By Joseph Perkins

Inmate lawsuits have become a cottage industry here in California. The Associated Press reports that such litigation has cost the state’s taxpayers more than $200 million over the past 15 years.

Gov. Jerry Brown suggests that much of that litigation is frivolous, ginned up by trial lawyers motivated less by concern for the state’s prison inmates, and more about extracting lucrative legal fees from the state.

“They don’t want to go away,” the governor said last month. “I mean, the name of the game here is, ‘Come to Sacramento and get your little piece of the pie.’”

The lawsuit abuse of which Brown spoke is hardly unique to the state’s penal system. It is a plague California’s business community has complained about for years, with little sympathy from lawmakers in the state capital.

Brown recognizes now just how avaricious the state’s trial lawyers can be. That should fire him up to not only declare war on frivolous inmate lawsuits, but also other categories of litigation where abuses are rampant.

Small business victims

ADA lawsuits. Such litigation takes advantage of regulations, based on the federal Americans With Disabilities Act, that are intended to ensure ease of access to public places, including private businesses.

The regs have provided the means for buck-raking plaintiffs to shake down small businesses by accusing them of ADA violations. The businesses receive a demand letter from a plaintiff citing so many violations, each of which entails a $4,000 fine.

The business owners are advised that they can settle the lawsuit by paying the plaintiff $5,000 or so for his trouble and agreeing to bring their neighborhood dry cleaner or nail salon or bookstore into ADA compliance.

Proposition 65 lawsuits. Businesses that contain one of more than 900 chemicals regulated by Proposition 65 are required by state law to post a warning sign. Several law firms have created a profit center for themselves by suing small businesses that either are not aware that they have chemicals on their premises or that they are required to post a warning to that effect.

There were more than 300 Prop. 65 lawsuits in 2011, from which the state’s trial lawyers pocketed more than $12 million in payments from victimized small businesses.

CEQA lawsuits. The California Environmental Quality Act is used by litigants not to enrich themselves but to thwart the construction of new home communities, commercial developments and even public works projects.

Once filed primarily by environmental groups, which are reflexively anti-growth, CEQA lawsuits are now routinely filed by neighborhood groups, who’ve gotten their piece of the California Dream and don’t want to share with others; by unions, which aim to force developers to accede to high-wage Project Labor Agreements; and even by developers themselves, seeking to hamstring competing developers.

Class Action lawsuits. California is the “undisputed champion of the consumer class action,” according to the American Tort Reform Association.

Ours is the state where Proctor & Gamble settled a class action alleging that it is impossible to get the last 20 percent of the toothpaste out of Crest’s “Neat Squeeze” Tubes.  It is also where Taco Bell spent millions of dollars fighting off a frivolous class action claiming that it improperly advertised that its beef taco contained “seasoned ground beef” when it should have said “taco meat filling.”

There are legislative fixes for each of these categories of lawsuit abuse. All they require is the support of Brown and a Legislature that acknowledges the need for legal reform in the nation’s most litigious state.

By Dave Roberts

Proposition 37 has been touted as a simple measure that provides consumers with the right to know what is in the food they buy at grocery stores. It requires that all products containing ingredients that have been genetically modified be labeled as such. While it’s questionable whether that knowledge would actually make consumers safer, there’s little doubt it would make California courts busier.

“Proposition 37 would create a litigation nightmare, no doubt about it, for grocers, who would need to comply with all of its requirements,” said Ron Fong, president and CEO of the California Grocers Association, speaking at a joint legislative committee informational hearing on the measure. “The proposition, in our opinion, is not a right to know — it’s a right to sue. And when it comes time to sue, grocers and retailers will be on the front line, no doubt about it. As a colleague of mine put it, ‘When lawsuits are filed, lawyers might not be able to figure out where your Cheerios come from, but they sure as heck know where they bought it.’ And that’s us, the grocery retailers.

“Grocers would be responsible for a paper trail on every ingredient on every product that we sell. And that’s potentially hundreds of thousands of products requiring paperwork down to the seed level. The average 50,000 square-foot grocery store that you probably shop at on the weekends contains over 100,000 SKUs [stock-keeping units] in a variety of categories coming from different suppliers. It would not be a simple process to keep a simple trail of paperwork. Is it the retailer that keeps the paperwork? Is it the supplier that keeps the paperwork? The wholesaler? You have to keep the paperwork with each delivery. That’s going to amount to a nightmare of potential paperwork and record keeping.”

