BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1722
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          Date of Hearing:   June 22, 2004

                           ASSEMBLY COMMITTEE ON JUDICIARY
                               Ellen M. Corbett, Chair
                    SB 1722 (Ducheny) - As Amended:  June 14, 2004

                              As Proposed to Be Amended

           SENATE VOTE  :   38-0
           
          SUBJECT  :  PROPOSITION 65: RES JUDICATA

           KEY ISSUES  :  

          1)SHOULD THE LEGISLATURE SPECIFICALLY PROVIDE BY STATUTE THAT  
            THE DOCTRINE OF RES JUDICATA - AN AFFIRMATIVE DEFENSE THAT  
            BARS THE SAME PARTIES (OR PARTIES IN PRIVITY) FROM LITIGATING  
            A SECOND LAWSUIT ON THE SAME CLAIM - APPLIES TO PRIVATE  
            ACTIONS BROUGHT TO ENFORCE PROPOSITION 65?

          2)SHOULD THIS BILL BE AMENDED TO PROVIDE THAT THE COURT  
            CONSIDERING WHETHER TO APPLY RES JUDICATA, BASED ON AN EARLIER  
            COURT DECISION, BE REQUIRED TO ALSO DETERMINE WHETHER THE  
            JUDGMENT IN THE FIRST ACTION WAS FAIR, REASONABLE, AND  
            ADEQUATE, AS OPPONENTS APPEAR TO REASONABLY SUGGEST?

          3)IN THE EVENT THAT THE AUTHOR CHOOSES TO AMEND THE BILL BACK TO  
            THE FORM PASSED BY THE SENATE, SHOULD NOT THE COMMITTEE STILL  
            INSIST THAT THE BILL BE AMENDED, AS SUGGESTED BY OPPONENTS, TO  
            DEAL WITH THE THREAT OF COLLUSIVE SETTLEMENTS? 

                                      SYNOPSIS
          
          This bill, sponsored by the California Apartment Association  
          (CAA), seeks to specifically provide by statute that the  
          doctrine of res judicata - an affirmative defense that bars the  
          same parties or parties in privity from litigating a second  
          lawsuit on the same claim(s) -  applies to private actions  
          brought to enforce the requirements of the Safe Drinking Water  
          and Toxic Enforcement Act of 1986, (hereinafter referred to as  
          "Proposition 65") relating to contamination of drinking water  
          and exposure warnings.  Specifically, the bill provides that a  
          court judgment in an action filed by a person in the public  
          interest bars another action, or part of an action, brought by  
          any person in the public interest where the court finds that the  








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          doctrine of res judicata bars relitigation of an issue or cause  
          of action.  As proposed to be amended, the bill also requires a  
          court, when approving a settlement of an action brought by a  
          person in the public interest, to make a finding that the  
          settlement is fair, reasonable and in the public interest in  
          addition to other specified findings currently required by  
          existing law.

          The author indicates that the bill seeks to address the problem  
          of "copycat" private prosecutors who sue business owners,  
          alleging the same Proposition 65 violation already adjudicated.   
          The author argues that this is a serious problem which hurts  
          small and big businesses alike and can impact any industry.   
          Supporters believe that the bill benefits the people of  
          California by limiting exposure to alleged private attorney  
          abuse of Proposition 65 lawsuits being experienced by businesses  
          and non-profit organizations.  They believe that the bill will  
          give business some relief from having to defend themselves  
          against multiple lawsuits on the same issue.

