Cue the soundtrack from Jaws.
Earlier this month, the California Department of Toxic Substances Control (DTSC) issued a press release alleging that several nail polish manufacturers failed to declare the presence of potentially dangerous cosmetic ingredients, Toluene, Dibutyl Phthalate (DBP) and Formaldehyde. DTSC based its allegations on initial testing of 25 different cosmetic brands, chosen at random. The investigation also revealed that many of the brands failed to declare these ingredients even though their labeling explicitly stated they were free of these chemicals.
California authorities have not taken official enforcement activity against any of the alleged violators mentioned in the release, however, the DTSC press release may turn out to be just as devastating to the manufacturers as any enforcement actions by the state or federal government.
The press release may affect short-term and long-term sales by immediately influencing consumers away from these brands now and decreasing consumer trust over time. Perhaps more devastating are the implications for these companies under California Proposition 65.
Prop 65 lists Toluene, DBP and Formaldehyde as chemicals known to cause birth defects or cancer, requiring products containing levels of these ingredients above the established threshold to include an explicit warning that the product contains chemicals known to cause cancer or birth defects. If a product is tested and shows levels above the threshold, DTSC may hand these violations over to the California Office of Environmental Health Hazard Assessment (“OEHHA”) for recommendation to the Attorney General for a Prop 65 action.
All Hands on Deck
DTSC and the State of California could choose to do nothing at all regarding possible Prop 65 violations and negative consequences could still emerge from a different source entirely. Under Prop 65 California law empowers private citizens to bring an action to enforce Proposition 65 violations “in the public interest.” Thus, an alleged Prop 65 violation exposes these firms to additional “public interest” lawsuits for violation of California unfair business practice statutes. The types of press releases mentioned above often function as “blood in the water” for plaintiff’s attorneys who are eager to “serve the public interest.”
Oddly enough, these ingredients are permissible for use in cosmetics under both state and federal law (at safe levels), thus making the only violations here a minor labeling issue. FDA has primary jurisdiction over the labeling of cosmetic products in the U.S. Under FDA regulations, the failure to declare the ingredients amounts to a minor misbranding violation, the enforcement remedy for which is typically a Warning Letter requiring remedial action (i.e., fix the label or else). Yet, here, these avoidable labeling violations may lead to much more serious consequences for these companies.
Understandably, firms desire to disassociate their products from cosmetic ingredients that are affiliated with cancer and birth defects, even if they are legally permitted. Many firms choose to simply omit these chemicals from their labels, in the hopes that nobody will ever find out because the costs of a potential lawsuit by the state or private citizens can be absolutely devastating. Thus, the choice is not whether cosmetic firms must deal with a lawyer; the choice is whether the firm will obtain legal counsel before the mess: seeking advice on how avoid the problem; or, whether the firm will obtain legal counsel after the mess: seeking assistance to negotiate the settlement with plaintiffs’ lawyers or state regulators after the problem has occurred.
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Source
http://www.dtsc.ca.gov/PressRoom/upload/News-Release-T-04-12.pdf
