BILL ANALYSIS
SB 1722
Page 1
Date of Hearing: June 15, 2004
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
John Laird, Chair
SB 1722 (Ducheny) - As Amended: April 27, 2004
SENATE VOTE : 38-0
SUBJECT : Proposition 65: enforcement: judgments.
SUMMARY : Makes it clear that the common law principals of res
judicata apply to actions brought pursuant to Proposition 65.
Specifically, this bill :
1)Adds a new provision to provide that when there is a court
judgment in a Proposition 65 case filed by a private plaintiff
acting in the public interest, or a court approved settlement
of such case, a court in a later action can bar that action,
if it finds that the doctrine of res judicata bars
relitigation of an issue or cause of action.
2)Declares that this addition to Proposition 65 furthers the
purpose of the act.
EXISTING LAW , under the Safe Drinking Water and Toxic
Enforcement Act of 1986 (otherwise referred to as "Proposition
65"), contains two major requirements: (a) warning for potential
toxic exposure and (b) prohibition of discharges to drinking
water.
1)Prohibits persons, in the course of doing business, from
knowingly and intentionally exposing persons to substances
known to the state to cause cancer or reproductive damage
without providing a specific warning. It also prohibits a
person from knowingly or intentionally discharging such
substances to sources of drinking water.
2)Imposes civil penalties of up to $2,500 per day for each
violation of the act and authorizes the Attorney General,
district attorneys, and city attorneys to bring actions to
enforce its provisions.
3)Authorizes any person to file a Proposition 65 action in the
public interest to enforce its provisions upon meeting a
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variety of conditions. Before a private plaintiff may bring
an action, he must first give notice to the alleged violator,
the Attorney General and any District Attorney in whose
jurisdiction the violation is alleged to have occurred. If
none of the authorized public prosecutors file an action
within sixty-days, the person can commerce a public interest
lawsuit. As amended in 1999, the statute requires that
persons filing actions in the public interest also notify the
Attorney General when they file a complaint, and when the case
reaches a settlement or judgment.
4)Requires an additional justification from the private
plaintiff if the alleged violation is for failure to warn . In
that case, the notice of violation must include a certificate
of merit stating that an expert has reviewed facts, studies or
other data regarding the exposure to the listed chemical that
is the subject of the action and, based on that information,
there is a reasonable and meritorious case for the private
action. The certificate of merit served on the Attorney
General must attach factual information sufficient to
establish the basis of the certificate of merit.
5)Over the past two legislative sessions, Proposition 65 has
been amended three times. These amendments have increased the
AG's oversight of private enforcement of Proposition 65. The
new procedures are intended to thwart abusive lawsuits that do
not provide sufficient protection to the public, but do
provide compensation to the plaintiffs' attorneys.
6)As a result of reporting requirements created by SB 1269
(Alpert) (Chapter 599, Statutes of 1999), SB 471 (Sher)
(Chapter 578, Statutes of 2001) and SB1572 (Sher) (Chapter
323, Statutes of 2002) confidential settlements of Proposition
65 matters are no longer possible. Any settlement of a
private Proposition 65 action must be approved by the court on
a noticed motion and must be reviewed by the AG (who can also
intervene in the action).
7)Prop 65 can only be amended by a two-thirds vote of the
Legislature and any amendment must also "further the purposes
of the act."
8)Provides that a defendant may raise a special defense based on
the common law of res judicata in any case in which the
defendant contends the action or any part thereof was resolved
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on the merits in a prior action between the same parties or
their privies.
FISCAL EFFECT : Unknown.
COMMENTS : The author of this measure is seeking to make it
explicit that the common law doctrine of res judicata can be
applied to Proposition 65 litigation in order to prevent
repeated litigation over the same issue or cause of action
through abusive, "copycat" lawsuits filed by private enforcers.
