Council for Education and Research etc. v. Starbucks Corp. ( 2022 )

Filed 10/26/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF
CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
COUNCIL FOR EDUCATION B309227/B310481
AND RESEARCH ON TOXICS,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No.
BC435759)
v.
STARBUCKS CORPORATION et
al.,
Defendants and
Respondents.
APPEALS from a judgment and orders of the Superior
Court of Los Angeles County, Elihu M. Berle, Judge.
Affirmed in part and reversed in part.
Metzger Law Group, Raphael Metzger and Scott P.
Brust for Plaintiff and Appellant Council for Education and
Research on Toxics.
Gibson, Dunn & Crutcher, Daniel M. Kolkey, Theodore
J. Boutrous, Jr., Patrick W. Dennis, Perlette M. Jura, Blaine
H. Evanson and Alexander P. Swanson; Morrison & Foerster
and James Schurz for Defendants and Respondents Apffels
Coffee, Inc.; Quarter G, Inc.; Brad Barry Company, Ltd.;
Caffe Calabria; Caffe Ibis, Inc.; Caribou Coffee Company,
Inc.; Cascade Coffee, Inc.; Central Coast Coffee Roasting Co.,
Inc.; The Coca Cola Company; Coffee Bean International,
Inc.; Coffee Roasters of Arizona, Inc.; Community Coffee
Company, Inc.; Copper Moon Coffee, LLC; Dona Mireya,
Inc.; Eight O’Clock Coffee Company; Equator Coffee & Teas;
F. Gavina & Sons, Inc.; Falcon Trading Company, Inc.;
Godiva Chocolatier, Inc.; Gold Medal Products Co.; Illy Caffe
North America, Inc.; Intelligentsia Coffee & Tea, Inc.;
International Coffee & Tea, LLC; James C. Cannell Coffees,
Inc.; JBR, Inc.; The J.M. Smucker Company; Kauai Coffee
Company LLC; Keurig Dr Pepper; The Kraft Heinz
Company; Lavazza Premium Coffees Corp.; Massimo Zanetti
Beverage USA, Inc.; Mayorga Coffee, LLC; Melitta U.S.A.,
Inc.; Montana Coffee Traders, Inc.; Mother Parkers Tea &
Coffee, Inc.; Napa Valley Coffee Roasting Company, LLC;
Nestle USA, Inc.; New England Partnership, Inc.; Paradise
Beverages, Inc.; Peerless Coffee Co., Inc.; Peet’s Operating
Company, Inc.; Quartermaine Coffee Roasters; Regal
Commodities; Rowland Coffee Roasters, Inc.; S & D Coffee,
2
Inc.; Sara Lee Corporation; Smucker Foodservice, Inc.;
Southern Wine and Spirits of America, Inc.; Starbucks
Corporation; Starbucks Holding Company; Steep & Brew,
Inc.; Verve Pacific Avenue Café, LLC; Victor Allen’s Coffee,
LLC; Vilore Foods Company, Inc.; and Zavida Coffee
Company, Inc.
Varner & Brandt, Richard D. Marca, and Angelica
Acosta Samaniego for Defendant and Respondent Stater
Bros Markets.
O’Melveny & Myers, Dawn Sestito, Adam Levine, and
Kate Ikehara for Defendants and Respondents Trader Joe’s
Company and Mountanos Brothers Coffee Company.
Blaxter Blackman and J.T. Wells Blaxter for
Defendants and Respondents Whole Foods Market
California, Inc.; Allegro Coffee Company.
Bryan Cave Leighton Paisner and Megan Irwin for
Defendant and Respondent Kerry Inc.
Aronowitz Skidmore Lyon, Lawrence E. Skidmore
Kathleen C. Lyon, and Erin J. Tognetti for Defendant and
Respondent L. Paul Phillips.
Arnold & Porter Kaye Scholer, Trenton H. Norris and
Brian K. Condon for Defendant and Respondent Dunkin’
Brands, Inc.
Rogers Joseph O’Donnell, Renee D. Wasserman, and
Alecia Cotton for Defendants and Respondents Costco
Wholesale Corporation and Bristol Farms
3
Nixon Peabody, Gregory P. O’Hara and Lauren M.
Michals for Defendants and Respondents Ralphs Grocery
Company and The Kroger Co.
Norton, Rose Fulbright US, Jeffrey B. Margulies, and
Lauren Shoor for Defendants and Respondents Target
Corporation; Safeway Inc.; Albertsons LLC; Sprouts Farmers
Markets LLC; Reily Foods Company; H.N. Fernandez, Inc.
Pillsbury Winthrop Shaw Pittman, Thomas L. Van
Wyngarden, and Stephanie Angkadjaja for Defendants and
Respondents Wal-Mart Stores, Inc. and Sam’s West, Inc.
Rob Bonta, Attorney General, Edward H. Ochoa,
Senior Assistant Attorney General, and Laura J. Zuckerman
and Tatiana K. Gaur, Deputy Attorneys General, for
California Office of Environmental Health Hazard
Assessment as Amicus Curiae.
_____________________________________________
INTRODUCTION
The Council for Education and Research on Toxics
(CERT) brought these actions under Proposition 651 (Prop.
65) against respondents, dozens of companies that roast,
distribute, or sell coffee.2 CERT claimed that respondents
1 The Safe Drinking Water and Toxic Enforcement Act of
1986. (Health & Saf. Code, § 25249.5 et seq.)
2 “Proposition 65 prohibits any person, in the course of doing
business, from knowingly and intentionally exposing any
(Fn. is continued on the next page.)
4
had failed to provide required Prop. 65 warnings for their
coffee products based on the presence of acrylamide, which is
included in the Prop. 65 list of known carcinogens and is
naturally produced in coffee as a result of the roasting and
brewing processes.
While the litigation was pending, the Office of
Environmental Health Hazard Assessment (the Agency),
charged with implementing Prop. 65, adopted a new
regulation providing that “[e]xposures to chemicals in coffee,
listed on or before March 15, 2019 as known to the state to
cause cancer, that are created by and inherent in the
processes of roasting coffee beans or brewing coffee do not
pose a significant risk of cancer.” (Cal. Code Regs., tit. 27,
§ 25704; the Coffee Regulation.) This regulation meant that
coffee generally did not require Prop. 65 warnings.
Respondents then moved for summary judgment, asserting
the Coffee Regulation as a defense, while CERT moved for
summary adjudication, challenging the regulation’s validity
on various grounds. In opposing summary judgment, CERT
also contended that regardless of the regulation, triable
issues remained regarding the presence of acrylamide
resulting from additives (plant roots, nuts, and seeds) in
some coffee products, which the regulation did not address.
It requested a continuance to conduct discovery regarding
individual to a chemical known to the state to cause cancer or
reproductive toxicity without giving a specified warning, . . .
except as specified. (§ 25249.5 et seq.)” (DiPirro v. American
Isuzu Motors, Inc. (2004) 119 Cal.App.4th 966, 969-970.)
5
additives in respondents’ products. The trial court denied
CERT’s motions and granted summary judgment for
respondents, concluding that the Coffee Regulation was
valid and dispositive of CERT’s actions, and that claims
regarding additives were outside the scope of the actions.
