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Ninth Circuit:
Preliminary Injunction Against A.G. Was Validly Issued
In One of Two Proposition 65 Cases, Bennett Says Plaintiff Will Probably Succeed in Action Alleging That Forcing
Companies to Print Warning on Labels Based on Presence of Acrylamide Breaches First Amendment
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday decided two cases involving California’s Proposition 65, in one of the opinions, upholding a preliminary injunction barring state Attorney General Rob Bonta and anyone acting in concert with him, including private enforcers, from suing over the lack of warning labels on products containing acrylamide, a chemical which laboratory tests show is carcinogenic to rats and mice.
In the second opinion involving acrylamide, the Ninth Circuit revived a dismissed action by a food company against an individual and her lawyer who sued it over purported non-compliance with Proposition 65, holding that it was an abuse of discretion not to grant leave to amend.
Circuit Judge Mark J. Bennett authored both opinions.
The California Chamber of Commerce (“CalChamber”) brought the action seeking to block actions under the Safe Drinking Water and Toxic Enforcement Act—Proposition 65—based on companies not warning of the presence of acrylamide in their products. A preliminary injunction was issued by Chief Judge Kimberly J. Mueller of the District Court for the Eastern District of California.
Wording of Warnings
Acrylamide lawsuits seek to force manufacturers to include on their labels these words:
“WARNING: Consuming this product can expose you to acrylamide, which is known to the State of California to cause cancer. For more information go to www.P65Warnin2s.ca.aov/food.”
Such forced speech, CalChamber contends, breaches the First Amendment rights of its affected members.
There are varying views as to the dangerousness of acrylamide, Bennett noted, relating in a footnote:
“Toxicological studies have shown that tumors are observed in rodents only when they are exposed to acrylamide at approximately 500 times the average daily amount consumed by Americans.”
The word “known” in the required wording is the problem, under Bennett’s opinion. He said a reasonable person might think that he or she, in consuming the product, would be exposed to a chemical “that California knows will increase [the] risk for cancer.”
Misleading Consumers
Bennett continued:
“Such a consumer would be misled by the warning because the State of California does not know if acrylamide causes cancer in humans. The district court did not abuse its discretion when it concluded the warning is misleading.”
He said that “the compelled disclosure appears unduly burdensome, and the district court did not abuse its discretion in so finding” and that “the district court did not abuse its discretion when it concluded that CalChamber was likely to succeed on the merits of its First Amendment claim.”
The case is California Chamber of Commerce v. Council for Education and Research on Toxics, 21-15745.
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B&G Foods’s SnackWell’s cookie cakes contain a trace of acrylamide, which causes cancer in rodents, sparking an action in the Alameda Superior Court against the food company for failing to affix a Proposition 65 warning on its label. The Ninth U.S. Circuit Court of Appeals yesterday held that B&G must be granted leave to amend its U.S. District Court complaint alleging that the plaintiff and her attorney are abridging its constitutional rights by suing it. |
Cookie Cakes
In the other Proposition 65 case decided yesterday, the plaintiff is B&G Foods North America, Inc. which owns such brands as B&M Baked Beans, Cream of Wheat, Green Giant, Spice Islands, and Wright’s Liquid Smoke. The product that was targeted by plaintiff Kim Embry and her attorney, Noam Glick, is SnackWell’s cookie cakes which contains traces of acrylamide.
B&G declined to put a Proposition 65 cancer warning on its labels, arguing that it does not add acrylamide to its cookie cakes, though a small amount does form in the baking process, and that there is no evidence it causes cancer in humans.
On the day Embry brought suit against B&G in Alameda Superior Court, B&G sued Embry and Glick in the U.S. District Court for the Eastern District of California under 42 U.S.C. §1983, alleging that the threats of suit and the bringing of the action in Alameda violated its constitutional rights.
Noerr-Pennington Doctrine
Embry and Glick invoked the Noerr-Pennington doctrine which bars actions against businesses intruding upon First Amendment rights. B&G responded by pointing to an exception: where the defendants had engaged in sham litigation.
Embry, it argued, was a serial instigator of acrylamide litigation under Proposition 65 in an effort to garner pay-offs. Individuals may bring actions, seeking injunctive relief and penalties up to $2,500 per violation, and may keep 25 percent of the sum collected (with the balance going to the state), plus an award of attorney fees.
In dismissing the action without leave to amend, Mueller said:
“A plaintiff’s successful history in the disputed litigation may rebut claims of a sham….That is the case here. B&G’s own allegations show Embry and Glick’s litigation is not a sham, at least not completely. B&G claims ‘over the last few years, [they] have extracted nearly $1.7 million in penalties and fines from food companies’ in acrylamide lawsuits. The Noerr-Pennington doctrine thus bars B&G’s complaint, which must be dismissed.”
Leave to Amend
Bennett wrote for the Ninth Circuit in affirming the order of dismissal (the federal analogue of a state judge sustaining a demurrer) but reversed the order denying leave to amend. The complaint, as it exists, is defective, he said, but B&G has persuasively argued that it might be able to cure the deficiencies.
B&G might be able to show, on an objective basis, that the applicability of sham litigation exception, Bennett said. He noted that B&G points to an exception exists under Proposition 65 when a chemical known to the state to cause cancer is present in a product at a “No Significant Risk Level,” and alleges that Embry and Glick brought the litigation without any investigation as to whether the cookie cakes cause cancer in humans.
“A reasonable factfinder could infer from these allegations that Defendants’ suit was objectively baseless because they knew (or should have known) that B&G was not violating Prop. 65 but filed suit anyway,” the circuit judge wrote.
Subjective Basis
He added that B&G might also be able to show on a subjective basis that the defendants had brought sham litigation. The new allegations, he said, “could support the inference that Defendants threatened and filed suit because they wanted to improperly pressure B&G into settling, not because they believed that they could achieve their objective based on the merits.”
Before suing under Proposition 65, a 60-day notice of alleged violation must be served, providing an opportunity of a manufacturer to add the warning to labels. B&G pointed out that Glick or a cohort in his office had withdrawn 129 of Embry’s 260 notices and has settled only 25 cases.
“This information, which was omitted from the complaint, could support an inference that Defendants’ acrylamide litigation was unsuccessful, as only a fraction of their threatened suits succeeded,” Bennett wrote, saying that this “would undermine” Mueller’s basis for dismissing.
Pressuring Businesses
“Moreover, that inference, together with the other new and existing allegations—for example, that Defendants file without regard to the merits and undertake no efforts to investigate their claims, and businesses like B&G will often settle because Prop. 65 suits are burdensome and very expensive to defend—could support that Defendants’ suits were not based on merit but were brought pursuant to a policy of improperly pressuring businesses, like B&G, to settle,” he added.
Bennett commented in a footnote that “a merits decision in California Chamber that Prop. 65 acrylamide litigation involves unconstitutional compelled speech might practically put an end to such litigation,” but added that “because such a decision is only hypothetical for now, it does not affect our Noerr-Pennington analysis.”
The case is B&G Foods North America v. Embry, 20-16971.
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