          The California League for Environmental Enforcement Now (CLEEN)  
          raises serious concerns that the June 14th amendments could  
          negatively impact the public health by opening the door to more  
          collusive settlements against the public interest.  CLEEN's  
          concerns are described in more detail in the analysis.  The  
          Consumer Attorneys of California (CAOC) also strongly opposes a  
          statutory application of res judicata to Proposition 65 cases  
           without providing a clear mechanism to deal with collusive  
          settlements in the later action  .  CAOC opposes the bill unless  
          it is amended to allow the court considering whether to apply  
          the doctrine of res judicata to determine whether the first  
          judgment was fair, reasonable and adequate before barring a  
          subsequent action.  The author and her sponsor are proposing to  
          amend the bill to instead require that the court approving the  
          settlement in the first action make a finding that the  
          settlement is fair, reasonable and in the public interest.  As  
          discussed in more detail in the analysis, CAOC does not believe  
          that this approach addresses the problem of collusive  
          settlements since the parties to a collusive settlement will put  
          their best face forward and will portray the settlement in  
          favorable terms.  

          It appears upon legal review that the bill should be amended as  
          suggested by the bill's opponents to ensure that the threat of  
          collusive settlements is mitigated.  








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           SUMMARY  :  Seeks to specifically provide by statute that the  
          doctrine of res judicata applies to private actions brought to  
          enforce the requirements of Proposition 65 relating to  
          contamination of drinking water and exposure warnings.   
          Specifically,  this bill as proposed to be amended:   

          1)Provides that a court judgment in an action filed by a person  
            in the public interest, or a judgment issued pursuant to a  
            settlement approved by the court in such a case, shall bar  
            another action, or part of an action, brought by any person in  
            the public interest where the court finds that the doctrine of  
            res judicata bars relitigation of an issue or cause of action.

          2)Provides that nothing in the bill is intended to change or  
            modify existing law as it applies to a judgment in a case  
            filed by a public prosecutor.
          
          3)Requires a court, when approving a settlement of an action  
            brought by a person in the public interest, to make a finding  
            that the settlement is fair, reasonable and in the public  
            interest in addition to other specified findings currently  
            required by existing law, as described below. 
          
          4)Contains a legislative finding and declaration that the bill  
            furthers the purposes of the Safe Drinking Water and Toxic  
            Enforcement Act of 1986 (Proposition 65).

           EXISTING LAW  : 

          1)Provides under Proposition 65 for the following provisions  
            applicable to businesses with 10 or more employees: 

              a)   Prohibition on Contaminating Drinking Water with  
               Chemicals Known to Cause Cancer or Reproductive Toxicity.    
               No person in the course of doing business may knowingly  
               discharge or release a chemical known to the state to cause  
               cancer or reproductive toxicity into water or onto or into  
               land where such chemical passes or probably will pass into  
               any source of drinking water, except as specified.  (Health  
               and Safety Code section 25249.5.  All further statutory  
               references are to this Code unless otherwise noted.) 

              b)   Required Warning Before Exposure to Chemicals Known to  
               Cause Cancer or Reproductive Toxicity.   No person in the  








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               course of doing business may knowingly and intentionally  
               expose any individual to a chemical known to the state to  
               cause cancer or reproductive toxicity without first giving  
               clear and reasonable warning to that individual, except as  
               specified.  (Section 25249.6.)

              c)   Penalties.   Civil penalties of up to $2,500 per day for  
               each violation may be imposed and Proposition 65 provides  
               that in assessing the amount of a civil penalty the court  
               shall consider all of the following: (1) The nature and  
               extent of the violation; (2) The number of, and severity  
               of, the violations; (3) The economic effect of the penalty  
               on the violator; (4) Whether the violator took good faith  
               measures to comply and the time these measures were taken;  
               (5) The willfulness of the violator's misconduct; (6) The  
               deterrent effect that the imposition of the penalty would  
               have on both the violator and the regulated community as a  
               whole; and (7) Any other factor that justice may require.   
               (Section 25249.7(b).)

              d)   Actions by Public Prosecutors.   The Attorney General,  
               any district attorney, and specified city attorneys may  
               bring an action to enforce Proposition 65's provisions.   
               (Section 25249.7(c).)

              e)   Actions by Persons in the Public Interest.   Any person  
               may bring a case in the public interest under Proposition  
               65 provided that the following requirements are met: 

               i)        The plaintiff first gives notice of the alleged  
               violation 60 days prior to commencing the action to the  
               alleged violator and to the Attorney General and the  
               district attorney, city attorney or prosecutor in whose  
               jurisdiction the violation is alleged to have occurred.

               ii)       If the alleged violation is for failure to warn,  
               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 that 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.