1)According to the author, these lawsuits allege the same
violation that was already adjudicated against the same
business that defended the first lawsuit. In such cases, it
may be more cost-effective for a business to pay a private
enforcer his fee to "go away" than it is to fight the claim in
court. Additionally, the author contends that such repeat
lawsuits do not protect the public and undermine the integrity
of Proposition 65. This bill would encourage courts to
dismiss duplicative lawsuits by reaffirming by statute that
the doctrine of res judicata is applicable in Proposition 65
cases.
2)In materials produced by a supporter of SB 1722, the California
Apartment Association (CAA) describes the doctrine of res
judicata an affirmative defense barring the same parties from
litigating a second lawsuit on the same claim(s). "Res judicata
relieves parties of the costs and vexation of multiple lawsuits,
conserves judicial resources, and, by preventing inconsistent
decisions, encourages reliance on adjudication. As noted by a
California Appellate Court, '[p]ublic policy and the interest of
litigants alike require that there be an end to litigation.'
Citizens for Open Access to Sand & Tide v. Seadrift Association
(1998) 60 Cal. App. 4th 1053, 1065.
3)In order to preclude the second lawsuit based on the res
judicata defense, the party asserting the defense must show
that: 'a) the issues decided in the prior adjudication are
identical with those presented in the later action; b) there was
a final judgment on the merits in the prior action; and c) the
party against whom the plea is raised was a party or was in
privity with a party to the prior adjudication.' Id. at 1065.
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However, even if these threshold requirements are established,
res judicata will not be applied by courts (thereby allowing the
second law suit to proceed) ''if injustice would result or if
the public interest requires that relitigation not be
foreclosed.'' Id. (quoting Consumers Lobby Against Monopolies
v. Public Utilities Com. (1979) 25 Cal. 3d 891, 902.)"
4)CAA contends that in multiple industries (diesel engine
manufacturers, cigar manufacturers and retailers, PVC
mini-blind distributors and retailers, wine makers,
manufacturers of paints and art materials, manufacturers of
hair coloring products, and hotels), defendants are being sued
by a plaintiff "in the public interest" and, after settlement
with or judgment for the first plaintiff , a second plaintiff
"in the public interest" has filed a "copy cat" lawsuit based
on the same facts and claims already decided in the first
case. CAA states that its members are being sued by
plaintiffs "in the public interest" for failure to post the
required warning signs and are fearful that apartment owners
and managers, like other industries before them, will soon be
sued again by a new plaintiff "in the public interest" on the
same claims.
Analysis of Measure as "Proposed to be Further Amended" by
Author
5)Opposition to previous versions of the measure had been
dropped to the measure as it was amended on April 27th, which
was also how it was passed by the Senate. The Senate analysis
reflected the comment that the author and the stakeholders
were going to continue negotiations to address concerns raised
by CAA. Those ongoing discussions focused on a way to provide
a "safe harbor" situation for a limited period of time while a
standardized warning form for apartment owners for potential
exposure to Proposition 65 materials was developed. Those
discussions recently ended without agreement being reached.
However, the author expressed a desire to make further changes
to the version as passed by the Senate shortly before our
hearing.
Expansion of Res Judicata to Include Concurrent Cases and Cases
Taken Over by the Attorney General
6)The author proposes to amend her bill to state the following:
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A court judgment in a case filed pursuant to subdivision
(d) or (c) of Section 25249.7, a settlement in a case filed
pursuant to subdivision (c) of Section 25249.7, or a
settlement approved by the court pursuant to paragraph (4)
of subdivision (f) of Section 25249.7, shall bar another a
later action, or a part thereof, brought in the public
interest pursuant to subdivision (d) of Section 25249.7
where the court , in the later action, finds that the
doctrine of res judicata bars relitigation of an issue or
cause of action.
7)The declared purpose of this measure is to make it clear to
the courts that they may apply the principal of res judicata
to cases brought pursuant to Proposition 65. While the
Committee on Judiciary seems best equipped to resolve the most
appropriate language to memorialize this concept, the final
form of the language with which it is resolved is of import to
the jurisdiction of this Committee. It is important to
remember that there are two parts to Proposition 65. One
relates to providing adequate warnings. Most of the examples
suggested by CAA in support of the measure relate to such
suits. Indeed most of the discussions amongst the
stakeholders seem to be headed to addressing issues related to
Proposition 65 warnings. But another section of Proposition
65 relates to suits to prevent release of toxic materials that
could affect drinking water supplies. SB 1722 applies to both
sections of the act, the warning and the discharge prohibition
which need to be considered.
