Charles v. Sutter Home Winery, Inc.

Filed 5/9/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
DORIS CHARLES et al., B275295
Plaintiffs and Appellants, (Los Angeles County
v. Super. Ct. No. BC576061)
SUTTER HOME WINERY, INC., et
al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, John Shepard Wiley, Jr., Judge. Affirmed.
Kabateck Brown Kellner, Brian S. Kabateck and Drew R.
Ferrandini; Esner, Chang & Boyer and Stuart B. Esner for
Plaintiffs and Appellants.
Jones Day, Frederick McKnight, Charles H. Moellenberg,
Jr., and Kerry C. Fowler for Defendants and Respondents Sutter
Home Winery, Inc.; Rebel Wine Co., LLC; Don Sebastiani & Sons
International Wine Negociants, Corp.; Jean-Claude Boisset
Wines, USA, Inc.; and Raymond Vineyard and Cellar, Inc.
Farella Braun + Martel, R. Christopher Locke and C.
Brandon Wisoff for Defendants and Respondents Treasury Wine
Estates Americas Company; Treasury Wine Estates Holding,
Inc.; Beringer Vineyards; The Wine Group, Inc.; The Wine Group,
LLC; Golden State Vintners; Varni Brothers Corporation; Fetzer
Vineyards; and Bronco Wine Company.
O’Melveny & Myers, Dawn Sestito and Guianna Henriquez
for Defendant and Respondent Trader Joe’s Company.
Nixon Peabody and Bruce E. Copeland for Defendant and
Respondent Constellation Brands U.S. Operations, Inc.
Morrison & Foerster LLP and James M. Schurz for
Defendant and Respondent California Natural Products.
Larson O’Brien, Robert C. O’Brien, Steven E. Bledsoe and
Steven A. Haskins for Defendant and Respondent F. Korbel &
Bros.
Maranga Morgenstern, Ninos Saroukhanioff and Robert A.
Morgenstern for Defendants and Respondents Megan Mason,
Randy Mason and Oakville Winery Management Corp.
Winston & Strawn, Erin R. Ranahan and Drew A.
Robertson for Defendants and Respondents Sonoma Wine Co.,
LLC; and Winery Exchange, Inc.
_____________________
Plaintiffs appeal from the judgment of dismissal based on
the sustaining of a demurrer to their putative class action
complaint under the California Safe Drinking Water and Toxic
Enforcement Act of 1986. (Health & Saf. Code, § 25249.5 et seq.
(Proposition 65 or the Act).) This appeal challenges the
Proposition 65 warning provided by defendants for wines that
contain purportedly unsafe levels of inorganic arsenic, a chemical
2
identified by the State of California as a carcinogen and
reproductive toxicant (listed chemical).
It is undisputed that defendants provided the so-called
“safe harbor” warning for alcoholic beverages: “WARNING:
Drinking Distilled Spirits, Beer, Coolers, Wine and Other
Alcoholic Beverages May Increase Cancer Risk, and, During
Pregnancy, Can Cause Birth Defects.” (Cal. Code Regs., tit. 27,
§ 25603.3, subd. (e)(1);1 see Ingredient Communication Council,
Inc. v. Lungren (1992) 2 Cal. App. 4th 1480, 1485 [describing “safe
harbor” warnings].) Plaintiffs do not take issue with the
adequacy of the safe harbor warning for alcoholic beverages as
applied to the health risks posed by alcohol. Instead, their
concern is with the lack of reference in that warning to inorganic
arsenic, a listed chemical, and the increased health risks
associated with that toxic substance. Plaintiffs contend
defendants were required to provide an additional warning for
inorganic arsenic, patterned after section 25603.2, which they
claim is stronger than the alcoholic beverage warning. As
pertinent, it reads: “WARNING: This product contains . . .
chemical[s] known to the State of California to cause cancer [and
birth defects, or other reproductive harm].”