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               iii)      Neither the Attorney General, any district  
               attorney, any city attorney, nor any prosecutor has  
               commenced and is diligently prosecuting an action against  
               the violation.  (Section 25249.7(d).)

              f)   Reporting Requirements.   Proposition 65 requires  
               plaintiffs bringing an action in the public interest to  
               comply with specified reporting requirements, including  
               notifying the Attorney General that the action has been  
               filed and completing a form created by the Attorney General  
               that specifies the results of the settlement or judgment  
               and the final disposition of the case.  (Section 25249.7(e)  
               and (f).)  
              
              g)   Approval of Settlement.   If there is a settlement of an  
               action brought by a person in the public interest, the  
               plaintiff is required to submit the settlement (other than  
               a voluntary dismissal where no consideration is received  
               from the defendant) to the court for approval and the court  
               may approve the settlement only if it makes all of the  
               following findings: 

               i)        Any warning that is required by the settlement  
               complies with Proposition 65.

               ii)       Any award of attorney's fees is reasonable under  
               California law. 

               iii)      Any penalty amount is reasonable based on the  
               criteria set forth in (1)(c), above. (Section  
               25249.7(f)(4).)

          2)Provides that a defendant may raise the special defense of res  
            judicata in any case in which the defendant contends the  
            action or any part thereof was resolved on the merits in a  
            prior action between the same parties or their privies.  (  See  
            generally  Code of Civil Procedure sections 1908, 1908.5,  
            1911.) 

           FISCAL EFFECT  :    The bill as currently in print is keyed  
          fiscal. 

           COMMENTS  :   

           Stated Need for the Bill.   In support of the measure, the author  








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          writes: 

               Senator Ducheny introduced SB 1722 because we have a  
               problem with "private enforcers" who have made a mockery  
               of Proposition 65 and who have used it to line their own  
               pockets.  Specifically, this bill seeks to address the  
               problem of copycat private prosecutors who sue business  
               owners, alleging the same Proposition 65 violation  
               already adjudicated.  This is a serious problem that does  
               not further the purposes of Proposition 65, hurts small  
               and big businesses alike; and can impact any industry.   
               The bill seeks to address this copycat lawsuit problem by  
               reaffirming by statute that the doctrine of res judicata  
               is applicable in Proposition 65 cases.  This clear  
               statement of the applicability of res judicata in  
               Proposition 65 cases will prevent and discourage  
               frivolous, "copycat" lawsuits filed by private enforcers.  
                

               Copycat lawsuits allege the same violation adjudicated in  
               another case against the same business that defended the  
               adjudicated case.  Indeed, other industries (diesel  
               engine manufacturers, cigar manufacturers and retailers,  
               wine makers, manufacturers of paints and art materials,  
               manufacturers of hair coloring products, and hotels) have  
               being [sic] hit with a second set of suits regarding the  
               same violations resolved and adjudicated in another  
               lawsuit.  Even though such copycat suits lack merit, it  
               is often more cost-effective for a business to pay a  
               private enforcer his/her "nuisance" fee to "go away"  
               instead of incurring the attorneys' fees and costs to  
               fight the frivolous lawsuit.

          The sponsor, CAA, writes "The California Apartment Association  
          is a student of history and its members understand that history  
          repeats itself.  It is only a matter of time before owners of  
          rental housing are hit with a second waive of duplicative  
          Proposition 65 lawsuits.  All it takes is one such suit to  
          dramatically and negatively impact the life of an individual  
          owner and the persons he/she houses.  Such copycat suits provide  
          no additional protection to tenants and increase tenants' cost  
          of living (because owners often must pass on their additional  
          costs to their clients: their tenants.)"

