WASHINGTON – SPI: The Plastic Industry Trade Association today announced its endorsement of a new insurance program designed to shield small- to medium-sized companies from opportunistic lawsuits related to California’s Proposition 65. The Prop 65 Protection Program insures product manufacturers, distributors, and formulators of products that contain federally-approved plasticizers from falling victim to predatory lawsuits filed by plaintiff attorneys.  

Proposition 65 gives California’s attorney general, or plaintiff’s attorney, the authority to serve a notice of violation against any company along the supply chain that sells a consumer product directly or indirectly in California containing chemicals classified by the state as carcinogens. Among the listed chemicals are plasticizers that add flexibility to commonly used products such as luggage tags, key chains and purses. Multiple plastics industry organizations say that scientific evidence shows that plasticizers included on the list are not hazardous to people’s health.

“Prop 65 punishes law-abiding business owners who are good actors,” Terry Peters, SPI’s vice president of industry affairs, said. “Attorneys and the state of California are the only winners in these lawsuits and they anticipate that companies targeted will choose to settle because it is less expensive and less time-consuming than mounting an affirmative defense.”

According to the California attorney general’s office, in 2014 there were 663 settlements totaling more than $29 million associated with Prop 65 notices of violation. Attorney’s fees and costs accounted for 71 percent of that total, or more than $21 million. SPI estimates that the average settlement cost for a California Prop 65 case exceeds $80,000.

The law affects any company providing constituent materials that end up in consumer products in California, regardless of where the business is headquartered. Unfortunately, companies can be named in multiple lawsuits and suffer even more damage to their bottom line.

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