8)The CAA reasoning (summarized above) supporting the rationale
for applying res judicata to "later" filed Proposition 65
cases as contained in the April 27th version is
straightforward. By amending the Senate approved language, to
cover "another" action, new issues are raised which may
require further definition in order prevent unintended
outcomes. The reason deleting later suits may be more
problematic than at first blush is because the notion of
"privity" embedded in the concept of res judicata is
significantly broadened when applied to the private plaintiff
who is bringing a suit "in the public interest." It is
important to keep in mind that this bill emphasizes that res
judicata can be applied to issues as well as the case as a
whole. Indeed, this change seems to emesh the principals of
case consolidation into Proposition 65 as well.
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9)Approved settlements or judgments may contain statement of
facts. But facts, common to both types of cases, deemed
important to the parties in a settlement or judgment related
to a case about warnings might be different than those related
to a suit on discharges. As this measure affects both types
of cases, there may be reason to explicitly acknowledge the
difference between the types of actions for res judicata
cases. If the author supplants the application of res
judicata to just later cases with application of res judicata
to any concurrent cases, perhaps this bill should be confined
to warning type Proposition 65 cases only, which seem to be
the type of cases at the core of CAA's dispute.
10)Because Proposition 65 has several unique procedural
requirements for the plaintiff in a Proposition 65 suit, such
as (a) the "60 day notice" requirements, that a private
plaintiff must provide to the Attorney General and local
prosecutors before he can file a suit, and (b) specified
approval mechanisms for settlements or judgments, there may be
some purpose to specifying additional notice requirements to
those who have filed 60 day notices before the suit that is
being settled so that the judge, or Attorney General,
considers the facts and the merits of the other cases related
to the one being settled. Such additional clarification would
dampen potential for "collusive suits" or "plaintiff shopping"
to get the most favorable settlement. Currently, Proposition
65 does not contain any details of the type of notice that
must be provided before a settlement is approved.
11)The author and the Committee may wish to consider that the
proposed changes to SB 1722 could make this measure more
problematic than the unopposed version that was passed by the
Senate. There are a variety of adjustments, which given the
nature of the issue ("res judicata" and "privity") may be best
crafted by the Committee on Judiciary in consultation with
this Committee. The options to be discussed include (a)
reverting to the Senate language, (b) further procedural
amendments to assure that the judge or Attorney General is
aware of all of the private plaintiffs' points of view before
certifying the adequacy of the settlement or entering final
judgment if the "another suit" language is kept, (c) providing
some codified interpretation language further clarifying to
the judge as to how the doctrine of res judicata is to be
applied so that it does not result in "unfair" additional
requirements on private plaintiffs to bringing suits in the
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public interest, and (d) more detailed notice requirements to
cover the cases noticed earlier by other private plaintiffs.
After all, the California Supreme Court has held that
Proposition 65 is to be construed broadly to protect the
public. In order to pass the legal challenge that these
changes do further the purposes of the Proposition 65
initiative, the language needs to be as narrowly crafted as
possible so as not to create new hurdles to protecting the
public health.
This measure has also been referred to the Assembly Committee on
Judiciary.
REGISTERED SUPPORT / OPPOSITION : (To the April 27th version)
Support
California Apartment Association (sponsor)
Allmark Properties
Archstone Smith
California Chamber of Commerce
Consulting Engineers and Land Surveyors of California
California Manufacturers & Technology Association
Cambridge Village
Civil Justice Association of California
Exlnt Property Management Co.
League of California Cities
Proposition 65 Coalition
Opposition
None on file.
Analysis Prepared by : Michael Endicott / E.S. & T.M. / (916)
319-3965