In sustaining the demurrer, the trial court reasoned that
disclosure of chemical ingredients in alcoholic beverages is not a
requirement of the Act, and compliance with Proposition 65 is
established as a matter of law where, as here, it is undisputed
that the safe harbor warning for alcoholic beverages was provided
to consumers of defendants’ wines. (§ 25603.3, subd. (e)(1).) We
conclude the demurrer was properly sustained on this and other
1 All further undesignated regulation section references are
to Title 27 of the California Code of Regulations.
3
grounds, including res judicata. The drafting of safe harbor
warnings is a regulatory function assigned to the lead agency, the
Office of Environmental Health Hazard Assessment (OEHHA),
and “[a]ny dissatisfaction with the adequacy of such a warning is
a matter for consideration by OEHHA and the Legislature,
rather than the court.” (Environmental Law Foundation v. Wykle
Research, Inc. (2005) 134 Cal. App. 4th 60, 68, fn. 8
(Environmental Law Foundation).)
FACTUAL AND PROCEDURAL BACKGROUND
Acting in their personal and representative capacities,
plaintiffs Doris Charles, Alvin Jones, Jason Peltier, and Jennifer
Peltier sued the defendant manufacturers, distributors, and
retailers of “arsenic-contaminated wines.” The defendants are:
Sutter Home Winery, Inc.; Rebel Wine Co., LLC; Don Sebastiani
& Sons International Wine Negociants, Corp.; Jean-Claude
Boisset Wines, USA, Inc.; Raymond Vineyard and Cellar, Inc.;
Treasury Wine Estates Americas Company; Treasury Wine
Estates Holding, Inc.; Beringer Vineyards; The Wine Group, Inc.;
The Wine Group, LLC; Golden State Vintners; Varni Brothers
Corporation; Fetzer Vineyards; Bronco Wine Company; Trader
Joe’s Company; Constellation Brands U.S. Operations, Inc.;
California Natural Products (named as Constellation Wines, US
and Simply Naked Winery); F. Korbel & Bros.; Megan Mason and
Randy Mason; Oakville Winery Management Corp.; Sonoma
Wine Co., LLC; and Winery Exchange, Inc.
Many of the defendants were parties to the consent
judgment in a previous Proposition 65 class action lawsuit,
Bonilla v. Anheuser-Busch (Super. Ct. L.A. County, 2014, No.
4
BC537188) (Bonilla).2 Because res judicata is an issue on appeal,
we begin with discussion of the Bonilla case.
The Bonilla Case
In Bonilla, plaintiffs John Bonilla, Rafael Delgado, Jr.,
Jesse Garrett, and Rachel Padilla filed a Proposition 65 class
action complaint on behalf of themselves and all similarly
situated California consumers of alcoholic beverage products
manufactured, distributed, and sold by defendants Anheuser-
Busch, LLC, Bacardi U.S.A., Inc., Constellation Brands, Inc.,
Diageo North America, Inc., Hangar 24 Craft Brewery, LLC,
Heineken USA Incorporated, and others. Their complaint alleged
the defendants failed to warn consumers that their alcoholic
beverage products contained “chemicals” known to the state to
cause cancer and reproductive harm.
OEHHA provides a safe harbor warning that the alcoholic
beverage industry may provide in order to comply with the Act:
“WARNING: Drinking Distilled Spirits, Beer, Coolers, Wine and
Other Alcoholic Beverages May Increase Cancer Risk, and,
During Pregnancy, Can Cause Birth Defects.” (§ 25603.3, subd.
(e)(1).) This warning is central to the 2014 consent judgment in
2 Defendants requested that judicial notice be taken of
relevant court documents from the Bonilla case. The request is
granted. (Evid. Code, § 452, subd. (d).) All defendants in this
case except the following are signatories to the Bonilla consent
judgment: Megan Mason, Randy Mason, Oakville Winery
Management Corporation, Winery Exchange, Inc., Sonoma Wine
Company, LLC, and Golden State Vintners. Although not a
signatory, Trader Joe’s is covered by the Bonilla consent
judgment as a distributor and retailer of wines produced by
Bronco Wine Company.
