Although California's Proposition 65 dates from 1986, prosecutors have only recently turned the statute's sights on electronics manufacturers that use the toxic chemicals cited in the law.
During the past 12 to 18 months, at least six Electronic Industries Alliance (EIA) members have become targets under the law, also known as the Safe Drinking Water and Toxic Enforcement Act of 1986, according to Robert Willis, president of EIA's Electronic Components, Assemblies, Equipment & Supplies Association, Arlington, Va.
One of those members-Assembly Technologies International Inc. (ATI), Clawson, Mich.-settled a suit two weeks ago brought on behalf of Michael DiPirro, a private citizen who filed suit in the public interest, as allowed by the law.
ATI manufactures solder equipment containing lead-one of the many chemicals requiring labeling under the proposition.
Proposition 65 provides for penalties of up to $2,500 per day for each violation. In addition, prosecutors often seek to enforce the act under California's unfair-competition statutes, which provide for similar penalties. EIA members report that settlements are typically between $25,000 and $50,000, Willis said.
ATI is prohibited under the settlement agreement from divulging terms, explained Robert Kuhn, chief executive of ATI. "It was less than $30,000," he said.
ATI first heard from DiPirro in September 1998, when it received a 60-Day Notice of Violation. The notice gives a company 60 days to comply with Proposition 65 and list all chemicals in its products that have been found to cause cancer, birth defects, or other reproductive harm. All companies doing business in California-including distributors-that use or sell any of the chemicals listed under the proposition are required to notify users by furnishing a warning label.
Kuhn said he didn't know ATI was subject to the law. None of ATI's products are manufactured or sold direct in California. The company uses distributors, which include Allied Electronics, Future Electronics, and Newark Electronics. But since the statute makes distributors similarly liable for the products they sell, all of the company's distributors were also named in the DiPirro suit.
In another indication of the law's potentially wide-ranging impact, the National Electronic Distributors Association, Alpharetta, Ga., recently notified its own members of potential lawsuits related to the proposition after one of its members was served, according to NEDA executive vice president Robin Gray.
In that case, a customer walked into a distributor's warehouse, requested that the company open a properly labeled carton of products, and sell one item. After purchasing the part, the customer filed a complaint against the company for not having correctly labeled each item, Gray said.
Kuhn's lawyer, Stephen Ronk, said he has represented several clients charged with Proposition 65 violations, at least three of whom are in the electronics industry, and he expects to see several more cases. "[The plaintiffs] have identified some fertile ground in soldering," he said.
The act contains a provision that allows any California citizen to file a complaint if the state attorney general fails to take action, according to Kuhn, who is also an attorney. That provision invites the likes of bounty hunters, he claimed. "This is a potentially explosive law. They can target anyone using these chemicals that sell products in California." Under the statute, the lawyers are allowed to keep 25% of the recovery, while 75% goes to the state.
Kuhn said he decided to settle with DiPirro after his lawyers advised him that this type of litigation is extremely expensive and time-consuming, and that there was no way around the law if the company wasn't using warning labels.
Kuhn believes it may behoove any company that uses chemicals listed under Proposition 65 and ships products to California to start labeling their products in order to prevent similar lawsuits.
The warning label must be prominent and distinct from other types of print on the product or container in which product is sold or shipped. If shipped wholesale, products packaged inside a container must be individually labeled, either on each package or on the product itself.
Meanwhile, the EIA's Willis said there is a bill pending before the Massachusetts Legislature, known as the Massachusetts Citizen's Right to Know Act, which is modeled on California's Proposition 65.