Prop. 65 Shakedown Lawsuits Hurting CA Businesses

Tom Scott
CA Executive Director, National Federation of Independent Business

CALA has repeatedly pointed out that a select group of organizations are profiting from shakedown Proposition 65 lawsuits. The list of Proposition 65 Private Settlements for 2014 has just been posted and, as always, shakedown lawsuits have put more money into the pockets of these organizations. Let’s be clear, these lawsuits and the resulting settlements are not about protecting the public. They are about lawyers using Proposition 65 as a means to extort money from businesses across California. For more background on Prop. 65 lawsuit abuse, see my December 2014 blog post on the issue.

The proof is in the pudding. In 2014 there were a total of 663 private settlements. The total settlement payments were $29,482,280. Of that total amount, more than 70% ($21,047,746) went to lawyers in the form of attorney’s fees and costs. This despite the fact that OEHHA is only going to make this worse by changing the warning signs spells disaster for businesses.

Below is a list of the organizations which received the biggest payouts (in the form of attorney’s fees and costs) from these shakedown lawsuits:

  • The Chanler Group: $8,628,593
  • Consumer Advocacy Group – $4,307,000
  • Center for Environmental Health – $4,195,734
  • Environmental Research Center – $4,905,577

Attorneys are supposed to give 75% of their settlements to the state to support environmental efforts. However, attorneys often define large portions of settlements as “payments in lieu of penalties” in order to evade that requirement.

This racket is only going to get worse. Voters in 1986 did not intend for lawyers to be shaking down businesses for technical violations and then pocketing millions in legal fees. Until meaningful reform is passed, lawyers will continue to make millions of dollars shaking down businesses through Proposition 65 lawsuits – and jobs will continue to be lost when those businesses close. No wonder California is a “Judicial Hellhole.”

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