After the court entered judgment for respondents,
CERT moved to recover attorney fees from some of the
respondents, on the basis that its litigation efforts catalyzed
those respondents to post Prop. 65 warnings voluntarily
during the pendency of its actions. The trial court denied
CERT’s motion, concluding it was ineligible for fees because
it had lost its case on the merits and conferred no significant
benefit on the public.
As relevant here, a few of the respondents (Starbucks
Corporation, Starbucks Holding Company, Seattle Coffee
Company, Peet’s Operating Company, and Dunkin’ Brands,
Inc.; the Section 998 respondents) sought an award of costs
under Code of Civil Procedure section 998 (section 998),
based on compromise offers CERT had rejected during the
litigation. CERT moved to tax costs, contending, inter alia,
that the offers were invalid because they were conditioned
on court approval (as required by Prop. 65), and because the
releases they included were overbroad. The trial court
denied the motion to tax costs and awarded the relevant
respondents almost $700,000 in post-offer costs.
In these consolidated appeals, CERT challenges the
trial court’s grant of summary judgment for respondents, its
denial of its motion for fees, and its award of section 998
6
costs. As to summary judgment, CERT contends the Coffee
Regulation was arbitrary and capricious because: (1) the
Agency failed to explain its departure from a prior position
expressed in a 2005 report; (2) the Agency’s Final Statement
of Reasons in support of the regulation failed to address
CERT’s objection relating to the claimed departure; (3) the
regulation is underinclusive and thus is not supported by its
rationale; and (4) the regulation is scientifically
unsupported.3 CERT also contends that triable issues
remained as to acrylamide from coffee additives, and that
the trial court should have granted a continuance for
additional discovery on these issues. As discussed below, we
conclude the regulation was validly adopted, and that claims
regarding coffee additives are beyond the scope of CERT’s
actions. Summary judgment was therefore appropriate.
Challenging the denial of attorney fees, CERT
reiterates its position that it was entitled to fees based on
the voluntary warnings provided by the relevant
respondents. We agree with the trial court that in light of
the Coffee Regulation, these temporary warnings proved
unnecessary and therefore conferred no significant benefit
on the public, rendering CERT ineligible for fees.
Finally, as to the award of costs to the section 998
respondents, CERT contends their compromise offers were
invalid because: (1) settlement offers in Prop. 65 cases can
3 With our permission, the Agency filed an amicus brief in
support of affirmance.
7
never be valid under section 998, as they require court
approval; and (2) the relevant respondents’ offers included
overly broad releases. We agree that the releases in the
section 998 offers were overbroad and thus rendered the
offers invalid. Accordingly, we reverse the trial court’s
denial of CERT’s motion to tax costs.
BACKGROUND4
A. CERT’s Pre-Suit Notices and Actions
In 2010, CERT sent two sets of notices of violations
under Prop. 65 to numerous companies that roasted,
distributed, or sold coffee in California.5 CERT’s notices
alleged that the companies had failed to warn that their
coffee products exposed Californians to high levels of
acrylamide, a chemical included in Prop. 65’s list of known
carcinogens. (Office of Environmental Health Hazard
Assessment, The Proposition 65 List, at
[as
4 We deny CERT’s motions for judicial notice and
augmentation of the record as either irrelevant or unnecessary.
5 As discussed below, any person may bring an action under
Prop. 65 “in the public interest” (Health & Saf. Code, § 25249.7,
subd. (d)), provided they first give notice of the claimed violations
to the alleged violator, the Attorney General, and others (id.,
§ 25249.7, subd. (d)(1)). A person who violates Prop. 65 is subject
to civil penalties of up to $2,500 per day for each violation (id.,
§ 25249.7, subd. (b)(1)), and a person who is suing under Prop. 65
in the public interest is entitled to 25 percent of the penalties
collected (id., § 25249.12, subd. (d)).
8
of Oct. 24, 2022].) One set of notices alleged that
“[e]xposures to acrylamide unavoidably occurred via
ingestion whenever a consumer purchased and thereafter
consumed the coffee produced, distributed, and/or sold by the
above named entities.” The other set, targeting the relevant
companies’ “ready-to-drink coffee,” similarly alleged that
“[e]xposures to acrylamide unavoidably occurred via
ingestion whenever a consumer purchased and thereafter
consumed the above named entities’ ready-to-drink coffee.”
CERT subsequently filed two actions under Prop. 65
against the previously noticed companies, repeating the
essential allegations in its pre-suit notices. The actions were
consolidated, and the matter proceeded through various
phases of a bifurcated trial.
B. Trial Phases 1 and 2
At phases 1 and 2 of the trial, the court rejected
multiple affirmative defenses asserted by respondents. The
court also granted CERT’s motion for summary adjudication,
concluding it had established its prima facie case against
most of the respondents, who had stipulated to facts that
supported CERT’s prima facie case. The matter was
scheduled to proceed to a remedies phase in October 2018.
C. The International Agency for Research on Cancer
Monograph
On June 13, 2018, the International Agency for
Research on Cancer (IARC) -- an authoritative body for the
9
identification of chemicals causing cancer under Prop. 65
(Cal. Code Regs., tit. 27, § 25306, subd. (m)(1)) -- released a
501-page monograph on the cancer risks of coffee
consumption (the Monograph). Based on “more than 1000
observational and experimental studies,” the Monograph
found there was “inadequate evidence in humans and
experimental animals for the carcinogenicity of coffee
drinking.”6 The document acknowledged that a working
group in 1991 had found that coffee caused cancer of the
urinary bladder, but explained that the new working group
focused on higher-quality epidemiological studies, which
showed no consistent association, and suggested that the
prior association observed in some studies was “probably due
to inadequate control for the confounding effects of tobacco
smoking.”
The Monograph continued: “In considering the data
now available for more than 20 other cancer sites in humans,
the Working Group found evidence suggesting lack of
carcinogenicity for cancers of the female breast, uterine
endometrium, prostate, pancreas, and liver, and inadequate
evidence in humans for cancers at all other sites. The
Working Group’s review of other relevant data found strong
6 The Monograph elsewhere defined the phrase “Inadequate
evidence of carcinogenicity” as denoting that “[t]he available
studies are of insufficient quality, consistency or statistical power
to permit a conclusion regarding the presence or absence of a
causal association between exposure and cancer, or no data on
cancer in humans are available.”
10
evidence in humans that coffee has antioxidant effects. As a
result of this re-evaluation, the Working Group concluded
that drinking coffee is not classifiable as to its
carcinogenicity to humans . . . .” The document additionally
noted that “[i]nverse associations with drinking coffee have
been observed with cancers of the liver and uterine
endometrium,” suggesting that coffee reduced the risks of
those cancers.
D. Adoption of the Coffee Regulation
1. Proposed Regulation and Initial Statement of
Reasons
On June 15, 2018, shortly after the IARC released its
Monograph, the Agency published a notice of its intent to
adopt a new regulation, to provide that “[e]xposures to listed
chemicals in coffee created by and inherent in the processes
of roasting coffee beans or brewing coffee do not pose a
significant risk of cancer.”7 (Underlining omitted.) That
same month, the Agency issued an Initial Statement of
Reasons (ISR) in support of the proposed regulation, and
stated that if it adopted the regulation, no cancer warnings
would be required for exposure to the relevant chemicals in
coffee.