5
the Bonilla case that was signed by many defendants in this case
as “opt in defendants.” The Bonilla defendants and opt-in
defendants (jointly, the Releasees) stipulated to the following
terms:
• The Releasees agreed to provide the safe harbor
warning for alcoholic beverages. (§ 25603.3, sub.
(e)(1).)
• Acting in the public interest, the Bonilla plaintiffs
agreed that the consent judgment would constitute a
full, final, and binding resolution “of any violation of
Proposition 65 that has been or could have been
asserted in the public interest against the Releasees
arising out of exposure to the Covered Products.”
• The Bonilla consent judgment defined “Covered
Products” to mean “alcohol beverage products that
expose consumers in the State of California to
chemicals listed by the State of California pursuant
to California Health & Safety Code [section] 25249.8,
including ‘alcoholic beverages, when associated with
alcohol abuse[,]’ ‘ethyl alcohol in alcoholic beverages,’
and ‘ethanol in alcoholic beverages. . . .’”
This Action
Plaintiffs initiated this action in March 2015, several
months after the Bonilla consent judgment was entered. The
parties do not dispute that Proposition 65 applies to the wines at
issue in this case, and defendants do not seek an exemption from
the warning requirement.
The Original Complaint. The original complaint alleges
that by failing to warn consumers of excessive levels of inorganic
6
arsenic in their wines, defendants are “poisoning wine consumers
in direct violation of California law.” However, there is no
allegation of personal injury or physical harm resulting from the
consumption of inorganic arsenic in the subject wines.
Proposition 65 is mentioned only once in the original
complaint, as the basis of the Unfair Competition Law claim.
(Bus. & Prof. Code, § 17200 et seq. (UCL).) That claim alleges
the failure to provide a Proposition 65 warning for exposure to
inorganic arsenic constitutes misleading and deceptive
advertising. This theory is the basis of the statutory claims for
violation of the Consumer Legal Remedies Act (Civ. Code, § 1750
et seq. (CLRA)) and False Advertising Law (Bus. & Prof. Code,
§ 17500 (FAL)), as well as claims for unjust enrichment, breach
of the implied warranty of merchantability, and negligent
misrepresentation.
The complaint seeks injunctive relief and restitution of the
purchase price paid for the arsenic-tainted wines from January 1,
2011 to the present. It reserves the right to amend the CLRA
claim to seek monetary damages after notice is provided under
Civil Code section 1782.
Operative First Amended Complaint. On the same date the
original complaint was filed, plaintiffs mailed a 60-day Notice of
Violation of Proposition 65 to defendants and the requisite
government agencies. (See Health & Saf. Code, § 25249.7, subd.
(d)(1).) This notice was based on defendants’ alleged failure to
warn consumers of exposure to excessive levels of inorganic arsenic
in the subject wines. Inorganic arsenic compounds is listed as a
carcinogen, and arsenic (inorganic oxides) is listed as a
reproductive toxicant on the State Internet site for Proposition 65.
7
([as of May 2, 2018].)
Following expiration of the 60-day notice period, plaintiffs
filed the first amended complaint, the operative pleading, which
alleges a new claim for violation of Proposition 65. The
remaining causes of action in the amended complaint are similar
to those of the original complaint.
The amended complaint refers to the “no significant risk
level” for exposure to inorganic arsenic. This is the level of
exposure that OEHHA has determined will pose no significant
risk of cancer, and for inorganic arsenic (except through
inhalation) it is 10 micrograms per day. (Citing § 25709, subd.
(b).) In anticipation of a defense to the warning requirement
based on the “no significant risk” level, plaintiffs allege that a
Proposition 65 warning must be given whenever the toxic
chemical is “added” to a food or beverage. Based on information
and belief, plaintiffs allege that because inorganic arsenic is
added to the wines in order “to filter, clarify, fine, sweeten, color,
stabilize or otherwise manipulate the wine product before sale,”
there is no exception to the warning requirement.
