Act of 1995, cited research
showing that pricing discrimination - dubbed a "gender tax" -
cost "each woman approximately $1,351 annually, or about $15
million for all women in California." (For a summary of this and
other studies reaching similar results see Jennifer Kerr,
"Gender Equity Bill Wins Assembly Approval," Orange County
Register May, 27, 1994; and Comment, Harvard Law Review 109 (May
1996) 1839-1944.)
It should be noted, however, that many of the price differences
noted in these studies would not necessarily be prohibited by
this bill. For example, some of the higher price differences
appear to be in women's clothing, beauty products, and personal
care products, such as shampoos, conditioners, and deodorants
presumably designed for women's physiology. So long as those
products are in fact different, in terms of materials,
ingredients, design, or overall quality, they would not be
products that are "goods of a substantially similar or like
kind." In other cases, where the only apparent differences
between the products are merely color or packaging, then a
gender-based price differential would clearly violate the
provisions of this bill.
Koire v. Metro Car Wash and the Gender Tax Repeal Act of 1995:
California's first response to the problem of gender pricing
discrimination came not from the Legislature but from the
courts. In Koire v. Metro Car Wash, the California Supreme
Court was asked to decide whether the Unruh Civil Rights Act
(Civil Code Section 51) prohibited sex-based price discounts.
In this case, the male plaintiff had visited several car washes
that offered female customers a discount on "Ladies' Day." He
asked to have his car washed at the discounted price but was
refused, presumably because he was a male. The same plaintiff
also visited several night clubs that offered free admission to
women on "Ladies' Night." Once again the plaintiff sought the
free admission, but was once again refused. Eventually the
plaintiff filed a suit against seven car washes and one night
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club alleging violation of the Unruh Civil Rights Act. The
language of the Unruh Act, as the Court noted, "is clear and
unambiguous." It prohibits a business establishment from
denying any person "full and equal accommodations, advantages,
facilities, privileges, or services" on the basis of sex.
Although the business defendants argued that the Unruh Act only
prohibited the "exclusion" of a member of a protected class from
a business establishment, the California Supreme Court rejected
this narrow reading, noting that the Act not only guarantees
access but, once there, "full and equal advantages, facilities,
privileges, or services." The Legislature's choice of words,
the Court reasoned, shows concern "not only with access to
business establishments, but with equal treatment of patrons in
all aspects of the business." (Koire v. Metro Car Wash (1985)
40 Cal. 3d 24, 29.) The Court held, therefore, that the Unruh
Act prohibited the sex-based price discounts offered by the
several car washes and the nightclub to female patrons. The
Court added that price discrimination based on sex not only
harmed the male plaintiff, it was "generally detrimental to both
men and women because it reinforces harmful stereotypes."
Despite the California Supreme Court's holding that the general
language of the Unruh Civil Rights Act prohibited sex-based
price discrimination, in 1995 the Legislature enacted the
arguably redundant Gender Tax Repeal Act (Civil Code Section
51.6.) which provided that "no business establishment of any
kind whatsoever may discriminate, with respect to the price
charged for services of similar or like kind, against a person
because of a person's gender." The legislative history suggests
that the Gender Tax Repeal Act was primarily targeted at
services like dry cleaners that typically charged more to clean
women's clothes even when the clothes were substantially similar
men's clothes in terms of size and fabric. The bill also
targeted barbers and similar haircutting establishments that
typically charged more to cut a woman's hair than men's hair.
To the extent that these services were truly of similar or like
kind, gender-based pricing was most likely already prohibited by
the Unruh Act as interpreted by Koire. Presumably, the intent
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of the 1995 legislation was to codify that holding. However,
because the Gender Tax Repeal Act only applied to "services," it
unintentionally created a presumption that price discrimination
was not prohibited when it came to "goods" - even though prior
to the Gender Tax Repeal Act, the Unruh Act, under the reasoning
in Koire, most certainly prohibited price discrimination in both
services and goods.
This bill, among other things, seeks to address the
unintentional gap created by the Gender Tax Repeal Act by
expressly applying its prohibition on gender-based pricing to
"goods" as well as "services." The bill qualifies this general
prohibition on pricing discrimination in a number of ways. For
example, the bill specifies that its provisions will not
prohibit price differences based on gender-neutral factors,
including, but not limited to, labor, material, tariffs, or
inventory management. The last factor, "inventory management,"
which will be added by the amendment taken in Committee today,
will allow a business to lower prices on a gender-specific good
in order to move goods that are not selling. The bill also
specifies that nothing in its provisions will prohibit a retail
establishment from passing through a price to the customer that
is set by a manufacturer, distributor, or other entity that the
retailer cannot control. This provision is intended to
recognize that the retailer's price may reflect different
wholesale prices charged to the retailer, or minimum pricing
policies established by the manufacturer.