7 In the trial court, respondents unsuccessfully sought a stay
of the remedies phase of trial pending the Agency’s adoption of
the proposed regulation. Respondents then sought and obtained
a stay from this court.
11
In the ISR, the Agency noted, “Coffee is . . . unusual
because it has been the subject of very high scientific
interest for many years -- IARC reviewed more than 1000
observational and experimental studies investigating the
potential carcinogenicity of coffee in humans and animals.”
It explained, “Coffee is unique in that it shows reductions in
certain human cancers, has not been shown to increase any
cancers, and is particularly rich in cancer chemopreventive
compounds.” The ISR listed antioxidants, anti-inflammatory
chemicals, and soluble and insoluble fiber as “constituents
that exhibit cancer chemopreventive properties,” and cited
numerous articles published in scientific journals to support
its position regarding these categories of coffee constituents.
2. Public Comments and the 2005 Report
During the public comment period, the Agency received
numerous submissions and held a public hearing, at which it
received oral comments. Some commentors contended that
the Agency should assess the cancer risk from acrylamide in
coffee in isolation, without consideration of coffee as a
mixture. CERT objected, inter alia, that the Agency had
failed to consider and address its own 2005 report regarding
acrylamide intake in various foods and beverages.
The 2005 report was prepared in support of a proposed
regulation that was subsequently withdrawn. According to
the report, its purpose was to “assist the public and the
regulated community in estimating average daily intake of
acrylamide from specific foods, and to inform the
12
development and content of regulations proposed by OEHHA
. . . .” Based on various data, the report estimated coffee
drinkers’ daily intake of acrylamide from coffee, and
concluded that coffee was a substantial source of exposure to
acrylamide, and that drinkers likely exceeded the previously
set “No Significant Risk Level” (NSRL) for acrylamide. The
NSRL represents a safe harbor that protects businesses from
liability relating to exposure to a listed chemical under Prop.
65. If the level of exposure from a product is below the
NSRL, the safe harbor is triggered, and no warning is
required. (Cal. Code Regs., tit. 27, § 25705.)
3. The Agency’s Modification of the Proposed
Regulation
On March 15, 2019, the Agency announced it was
modifying its proposed regulation to limit the exempted
exposures to chemicals listed as of that date. The modified
proposed regulation therefore provided: “Exposures to
chemicals in coffee, listed on or before March 15, 2019 as
known to the state to cause cancer, that are created by and
inherent in the processes of roasting coffee beans or brewing
coffee do not pose a significant risk of cancer.”
4. The Agency’s Final Statement of Reasons and
Adoption of the Regulation
Following the comment period, the Agency issued a
lengthy Final Statement of Reasons (FSR), which responded
to public comments and concluded that the available
13
scientific information supported the regulation. The Agency
explained that because extensive research suggested that
coffee, as a mixture, posed no significant risk of cancer, the
individually listed chemicals formed through the roasting
and brewing process also posed no significant risk of cancer
when combined and consumed in the mixture. The FSR
listed “[the Agency]’s key overall considerations in adopting
this regulation”:
“‘[1] There is inadequate evidence for the
carcinogenicity of drinking coffee, based on a very
large number of human studies.
“‘[2] There are inverse associations––decreasing
risk with increasing coffee consumption - for
human cancers of the liver and uterine
endometrium.
“‘[3] There is inadequate evidence of increased
carcinogenicity in animals administered coffee in
controlled experiments.
“‘[4] There are inverse associations in a number of
animal experiments and the overall evidence
from animal studies is that of reduced incidence
or reduced multiplicity of cancers with coffee
intake.
“‘[5] There is a rich mix of cancer-preventative
agents in brewed coffee.’”
(Fns. omitted.)
14
Relying in part on the IARC Monograph, the FSR
repeatedly noted the IARC’s conclusion that coffee was “‘not
classifiable as to its carcinogenicity to humans.’” While the
IARC Monograph featured prominently in the FSR, the
Agency did not merely adopt its conclusions, and explained
that the Agency’s determination regarding the risk of cancer
from coffee was “strongly supported by the extensive
research evaluated and summarized by IARC and by [the
Agency]’s evaluation of the IARC Monograph and studies
published subsequent to the IARC review . . . .”
In its FSR, the Agency did not expressly address
CERT’s objection that it had failed to consider the 2005
report and its conclusion that coffee drinkers exceeded the
NSRL for acrylamide. However, in addressing the comments
urging the Agency to examine the risk from acrylamide in
coffee in isolation, it explained that given the large volume of
research regarding the cancer risk from coffee as a mixture,
it was appropriate to assess the evidence relating to the
mixture as a whole, and explained that “reliance on a single
carcinogenic constituent to infer significant risk can result in
a substantial mischaracterization of the risk profile.” In
June 2019, the Office of Administrative Law approved the
Coffee Regulation (as modified in March 2019).
15
E. Respondents’ Assertion of the Regulation as a
Defense, and the Motions for Summary Adjudication
and Summary Judgment
Following the Agency’s adoption of the Coffee
Regulation, respondents moved to amend their answers to
add the regulation as an affirmative defense, and the trial
court granted them leave to do so. CERT then filed several
motions for summary adjudication, attacking the validity of
the Coffee Regulation on various grounds. In turn,
respondents moved for summary judgment based on the
regulation.8
Following hearings, the trial court denied CERT’s
motions for summary adjudication and granted respondents’
motion for summary judgment, rejecting CERT’s challenges
to the Coffee Regulation’s validity. Addressing CERT’s
contention that issues remained regarding acrylamide
resulting from additives in some of respondents’ coffee
products, the court concluded such claims were outside the
scope of CERT’s actions, based, inter alia, on the allegations
in its pre-suit notices and complaints.
8 While these motions were pending, CERT served
respondents with document requests, seeking information
relating to additives included in some coffee products. It then
moved for a continuance to conduct additional discovery
regarding this issue. The trial court did not expressly address
CERT’s motion, but as discussed below, in granting summary
judgment for respondents, it ruled that claims relating to coffee
additives were outside the scope of CERT’s actions.
16
F. CERT’s Motion for Attorney Fees
After the entry of judgment, CERT moved to recover
attorney fees from 18 of the respondents under Code of Civil
Procedure section 1021.5. Acknowledging it had lost its case
on the merits in the trial court, CERT claimed it was
nevertheless a successful party entitled to fees under the
“‘catalyst theory,’” asserting that its litigation efforts had
caused the relevant respondents to provide Prop. 65
warnings voluntarily during the litigation period.9
The trial court denied CERT’s motion, concluding it
was not a successful party eligible for fees even under the
catalyst theory, as it had lost its case on the merits. The
court determined, alternatively, that CERT was not eligible
for fees because it had not conferred a significant benefit on
the public, as any warnings given during the pendency of its
actions “were ultimately proven unnecessary for public
health” under the Coffee Regulation.