Demurrer to First Amended Complaint
In their demurrer to the amended complaint, defendants
argue that arsenic is ubiquitous in air, soil, and water, and
appears in trace amounts in wine, beer, tea, fruits, rice,
vegetables, and grains. They contend there is no federal or state
maximum acceptable daily exposure level for inorganic arsenic in
wine, and that by providing the safe harbor warning for alcoholic
beverages, they are in full compliance with Proposition 65.
8
In addition to the Bonilla court documents, defendants seek
judicial notice of various OEHHA regulations and Statements of
Reasons pertaining to Proposition 65 and safe harbor warnings.
Defendants also seek judicial notice of the maximum acceptable
daily exposure levels for arsenic in wine that have been
established by Canada (100 ppb [100 micrograms (µg) of arsenic
per liter of wine]), and 46 foreign countries that are members of
the International Organization of Vine and Wine (OIV) (200 ppb
[200 µg of arsenic per liter of wine]). These requests, which are
not opposed, are granted.
Defendants assert the “no significant risk level” of exposure
claim is irrelevant to this case because they concede the wines
are subject to the Proposition 65 warning requirement, and do
not claim an exception to the warning requirement for chemicals
that are naturally occurring in food (§ 25501, subd. (a)) or
introduced through human activity (§ 25501, subd. (a)(3)). (See
Health & Saf. Code, § 109935 [“food” includes “beverages”]; see
also People ex rel. Brown v. Tri-Union Seafoods, LLC (2009) 171
Cal. App. 4th 1549, 1554 [exception for methylmercury that is
naturally occurring in tuna].)
Defendants take issue with the allegation that a separate
arsenic warning must be given for wines that contain more than
10 micrograms of inorganic arsenic per liter. They contend the
complaint conflates the “no significant risk level” of 10
micrograms per day with a maximum daily exposure level for
inorganic arsenic in wine, and that 10 micrograms per liter is the
maximum acceptable daily limit for exposure to inorganic arsenic
in drinking water, not wine. The parties have cited no federal or
state regulation that established a maximum daily exposure level
9
for inorganic arsenic in wine. Nor have we found any such
decision.
Applying the drinking water standard to wine would be
inappropriate, defendants contend, because it “is based upon a
person drinking two liters of water a day every day for a lifetime”
(citing 66 C.F.R. § 7006 (2001)). “For the drinking water
standard to be comparable to wine, a person would first need to
drink 13.5 glasses of wine—nearly three bottles—every day since
birth,” and, they claim, it would be wrong to apply the same level
of consumption to alcoholic beverages. They argue it is neither
typical nor reasonable to consume 13.5 glasses of wine each day
for a lifetime.
Defendants also contend the drinking water standard of 10
micrograms of arsenic per liter of water is stricter than any
known standard for inorganic arsenic in wine, which in Canada is
100 micrograms of arsenic per liter of wine, and in 46 other
countries is 200 micrograms of arsenic per liter of wine. Even
applying the drinking water standard to wine, the allegation that
wines contain inorganic arsenic at levels that are 500 percent or
more than the drinking water standard means that the
concentration of inorganic arsenic in wine is 50 micrograms of
arsenic per liter of wine (500% of 10 µg per liter = 50 µg per liter).
Because the alleged arsenic level is below even the strictest
standard for inorganic arsenic in wine, none of the wines at issue
in this case would exceed the permissible limit for inorganic
arsenic in wine in the 47 countries that have adopted such
standard. Defendants argue that setting a state maximum
acceptable daily exposure limit for inorganic arsenic in wine is a
regulatory function that requires a balancing of complex policy
issues that only the Legislature or OEHHA is qualified to
10
perform. (See, e.g., §§ 25721 [calculating level exposure to
chemicals causing cancer], 25821 [calculating level of exposure to
chemicals causing reproductive toxicity].)
Defendants also argue that the omission of chemical
references does not render a Proposition 65 warning deficient.
