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Navigating California's consumer protection frontier: An analysis of new product liability laws and state discovery obligations in 2024
2023 PRINDBRF 0635
• Practitioner Insights Commentaries
• December 18, 2023
(December 18, 2023) - Anne Marie Ellis and Neusha "Naz" Etemad of Buchalter discuss California's upcoming consumer protection laws and how companies and law firms can prepare for them in the new year.
Right to repair law, SB 244, effective July 1, 2024
Emulating New York, Colorado, and Minnesota, Governor Gavin Newsom enacted SB 244, a right-to-repair bill designed to establish a fair marketplace for electronics and appliances while prohibiting impediments to third-party repair. Notably, video game consoles and alarm systems are exempted from the Right to Repair Act as they fall outside the definition of "electronic or appliance products."
A summary of differences between the Song-Beverly Act and the Right to Repair Act include the following:
(1) Song Beverly applies to products generally, while SB 244 applies to electronic and appliance products "manufactured for the first time, and first sold or used in California, on or after July 1, 2021."
(2) Repair materials now must include sufficient documentation and functional parts and tools, inclusive of any updates (including software) "on fair and reasonable terms," as opposed to "literature and functional parts" generally.
(3) SB 244 requires manufacturers of electronic or appliance products to provide repair materials to product owners and service dealers in addition to authorized service and repair facilities.
(4) Repairs must now be available to effect the diagnosis, maintenance, or repair of a product as opposed to just the repair.
(5) Both laws require repairs for three (3) years for products with a wholesale price between $50 and $99.99 and seven (7) years for products with a wholesale price of $100 or more. However, Song Beverly is in effect after the date a product model or type was manufactured, whereas the Right to Repair Act gains effect after the last date a product model or type was manufactured.
Any service and repair facility or service dealer that is not an authorized repair provider for the product must provide written notice to customers before any repair, informing the consumer of any used or non-OEM (original equipment manufacturer) parts being used, and the fact that it is not an authorized repair provider.
The Right to Repair Act has a three-year statute of limitations and does not apply if the company provides customers with equivalent or better replacement parts at no charge. Additionally, manufacturers or authorized repair shops cannot be held liable for damages or injuries caused to devices or persons because of a repair performed by a service dealer or owner.
Enforcement power is given to any city or county, or the state, and the Act provides for fines in the amount of $1,000 per day for the first violation of the act, $2,000 per day for the second violation, and $5,000 per day for the third and subsequent violations.
From a product liability standpoint, the Right to Repair Act will have a significant impact on manufacturers because companies must ensure that their manuals, data, and tools needed for any repairs are widely accessible to unauthorized service providers. This may lead to additional third-party involvement in the product life cycle, thus resulting in additional claims involving improper maintenance, misuse, or negligence on the part of the repair person or consumer arising out of an allegedly defective product.
Manufacturers must be extremely vigilant in analyzing whether an alleged product defect was actually caused by a product that "rolled off the line" or has been manipulated and fixed by inexperienced service providers or consumers.
Because non-OEM parts may be involved in product repairs, manufacturers should consider revising their warranties to ensure that they do not extend into a territory beyond the three or seven-year repair period. The Right to Repair Act will impact consumer expectations because incorporating non-OEM parts into higher value products above $100 may result in a loss of quality control.
For lower-value products in the $50-$99.99 range with a normally shorter life cycle, consumers are now more likely to pursue repairs instead of disposing of a malfunctioning product. Manufacturers, including those overseas, now have a higher burden to provide all documentation, parts, and tools necessary to ensure that any repairs, no matter how big or small, are readily accessible.
Per- and polyfluoroalkyl substances ("PFAS"), AB 1200, AB 1817, AB 2771, various effective dates
"PFAS," or perfluoroalkyl and polyfluoroalkyl substances, represent a group of synthetic chemicals known for their resistance to heat, grease, and water. Widely utilized in consumer products and industrial processes for decades, PFAS have recently faced increased regulation across the United States, especially in California.
Numerous states have implemented laws prohibiting PFAS in various consumer goods, including firefighting foam, stain-resistant fabrics, food packaging, cookware, paint, pesticides, and cosmetics. This overview focuses on California's PFAS regulations concerning cookware, textiles, apparel, and cosmetics.
One of the first PFAS laws to take effect in California was AB 1200, which prohibited the distribution and sale of food packaging containing PFAS as of January 1, 2023. Now, cookware manufacturers must include a list of intentionally added PFAS chemicals on their website by January 1, 2023 and on product labels by January 1, 2024. Many manufacturers are used to complying with California's Proposition 65 labeling requirements, so this additional labeling scheme should be familiar to entities doing business in California.