          The Civil Justice Association writes in support that the measure  








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          "benefits the people of California by limiting exposure to  
          private attorney abuse of Proposition 65 lawsuits being  
          experienced by businesses and non-profit organizations  
          throughout the state.  The measure will help reduce costs to  
          businesses and help them put capital and jobs back into the  
          California economy."  The Apartment Association of Greater Los  
          Angeles writes "The tactics of these 'law firms' is to bring  
          often frivolous claims, such as second hand smoke over which an  
          owner has little or no control nor responsibility.  They then  
          agree not to pursue the matter for a settlement.  . . .   
          Unfortunately, without SB 1722, settlement does not preclude  
          future frivolous actions on the same claim."  

          The California Chamber of Commerce states that the bill is  
          "intended to prevent Proposition 65 enforcers from taking a  
          'second-bite-at-the apple, by clarifying that a second lawsuit  
          cannot be brought against a business by a private enforcer if  
          the claim at issue has already been decided by a court of law.   
          The bill will give business some relief from having to defend  
          themselves against multiple lawsuits on the same issue."

           Summary of Proposed Amendments.   This bill is being heard today  
          as proposed to be amended.  The mock-up reflects these  
          amendments which the author and her sponsor have indicated they  
          would like inserted in the measure.  At the request of the  
          Attorney General's Office, the amendments delete language which  
          had included judgments in cases brought by public prosecutors.   
          With this amendment as well as the addition of language  
          providing that nothing in the bill is intended to change or  
          modify existing law as it applies to a judgment in a case filed  
          by a public prosecutor, the Office is neutral on the bill.  

          The amendments also require a court to make an additional  
          finding when approving a settlement of an action brought by a  
          person in the public interest.  Under existing law, a plaintiff  
          bringing an action in the public interest must submit a  
          settlement of that action to the court for approval and the  
          court must make three findings before it may approve the  
          settlement as follows: (1) Any warning that is required by the  
          settlement complies with Proposition 65; (2) Any award of  
          attorney's fees is reasonable under California law; and (3) Any  
          penalty amount is reasonable based on specified criteria.  As  
          proposed to be amended, this bill would require a fourth  
          finding; that the settlement is fair, reasonable and in the  
          public interest (this is identical to the finding proposed to be  








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          added by AB 1176 (Campbell) of 2003, as noted below).

           Background: Doctrine of Res Judicata.   The doctrine of res  
          judicata is an affirmative defense barring the same parties or  
          their privies from litigating a second lawsuit on the same  
          claim(s).  "The doctrine of res judicata rests upon the ground  
          that the party to be affected, or some other with whom he is in  
          privity, has litigated, or had an opportunity to litigate the  
          same matter in a former action in a court of competent  
          jurisdiction, and should not be permitted to litigate it again  
          to the harassment and vexation of his opponent.  Public policy  
          and the interest of litigants alike require that there be an end  
          to litigation."  (  Panos v. Great Western Packing Co.  (1943) 21  
          Cal.2d 636, 637.)  Res judicata bars a second or subsequent  
          lawsuit when the party asserting the defense demonstrates the  
          following elements:

             1)   The issue decided in the prior adjudication is identical  
               to the one presented in the later action; 

             2)   There was a final judgment on the merits in the prior  
               action; and 

             3)   The party against whom the plea is asserted was a party  
               or in privity with a party to the prior adjudication.   
               (  Bernhard v. Bank of America Nat'l Trust & Sav. Asso.   
               (1942) 19 Cal. 2d 807;  Citizens for Open Access to Sand and  
               Tide, Inc. v. Seadrift Assn.  (1998) 60 Cal.App.4th 1053.)  