G. The Award of Costs under Section 998
As discussed more fully below, during the litigation,
the section 998 respondents served statutory offers of
compromise on CERT, which rejected the offers. After entry
9 “Under the catalyst theory, attorney fees may be awarded
even when litigation does not result in a judicial resolution if the
defendant changes its behavior substantially because of, and in
the manner sought by, the litigation.” (Graham v.
DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 560.)
17
of judgment, these respondents filed memoranda of costs
seeking to recover their post-offer costs. CERT moved to tax
costs, challenging the validity of the section 998 offers, but
the trial court denied its motion and awarded the requested
costs. This appeal followed.
DISCUSSION
CERT challenges the trial court’s grant of summary
judgment, its denial of attorney fees to CERT, and its award
of costs to the section 998 respondents. We conclude the
trial court properly granted summary judgment and properly
denied CERT’s motion for fees. However, we agree with
CERT that the court erred in awarding the relevant
respondents costs under section 998.
A. Summary Judgment
CERT claims the trial court erred in granting
summary judgment for respondents and denying its motions
for summary adjudication, because (1) the Coffee Regulation,
on which the court’s order rested, was invalid, and (2) even
assuming the regulation was valid, triable issues remained
regarding acrylamide from coffee additives. As discussed
below, we find neither contention persuasive.
18
1. Standards of Review
a. Summary Judgment
We review the trial court’s rulings on CERT’s motions
for summary adjudication and respondents’ motion for
summary judgment de novo. (Gresher v. Anderson (2005)
127 Cal.App.4th 88, 96.) A motion for summary judgment or
summary adjudication is properly granted if the moving
papers establish that there is no triable issue of material
fact, and the moving party is entitled to judgment as a
matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)
b. Administrative Regulations
The Agency adopted the coffee regulation under its
authority to “adopt and modify regulations . . . as necessary
to conform with and implement [Prop. 65].” (Health & Saf.
Code, § 25249.12, subd. (a).) A regulation adopted pursuant
to a delegation of lawmaking power has “the dignity of
statutes.” (Yamaha Corp. of America v. State Bd. of
Equalization (1998) 19 Cal.4th 1, 10.) “When a court
assesses the validity of such rules, the scope of its review is
narrow. If satisfied that the rule in question lay within the
lawmaking authority delegated by the Legislature, and that
19
it is reasonably necessary to implement the purpose of the
statute, judicial review is at an end.”10 (Id. at 10-11.)
Our review of whether a regulation is reasonably
necessary is limited to “whether the rule is arbitrary,
capricious, or without rational basis [citation] and whether
substantial evidence supports the agency’s determination
that the rule is reasonably necessary.” (Western States
Petroleum Assn. v. Board of Equalization (2013) 57 Cal.4th
401, 415.) Under this standard, the challenged regulation is
presumptively valid, and the burden is on the party
challenging it to show that it is infirm. (Tomlinson v.
Qualcomm (2002) 97 Cal.App.4th 934, 940-941.) In the
absence of an arbitrary and capricious decision, we will defer
to the agency’s expertise (Ford Dealers Assn. v. Department
of Motor Vehicles (1982) 32 Cal.3d 347, 355), and “will not
. . . venture into an independent determination of the
wisdom of the challenged regulation” or “substitute our
judgment for that of the agency with respect to such things
as the existence and weight to be accorded the facts and
policy considerations . . . .” (Western States Petroleum Assn.
v. State Dept. of Health Services (2002) 99 Cal.App.4th 999,
1007.)
10 While CERT suggests these principles are inapplicable to
an indirect challenge to the validity of a regulation in the context
of summary judgment, it cites no relevant authority for this
proposition, and we are aware of none.
20
2. Analysis
CERT challenges the regulation on multiple grounds,
asserting: (1) the Agency failed to explain its departure from
the prior position it expressed in the 2005 report; (2) the
Agency’s FSR failed to address CERT’s objection based on
the claimed departure; (3) the regulation is underinclusive
and thus is not supported by its rationale; and (4) the
regulation is scientifically unsupported. We address these
contentions in turn.
a. There Was No Conflict Between the
Regulation and the 2005 Report
Citing federal caselaw applying the federal
Administrative Procedures Act, CERT contends that an
agency adopting a regulation contrary to its prior
conclusions must acknowledge and explain the departure.
Assuming, without deciding, that such a requirement exists
under California law, we conclude it would have no
application here, because the Coffee Regulation was not
contrary to the Agency’s 2005 report.
As noted, the 2005 report was a technical document
dealing with the intake levels of acrylamide in different
foods and beverages. Its purpose was to “assist the public
and the regulated community in estimating average daily
intake of acrylamide from specific foods, and to inform the
development and content of regulations proposed by OEHHA
. . . .” The report concluded that coffee drinkers likely
21
exceeded both the NSRL for acrylamide, and that coffee was
a substantial source of exposure to acrylamide.
Contrary to CERT’s suggestion, the conclusion that
coffee drinkers exceeded the NSRL for acrylamide did not
encompass a determination that coffee drinking caused
cancer. As explained above, the NSRL provides a safe
harbor. That an exposure level exceeds the NSRL does not
imply it presents a significant risk of cancer. “In [the
Agency]’s words, its establishment of a[n] NSRL ‘expressly is
not a determination that any level above the NSRL poses a
significant risk.’” (Baxter Healthcare Corp. v. Denton (2004)
120 Cal.App.4th 333, 358.) These safe harbor levels do not
preclude the use of alternative levels that can be
demonstrated to be safe. (See Cal. Code Regs., tit. 27,
§ 25701, subd. (a) [“Nothing in this article shall preclude a
person from using evidence, standards, risk assessment
methodologies, principles, assumptions or levels not
described in this article to establish that a level of exposure
to a listed chemical poses no significant risk”].)
The 2005 report included no independent risk
assessment and did not address whether coffee caused
cancer or whether any cancer risk inherent in coffee
drinking should be assessed based on the mixture or its
constituents. Thus, the Coffee Regulation’s determination
that exposure to acrylamide inherent in coffee did not pose a
significant risk of cancer contradicted nothing in the 2005
22
report, and there was therefore no change of position calling
for any explanation.11
b. The Agency Substantially Complied with
Its Duty to Address CERT’s Objections
i. Governing Principles
Under the California Administrative Procedures Act
(APA), before adopting a proposed regulation, an agency
must provide an FSR that includes, among other things, a
summary of “each objection or recommendation made
regarding the [proposed regulatory action], together with an
explanation of how the proposed action has been changed to
accommodate each objection or recommendation, or the
reasons for making no change.” (Gov. Code, § 11346.9, subd.
(a)(3).) An agency’s “substantial failure” to comply with the
APA’s requirements may result in the regulation’s
invalidation. (Gov. Code, § 11350, subd. (a).)
Construing the phrase “substantial failure” in the APA,
the court in Sims v. Department of Corrections &
Rehabilitation (2013) 216 Cal.App.4th 1059 (Sims) relied on
the concept of “[s]ubstantial compliance,” which it described
as “the counterpart, or obverse, of the substantial failure to
comply, which negatively expresses the same idea.” (Id. at
11 As discussed below, the Agency sufficiently explained its
decision to forgo a quantitative assessment of coffee’s
constituents in favor of a qualitative assessment of the mixture
as a whole.
