California Hotel Legal Alert: 60-Day Notices and Claims under Prop. 65 / JMBM / Dec 1998

California Hotel Legal Alert: 60-Day Notices and Claims under Prop. 65 Proposition 65 Fact Sheet

Jim Butler recently sat down with Janice Kamenir-Reznik, chairperson of JMBM's Environmental Group to discuss Proposition 65 and its effect on hotels in California.

Jim Butler: What is Proposition 65?

Janice Kamenir-Reznik: Proposition 65 is a voter initiative passed in 1986. It is a California state law now found in the California Health and Safety Code. Proposition 65 requires that businesses who knowingly expose people to certain cancer causing chemicals post clear and reasonable warnings. Failure to post the warnings can lead to penalties of $2,500 per violation per day.

Butler: How would a hotel or other business know if they are subject to the provisions of Prop. 65?

Reznik: If you own manage or franchise hotels in the state of California it is likely that you have recently received (or soon will receive) a document titled "60-Day Notice for Failure to Warn Public About Chemicals Listed Under Health & Safety Code Section 25249.6."

Butler: Who can bring a suit under the new Proposition?

Reznik: Prop. 65 lawsuits can be brought by the State of California. However, Prop. 65 provides that private citizens may also bring Prop. 65 enforcement suits after the citizen has given a 60-Day Notice to the government. If the government has not initiated an action within 60 days of receiving the notice the citizen may file a private lawsuit. These citizen plaintiffs are sometimes called bounty hunters.

Butler: Many hotels have received a Notice served by Reuben D. Yeroushalmi, what are these?

Reznik: 60-Day Notices under Prop. 65 are now being served on many of the hotels throughout California by Reuben D. Yeroushalmi. We believe that the Notices are vague and unclear and therefore defective. However it appears that in the Notices Yeroushalmi is targeting sales of cigars as well as exposure by a hotel of its patrons to second hand smoke. As of this date several suits have now been filed by Yeroushalmi, and more are expected.

Butler: What should a hotel do if they have received a Notice?

Reznik: First be sure you now make the required disclosure. Then, you will need legal representation to assist you in devising a strategy to minimize liability. The potential exposure of $2,500 per day per violation can be significant and these matters must be taken seriously.

JMBM's Global Hospitality Group is handling these claims for several dozen California hotels and is fully up to speed on the nature of these claims and appropriate defenses and strategies. We strongly recommend a prompt and coordinated response for all your properties in California to minimize exposure and costs. You do not want to pay to get any advisors up to speed on this complex set of issues, and you do not need the expense of multiple responses for your California properties when the responses can all be coordinated more effectively.

Butler: Are there defenses to a Prop. 65 suit?

Reznik: There are various defenses to a Prop. 65 suit as well as various legal strategies to employ in minimizing potential penalties. JMBM's Global Hospitality Group is available to discuss the best available defense.

For More Information Contact:
Jim Butler at (310) 201-3526 (jbutler@jmbm.com) or Janice Kamenir-Reznik at (310) 201-3509 (jreznik@jmbm.com).

**Proposition 65 Fact Sheet**
January 1997
Provided by: California Environmental Protection Agency's Office of Environmental Health Hazard Assessment (OEHHA)
Contact: Cynthia Oshita @ 916-445-6900
Summary Proposition 65 requires the Governor to publish a list of chemicals that are known to the State of California to cause cancer, birth defects or other reproductive harm. Nearly 580 chemicals have been listed as of September 1, 1996. Proposition 65 imposes certain requirements that apply to chemicals that appear on this list. These requirements are designed to protect California's drinking water sources from contamination by these chemicals, to allow California consumers to make informed choices about the products they purchase, and to enable residents or workers to take whatever action they deem appropriate to protect themselves from exposures to harmful chemicals. The list contains a wide range of chemicals, including dyes, solvents, pesticides, drugs, food additives, and by-products of certain processes. These chemicals may be naturally occurring or synthetic. Some of them are ingredients of common household products, others are specialty chemicals used in very specific industrial applications. A chemical is listed if the "state's qualified experts"--an independent panel of scientists and health professionals appointed by the Governor--find that the chemical has been clearly shown to cause cancer or birth defects or other reproductive harm. Chemicals are also listed if: 1) a body considered to be "authoritative" by the State's qualified experts has formally identified the chemical as causing cancer or reproductive toxicity; or 2) a state or federal government agency has formally required the chemical to be labeled or identified as causing cancer or reproductive toxicity. Proposition 65 applies to all persons doing business in California, except those businesses which have fewer than 10 employees. Governmental entities and drinking water utilities are exempt. Businesses must, twelve months after a chemical is listed, provide a "clear and reasonable warning" before knowingly and intentionally exposing anyone to a listed chemical. Twenty months after a chemical is listed, businesses are prohibited from knowingly discharging or releasing the chemical into water or air, or into land where such chemical passes or probably will pass into any source of drinking water. Warning is required and discharge is prohibited unless the business responsible can show that the exposure or discharge pose no significant risk. Background Proposition 65, formally known as the Safe Drinking Water and Toxic Enforcement Act of 1986 (Health and Safety Code, Chapter 6.6, Sections 25249.5 through 25249.13) was enacted as a ballot initiative in November 1986. The requirements imposed by Proposition 65 on persons doing business in California apply to chemicals that appear on the list. The California Environmental Protection Agency's Office of Environmental Health Hazard Assessment is designated by the Governor as the lead agency for Proposition 65 implementation.

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CAVEAT: Nothing in this newsletter constitutes legal advice, which can only be given by a lawyer based upon all the relevant facts and circumstances of a particular situation. Please call us if we can assist you with legal advice!

JMBM is a full-service, business law firm of more than 140 attorneys with offices in Los Angeles and San Francisco and with an independent network of over 1,600 lawyers in more than 75 cities world-wide. We have been involved in hundreds of transactions spanning the globe and representing over $12 billion in total sales, financings, and acquisitions of lodging and leisure properties and companies. We handle: financing, acquisition, sale, bankruptcy, ownership structure and dispute issues, securities, litigation, mergers and acquisitions of companies, union and employment matters, employee benefits, repositionings, management of franchise matters, recreational use agreements, trademarks, litigation of any sort, insurance claim, disaster, timeshare and vacation ownership, tax, foreclosure, and virtually every other challenge.

For more information: Visit Jeffer, Mangels, Butler & Marmaro LLP’s web site. Email Jim Butler at jrb@jmbm.com Email Peter Benudiz at pbenudiz@jmbm.com Or contact: Jim Butler or Peter Benudiz at the Firm Jeffer, Mangels, Butler & Marmaro LLP 2121 Avenue of the Stars Los Angeles, CA 90067 Phone: (310) 203-8080

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