           Privity.   "The requirement of identity of parties or privity is  
          a requirement of due process of law  . . .  due process requires  
          that the party to be estopped must have had an identity or  
          community of interest with, and adequate representation by, the  
          losing party in the first action as well as that the  
          circumstances must have been such that the party to be estopped  
          should reasonably have expected to be bound by the prior  
          adjudication."  (  Garcia v. Rehrig International, Inc.  (2002) 99  
          Cal. App. 4th 869, 877 (citing Clemmer v. Hartford Insurance Co.  
          (1978) 22 Cal. 3d 865).)  Res judicata must "conform to the  
          mandate of due process of law that no person be deprived of  
          personal or property rights by a judgment without notice and an  
          opportunity to be heard."  (  Bernhard v. Bank of America Nat'l  
          Trust & Sav. Asso.  19 Cal. 2d at 810-811.)

          "Privity is not susceptible of a neat definition, and  








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          determination of whether it exists is not a cut-and-dried  
          exercise. [citation]  In the final analysis, the determination  
          of privity depends upon the fairness of binding appellant with  
          the result obtained in earlier proceedings in which it did not  
          participate. [citation]  Whether someone is in privity with the  
          actual parties requires close examination of the circumstances  
          of each case. [citation]"  (  Citizens for Open Access to Sand and  
          Tide, Inc. v. Seadrift Assn.  60 Cal.App.4th at 1070.)  

           Application of Doctrine to Proposition 65 Cases.   The author  
          writes that "Proposition 65 currently does not address the issue  
          of whether the final resolution of an enforcement action brought  
          by a private party or public prosecutor bars subsequent  
          litigation by private enforcers over the same alleged  
          violation."  In support, the author points to "two appellate  
          cases that have applied res judicata in the Proposition 65  
          context, but both cases are not citable as legal authority  
          because they are not published.  See American International  
          Industries, 82 Cal. Rptr. 2d 836 (1999) (depublished);  
          Environmental World Watch v. Cummins Engine Co., Inc., 2003 WL  
          21540774 (2003) (unpublished).  Although the courts have  
          generally agreed at the end of the day with the concept that  
          duplicative enforcement over the same alleged violation is not  
          permissible, the lack of definitive standard in the case law or  
          statute has contributed to unnecessary transaction costs in  
          defending baseless litigation."  

          CAOC responds that it is "unaware of any cases where a court  
          refused to apply the doctrine of res judicata in a Proposition  
          65 case."  The organization then cites the two cases mentioned  
          by the author and writes that these decisions "used the doctrine  
          to bar subsequent actions claiming Prop 65 violations.  In  
           American International Industries  , the court went through an  
          extensive analysis and noted the potential problem of collusive  
          settlements in these cases (at footnote 12) while at the same  
          time concluding that the action was barred.  In  Environmental  
          World Watch  , the court, having previously refused to apply the  
          doctrine because of a lack of privity, held a subsequent action  
          barred where the stipulated judgment provided that it 'includes  
          and resolves all Proposition 65 claims under [ 25249.5 et seq.]  
          relating to potential occupational, environmental and consumer  
          exposures to Covered Products, as that term is defined in the  
          Judgment.'"

           Privity and Proposition 65: Actions Brought in the Public  








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          Interest.   As noted above, the requirement of identity of  
          parties or privity is a requirement of due process of law.  CAOC  
          writes, however, that the "doctrine of privity fits imperfectly  
          when applied to an action brought in the public interest.  The  
          particular issues raised in Proposition 65 litigation make this  
          case specific determination [noted above  Citizens for Open  
          Access to Sand and Tide, Inc. v. Seadrift Assn.  ] all the more  
          critical."

