What happens when your business is targeted with an NOV?
The unique aspect of Proposition 65 is that it is enforced by private citizens and the threat of civil litigation via a Notice of Violation (NOV). Even without going to court, receiving an NOV can be costly.
If your company is targeted with a Notice of Violation under California Proposition 65, which alleges you are not compliant with the regulation, your company will be faced with 2 options:
a) If you are fully compliant with the regulation and the NOV appears off-base, you could go to court to prove you are compliant; however, your company would need to be ready to pay legal and expert witness fees, which could easily add up to several hundreds of thousands of dollars (or more), depending on the complexity of the case. If you lose your case, you may have to pay the legal fees of the enforcing side as well. And on top of that could face fines of $2,500/day per violation! The potential costs could be exorbitant, or...
b) Settle with the plaintiff and avoid a full legal battle. This has been the default approach for hundreds of companies, and typically the most begrudgingly "cost-effective" (although still punitive) route. The average settlement value has been ~$40,000/settlement over the last 5 years of available data. Approximately 75% of this money goes directly into the pockets of the plaintiff lawyers.
This means that if your company is targeted with an NOV under Proposition 65, you could be facing the prospect of paying out tens of thousands of dollars just in settlement fees. In addition, you would still need to factor in legal fees to stick-handle and negotiate the settlement process to ensure you get the best possible outcome, as well as the costs of product recalls, reformulation, testing, and/or re-labeling. These costs can add up very quickly.
And companies from all sectors have been targeted: food, dietary supplements, consumer products, electronics, building materials, toys, home and garden, furniture.
That is why it is critical to be proactive about Prop 65 compliance to make sure your risks are managed as much as possible, before you are targeted. This will give you a stronger foundation to push back against any NOV you do receive, which will ideally eliminate or at least reduce the settlement amounts.
RegTox Solutions provides comprehensive but affordable Proposition 65 compliance services to meet your needs. Contact our experts for a free consultation to learn more!