23
1073.) “‘[S]ubstantial compliance . . . means actual
compliance in respect to the substance essential to every
reasonable objective of the statute. But when there is such
actual compliance as to all matters of substance[,] then mere
technical imperfections of form . . . should not be given the
stature of noncompliance . . . .’” (Id. at 1073, quoting Stasher
v. Harger-Haldeman (1962) 58 Cal.2d 23, 29.)
ii. Application
Although the Agency did not expressly address CERT’s
objection that it had failed to consider the 2005 report’s
conclusion that coffee drinkers exceeded the NSRL for
acrylamide, it sufficiently addressed the substance of the
objection by explaining its rejection of a quantitative NSRL
like the one employed in the report. The Agency thus did not
substantially fail to comply with the APA’s requirements.
As noted, the Agency addressed comments claiming
that cancer risk from acrylamide in coffee should be assessed
in isolation, without consideration of coffee as a mixture. It
explained that given the large volume of research concerning
the cancer risk from coffee as a mixture, it was appropriate
to assess the evidence relating to the mixture as a whole,
and stated that “reliance on a single carcinogenic constituent
to infer significant risk can result in a substantial
mischaracterization of the risk profile.” That the Agency
addressed the substance of CERT’s concern without
expressly referencing the 2005 report constituted, at most, a
“‘mere technical imperfection[] of form,’” which will not
24
invalidate a regulation.12 (Sims, supra, 216 Cal.App.4th at
1073.)
c. The Coffee Regulation is Consistent with
the Agency’s Rationale
Contrary to CERT’s contention, the Coffee Regulation
is consistent with the rationale offered by the Agency. In
adopting the regulation, the Agency explained that because
extensive research suggested that coffee, as a mixture, posed
no significant risk of cancer, the individual listed chemicals
formed through the roasting and brewing process also posed
no significant risk of cancer when combined and consumed
in the mixture. We see nothing inconsistent or illogical in
this rationale.
CERT notes that the regulation applies only to
chemicals listed on or before March 15, 2019, and argues it is
12 Any technical noncompliance by the Agency in failing to
expressly reference the 2005 report is a far cry from the
substantial failures in the cases CERT cites in support of its
position. (See Sims, supra, 216 Cal.App.4th at 1074 [California
Department of Corrections and Rehabilitation violated APA by:
failing to set forth alternatives to its proposed lethal injection
protocol, failing to explain rejection of various alternatives,
falsely representing how it selected proposed method, failing to
include required documents in rulemaking file, and failing to
make file publicly available in timely manner]; Mountain Lion
Foundation v. Fish & Game Com. (1997) 16 Cal.4th 105, 133
[noting Office of Administrative Law’s disapproval of regulatory
action where agency’s final statement of reasons failed to include
any summary and response to public comments].)
25
arbitrary and capricious because “[i]f [the Agency’s]
rationale for the regulation were true and valid, there would
be no basis for excluding unlisted carcinogens from the scope
of the regulation” because “unlisted carcinogens in coffee
could no more present a significant risk of cancer . . . than
could listed carcinogens.” But “regulations are ‘not invalid
merely because they are to some extent underinclusive or
overinclusive . . . .’” (State Farm General Insurance
Company v. Lara (2021) 71 Cal.App.5th 148, 183.) The
Agency was entitled to address currently listed chemicals
first, saving for another day any chemicals inherent in the
roasting and brewing of coffee that might be listed in the
future. (See ibid.; Western States Petroleum Assn. v. Board
of Equalization, supra, 57 Cal.4th at 421 [regulation that
singled out petroleum refineries, even though its rationale
applied to other types of industrial facilities as well, was not
arbitrary and capricious]; cf. U.S. Cellular Corp. v. F.C.C.
(D.C. Cir. 2001) 254 F.3d 78, 86 [“agencies need not address
all problems ‘in one fell swoop,’” and “‘[r]eform may take
place one step at a time, addressing itself to the phase of the
problem which seems most acute to the [regulatory] mind’”].)
The regulation is therefore consistent with its rationale.
d. CERT Has Not Shown That the Coffee
Regulation Lacks Scientific Foundation
CERT claims the regulation lacks scientific foundation
for several reasons. It contends: (1) Lockheed Litigation
Cases (2004) 115 Cal.App.4th 558 (Lockheed) held that IARC
26
monographs are insufficiently reliable; (2) the IARC is not
an authoritative body for cancer risk assessment; (3) the
Agency misrepresented the IARC’s conclusions in various
ways; and (4) the Agency relied in part on an unsupported
finding that antioxidants in coffee had an anti-carcinogenic
effect. We find none of these contentions convincing.
First, CERT cites Lockheed for the proposition that an
IARC monograph regarding a chemical mixture is
scientifically unreliable for purposes of determining human
cancer risk from a chemical within the mixture. Lockheed is
inapposite. There, the court held that an expert could not
reasonably opine that exposure to five particular chemicals
caused cancer based on an IARC study that found that
“painters who potentially were exposed to a long list of more
than 130 substances and thousands of chemical compounds
contracted cancer” at a higher rate. (Lockheed, supra, 115
Cal.App.4th 558, 564-565.) The court explained that the
expert’s opinion was “based on conjecture and speculation as
to which of the many substances to which the study subjects
were exposed contributed to the greater incidence of cancer.”
(Id. at 565.) This analysis has no application here, where
the IARC Monograph evaluated the very mixture addressed
by the Coffee Regulation, and tended to negate a substantial
risk of cancer from it. While the IARC Monograph provides
no basis for determining the cancer risk from an individual
constituent of coffee, like acrylamide, in isolation, the Coffee
Regulation rests on the Agency’s conclusions regarding the
27
risk of cancer from coffee as a mixture -- a conclusion the
Monograph tends to support.
Second, CERT complains that “while IARC is an
authoritative body for the identification of chemicals as to
their carcinogenicity to humans (i.e., cancer hazard
assessment), it is not recognized as an authoritative body for
quantifying risks of cancer from carcinogens (i.e., cancer risk
assessment).” CERT fails to explain the significance of this
distinction for purposes of the Agency’s reliance on the IARC
Monograph. As the Monograph itself explains,
“[m]onographs represent the first step in carcinogenic risk
assessment,” and they “identify cancer hazards even when
risks are very low at current exposure levels.” The Agency
therefore reasonably relied on the IARC’s findings regarding
coffee’s carcinogenicity and its Monograph’s conclusion that
coffee was “not classifiable as to its carcinogenicity.” (Italics
omitted.)
Third, CERT claims that in various ways, the Agency’s
FSR gave a “false impression” that the IARC had concluded
coffee does not cause cancer, when in fact the Monograph
concluded only that there was inadequate evidence for
coffee’s carcinogenicity. We disagree. The Agency’s FSR
quoted multiple times the IARC’s overall conclusion that
coffee was “‘not classifiable as to its carcinogenicity to
humans.’” CERT points to the FSR’s statement of the
Agency’s key considerations in adopting the regulation, and
complains that it presents the IARC’s conclusions in a
misleading manner because of its wording, its use of the
28
phrase “‘inadequate evidence’” without providing the IARC’s
definition for the phrase, and its omission of relevant context
from the IARC Monograph. However, the FSR’s statement
of key considerations represented the Agency’s conclusions,
rather than those of the IARC. Indeed, the Agency
explained that its determination regarding the risk of cancer
from coffee relied on its own evaluation of the Monograph,
the underlying research summarized by the Monograph, and
“studies published subsequent to the IARC review . . . .”