           The Issue of Collusive Settlements.   CAOC is opposed to this  
          bill's "statutory application of res judicata to Proposition 65  
          cases without providing a clear mechanism to deal with collusive  
                                          settlements in the later action."   CAOC further explains: 

               We understand through discussions with the Office of the  
               Attorney General that collusive settlements continue to  
               raise problems in Proposition 65 litigation.  The  
               amendments to the statute contained in SB 471 (Sher) have  
               gone a long way in reducing the number of Prop 65 notices  
               filed and in increasing oversight by the Office of the  
               Attorney General.  However, most of these actions are  
               settled through stipulated judgments.  The parties  
               entering into the settlement have a keen interest in  
               putting forth information that shows the settlement in a  
               favorable light.  Even experienced environmental lawyers  
               would be hard pressed to know if the terms are fair  
               without having additional information.  Judges reviewing  
               the settlements rarely if ever look behind the terms of  
               the settlement.  Indeed, judges are only required to  
               review whether the warning agreed upon in the settlement  
               meet the requirements of the statute.  Thus, we do not  
               have an adequate mechanism for assuring that all  
               settlements are indeed in the public interest.  

          With respect to the collusive settlement issue, the sponsor  
          writes "if res judicata is existing law and this bill is  
          merely codifying existing law, how does this bill create the  
          collusive settlement problem?  Assuming that collusive  
          settlements are a problem, since this bill does not create or  
          add to the problem, there is not reason why Senator Ducheny  
          should be required to address the alleged collusive settlement  
          problem through her bill."

          CAOC worries that "If the legislature declares that the doctrine  
          should apply, courts will necessarily conclude that they should  








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          be applying the doctrine more rigorously than they are now."   
          Indeed, courts do not presume that the Legislature performs idle  
          acts, nor do they construe statutory provisions so as to render  
          them superfluous.  (  Hagberg v. California Federal Bank  (2004) 32  
          Cal. 4th 350;  Harbor Fumigation, Inc. v. County of San Diego Air  
          Pollution Control District  (1996) 43 Cal. App. 4th 854;  
           Shoemaker v. Myers  (1990) 52 Cal. 3d 1.)

           Are the Public Interest/Injustice Exceptions to Res Judicata  
          Sufficient?   The sponsors write that even if the elements of res  
          judicata 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' (citations omitted)."   
          Therefore, they assert, should a collusive settlement occur in  
          the first action, the plaintiff in the subsequent action would  
          still have an opportunity to convince the court that his or her  
          action should proceed despite the fact that the elements of res  
          judicata are met.  In response, CAOC writes "Existing  
          protections to assure that the public interest is protected are  
          inadequate.  The 'public interest' exception is invoked only in  
          the most exceptional circumstances.  The doctrine only applies  
          in the rare circumstance where the first judgment was erroneous  
          (citations omitted)."  Indeed, legal treatises further state:

               Two exceptions have been recognized to the application of  
               res judicata in unjust circumstances.  One is a "public  
               interest" exception, holding that if an issue is a  
               question of law rather than of fact, then the prior  
               determination is not conclusive if the public interest  
               requires that relitigation not be foreclosed.  This  
               public interest exception is extremely narrow, and may  
               only be applied in exceptional circumstances.  The other  
               exception, which has been criticized and narrowly  
               applied, is an "injustice" exception, holding that, in  
               some rare cases, a judgment may not be res judicata where  
               to rigidly apply the doctrine would defeat the ends of  
               justice or important considerations of policy underlying  
               the doctrine.  This injustice exception, though not  
               directly overruled, has been criticized and narrowly  
               applied. (citations omitted) (40 Cal Jur 3d (Rev) Part 2,  
               Judgments  134.)
           
          As a result, it does not appear that the public interest and  
          injustice exceptions under the doctrine are sufficient to afford  








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          the plaintiff in the subsequent action a meaningful opportunity  
          to convince the court that his or her action should proceed  
          despite the fact that the elements of res judicata are met.