While the California Safer Clothes and Textiles Act was signed into law in 2022 (AB 1817), those in the supply chain will need to spend 2024 preparing for compliance. The bill prohibits any person from manufacturing, distributing, selling, or offering for sale any new and not previously owned textile articles that contain PFAS, and requires a manufacturer to use the "least toxic alternative" when removing regulated PFAS in textile articles.
It also requires manufacturers to provide those offering the product for sale or distribution with a certificate of compliance stating that the textile article is in compliance with the provisions of AB 1817 and does not contain any regulated PFAS. This will add another administrative burden for companies already scrambling to meet the increased regulatory oversight.
AB 1817 also bans PFAS in most clothing, including outdoor apparel on the same timeline. The bill prohibits PFAS at 100ppm, as measured in total organic fluorine in 2025, then drops to 50ppm in 2027. Beginning in 2025, manufacturers will also have to disclose the presence of PFAS in their product with a statement, "Made with PFAS Chemicals." Outdoor apparel for severe weather conditions has an extension until 2028.
Product manufacturers should be attentive to recent private litigation in California related to PFAS. Despite the absence of an enforcement mechanism within PFAS laws, private litigants and inventive plaintiff attorneys are pursuing class actions. These actions allege violations of the Unfair Competition Law for misleading product advertising as "PFAS free" and "non-toxic," when the product purportedly contains PFAS.
Claims also include breach of implied warranty and violations of the Consumer Legal Remedies Act. Moreover, private enforcers are seeking to enforce PFAS bans under California's Proposition 65, a warning statute for significant exposures to designated chemicals. Proposition 65 litigation is financially burdensome and evolving rapidly, posing challenges for businesses.
For example, the California Attorney General recently issued "no merit" letters to an enforcer who sent 60-day Proposition 65 Notices of Violation to companies regarding perfluorooctanoic acid ("PFOA") and perfluorooctain sulfonate ("PFOS") exposures from outerwear.
PFOA is a synthetic chemical used to make products resistant to stains, grease, soil, and water and are part of a class of chemicals called PFAS. PFOA and PFOS are on the California Proposition 65 list because exposure to these chemicals may increase the risk of cancer, birth defects, or other reproductive harm.
This means that after reviewing the required Certificate of Merit, the California Attorney General found that the noticing party failed to provide adequate information to demonstrate there was a credible basis for the Notices. We expect that PFAS litigation will be ongoing for years to come, not just in California but across the country, and affecting a wide variety of products and industries.
Cosmetics and personal care, AB 2771, AB 496, AB 2762, various effective dates
Significant reforms to California laws impacting the cosmetics and beauty industry are anticipated in 2024, drawing inspiration from regulations in the European Union, which has been a pioneering force in shaping regulations for this industry.
Effective January 1, 2027, AB 496 bans twenty-six (26) chemicals that are also banned in the European Union, including boron substances, vinyl acetate, and certain colors and fragrances.
This Act builds on AB 2762, which banned 24 chemicals in cosmetics and personal care products that are banned in the EU, including dibutyl phthalate, diethylhexyl phthalate, formaldehyde, and 13 PFAS chemicals by 2025. California is the first state in the nation with such aggressive laws in the cosmetics and personal care industry.
Beauty companies selling in California must also be aware of California Safe Cosmetics Product Database. This requires manufacturers, packers, and/or distributors of cosmetic products to report to the California Department of Public Health (CDPH), all products sold in California which contain ingredients known or suspected to cause cancer, birth defects, or other reproductive harm.
The Cosmetic Fragrance and Flavor Ingredient Right to Know Act of 2020 (CFFIRKA) has been requiring companies to report products with specific fragrance and flavor ingredients since January 1, 2022.
Given California's significant market influence, businesses are expected to reformulate products to align with these stringent regulations. This comes amidst industry concerns with respect to impending MoCRA regulations, which promise expanded requirements and increased the U.S. Food & Drug Administration's (FDA) authority to regulate cosmetics.
MOCRA will have a similar fragrance allergen disclosure, will establish and require standardized testing methods for detecting and identifying talc containing cosmetics products, and will require companies to provide scientific evidence on the safety of PFAS in cosmetics by December 29, 2025. In contrast, intentionally added PFAS in cosmetics will be banned in California by 2025 by virtue of AB 2771, which was signed into law in 2022. Therefore, companies must be hypervigilant to comply with California's laws and understand the differences and similarities between California's laws and MoCRA.
Food safety
AB 899, effective January 1, 2024
In a groundbreaking move, AB 899 ushers in a new era for baby food safety. Beginning in January 2024, manufacturers of baby food intended for distribution into California will be required to conduct monthly testing on representative samples of the final product, focusing on arsenic, cadmium, lead, and mercury.