(Citing Environmental Law Foundation, supra, 134 Cal.App.4th
at p. 69, fn. 10 [“fact that the warning language does not
specifically indicate that it is referring to a risk created by . . .
mercury, however, is not in itself a deficiency under the
regulations to Proposition 65”].) In drafting the safe harbor
warnings, OEHHA considered and rejected a recommendation
that the warning provide the names of specific chemicals
contained in the product. Defendants quote from OEHHA’s
Revised Statement of Final Reasons: “One commentator
recommended that the warning specify the chemicals involved by
name. . . . The Agency believes that this would provide little
benefit to consumers and might greatly complicate the warning
process. Chemical names would probably hold little meaning for
the ordinary individual. Placing the names in the warning would
mean that separate warning placards might need to be obtained
for each product. The goal of the prescribed warnings is to
effectively place persons on notice that a risk of cancer or
reproductive toxicity is associated with the use of the product.
Once on notice, if the person desires additional information, he or
she can direct further inquiries to the party giving the warning.”
Defendants assert that their compliance with all federal
and state labeling and warning regulations for alcohol is
undisputed in the complaint. They contend their compliance
with these regulations forecloses plaintiffs’ claims for additional
disclosures.
11
They also argue the Bonilla consent judgment bars this
subsequent action against the Releasees for “any violation of
Proposition 65 that . . . could have been asserted in the public
interest against the Releasees arising out of exposure to the
Covered Products.” They also contend the term “Covered
Products” as defined in the consent judgment includes alcoholic
beverage products that expose consumers to listed “chemicals,”
that inorganic arsenic is listed by the state as both a carcinogen
and reproductive toxicant, and because the claims in this case
arise from alleged exposure to inorganic arsenic in wine, they are
barred under the doctrine of res judicata.
Defendants argue the remaining causes of action are
derivative of the Proposition 65 claim and must be dismissed.
Defendants also contend that the remaining claims are based on
a theory of misrepresentation by omission—that by not listing
inorganic arsenic in the safe harbor warning, defendants misled
consumers into believing their only chemical exposure was to
alcohol, and that because there is no duty or obligation to disclose
the “trace arsenic content of their wines,” the complaint fails to
state a viable theory of misrepresentation by omission or
concealment.
In opposition to the demurrer, plaintiffs argue the safe
harbor warning for alcoholic beverages fails to provide a defense
to the complaint because the warning refers only to alcohol and is
silent about the presence of inorganic arsenic, which is unsafe in
any amount. Consumers are aware that wine contains alcohol,
but the same is not true of inorganic arsenic. Accordingly, they
argue that a separate Proposition 65 warning for inorganic
arsenic is necessary to allow consumers to make an “informed
12
decision about whether or not to be exposed to inorganic arsenic
(e.g., whether they want to be poisoned).”
The trial court sustained the demurrer. Reasoning that the
safe harbor warning for alcoholic beverages is deemed clear and
reasonable by the OEHHA, the trial court concluded no
additional warning is required.
At the demurrer hearing, the trial court assumed, as do we,
that the subject wines contain alcohol, which is listed by the state
as a chemical known to cause cancer and reproductive harm, plus
a second chemical, inorganic arsenic, which also is listed by the
state as a carcinogen and reproductive toxicant. The court
rejected the allegation that a general warning for listed chemicals
other than alcohol is required where the wines contain a second
chemical, inorganic arsenic, that is not mentioned in the safe
harbor warning for alcoholic beverages. The type of general
warning sought by plaintiffs, patterned after the present version
of section 25603.2 (operative until Aug. 30, 2018), would read:
“WARNING: This product contains . . . chemical[s] known to the
State of California to cause cancer [and birth defects, or other
reproductive harm].” The trial court determined that Proposition
65 does not require both a general warning and a specific
warning for an alcoholic beverage product, and whatever
shortcomings exist in the alcoholic beverage warning are for the
OEHHA or the Legislature to address. (Citing Environmental
Law Foundation, supra, 134 Cal.App.4th at p. 69, fn. 8.)