           Issue:  Should the Bill Be Amended To Better Deal With the  
          Threat of Collusive Settlements?   As noted above, as proposed to  
          be amended, this bill would require a court, when approving a  
          settlement of an action brought by a person in the public  
          interest, to make a finding that the settlement is fair,  
          reasonable and in the public interest.  CAOC raises concerns  
          about this language as it would require the court in the first  
          action to make the evaluation rather than the court determining  
          whether the doctrine of res judicata should apply.  On this  
          point, CAOC writes: 

               . . . it is imperative that a court considering whether  
               to apply the doctrine be required to determine whether  
               the first judgment was fair, reasonable and adequate  
               before barring a subsequent action.  It does not make  
               sense to include this determination in the first action  
               as the first judge will not have adequate information  
               to evaluate the settlement.  If indeed the settlement  
               is collusive, the parties will in effect "put their  
               best face forward" and will portray the settlement in  
               favorable terms.  The court that is required to decide  
               whether to permit a later action to proceed is in the  
               best position to rule whether that first judgment was  
               fair, reasonable and adequate.  

               Blanket application of res judicata to Proposition 65  
               cases without addressing the problem of collusive  
               settlements does not further the purpose of the  
               statute.  Proposition 65 is only furthered if a court  
               ruling on the res judicata motion considers whether the  
               first action was fair, reasonable and adequate before  
               deciding to bar the later action.  

          CAOC has offered the following amendment to address its  
          concerns on the collusive settlement issue: "In addition to  
          applying any other factors required by law, the court in the  
          later action shall also determine whether the first judgment  
          was fair, reasonable and adequate in protecting the public  
          interest."  The author and her sponsors did not accept the  
          amendment suggested by CAOC and instead are proposing to  
          amend the bill as described above. 








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          CLEEN also writes that it "supports the concept of providing  
          the courts with additional tools to address the problem of  
          collusive settlements.  In particular, an amendment adding  
          language that would require a party challenging a later action  
          to provide evidence that the first action was 'fair,  
          reasonable and adequate' would provide the court a standard to  
          evaluate the prior case as potentially collusive."  CLEEN  
          further believes that "the inclusion of 'fair, reasonable, and  
          in the public interest' as part of the case in main (first  
          case) would make the collusive settlements more iron-clad -  
          worsening the problem" and the group is opposed to that  
          language as part of the first case.   As a result, the  
          Committee may wish to amend the bill to provide that the court  
          determining whether to apply res judicata determine whether  
          the first judgment was fair, reasonable and adequate in  
          protecting the public interest.  This amendment is necessary  
          even in the event that the author chooses to amend the bill  
          back to the form passed by the Senate. 
           
           The Another v. Later Issue.   This bill provides that a prior  
          judgment in a case brought by a plaintiff in the public interest  
          will bar "another" action brought by a plaintiff in the public  
          interest 
          where the court finds that res judicata bars relitigation of an  
          issue or cause of action.  Previously, the bill had provided  
          that the prior judgment would bar a "later" action.  The sponsor  
          explains that the change to "another" was necessary because the  
          previous "version of the bill can be construed as suggesting  
          (wrongly) that res judicata applies only to actions that are  
          initiated after the action that will be granted res judicata  
          effect.  Thus, the terms 'a later' and 'in the later action' are  
          deleted."

          CLEEN indicates that it is "particularly concerned about the  
          impact of SB 1722 on the problem of collusive settlements.  The  
          June 14 amendments struck the word 'later' and replaced it with  
          'another'.  Unfortunately this change increases the likelihood  
          that unethical parties will engage in collusive behavior.  Under  
          the new language, an environmental organization in a hard fought  
          case in which it is likely to prevail, would have to face the  
          real possibility that the same defendant would solicit a  
          friendly collusive plaintiff who would quickly sue, and then  
          settle, for nominal relief, all before the legitimate case  
          settled.  The result would be the bar of the legitimate case by  








                                                                  SB 1722
                                                                  Page  14

          the collusive sweetheart deal, fundamentally undermining the  
          public interest in that case."