Fong predicted that Prop. 37 will result in a repeat of the lawsuit tsunami created by Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986. A multi-million-dollar industry sprang up for bounty-hunter lawyers preying on businesses, often on flimsy pretenses. To protect themselves, businesses had to put up those annoying signs: “WARNING: This area contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.”

Grocers

“Grocery retailers have lived and learned from Proposition 65,” said Fong. “In the last two decades, Proposition 65 has been abused by lawyers seeking to shake down grocers into paying huge settlements that benefit only trial lawyers. Similar to Prop. 65, the food labeling proposition creates a new category of lawsuits allowing private citizens the right to sue claiming that a food company, a grocer or farmer has violated the labeling provisions. Like Proposition 65, the food labeling measure would require businesses to pay attorney fees and other legal costs incurred by the plaintiff’s lawyers.”

Fong argued that, if Prop. 37 was actually designed to help consumers, it would not contain so many exemptions.

“For example, soy milk requires a label, but cow’s milk does not,” he said. “Dairy products, eggs, meat and poultry are all exempt, even though those animals are fed genetically engineered grain. Dog food with meat requires a label, but meat for human consumption does not. Fruit juices require a label, but alcohol made with some of the same genetically engineered ingredients is exempt. Food in grocery stores you have to label, but the same foods in restaurants are exempt. If the proponents of 37 are so concerned with the right to know, why would they exempt so many of these categories? The reality is Prop. 37 is not a simple labeling measure. It’s filled with lawsuits, loopholes, increased costs for the consumers — and that’s the bottom line.”

Kent Bradford, a professor of plant science at UC Davis, pointed out that genetic engineering of crops with grafting and cross-breeding has been going on for hundreds if not thousands of years, with no adverse consequences to human health. In fact, the newer techniques are safer.

“We do many things to create new crops based on genetics,” he said. “We genetically modify them all the time based on techniques that we use in standard breeding techniques and other types of approaches. All modify the genetics of our plants in one way or another. That’s how we make progress. Today we have newer techniques. That is, we can be very targeted, very specific in what we’re trying to do. If we need to enhance just one trait, one property of a plant, we have the capability of doing that. This makes the process safer, not less safe.

“Foods produced from that, which the proponents of Proposition 37 want to put warning labels on, have in fact been eaten by trillions of servings. The vast majority of these foods are fed to animals. And we eat and utilize billions of farm animals every year. I think if there were really serious health issues, our livestock producers would have noticed that. The vast majority of corn and soybeans utilize these [genetically modified] products. And certainly we have no documented cases yet of any health issues to humans or animals due to genetically engineered foods.”

European Union

The European Union, which bans genetically engineered foods, has commissioned hundreds of studies, none of which show serious health or safety issues with those products, according to Bradford. But California’s regulations would be even stricter than the EU if Prop. 37 passes. It would require a 0.5 percent maximum for genetically modified content versus Europe’s 0.9 percent threshold. Such a low threshold would increase litigation liability because a fraction of the tests create false positives, Bradford said.

Ironically, the environment would actually be worse off by eliminating genetically engineered crops.

“Utilization of herbicide-tolerant crops has enabled conservation of tillage,” said Bradford. “We have farmers who don’t own ploughs anymore because they can control their weeds in other ways. This has many benefits on reducing soil erosion, enhancing organic matter in soil. In fact, hopefully sequestering carbon out of the air into soil if we stop plowing enough. This has been a huge benefit. We have used more of some certain herbicides. But we have replaced herbicides that have much greater impact on the environment. So the overall impact on herbicides has gone down considerably.

“Insecticides used in corn and cotton have been much more dramatically reduced. There’s no question on any side that we have reduced the use of those insecticides which are the ones that tend to have the most likelihood of collateral injury to humans and particularly to workers who are plowing in these fields. If we can reduce the application of these insecticides, we would really like to do that. And that has been done.

“Labeling requirements such as this, which would create pushback in the marketing stream for these types of crops, would certainly be a disincentive for further investment in genetically engineered crops, including those that are in the pipeline that would be targeting much more important traits such as drought tolerance, salinity tolerance, heat tolerance. Issues that are very, very important in California. Water use is a key issue in California. We have already approved the concept of these types of advances. They can be done using genetically engineered crops.