Finding the remaining claims to be derivative of the
Proposition 65 claim, the court sustained the demurrer to the
entire complaint without leave to amend. The court entered a
final order (judgment) of dismissal. This timely appeal followed.
13
DISCUSSION
“‘In reviewing the sufficiency of a complaint against a
general demurrer, we are guided by long-settled rules. “We treat
the demurrer as admitting all material facts properly pleaded,
but not contentions, deductions or conclusions of fact or law.
[Citation.] We also consider matters which may be judicially
noticed.” [Citation.] Further, we give the complaint a reasonable
interpretation, reading it as a whole and its parts in their
context. [Citation.] When a demurrer is sustained, we determine
whether the complaint states facts sufficient to constitute a cause
of action. [Citation.] And when it is sustained without leave to
amend, we decide whether there is a reasonable possibility that
the defect can be cured by amendment: if it can be, the trial
court has abused its discretion and we reverse; if not, there has
been no abuse of discretion and we affirm. [Citations.] The
burden of proving such reasonable possibility is squarely on the
plaintiff.’ [Citation.]” (Blumhorst v. Jewish Family Services of
Los Angeles (2005) 126 Cal. App. 4th 993, 999.)
I
On November 4, 1986, the California electorate approved
Proposition 65. The Act “prohibits any person, in the course of
doing business, from knowingly and intentionally exposing any
individual to a chemical known to the state to cause cancer or
reproductive toxicity without giving a specified warning . . . .
([Health & Saf. Code,] § 25249.5 et seq.)” (DiPirro v. American
Isuzu Motors, Inc. (2004) 119 Cal. App. 4th 966, 969–970.)
A. The Proposition 65 Warning Requirement
The Act requires each person who, in the course of doing
business, knowingly and intentionally exposes another person to
a listed chemical, to provide a clear and reasonable warning prior
14
to the exposure. (Health & Saf. Code, § 25249.6.) In the context
of consumer products, the Act requires that the warning “clearly
communicate that the chemical in question is known to the state
to cause cancer, or birth defects or other reproductive harm.”
(§ 25601.)
The warning may be provided through various methods.
(Health & Saf. Code, § 25249.11, subd. (f).) These include labels,
postings of notices, and public announcements, ““‘provided that
the warning accomplished is clear and reasonable.” [Citation.]’
[Citation.]” (Environmental Law Foundation, supra, 134
Cal.App.4th at p. 64.)
B. Safe Harbor Warnings
OEHHA, the lead agency designated to implement the Act,
has adopted regulations and safe harbor warnings for the
businesses that must comply with Proposition 65. (Health & Saf.
Code, § 25249.12; Environmental Law Foundation, supra, 134
Cal.App.4th at p. 64.) For consumer products that contain one or
more of the listed chemicals—in this case, we assume at least two
listed chemicals, alcohol and inorganic arsenic, were present in
the wines—OEHHA has deemed warnings given in accordance
with the safe harbor provisions “to be clear and reasonable.”
(§ 12601, subd. (b); Environmental Law Foundation, supra, 134
Cal.App.4th at p. 65.) The purpose of the safe harbor warnings is
“‘to provide the businesses choosing to use them reasonable
certainty that they will not be subjected to an enforcement action
over the warning they provide.’ (OEHHA, Rev. Final Statement
of Reasons (Oct. 6, 1988) pp. 7–8; 22 Cal. Code Regs., Div. 2,
§ 12601, Clear and Reasonable Warnings.)” (Environmental Law
Foundation, at p. 67.) When a safe harbor warning is given in
compliance with the requirements of the Act, OEHHA has
15
concluded that the warning eliminates the need for a “‘case-by-
case factual determination’” of the sufficiency of the warning. (Id.
at p. 66.)