           Bill Applies to Both Contamination of Drinking Water and Failure  
          to Warn Cases.   In background materials, the sponsor provided  
          the Committee with examples of "duplicative Proposition 65  
          actions that have been filed against different industries."   
          Most, if not all, of these examples appear to be failure to warn  
          cases brought under Proposition 65's requirement that a business  
          first give clear and reasonable warning before knowingly and  
          intentionally exposing individuals to a chemical known to the  
          state to cause cancer or reproductive toxicity.  The bill,  
          however, is not limited to failure to warn cases.  It also  
          applies to cases brought under Proposition 65's requirement that  
          no business may knowingly discharge or release a chemical known  
          to the state to cause cancer or reproductive toxicity into water  
          or onto or into land where such chemical passes or probably will  
          pass into any source of drinking water.  

           Passage of this Bill Requires Finding and Declaration that it  
          Furthers the Purposes of Proposition 65 and Requires a  
          Two-Thirds Vote.   Proposition 65 requires that any amendment be  
          in furtherance of the purposes of the act, and requires that it  
          be passed in each house by a two-thirds vote. (Initiative  
          Measure, Nov. 4, 1986, Sec. 7.)  This bill contains a  
          legislative finding and declaration that the bill furthers the  
          purposes of the Safe Drinking Water and Toxic Enforcement Act of  
          1986 (Proposition 65).  In a letter to the Chair of the  
          Environmental Safety and Toxic Materials Committee, the  
          Legislative Counsel's Office indicated that "A court may  
          determine that the proposed change in the enforcement provisions  
          of the act does not further the purposes of the initiative,  
          notwithstanding the legislative finding in Section 2 of the  
          measure [citation]."

           Prior Related Legislation.   AB 2379 (Campbell) of 2004, which  
          would have prohibited a person from bringing an action in the  
          public interest if the defendant has previously been a party to  
          a final judgment in another action brought pursuant to the act  
          and the person bringing the action alleges the same violation of  
          the act that was adjudicated, died in the Assembly Environmental  
          Safety and Toxic Materials Committee. 

          AB 1176 (Campbell) of 2003 required the court to make a finding  
          that a settlement is fair, reasonable, and in the public  








                                                                  SB 1722
                                                                  Page  15

          interest when approving a settlement of an action brought by a  
          person in the public interest.  The bill, which also prohibited  
          a person from filing an action in the public interest or  
          bringing an action that alleges a violation of the act if the  
          defendant has previously entered into a settlement or judgment  
          pursuant to the act and the person filing or bringing the action  
          alleges the same violation of the act that was settled or  
          adjudicated, died in the Assembly Environmental Safety and Toxic  
          Materials Committee. 

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Apartment Association (sponsor)
          Allmark Properties
          Apartment Association of Greater Los Angeles
          Archstone Smith
          California Building Industry Association
          California Business Properties Association
          California Chamber of Commerce
          California Grocers Association
          California Independent Petroleum Association
          California Lodging Industry Association
          California Manufacturers and Technology Association
          California Paint Council
          California Railroad Industry
          California Small Business Alliance
          Chemical Industry Council of California 
          Chlorine Chemistry Council
          Civil Justice Association of California
          Cosmetic, Toiletry and Fragrance Association
          Eden Realty
          Engineering and Utility Contractors Association
          Grocery Manufacturers of America
          Housing Authorities of the City and County of Fresno
          Income Property Specialists
          John Stewart Company
          League of California Cities
          Lumber Association of California and Nevada
          Montanosa Apartments
          Norwood Realty
          Novartis Pharmaceuticals Corporation
          Printing Industries of California 
          Regency Palm Court Apartments 








                                                                  SB 1722
                                                                  Page  16

          Richard Philips
          Robert L. Jensen & Associates 
          San Francisco Apartment Association
          Sharon Green Apartments
          Smurfit-Stone Container Corporation
          Soap & Detergent Association
          South Coast Apartment Association
          Spruce Grove, Inc.
          Styrene Information Research Center
          The Natoma Company
          Tiffany Court Apartments 
          Villa Siena Apartments 
          Western Independent Refiners Association
          Windsor Court Apartments 
          Several Individuals

           Opposition 
           
          Consumer Attorneys of California (unless amended)

           Analysis Prepared by  :    Saskia Kim / JUD. / (916) 319-2334