“So I just have to ask whether in fact this is a strategy as a society we should pursue to put additional hurdles, de facto warning labels, on a whole technology. This is not like saturated fat or calories. This is an entire technology not specific to the product that we are going to label foods for, I think it’s clear to say, with the clear intent to create fear and some concern in the consumer’s mind. That will have an impact on the market and investment in these scientific advances. And we are going to forego as a society advances that we need and that the global population needs. We need to feed 9 to 10 billion people in about 30 years. And we need these tools.”

Prop. 37 proponents don’t acknowledge that hurting the mainstream food industry in order to buck up the organic share of the market is one of the main goals of the measure. Instead, they couch their arguments in terms of transparency.

Arguments in favor of Prop. 37

“One of the great freedoms we have as Americans is the basic right to choose from a different variety of foods in the marketplace,” said Rebecca Spector, west coast director of the Center For Food Safety. “If we want to know if our food contains gluten, high fructose corn syrup, trans fats or MSG, we can simply read the label. This information has empowered millions of consumers to take control of what we eat and feed our families for health, religious, environmental or ethical reasons.

“However, these freedoms are being denied to the more than 90 percent of Americans who want to know if their food contains genetically engineered ingredients. The intention of Prop 37 is simple. It merely requires that foods that are produced using genetic engineering are labeled as such. The initiative is intended to provide California consumers with information about the foods they purchase that is currently hidden. Because more than 80 percent of all processed foods contain genetically engineered ingredients such as corn and soy.

“Unlike 50 other countries, including European Union member states, Japan, Brazil, Russia and China, the U.S. has no law requiring labeling of genetically engineered foods. As a consequence, millions of consumers are unknowingly purchasing and consuming genetically engineered foods every day, despite the fact that the U.S. Food and Drug Administration does no independent testing of the safety. In fact, documents that we uncovered in our previous litigation against the agency showed that scientists within FDA have indicated that genetically engineered foods could pose serious health risks.”

Spector suggested that the FDA has failed to crack down on genetic engineering because it is in the pocket of the pesticide industry.

It appears that Californians might not be ready to go organic. An Oct. 28 California Business Roundtable/Pepperdine poll shows 39 percent support with 50 percent opposed. An Oct. 21 Los Angeles Time poll shows 44 percent support and 42 percent opposed.

Commentary

Sept. 19, 2012

By Laer Pearce

The warm, caring hands of government are poised to protect us once again.  Just like how California started protecting us in 1986 from chemicals it knew, in its wisdom, could cause cancer, birth defects and other reproductive harm, it may soon be protecting us from those nasty genetically engineered foods.

In 1986, it was Proposition 65, the Safe Drinking Water and Toxic Enforcement Act. I began to understand how sleazy that proposition was when I got a frantic call from a homebuilder client just a couple months after it passed.

“I’m going to have to put warning signs on all my new model homes or I’ll get sued,” he moaned. “What’s it going to do to sales if people have to walk by a cancer warning to go into one of my models?”

I told him not to worry because his competitors would have to post similar signs.  But I was curious why a model home would need a Prop. 65 warning.  After all, a brand new home is hardly a toxic sump of the sort the Yes on Prop. 65 ads had frightened Californians about.

“Well, for starters,” he said, “estrogen and testosterone are both on the Prop. 65 list of known carcinogens, so unless something other than men and women is going through my models, I’m going to have to post the signs.”

That was when I realized California had become what I’ve come to call “Crazifornia,” a state that has become a state of disaster. And it will be even more of a disaster if Proposition 37 passes this November.

Prop. 37

Prop. 37, we learn from its campaign website, “is a common-sense November ballot measure that will help consumers make informed choices about the food they eat.” That sounds reasonable.  If my donut is laced with DDT or my orange was doused in Agent Orange, I want to know about it before I take a bite.  Who could possibly have a problem with that?

Certainly not Jim Wheaton (pictured above), the Berkeley-educated lawyer who wrote Prop. 37. That would be the same Jim Wheaton who heads up the Environmental Law Foundation, a Bay Area litigation mill that has made $3 million in settlements and legal fees off Prop. 65 lawsuits.  Oh, and he’s the same Jim Wheaton who wrote much of Prop. 65 in the first place.

