Painted Into a Corner— by Todd Woody at The Recorder

Environmentalists have forced four companies to pull a line of paint strippers that contain a carcinogen. Critics say they are pushing the state’s toxics-control law beyond its intended uses.

In a display of Proposition 65’s power, four companies have agreed to pull a line of carcinogen-containing paint strippers out of California rather than face prosecution by environmentalists under the state’s toxics-control law.

Under settlements with the Environmental Defense Fund that go far beyond Prop 65’s consumer-warning requirements, such industry heavyweights as Ace Hardware Corp. will stop licensing, selling or shipping paint removers and similar household products that contain methylene chloride into California.

Environmentalists and the state attorney general's office have reached similar agreements in other actions brought under the Safe Drinking Water and Toxics Enforcement Act.  But the paint stripper settlements mark the first time an entire product line has been pulled from California -- a development some defense attorneys claim shows Prop 65's potential for abuse.  To environmentalists however, the settlements fulfill the mandate of voters who passed the initiative by a 2-to-1 margin in 1986.

“It’s the first real action on what’s by far the highest cancer risk consumer product on the market today,” said David Roe, senior staff attorney at the Environmental Defense Fund and a Prop 65 author.  “These agreements won’t wipe the shelves clean tomorrow, but they are very strong steps in getting alternatives into consumers’ hands and letting users realize they have a choice.”

The AG’s office approved the settlements Thursday, a day after a federal appellate court rejected the chemical industry’s attempt to overturn Prop 65 on federal preemption grounds.  Also on Wednesday, a San Francisco judge issued a preliminary injunction prohibiting two other companies sued by the defense fund from shipping similar products into California unless they provide consumer warnings.

The settlements, the injunction and a pair of suits filed Wednesday against two other manufacturers are part of Prop 65-inspired strategy to eliminate exposure to methylene chloride, a principal ingredient of many paint strippers.  Laboratory tests show that some products exceed state limits by as much as 180,000 times and not less than 114 times, depending on their use, according to court papers filed by defense fund attorneys.

In three of the four settlements, a lone public interest attorney representing the defense fund secured agreements and obtained fees and costs without filing a suit. To environmentalists, the sight of corporate leaders falling in line without litigation speaks well of Prop 65’s clout and the defense fund’s strategy of seeking broad settlements and modest compensation from companies that cooperate while suing those that resist.

“No court, no state agency could make the companies do what they’ve agreed to do,” said defense fund attorney Clifford Chanler, a partner in Chanler & Barnaby. “The law is undeveloped and these companies don’t want to be the guinea pigs for developing it.”

That’s the problem, say some defense attorneys who accuse the defense fund of exploiting Prop 65 to shake down corporations for fees and settlements that far exceed what voters envisioned in 1986.

“It’s quite arrogant that a handful of people should determine what the people of California wanted when they voted for Prop 65,” said James Jaffe, a partner at Jaffe, Trutanich, Scatena & Blum who represented a Mountain View manufacturer that settled with the defense fund in August.  “I think some companies see EDF’s actions on methylene chloride as nothing more than legalized blackmail.”

Responds Roe: “That may be client-pleasing rhetoric but it’s pretty wide of the truth.  We’re probably taking a loss on these cases as far as internal costs and fees are concerned.”

After methylene chloride appeared on the state’s list of known carcinogens in April 1988, manufacturers had one year to provide clear and reasonable warnings to consumers.  Private parties can sue those companies that do not comply with the law after giving the AG’s office the opportunity to do so.

Roe and other Prop 65 proponents had hoped that requiring warning labels would encourage companies to reformulate their products under the theory that consumers would prefer to purchase items that didn’t advertise their potential to cause cancer.

But as time passed, some manufacturers appeared more willing to sticker than switch.  So the defense fund, which has always regarded the warning requirement as a platform from which to seek reductions in toxic levels, toughened its stance.  It began filing suits against companies that didn’t label their products or labeled them inadequately, in the fund’s eyes.

In the defense fund’s first paint stripper settlement last August, Chanler obtained $86,000 and an agreement from Mountain View’s Jasco Chemical Corp to introduce non-methylene chloride products to compete with ones containing the chemical.

The defense fund then sent out notices of its intent to sue eight more manufacturers and distributors.  Investigators for Chanler’s firm had traveled throughout California, purchasing cans of paint stripper and other methylene chloride products that did not contain Prop 65 warning labels.

Chanler attached a cover letter to the notices offering to settle the cases in “a friendly manner without litigation.”  But he came to the bargaining table with an unyielding set of demands.

“We made it clear from the onset that our goal was not just to get a warning label but to reduce the toxic content of the products,” Chanler said.  “In the past, EDF has been willing to forgive back penalties in lieu of a reduction in methylene chloride.”

The law provides for civil penalties of up to $2,500 a day for each violation, thus posing potentially astronomical liabilities if a judge decided to fine a company for every day each can of paint stripper lacked the required warning.