Finally, CERT challenges the FSR’s assertion that
“[t]here is a rich mix of cancer-preventative agents in brewed
coffee.” CERT speculates that this statement “apparently
refers to antioxidants in coffee” and proceeds to contest the
notion that antioxidants in coffee prevent cancer. Initially,
there is no reason to think that the FSR’s reference to
cancer-preventative agents was limited to antioxidants. In
its ISR, the Agency listed anti-inflammatory chemicals as
well as soluble and insoluble fiber, alongside antioxidants, as
“constituents that exhibit cancer chemopreventive properties
. . . .” The ISR cited numerous articles published in scientific
journals to support its position that these categories of coffee
constituents possessed anticarcinogenic properties. The
Agency’s FSR referenced the ISR’s discussion of cancer-
preventative agents and noted its citation to multiple
scientific authorities in support of its conclusions.13
13 CERT’s contention that the Agency relied on a single article
is therefore incorrect.
29
Moreover, we decline CERT’s invitation to wade into a
scientific debate about the effects of antioxidants in coffee or
the quality of the studies on which the Agency relied in
adopting the Coffee Regulation. Our task is to assess only
whether the Agency’s adoption of the regulation was
arbitrary or capricious. We may not “substitute our
judgment for that of the agency” regarding “the existence
and weight to be accorded the facts and policy considerations
that support the regulation.” (Western States Petroleum v.
State Dept. of Health Services, supra, 99 Cal.App.4th at
1007.) In short, the regulation does not lack scientific
foundation.
e. Claims Regarding Acrylamide from
Additives Are Beyond the Scope of CERT’s
Actions
CERT’s claims regarding acrylamide formed by the
roasting of plant roots, nuts, and seeds added to coffee --
which are not addressed by the Coffee Regulation --
exceeded the scope of CERT’s actions, as delineated by its
pre-suit notices. These claims therefore did not preclude
summary judgment.
Before bringing a Prop. 65 action in the public
interest, a private plaintiff must provide a pre-suit notice
containing sufficient information about the claim to (1) the
Attorney General and other public prosecutors, to allow
them to adequately investigate the claim’s basis, and (2) the
alleged violator, to allow it an opportunity to cure the
30
violation. (See Health & Saf. Code, § 25249.7, subd. (d);
Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of
America (2007) 150 Cal.App.4th 953, 960-961 (Consumer
Advocacy Group).) This pre-suit notice must describe,
among other things, “the specific type of consumer product
. . . with sufficient specificity to inform the recipients of the
nature of the items allegedly sold in violation of the law and
to distinguish those products . . . from others sold . . . .”
(Cal. Code Regs., tit. 27, § 25903, subd. (b)(2)(D).) Failure to
comply with pre-suit notice requirements is grounds for
dismissal, and deficiencies cannot be cured after the
complaint is filed. (See Physicians Committee for
Responsible Medicine v. KFC Corp. (2014) 224 Cal.App.4th
166, 181 (Physicians Com.).)
It is undisputed that CERT’s pre-suit notices failed to
distinguish regular coffee from a subset of coffee with
additives from plant roots, nuts, or seeds, and made no
mention of acrylamide from such additives as the basis of
any violation. Indeed, CERT alleged that “[e]xposures to
acrylamide unavoidably occurred via ingestion whenever a
consumer purchased and thereafter consumed” the alleged
violators’ “coffee” or “ready-to-drink coffee.” (Italics added.)
This description provided no notice to respondents or public
prosecutors that CERT’s claim targeted a subset of products
containing coffee additives -- to which consumers were not
exposed “whenever” they purchased respondents’ coffee --
and thus that they should investigate the existence and
31
carcinogenicity of acrylamide produced from the roasting of
such additives.
CERT argues: “whether or not acrylamide-containing
additives were mentioned in CERT’s pre-suit notices of
violations, . . . acrylamide-containing additives became
relevant to this case when [respondents] were granted leave
to amend their answers to assert the Coffee Regulation,
because that regulation does not exempt from liability
companies that expose Californians to acrylamide-containing
additives.” According to CERT, “to obtain summary
judgment on their new defense, [respondents] were obliged
to prove that defense applied to their products,” and thus,
respondents “had to offer evidence that their coffee products
did not contain any acrylamide-containing flavorings or
other additives.”
CERT’s argument ignores its pre-suit notice
obligations. As noted, to allow alleged violators and public
prosecutors to investigate claims, pre-suit notices must
identify the specific type of consumer product, with sufficient
specificity to distinguish it from others. (See Cal. Code
Regs., tit. 27, § 25903, subd. (b)(2)(D); Consumer Advocacy
Group, supra, 150 Cal.App.4th at 960-961.) That
respondents’ defense precluded liability based on the broad
category CERT identified in its notices does not excuse
CERT from complying with this requirement. Under
CERT’s approach, private plaintiffs would be able to cast a
wide net, identifying vast categories of products in hopes of
catching something that would support a violation, and
32
adjusting their claims according to developments in the
litigation. This approach is contrary to Prop. 65’s intent to
allow pre-suit investigation of alleged violations.
Accordingly, we conclude that CERT’s broad and
undifferentiated identification of “coffee” in its pre-suit
notices prevents it from now pointing to a subset of coffee
with additives from plant roots, nuts, and seeds as the basis
for respondents’ liability.14 (See Consumer Advocacy Group,
14 Given our conclusion, we need not address CERT’s
additional contention that the trial court erred by failing to grant
it a continuance to conduct additional discovery regarding coffee
additives. In its reply brief, CERT argues for the first time that
epidemiological studies of acrylamide in food are scientifically
unreliable, citing an expert declaration filed by the Attorney
General in a different case in January 2020 (after the Agency
issued the Coffee Regulation but before the filing of CERT’s
opening brief). Similarly, for the first time in its answer to the
Agency’s amicus brief, CERT contends that the Agency adopted
the Coffee Regulation due to political pressure, and that its
rationale was simply a post hoc rationalization that cannot
support the regulation. CERT has forfeited these contentions by
failing to raise them in its opening brief. (See Tukes v. Richard
(2022) 81 Cal.App.5th 1, fn. 5 [“A contention not appropriately
raised in the opening brief under a separate argument heading
may be deemed forfeited.”)
Because we affirm the grant of summary judgment based
on the Agency’s regulation and the conclusion that claims
involving additives were outside the scope of CERT’s actions, we
need not address respondents’ alternative argument that
compelling them to provide Prop. 65 warnings would have
violated the First Amendment.
33
supra, at 960-961; Physicians Com., supra, 224 Cal.App.4th
at 181.)