Prop. 37 is a genetically engineered clone of Prop. 65. To create it, Wheaton simply grafted an anti-genetically engineered food gene onto Prop. 65’s DNA. If you’re worried about genetically engineered foods running rampant and destroying ecosystems, you should see what a genetically engineered proposition can do to California’s already reeling business sector.

More bureaucrats

Like Prop. 65, Prop. 37 would create a panel of experts, hand selected by Wheaton and his environmentalist and trial attorney collegues, that would decide what food ingredients and compounds at what concentrations constitute risk in California’s eyes. As a starting point, California’s regulations will be about twice as tough as ones that are already hurting farmers and food processors in Europe.

And as occurs with Prop. 65, each year attorneys from litigation mills and their environmentalist expert witnesses will petition this panel to have more compounds added to the list.  Industry will push back, but most of the compounds will make it onto the list.

Then, similar to Prop. 65, state functionaries will look for violators who have missed the latest round of updates. They will monitor tens of thousands of food labels at grocery stores, retail outlets, farms and food processors, burning through tax dollars to produce the citations that are the raw materials for one of California’s biggest products: anti-business litigation.

The Prop. 65 litigation mills worked this formula so well with Prop. 65 that, between 1989 and 2011, companies have paid attorneys like Wheaton nearly half a billion dollars in legal fees and settlements to settle nearly 20,000 lawsuits.  That’s apprently not enough, so the trial attorneys are hopeful they’ll open a big new market with Prop. 37.

At the top of this column, I alluded to DDT in my donuts and Agent Orange in my oranges.  Surely the Yes on 37 campaign wouldn’t stoop so low as to dredge up dangerous chemicals that have long since been banned, right? Think again.

“You’ve heard the false corporate health claims before,” says a pro-37 ad.  “DDT is ‘safe.’ Agent Orange is ‘harmless.’ Now they say genetically engineered food is safe.”

Of course, food manufacturers, retailers and farmers are lining up against Prop. 37, but as with the earlier Yes on 65 campaign, Yes on 37 is simply painting them as greedy corporations that don’t mind killing off customers, as long as they make an extra buck or two.

In 1986, 63 percent of California voters bought the lie. With polls showing 51 percent of likely voters planning to vote for Prop. 37 and just 16 percent planning to vote against it, there’s little evidence the voters have wised up to Wheaton’s game.

Laer Pearce is the author of “Crazifornia: Tales from the Tarnished State.” Portions of this column are excerpted from the book.

(Editor’s Note: The first part in a two-part series on how California’s regulations affect the global economy.)

July 26, 2012

By John Hrabe

Regulations are killing California’s global competitiveness. Or, so you’ve heard from policymakers left, right and center.

“Our environmental regulatory system is obsolete, duplicative and burdensome in many areas, which is hurting our business community’s ability to thrive and compete in a global marketplace,” lamented Assembly Majority Leader Charles Calderon, D-Industry, in an opinion piece at Capitol Weekly.

Republican U.S. Senate candidate Elizabeth Emken repeated the complaint a few weeks later.

“Thanks to over-taxation, over-regulation and over-litigation, American companies are at a distinct competitive disadvantage,” Emken wrote in her policy paper on regulations. “This disproportionate cost on small business causes inefficiencies in the structure of American enterprises, and the relocation of production facilities to less regulated countries, adversely affecting our ability to compete in the global marketplace.”

“California has a daunting task to regain its competitiveness,” complained Loren Kaye, president of the California Foundation for Commerce and Education, in a blog post entitled, “Job Killing Bills Hobble California in Global Competition.” The piece continued, “It can’t be a leader in the global economy if it interferes in the global marketplace.”

While there’s some truth to the cliché, it’s not the whole story. Increasingly, it’s the regulations themselves that are being exported globally.

That makes the story of California’s over-regulation even more troubling. Unelected bureaucrats on obscure boards in Sacramento are establishing regulations for the world—in many cases based on weak or contradictory scientific data that is selectively edited by special interest groups.

“The regulatory field has a lemming-like attitude, often reflecting biases,” Dr. F. Peter Guengerich, the interim chairman of the biochemistry department at Vanderbilt University School of Medicine, told CalWatchDog.com.