Identifying gender-specific products and goods of "substantially
similar or like kind:" As noted below, opponents of this bill,
especially those representing retailers, contend that it will be
very difficult for them to comply with this law for two critical
reasons. First, in considering the legitimacy of price
differences, retailers will need to determine whether the goods
are gender-neutral or gender-specific. Second, if the goods are
gender-specific, but priced differently, then the retailer will
need to determine if the goods are "of a substantially similar
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or like kind." If the two products are substantially similar,
then the price of the two products will need to be identical
unless some "gender-neutral" pricing factor applies. Opponents
contend that, in practice, making these determinations will be
extremely difficult. While some goods may be clearly designed
or expressly labeled for one gender or the other, other goods
may be more ambiguous. Similarly, determining whether goods are
"substantially similar" may be easy where the only apparent
difference between two products is the color or the packaging;
however, many more products that offer different versions for
men and women will have varying degrees of difference that
reflects the supposedly different needs or desires of men and
women. Calculating what degree of difference will justify a
price difference may be quite difficult and somewhat arbitrary.
Opponents believe that these determinations will ultimately be
resolved in costly litigation or settlements with persons who
believe that the retailer has charged a different price solely
because the presumed gender of the intended consumer of the
product.
Beyond Pink and Blue Razors: One of the most cited example of
the problem that this bill seeks to address is that of the
"pink" disposable razor "for women" that reportedly cost more
than the virtually identical "blue" disposable razor "for men."
In an admittedly unscientific approach, the Committee consulted
prices for Gillette disposable razors on Amazon.com. While
there was indeed a difference, in this particular instance the
razors "for men" cost more than the ones for women. For
example, the pink-packaged "Gillette Daisy Comfort Hold Pivot
Disposable Women's Razor" sells for $8.26 for a package of ten
(or $.075 each). On the other hand, the blue-packaged "Gillette
CustomPlus Pivot Disposable Razor for Men" cost $10.29 for a
package of ten (or $1.03 each). Both items were "pivot
disposable" razors with twin blades. Perhaps the "CustomPlus"
feature in the men's razor - whatever that entails - accounts
for the greater price. However, this seems unlikely, because
the basic blue "Regular" Gillette costs even more at $7.59 for a
package of five (or $1.52 each). (See
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https://www.amazon.com/s/ref=nb_sb_ss_c_0_12?url=search-alias%3Da
ps&field-keywords=gillette+disposable+razors&sprefix=gillette+dis
%2Caps%2C216 , visited on June 16, 2016.)
Of course, the single example above in no way negates the
evidence that women's products are, on average, priced higher
than similar products for men. However, the example above is
instructive in other ways, especially insofar as it offers some
support to the opposition's claims that retailers will not know
with certainty whether differences in the products, however
small or large, justify a price difference. Despite the seeming
similarity of the products - they are all about the same size,
made of plastic, and have twin blades and moist "glide strips" -
the marketing suggests that each is different in some subtle way
that is apparently significant to the intended consumer. For
example, the product description for the pink-packaged "Gillette
Daisy" razor claims that the blades are thinner in order "to
glide effortlessly across your skin" and that the "soft comfort
hold handle is designed for comfort and control." Whether these
claims are truthful or not might be relevant if bringing a false
advertising claim, but these product claims illustrate the
problems that a business establishment may face in trying to
determine whether the differences in design and purported
quality are substantial enough to justify a higher price.
The example above is also instructive in another way. As noted,
this bill defines "goods of substantially similar or like kind"
to mean one sharing the same brand, functional components, and
90% of the same material or ingredients. The razors in the
example were all the same brand (Gillette), had the same
functional components (a handle and blade for shaving), and
appear to be made of out of the same materials (over 90%
plastic). But having all of these things in common does not
mean that the products are of the same quality or, more
important, of the same value to the consumer. Prices not only
reflect materials and ingredients, but also research and
development costs, such as testing whether a thinner blade
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glides more smoothly over the skin or whether the shape of a
handle offers more control. Developing and manufacturing
thinner blades or curved handles may entail different costs than
regular-sized blades and straighter handles. To be sure, these
differences may be small, but so too are the differences in
price. Moreover, however small the differences in design or
quality, the consumer choosing one over the other apparently
believes that such differences matter. Price is not simply
determined by labor, materials, or even research and design; it
is also determined by demand, which in turn is affected by how
much the consumer values a particular characteristic - be it a
color, a soft handle, or how a razor glides over the skin.