B. Attorney Fees
CERT contends the trial court abused its discretion in
denying its motion for attorney fees. It argues, among other
things, that it conferred a significant benefit on the public,
contrary to the trial court’s determination, because the
voluntary, temporary Prop. 65 warnings posted by some
respondents provided an “informational benefit.” As
explained below, in light of the Agency’s determination that
coffee poses no significant risk of cancer, we conclude CERT
has shown no benefit from these temporary warnings.15
1. Applicable Law
a. Eligibility for Fees under Code of Civil
Procedure Section 1021.5
“[Code of Civil Procedure] [s]ection 1021.5 codifies the
‘private attorney general’ doctrine of attorneys fees
15 We also question whether CERT could be deemed a
successful party under the catalyst theory after litigating and
losing its case on the merits. (See Skaff v. Rio Nido Roadhouse
(2020) 55 Cal.App.5th 522, 540 [“we are not convinced that the
catalyst theory should even apply here,” as “[t]he catalyst theory
is generally not invoked in cases where the merits have been fully
litigated to a final judgment”].) However, because we conclude
that CERT conferred no significant benefit on the public, we need
not decide the issue.
34
articulated in Serrano v. Priest (1977) 20 Cal.3d 25 . . . and
other judicial decisions.” (Flannery v. California Highway
Patrol (1998) 61 Cal.App.4th 629, 634.) “The statute gives
the trial court discretion to award fees to a successful party
if (1) its action has resulted in the enforcement of an
important public right, (2) the general public or a large class
of persons has received a significant benefit, (3) the burden
of private enforcement is disproportionate to the litigant’s
personal interest, and (4) it is unfair to make a successful
plaintiff pay the fees out of any recovery.” (Concerned
Citizens of La Habra v. City of La Habra (2005) 131
Cal.App.4th 329, 334 (Concerned Citizens).)
“The award of fees under section 1021.5 is an equitable
function, and the trial court must realistically and
pragmatically evaluate the impact of the litigation to
determine if the statutory requirements have been met.
[Citation.] This determination is ‘best decided by the trial
court, and the trial court’s judgment on this issue must not
be disturbed on appeal “unless the appellate court is
convinced that it is clearly wrong and constitutes an abuse of
discretion.” [Citations.]’” (Concerned Citizens, supra, 131
Cal.App.4th at 334.)
2. Analysis
CERT has shown no benefit to the public from the
temporary warnings provided, let alone an abuse of
discretion in the trial court’s conclusion that no benefit had
been conferred. CERT contends it conferred an
35
informational benefit in accord with Prop. 65’s purposes by
advising consumers that the coffee contained a carcinogen
and allowing them to make informed decisions regarding
their coffee consumption. However, the Coffee Regulation,
promulgated by the agency responsible for implementing
Prop. 65, establishes that those warnings were unnecessary
and misleading regarding the risk of cancer from coffee. The
warnings therefore provided no informational benefit to
consumers. (Cf. Dowhal v. SmithKline Beecham Consumer
Healthcare (2004) 32 Cal.4th 910, 934 (Dowhal) [“a truthful
warning of an uncertain or remote danger may mislead the
consumer into misjudging the dangers stemming from use of
the product, and consequently making a medically unwise
decision”]; Nicolle-Wagner v. Deukmejian (1991) 230
Cal.App.3d 652, 661 (Nicolle-Wagner) [avoiding warnings
regarding substances that pose insignificant risk of cancer
“will further the statutory purpose [of Prop. 65] in
safeguarding the effectiveness of warnings which are
given”].)
CERT argues that the warnings were required at the
time they were posted, before the Coffee Regulation was
issued, and suggests that its suit conferred a benefit by
enforcing the law at the time. But even assuming that Prop.
65 warnings for coffee were required before the Agency
adopted the Coffee Regulation -- a matter we do not decide --
enforcement of the law does not necessarily confer a
significant benefit on the public. “Of course, the public
always has a significant interest in seeing that legal
36
strictures are properly enforced and thus, in a real sense, the
public always derives a ‘benefit’ when illegal private or
public conduct is rectified. Both the statutory language
(‘significant benefit’) and prior case law, however, indicate
that the Legislature did not intend to authorize an award of
attorney fees in every case involving a statutory violation.
[Rather,] the Legislature contemplated that in adjudicating
a motion for attorney fees under section 1021.5, a trial court
would determine the significance of the benefit, as well as
the size of the class receiving benefit, from a realistic
assessment, in light of all the pertinent circumstances, of the
gains which have resulted in a particular case.” (Woodland
Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d
917, 939-940; accord, Villarreal v. Gordon (2019) 44
Cal.App.5th 233, 240.) Given that the warnings in this case
disserved Prop. 65’s purpose to inform the public of
significant cancer risks (see Dowhal, supra, 32 Cal.4th at
934; Nicolle-Wagner, supra, 230 Cal.App.3d at 661), they
provided no significant benefit for purposes of the attorney
fees statute. Accordingly, the trial court properly denied
CERT’s motion for attorney fees.
C. Section 998 Costs
CERT contends the section 998 respondents’
compromise offers were invalid because: (1) settlement offers
in Prop. 65 cases can never be valid under section 998, as
they require court approval; and (2) the relevant
respondents’ offers included overly broad releases.
37
Assuming, without deciding, that section 998 applies to
Prop. 65 claims, we agree that the offers here were invalid
because they included overly broad releases. Accordingly,
we reverse the trial court’s denial of CERT’s motion to tax
costs.
1. Background
During the litigation, the section 998 respondents
served CERT with statutory offers to compromise. Under
the terms of the offers, these respondents were to pay CERT
substantial amounts and post Prop. 65 warnings, with
certain conditions. In return, CERT was to provide two
kinds of releases. The first was a public release, requiring
CERT, as a plaintiff suing “in the public interest,” to release
the offerors from “all claims . . . as to any alleged violation of
Proposition 65 that is or that could have been asserted in the
[pre-suit] Notice or [complaint] based on the facts alleged
therein.” The second release applied to CERT in “its
individual capacity,” and required it to provide “a general
release” of “all [c]laims of CERT . . . of any nature, character
or kind, known or unknown, suspected or unsuspected,
arising under Proposition 65 or for an alleged failure to
provide warnings for exposures to acrylamide.” CERT
rejected these compromise offers.
After entry of judgment, the section 998 respondents
filed memoranda of costs seeking to recover almost $700,000
in post-offer costs. CERT moved to tax costs, challenging the
validity of the statutory compromise offers and arguing,
38
inter alia, that the releases included in the offers were overly
broad because they applied to claims outside the scope of the
litigation “such that there would be no way to determine
whether a judgment in the pending action is ‘more favorable’
than the value of those claims.” The trial court denied
CERT’s motion and awarded the requested post-offer costs.16
2. Applicable Law
“On a motion to strike or tax costs, ‘[t]he burden is on
the offering party to demonstrate that the offer is valid
under section 998.’ [Citations.] ‘The offer must be strictly
construed in favor of the party sought to be bound by it.’
[Citations.] ‘“We independently review whether a section
998 settlement offer was valid. In our review, we interpret
any ambiguity in the offer against its proponent.”’”
(Khosravan v. Chevron Corp. (2021) 66 Cal.App.5th 288,
294-295.)
