Bill deterring business shakedowns passes state Assembly panel

A bill that would deter small-business shakedowns for Proposition 65 signage violations has been approved by a state Assembly committee.

AB 227 would give business owners who violate the Safe Drinking Water and Toxic Enforcement Act 14 days to comply without facing steep fines. Prop. 65, passed in 1986, requires establishments to warn customers that they could be exposed to certain chemicals such as alcohol.

Assemblyman Mike Gatto (D-Los Angeles) introduced the bill after he was told by small-business owners that the law is easily abused by lawyers who file claims in the hopes of extracting settlements. Establishments could pay up to $2,500 in fines per day under Prop. 65.

Some of the people suing businesses expect them to opt for quick settlements to make the lawsuit go away rather than pay for litigation costs, said Gatto, who is chairman of the state Assembly Appropriations Committee.

“Voters passed Prop. 65 to be protected from chemicals that would hurt them," Gatto said in a statement.  "They did not intend to create a situation where shakedowns of California’s small-business owners would cause businesses to want to close their doors."

AB 227, which passed the Assembly Environmental Safety and Toxic Materials Committee on a bipartisan 7-0 vote Tuesday, is now headed to the state Assembly Judiciary Committee. It would then need to go through the Appropriations Committee before it hits the Assembly floor for a vote.

"This common-sense bill will help small businesses avoid costly litigation while ensuring that the public has prompt and proper warnings about potentially dangerous chemicals,” Gatto said

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In 2012, more than two dozen brick-and-mortar businesses in Southern California, including restaurants and cafés in Burbank, Glendale, Pasadena and Los Angeles, have been threatened with Prop. 65 lawsuits, according to Gatto's office.

More than 800 chemicals require warning signage under Prop. 65. In addition to alcohol, warning signs also are required for acrylamide, which forms naturally during baking, frying or roasting of plant-based foods such as coffee, potatoes and asparagus.

"Threatening a small business with a lawsuit for serving its customers coffee with their breakfast, vegetables with their lunch or a glass of beer or wine with dinner is absurd," Gatto said. "The vast majority of California’s attorneys behave ethically, but a few bad apples are giving the profession a bad name by threatening people who are just trying to make a living."


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