Finally, the example above is instructive in yet another way.
Although Amazon.com lists the pink-packaged "Daisy" razors as a
"woman's razor" in the product description on its website, the
packaging does not appear to use the words "for women" or
"women's razor." Perhaps Amazon has inferred this from the
color or the name "Daisy." Because this bill is not limited to
goods that are clearly labeled as being for one gender or the
other, the retailer setting a price must consider whether the
product is intended for a man or a woman, despite the absence of
a label. While there may be near universal consensus that some
products are designed for some unique aspect of male or female
anatomy or biology, for most products a retailer will need to
make a determination based on the same gender stereotypes that
gave rise to the discrimination in the first place. Should a
retailer assume that a product is designed for a woman simply
because it is pink? Is a lavender scented soap inherently
female? Are monster-sized tires for a pick-up truck necessarily
meant for a man? Is a child's tee shirt with flowers on it a
girl's tee shirt, while a tee shirt with a football on it a
boy's tee shirt? Like the reader of Goldilocks and the Three
Bears, the retailer may need to assume that the hard bed is for
Papa Bear, the soft bed is for Mama Bear, and the medium bed for
a Baby Bear of an undetermined gender. Ironically, this bill
may require the retailer to engage in the very kinds of cultural
stereotyping that the bill is attempting to combat.
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In conclusion, this bill raises intriguing policy questions. On
the one hand, the weight of evidence suggests that even though
women, on average, make less income than men, they also, on
average, pay more for functionally similar products. It is also
unclear exactly why this is so, other than to say that due to
some complex set of cultural and ideological factors women, in
the aggregate, place greater value on certain products and are
willing to pay more for them. Retailers and marketers rely
upon, and manipulate, those cultural and ideological factors to
charge what the market will bear. The cultural and ideological
factors may well be a product of patriarchy, but pricing
discrimination is a product of free market capitalism. What if
anything can be done about this state of affairs? According to
the proponents, the Legislature should prohibit retailers and
manufacturers from exploiting gender stereotypes to maximize
their profits. Supporters appear to hope that, in the long run
laws like this one will not only prohibit gender discrimination
in pricing but will cause manufacturers and retailers to abandon
a gendered approach to marketing altogether. Opponents, on the
other hand, contend that this bill only serves to reinforce
gendered stereotypes. This bill will require retailers to make
decisions based on the very gender stereotypes that our society
is trying to move away from. Indeed, one might argue that this
bill is premised on the sexist belief that women are not as
strong as men when it comes to resisting marketing pressures and
have no choice but to choose pink razors over blue razors, even
if the pink razors are more expensive. Opponents, on the other
hand, contend that men and women are equally capable of making
informed choices. Parents, for example, can opt for the $25
blue scooter over the $50 pink scooter. The parents can teach
their daughter an important lesson about gender stereotyping and
save $25 to boot.
ARGUMENTS IN SUPPORT: The Consumer Federation of California
(CFC), the sponsor, argues that "[f]or products that do not
differ in the labor, materials and related costs of production,
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it is unfair to charge more based on the gender of the consumer
to whom it is marketed." CFC cites a study conducted by the New
York City Department of Consumer Affairs showing that "women's
products cost seven percent more, on average, than similar or
identical products for men. Certain products, such as personal
care products, were priced up to 13 percent higher compared to
identical products for men." According to CFC, this report
identified 800 products, including razors, toys, clothing, and
care products that are marketed to women that cost more than the
identical products for men." CFC also notes this discrepancy is
especially unfair when one considers that "women still earn 21%
less than men working in similar full-time jobs. The injustice
of lower wages is further compounded when we examine how
everyday consumer products are commonly priced nearly 13% more
when marketed to women". CFC contends that gender-based pricing
is "blatant gender discrimination. Women should not have to pay
more for a razor simply because it is pink."
Santa Barbara Women's Political Committee (SBWCP) supports this
bill, in part, because even though the Gender Tax Repeal Act
"protected consumers against price discrimination in services,
those protections did not extend to consumer products." Noting
the studies which show that, on average, women's products cost
more than similar products for me, SBWPC argues that it is "well
past time to update the law so that women are not charged a
premium for these products based on their gender."
The bill is supported by several other women's organizations,
labor unions, consumer protection, and civil rights groups for
substantially the same reasons as those articulated above.