Under section 998, “any party may serve an offer in
writing upon any other party to the action to allow judgment
to be taken or an award to be entered in accordance with the
terms and conditions stated at that time.” (§ 998, subd. (b).)
“If an offer made by a defendant is not accepted and the
plaintiff fails to obtain a more favorable judgment,” the
plaintiff must “pay the defendant’s costs from the time of the
offer,” and the court has discretion to “require the plaintiff to
16 On appeal, CERT has not provided a reporter’s transcript
of the hearing on its motion to tax.
39
pay a reasonable sum to cover postoffer costs of the services
of expert witnesses . . . .” (§ 998, subd. (c)(1).)
Because section 998 requires a determination whether
the offer’s terms were more favorable than the judgment, the
offer must not include a release of claims beyond those
involved in the litigation. (Ignacio v. Caracciolo (2016) 2
Cal.App.5th 81, 86-87 (Ignacio); see id. at 87 [“Requiring
resolution of potential unfiled claims not encompassed by the
pending action renders the offer incapable of valuation”].)
Thus, in Ignacio, the court held a section 998 offer invalid
because it went “well beyond the scope of the litigation,”
requiring the release of “‘any and all claims’ the releasees
may have against the releasors ‘whether now known or
unknown, suspected or unsuspected, that have existed or
may have existed or which do exist, or which hereinafter
can, shall or may exist . . . .’” (Ignacio, supra, at 89.) The
Ignacio court noted that the plaintiff-offeree had identified
before the trial court a claim that was not involved in the
pending litigation but would have been encompassed by the
release. (Id. at 90.) Because the proposed release of
extraneous claims made the offer incapable of valuation, the
court concluded the offer was invalid for purposes of section
998. (Ignacio, supra, at 87, 89-90.)
Similarly, in Chen v. Interinsurance Exchange of the
Automobile Club (2008) 164 Cal.App.4th 117 (Chen), the
court deemed an offer invalid because it required a “‘general
release of all claims.’” (Id. at 122.) The court reasoned that
the required release was at least ambiguous as to whether it
40
applied to a pending insurance claim outside the scope of the
litigation, rendering the offer incapable of valuation. (Id. at
122-123.)
3. Analysis
The individual-capacity general releases included in
the section 998 respondents’ compromise offers were overly
broad, as they encompassed claims beyond the scope of this
litigation. As noted, those releases would have applied to
“all Claims . . . known or unknown . . . arising under
Proposition 65 or for an alleged failure to provide warnings
for exposures to acrylamide.” While the release would have
applied only to Prop. 65 claims, the section 998 respondents
point to nothing in their language that would have limited
them to the claims involved in CERT’s actions, and we see no
such limitation. Because the releases extended beyond the
scope of the litigation, they invalidated the compromise
offers. (See Ignacio, supra, 2 Cal.App.5th at 86-87; Chen,
supra, 164 Cal.App.4th at 122.)
The section 998 respondents argue the general releases
did not invalidate their statutory compromise offers for four
reasons. First, they note that during the litigation, CERT
approved other defendants’ section 998 offers containing the
same releases. Citing no authority, the section 998
respondents argue, “The fact that such releases were
standard for CERT . . . supports the conclusion that CERT
was not prejudiced by such provisions, and that they were an
appropriate part of a proposed consent judgment under
41
Proposition 65.” However, the relevant question under
section 998 is whether the offers allowed for a determination
that the judgment was more favorable, not whether the
offers “prejudiced” the offeree. Regardless of whether CERT
accepted other flawed section 998 offers, these respondents’
offers required the court to engage in an impracticable
valuation of potential claims outside the scope of the
litigation, and were therefore invalid. (See Ignacio, supra, 2
Cal.App.5th at 87; Chen, supra, 164 Cal.App.4th at 122-123)
Second, the section 998 respondents state that under
Goodstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899(Goodstein), a valid statutory compromise offer may include
a general release. In Goodstein, however, the court
concluded that a “general release” did not invalidate a
statutory compromise offer after construing it to apply only
to the litigation before it. (Goodstein at 907; accord, Ignacio,
supra, 2 Cal.App.5th at 89 [“The rule to be taken from
Goodstein is not that a ‘general release’ does not invalidate a
section 998 offer; the rule is that a release of unknown
claims arising only from the claim underlying the litigation
itself does not invalidate the offer”].) We cannot similarly
construe the releases here, which applied to “all [c]laims . . .
under Prop. 65.”
Third, the section 998 respondents contend that to
establish that a release was overbroad, the offeree must
identify a potential claim that would have been encompassed
by the release but is beyond the scope of the litigation. They
contend CERT failed to do so, both in the trial court and on
42
appeal. Assuming arguendo that such a requirement exists,
no special effort is needed to identify a qualifying potential
claim in this case. As discussed above, and as these
respondents themselves argue in the context of summary
judgment, CERT’s asserted claim involving exposure to
acrylamide formed by additives in coffee was beyond the
scope of its actions. Yet under the terms of the proposed
general releases, this claim -- undoubtedly a claim under
Prop. 65 -- would have been relinquished.17
Finally, the section 998 respondents claim their offers,
which included Prop. 65 warnings and substantial payments
to CERT, “were clearly more favorable than the judgment of
dismissal that CERT achieved.” But this assertion ignores
claims beyond the scope of CERT’s actions that were to be
released under the offers. The asserted claim involving
17 The section 998 respondents suggest that CERT forfeited
its arguments by failing to expressly identify a released claim
beyond the scope of the litigation. To the extent this asserted
failure triggers the forfeiture rule, we exercise our discretion to
consider CERT’s contentions and the claim we have identified
because this matter is subject to de novo review and the relevant
claim was extensively discussed both below and on appeal in the
context of summary judgment, providing the section 998
respondents ample opportunity to address it. (See Husman v.
Toyota Motor Credit Corp. (2017) 12 Cal.App.5th 1168, 1187
[noting appellate courts’ discretion to consider matter that was
not argued below but involves only legal question based on
undisputed facts]; Jameson v. Desta (2009) 179 Cal.App.4th 672,
674, fn. 1 [exercising discretion to consider claim not raised in
opening brief because respondent had not been deprived of
opportunity to address issue].)
43
coffee additives was unaffected by the Coffee Regulation, and
if found meritorious, could have yielded a significant reward
for CERT, which would have been entitled to 25 percent of
all penalties collected.18 Given that the proposed releases in
the section 998 offers covered this and other potential
claims, the trial court could not have determined that the
offers were more favorable than the judgment. Thus, the
offers were invalid for purposes of section 998, and the trial
court erred in denying CERT’s motion to tax costs.
18 As noted, a person who violates Prop. 65 is subject to civil
penalties of up to $2,500 per day for each violation. (Health &
Saf. Code, § 25249.7, subd. (b)(1).)
44
DISPOSITION
The trial court’s orders granting summary judgment
and denying attorney fees are affirmed. The order denying
CERT’s motion to tax costs is reversed. The parties shall
bear their own costs on appeal.
CERTIFIED FOR PUBLICATION
MANELLA, P. J.
We concur:
WILLHITE, J.
COLLINS, J.
45