Prop. 65: Hazardous Substance Warning Label

To understand the increasingly global nature of California’s regulations, consider the case of a chemical compound that you’ve likely never heard of and probably can’t pronounce, 4-methylimidazole or 4-MEI. It’s a common byproduct of the cooking process and gives sodas their caramel color.

In March 2009, regulators at the Office of Environmental Health Hazard Assessment, a department of California’s Environmental Protection Agency, began the process of adding the chemical to a list of potentially harmful substances. Products that contain chemicals on the list must carry warning labels about their potentially harmful effects. Voters created the process with passage of Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986.

“Prop. 65 is primarily a right to know law that provides information about exposure to listed chemicals that the public can use to make informed choices,” explained Sam Delson, deputy director of the Office of Environmental Health Hazard Assessment.“The addition of 4-MEI to the Prop. 65 list does not ban it from use in California or anywhere else.”

Of course, who wants to buy something that warns of death on its packaging?

4-MEI Does “Not Represent a Risk”

A substance can be added to the Prop. 65 warning list through one of four ways, including if it has been flagged by any “authoritative body” chosen by an unelected state committee. Some legislators say that this process deserves greater scrutiny.

“As Vice-Chair of the committee of Toxics and Environmental Safety, I have had a front row seat to the show which is legislating the use of chemicals in products that are sold and made in California,” said Assemblyman Jeff Miller, R-Corona. “Over time, what sticks with me, is that we have to be very careful about the decisions we make in California regarding banning or placing chemicals on a list of ‘chemicals of concern.’”

California’s regulators weren’t so careful with 4-MEI. The state began the review process after only one study of mice and rats showed an increased risk of cancer.

“According to California’s regulators, a level of more than 16 micrograms per day would pose a significant risk,” Time cautioned last year. “Meaning it could result in at least one excess case of cancer per 100,000 exposed people.”

The study’s findings weren’t as scary as they sound.

“Basically my advice would be just to relax … I did some simple math. … If you look at the study in terms of what the mice got, in terms of causing any effect, a human being would have to drink more than 1,000 sodas a day,” Dr. Guengerich told ABC News back in 2011, when the chemical first garnered headlines.

Dr. Guengerich’s view is backed up by health and safety agencies from all over the world. The European Food Safety Authority conducted a comprehensive review of the scientific evidence and concluded that 4-MEI is not a health concern. The same goes for Health Canada, the country’s federal health agency. It ruled that 4-MEI does “not represent a risk” to consumers.

Even the original study, which prompted the 4-MEI scare, showed a reduction of tumors in the group of female rats that received the highest dosage of 4-MEI. A 2011 study published in Food Chem Toxicol, an international food chemical toxicology journal, reinforced that finding. “4-MEI itself may possess an ability to prevent tumor formation,” Dr. F. Jay Murray wrote.

Safe Harbor Standard Raised by 81 percent Without Any New Research

Nevertheless, some consumers might prefer a “better safe than sorry standard” when it comes to potentially hazardous products. For this very reason, Prop. 65 required the state to adopt a “safe harbor standard,” or an acceptable exposure level for each chemical. The safe harbor standard for 4-MEI was originally set at 16 micrograms per day. Then, state regulators changed their minds.

The experts were only off by 81 percent. In October 2011, 32 months after the regulatory process began, California increased the safe harbor standard from 16 to 29 micrograms. State regulators confirm that the increase wasn’t based on any new research.

“The change was based not on new research but on adoption of an updated method for calculating human cancer potency based on animal studies,” Delson, the OEHHA’s spokesman, said. “So the effect of setting the NSRL for 4-MEI at 29 micrograms per day instead of 16 was to create a larger “safe harbor” and exempt a larger number of products from Prop. 65 warning requirements.”

That means the decision to label 4-MEI as a potentially hazardous chemical wasn’t based on objective scientific data. Or rather, the science itself isn’t as precise as the public is made to believe.

So, what does 4-MEI have to do with the rest of the world? For that, we return to Dr. Guengerich’s evaluation of the regulatory field’s “lemming-like attitude, often reflecting biases.” There’s a movement afoot to ban 4-MEI in Kenya. The reason: the chemical “has been restricted in the US state of California.”

Coming soon: Part Two: How California’s regulation are sold to other countries.