There has been only one Prop 65 trial to date and, because the defense prevailed, the courts’ willingness to award damages remains unknown.  But some companies officials who settled the paint thinner cases said they weren’t willing to take such a risk.  The defense fund’s suits against four companies that initially would not settle also made an impression.

“It just didn’t make sense to get dragged through litigation from a business sense,” said Donald Smith, corporate vice president for Buffalo, N.Y.-based Pratt & Lambert.

The fact that methylene chloride products constituted less than 1 percent of the company’s sales made it easier for Pratt & Lambert to agree to cease shipping into California by January, said Smith, who negotiated the settlement.  Pratt & Lambert also agreed to pay the defense fund $7,800 in attorneys fees and costs.

Chicago’s Tru-Test Manufacturing Co. had joined with three other companies to fight the defense fund in San Francisco Superior Court.  But on the day Judge Stuart Pollak was to approve a preliminary injunction against the company, Tru-Test announced it would also stop shipping methylene chloride products to 650 Tru-Value hardware stores in California.  The company also agreed to redouble efforts to ensure that retailers provide warnings on products already on the shelves.

Tru-Test will pay the defense fund $38,500 in fees and costs, according to the settlement.  In-house attorney John Moynihan declined to comment.  A company spokesman said methylene chloride products constitute less than 1 percent of sales.

Two other companies that distribute paint strippers, Ace Hardware Corp. and Sinclair Paints Co., agreed not to license their names for products containing the chemical.  Both companies also pledged to stock their store shelves with non-methylene chloride paint removers while Ace agreed to license its name for such products, to be sold at its 500 California stores.  Ace will pay the defense fund $8,900 and Sinclair will pay $10,900 in fees and costs, according to the settlements.

“People look to companies like Ace as reliable brand names,” said the defense fund’s Roe.  “That stamp of approval will no longer be there for paint strippers with methylene chloride.”

Sinclair Paints spokesman Grant Billingsley called the settlement “a prudent resolution under the circumstances.”  He said California was a significant market for the Texas Company’s methylene chloride paint removers, but that such products constituted a small part of Sinclair Paints’ overall sales.

An in-house attorney for Ace, David League, said he had “no comment whatsoever” on the settlement.

Defense attorney Jaffe, who represents a South San Francisco manufacturer currently negotiating with the defense fund, said he believes companies will begin to fight back.  “At first I saw a lot of companies just rolling over because of fears of adverse publicity.  But I’m now seeing smaller and medium-sized companies resisting.”

Manufacturers with bigger stakes in the market have already gone to court to contest the defense fund’s claims.

“[Methylene chloride products] are a significant part of their business and they’re willing to fight and are not willing to pull out of the state,” said Santa Monica attorney Jeffrey Margulies, who represents the three companies in litigation with the defense fund.

“They don’t think they did anything wrong.  Defendants tried in all good faith to comply with Prop 65.  Unfortunately…there’s not much in the law to tell them what they did was inappropriate.  In terms of what EDF wants out of the settlements, they’re not willing to do that at this point.”

Defense fund attorneys contend that some of Margulies clients’ did not label their products while others provided warnings that are too small and inconspicuous to attract consumers’ attention.

Margulies, who also represents a company sued Wednesday by the defense fund, says he expects to appeal the preliminary injunctions issued by Pollak on Wednesday against two of his clients.  Chanler requested that an injunction not be issued against the third company because settlement talks have begun.

Particularly galling to some defense attorneys is the attorney general’s approval of the methylene chloride settlements.

“They do seem to be lending a great deal of moral support to EDF,” Jaffe said.  “They’re getting approval from the environmental unit but not necessarily from Mr. Lungren.”

Not quite.  Attorney General Dan Lungren in November joined with the defense fund to sue manufacturers of lead-tainted tableware.  And in a statement prepared for a business-sponsored Prop 65 conference earlier this month he tacitly endorsed the defense fund’s strategy: “I believe that the intent and the spirit of this initiative is to remove harmful chemicals from products and the environment.”

“We have pressed manufacturers who are in violation of the law to make some fundamental changes in their products – to go beyond posting warnings – by in many cases eliminating the presence of the toxic substance in their products altogether,” Lungren wrote.

One manufacturer who settled with the defense fund in January said his colleagues have no one to blame but themselves.

“The chemical community was given fair warning and they should have known better,” said Larry Owens, president of Atlanta Sundries Inc., a Georgia company that agreed to reformulate a methylene chloride-based graffiti remover.  “I knew about Prop 65 but  I let it slip by that I still had a product with methylene chloride.  I really believe you can reformulate.  I took methylene chloride out of my main product seven years ago when I found out it was a carcinogen.  But methylene chloride is very important to some real heavy hitters out there.  Me, I figured I’d rather switch than fight.”