Manufacturers must also put a QR code on the label linking to the manufacturer's website, which will provide test results for the elements. These test results must be provided to the State Department of Public Health upon request.
Looking ahead to January 1, 2025, manufacturers will need to post the results of their testing on their website, and must disclose the name and level of each heavy metal present in the final baby food product.
AB 899 expands on FDA's Closer to Zero action plan aimed at reducing exposure to environmental contaminants from food, which has different compliance requirements and imposes an additional regulatory burden on companies. FDA announced action levels for lead as part of the Closer to Zero campaign, but California is going the extra mile by requiring disclosure of heavy metals that FDA has not yet addressed.
The reality is that printing and labeling products can be a difficult and costly task, and the potential for contradictory regulatory schemes will make this task even more demanding. From a compliance perspective, the requisite testing will create more data that could be used in civil litigation, particularly if there is legal action against the manufacturers involving the presence of these metals in baby food. The legislature decided to give this law some teeth and created a new misdemeanor in California for failure to comply with these provisions.
AB 418, effective January 1, 2027
This law under the California Food Safety Act prohibits entities from manufacturing, distributing, or selling food products that contain certain additive substances, similar to the EU and other foreign jurisdictions. The five banned additives are: brominated vegetable oil (stabilizer for fruit flavoring in beverages to keep the citrus flavoring from floating to the top), potassium bromate (used in commercially produced baked goods), propyl paraben (preservative that extends the shelf life of packaged foods by preventing growth of mold and bacteria), and red dye 3 (aka FD&C Red No. 3 and erythrosine which is a food coloring).
The legislature underscored the severity of this law by making a violation punishable by a civil penalty not to exceed $5,000 for the first violation and not to exceed $10,000 for each subsequent violation. City attorneys, county attorneys, and the California Attorney General may bring charges under this statute.
Again, California is ahead of the federal government's regulatory schemes and manufacturers will be charged with understanding the similarities and differences between California's laws and the various federal laws.
Significant changes to California's discovery laws
SB 235, effective January 1, 2024
SB 235 paves the way for a more transparent legal process by amending the California Code of Civil Procedure to align with the early discovery procedures found in the Federal Rule 26(a)(1) initial disclosure requirement. This change includes disclosing documents and witnesses relevant to the action, identifying insurance policies, and allowing supplemental demands.
Unlike Rule 26(a)(1), which calls for disclosure of witnesses and documents in support of a party's claims, SB 235 requires a party to disclose witnesses and documents that are merely relevant to the action. SB 235's broad reach for relevant documents and witnesses puts litigants in a position where they may have to disclose evidence that is potentially harmful to their case.
Notably, this rule raises the discovery abuse sanction from $250 to $1,000. Sanctions are typically awarded for misuse of the discovery process unless the one subject to the sanction acted with substantial justification. Considering the relatively straightforward nature of these disclosures, it will be hard to imagine why a litigant cannot readily comply.
SB 365, effective January 1, 2024
SB 365 introduces a significant change by amending the California Code of Civil Procedure and clarifying that perfecting an appeal (i.e., filing a timely and procedurally proper notice of appeal) from a denial of a petition to compel arbitration will not automatically stay proceedings in the trial court during the appeal. With limited exceptions, the current version of the Code of Civil Procedure stays trial court proceedings upon perfecting an appeal.
This change in the California Code of Civil Procedure gives companies another factor to consider when weighing the pros and cons between the California Arbitration Act (CAA) and the Federal Arbitration Act (FAA). Contrary to SB 365, federal law bolsters the benefits of arbitration, and the United States Supreme Court is firm in its position that a district court must stay proceedings during an ongoing interlocutory appeal.
It is likely that SB 365 will be challenged on preemption grounds because, on its face, it contradicts case law from the United States Supreme Court. We recommend that companies consult counsel when drafting arbitration provisions due to the flux in legislation surrounding arbitration issues.
Anne Marie Ellis is the California chair of Buchalter's product liability practice group and chair of the chemical law and Prop. 65 industry group based in the firm's Orange County office. She provides advice and counsel to regulated businesses across industries including consumer products, food, beauty and cosmetics, apparel, and textiles. She is also a seasoned product liability litigator, managing risks associated with allegations of catastrophic injuries and wrongful death. She can be reached at [email protected]. Neusha "Naz" Etemad advises on compliance with local, state and federal statutory and regulatory schemes during all phases of the product cycle. She counsels clients to avoid product liability claims before they arise and has successfully litigated claims involving electric vehicles, pharmaceuticals, technology platforms and consumer products. She is based in San Diego and can be reached at [email protected].
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Neusha "Naz" Etemad| End of Document | © 2024 Thomson Reuters. No claim to original U.S. Government Works. |