ARGUMENTS IN OPPOSITION: The California Chamber of Commerce
(Chamber) has placed SB 899 on its "job killer" list, contending
that ambiguous language in the bill will expose businesses to
costly litigation. First, the Chamber argues that most goods
cannot be readily identified as "male" or "female" products.
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With the exception of undergarments or goods clearly labeled
"for men" or "for women," retailers will often be required to
engage in gender stereotyping in order to identify a product as
inherently associated with one gender or the other. The Chamber
asks, for example: "Is a pink shirt a female shirt just because
of the color? Comparatively, is a blue or teal razor a male
razor just because of its color?" The Chamber notes that for
many products, especially children's toys, manufacturers and
retailers are moving away from targeting toys specifically to
boys or girls, in part because psychologists that gendered
stereotypes eventually extend "from toys and clothes to future
roles, occupations, and characteristics." The Chamber contends
that this measure will "force retailers and grocers back into
gender stereotyping in order to make sure that they do not
charge a consumer a higher price for a female product versus a
male product of a similar kind." In addition, the Chamber
contends that once the retailer determines whether two different
products are gender-specific, it would then need to determine
whether the two products are "substantially similar" or of "like
kind." This will be difficult in practice, the Chamber claims,
and the retailer will be more likely to protect themselves by
raising the price of the lower-priced good as opposed to
lowering the price of the higher-priced good.
Finally, the Chamber contends that SB 899 will expose retailers
"to significant litigation similar to the ADA litigation
plaguing California." The Chamber claims that despite recent
amendments that permit price differences based on
"gender-neutral" factors, as a practical matter whether a
pricing decision was gender-based or gender-neutral will
ultimately be resolved by litigation. The Chamber emphasizes
that Civil Code Section 52 (which establishes the remedy for a
violation) provides for a minimum award of $4,000 for each
violation, as well as attorney's fees; this will provide a
powerful incentive for attorneys to bring suits, regardless of
the measure of damages.
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A coalition of retail, business, and marketing associations
oppose this bill for substantially similar reasons as those put
forth by the Chamber. These opponents, however, stress
additionally that price determinations "are fluid and affected
by numerous factors," not just the labor or materials necessary
to make the product. Prices are also determined by many other
factors, such as "competitor pricing, brand, country of origin,
cost of production, availability of supply, promotional
campaigns, cost of design, cost of marketing, cost of packaging,
merchandising, method of manufacture, and size, among others."
Like the Chamber, the coalition is also concerned about the
incentives for litigation, especially given that the bill would
seem to prohibit any price differences, whether it is a few
pennies or a few dollars. But whatever the price difference,
"each successful lawsuit can yield an award of up to $4,000 per
instance . . . plus attorney's fees." Finally, the coalition
notes that this "bill offers no guidance as to what goods are
considered gender-specific and therefore subject to the law."
Retailers will have to make these determinations on their own.
The coalition believes that this "requirement to gender-identify
all products seems like a step backward, especially as our
society works to eliminate gender bias."
Proposed Author Amendment: In order to clarify that a retailer
may lower prices of gender-specific goods for purposes of
inventory management, the author will take the following
amendment in this Committee:
- On page 2, lines 16-19, amend paragraph (1) of
subdivision (d) as follows:
(d) (1) Nothing in paragraph (2) of subdivision (b) prohibits
price differences based on gender-neutral factors, including,
but not limited to, specifically on the labor, materials,
tariffs, or inventory management. other gender-neutral reasons
for having increased cost for providing the goods .
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REGISTERED SUPPORT / OPPOSITION:
Support
Consumer Federation of California (sponsor)
ACLU
AFSCME
California Alliance for retired Americans
California Immigrant Policy Center
California National Organization of Women
California Rural Legal Assistance
CALPIRG
City of Santa Monica
Equal Rights Advocates
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Professor Rebecca Hains, Center for Childhood and Youth Studies,
Salem State University
Heroica Films
Let Toys Be Toys
Mujeres Unidas y Activas
Older Women's League, Sacramento Capitol
Planned Parenthood of California
Santa Barbara Women's Political Committee
U.S. Senator Jackie Speier
Professor Elizabeth V. Sweet, Department of Sociology, UC Davis
UDW Homecare Providers Unions
United Food & Commercial Workers Union: Western States Council
Women's Foundation of California
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Opposition
California Chamber of Commerce
California Grocers Association
California Retailers Association
Civil Justice Association of California
Consumer Specialty Products Association
Direct Marketing Association
Grocery Manufacturers of America
National Federation of Independent Businesses
TechNet
Toy Industry Association
Analysis Prepared by:Thomas Clark / JUD. / (916)
319-2334
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