P&G Prop 65 Settlement Reversal Sought By California AG

California is advocating reversal of a Prop 65 settlement reached last August on the grounds that an environmental group should not be financially "rewarded" for filing suit in the name of public interest.

The American Environmental Safety Institute "may not simply trade its claims 'in the public interest' for...illusory injunctive relief and a reward for itself," California State Attorney General Bill Lockyer states in the appeal, filed March 21.

In June 2005, AESI sued Procter & Gamble over trace amounts of lead in the manufacturer's Crest toothpaste products. The suit was filed under California's Safe Drinking Water & Toxic Enforcement Act (Prop 65), which requires that products that expose consumers to levels of certain known carcinogens or reproductive toxins in excess of established limits must bear a "clear and reasonable" warning label on their products.

The measure, implemented in 1997, allows citizen law enforcement groups to file actions if public prosecutors decline to do so. However, the ability to sue "in the public interest" under Prop 65 is not "an opportunity for plaintiffs to raise funds for their favorite activities, even where those activities are themselves lawful activities of charitable corporations," Lockyer asserts.

In August 2005, the Los Angeles County Superior Court approved a settlement that required P&G to "specify" that material orders for hydrated silica, a cleaning component of toothpaste, contain less than 7.5 parts per million lead. The firm had previously been ordering the material at 10 ppm lead, according to a court document. The order also required P&G to "explore" ways of reducing lead for a period of 12 months and to reduce those levels if feasible.

P&G was ordered to pay $387,500 to AESI "for its ongoing compliance monitoring costs of this consent judgment, and to reimburse AESI for its enforcement efforts on behalf of the public interest and the general public." Of that amount, approximately $325,000 went directly to AESI, Lockyer notes.

The AG submitted a letter to the court objecting to the proposed settlement in early October, stating the "illusory relief" provided in the settlement provided "no substantial public benefit," and therefore could not support an award of attorney fees.

AESI filed a cross-appeal on Oct. 31, claiming the AG's involvement in the case was "unconstitutional."

In his appeal, Lockyer maintains AESI "cannot be considered a prevailing party entitled to attorney fees," since the settlement provides no genuine public benefit, therefore negating a "public interest" attorney fee reward. According to Prop 65, the plaintiff must prove significant public benefit to prevail and obtain fees.

"Careful review of the proposed settlement shows that, in fact, there is no real change either in the products in question or in the information given to the public," as the "specification" and "exploration" requirements cannot be considered actual changes in P&G's behavior, according to Lockyer.

In addition, "the judgment fails to assure that payments to the plaintiff will be used in a manner that furthers the purposes of the statute." Lockyer cites a section of Prop 65 that authorizes financial relief in the form of civil penalty, of which the plaintiff may keep 25%; the remaining 75% must be turned over to the state for further implementation of the measure. He charges that AESI is collecting the $325,000 in a "manner not expressly authorized by Prop 65 or any other statute."

The settlement also fails to "adequately identify" what AESI proposes to do with the money, Lockyer maintains. The group's proposed actions are "vague generalities" that "fall short of the necessary binding assurances" that use of the funds will be consistent with existing law, he claims.

Furthermore, the AG says the L.A. court made the decision to approve the settlement in part due to a misunderstanding that the ruling would not affect any other parties, according to Lockyer.

In fact, the court later used a provision for correcting clerical errors to amend a paragraph in the settlement agreement defining what parties would be affected, according to Lockyer's appeal. The mistake was a legal error rather than a clerical one and should have been addressed by a modified judgment, including an opportunity for the AG to be consulted, he maintains.

- [Editor's note: This story was contributed by "¹ The Tan Sheet," your weekly source for nonprescription pharmaceutical and nutritional news. For more information call 1-800-332-2181.]