Alcoholic Beverage Warning. For alcoholic beverages, the
state has identified three Proposition 65 chemicals, which are
commonly referred to as “alcohol”: (1) “ethyl alcohol in alcoholic
beverages” was listed as a reproductive toxicant in 1987; (2)
“alcoholic beverages, when associated with alcohol abuse” was
listed as a carcinogen in 1988; and (3) “ethanol in alcoholic
beverages” was listed as a carcinogen in 2011. (See § 27001,
subd. (b); Dec. 29, 2017 Proposition 65 List at
[as of
May 2, 2018].) Following the listing of ethyl alcohol in alcoholic
beverages as a reproductive toxicant, OEHHA provided the
original safe harbor warning for alcoholic beverages, which read:
“WARNING: Drinking Distilled Spirits, Beer, Coolers, Wine and
Other Alcoholic Beverages During Pregnancy Can Cause Birth
Defects.” Subsequently, after “alcoholic beverages, when
associated with alcohol abuse” was identified as a carcinogen,
OEHHA amended the safe harbor warning to read: “WARNING:
Drinking Distilled Spirits, Beer, Coolers, Wine and Other
Alcoholic Beverages May Increase Cancer Risk, and, During
Pregnancy, Can Cause Birth Defects.” (§ 25603.3, subd. (e)(1).)
General Consumer Products Warning. In addition to
specialized safe harbor warnings, OEHHA provides safe harbor
warnings for exposure to listed chemicals found in general
consumer products. This is the additional warning plaintiffs
contend is required for wines that contain inorganic arsenic,
which is both a carcinogen and a reproductive toxicant.
16
(§ 25603.2.) OEHHA has determined that for general consumer
products:
(a) The warning message must include the following
language:
1. For consumer products that contain a chemical known
to the state to cause cancer:
“WARNING: This product contains a chemical known
to the State of California to cause cancer.”
2. For consumer products that contain a chemical known
to the state to cause reproductive toxicity:
“WARNING: This product contains a chemical known
to the State of California to cause birth defects or
other reproductive harm.” (§ 25603.2.)
New Warning for Alcoholic Beverages. The most recent
amendments to OEHHA’s safe harbor warnings will take effect in
August 2018. For consumer products manufactured prior to
August 31, 2018, which includes the wines at issue in this case,
the OEHHA has determined that a warning “is deemed to be
clear and reasonable if it complies with the September 2008
revision of this article” (referring to art. 6 of tit. 27 of the Cal.
Code of Regs.). (§ 25600, subd. (a), operative Aug. 30, 2018.)
For alcoholic beverages, the new safe harbor warning
remains largely unchanged: “‘WARNING: Drinking distilled
spirits, beer, coolers, wine and other alcoholic beverages may
increase cancer risk, and during pregnancy, can cause birth
defects. For more information go to
www.P65Warnings.ca.gov/alcohol.’” (§ 25607.4, subd. (a),
operative Aug. 30, 2018, italics added.)
17
In its Final Statement of Reasons (Sept. 2, 2016),3 OEHHA
discussed the effect the new alcoholic beverage safe harbor
warning will have on the parties to the Bonilla consent judgment.
It stated that “appropriately 90 percent of all alcoholic beverage
products in California” are produced by the Releasees in Bonilla.
Citing section 25600, subdivision (e) (“A person that is a party to
a court-ordered settlement or final judgment establishing a
warning method or content is deemed to be providing a ‘clear and
reasonable’ warning for that exposure for purposes of this article,
if the warning complies with the order or judgment”), OEHHA
approved the continued use of “the warnings described in the
Consent Judgment.”
As to those who did not participate in the Bonilla consent
judgment, OEHHA stated they may use the “methods and
content in Section 25607.2 [content for new food exposure
warning operative Aug. 30, 2018] and 25607.3 [methods of
transmission for new alcoholic beverage exposure warning
operative Aug. 30, 2018], respectively, if they wish to take
advantage of the ‘safe harbor’ under Article 6,” or “post any
warning that is clear and reasonable, including the one adopted
in the [Bonilla] court settlement.” (OEHHA Final Statement of
Reasons (Sept. 2, 2016).)
Under both the current and amended versions, the safe
harbor warnings do not require that chemical ingredients be
named on or adjacent to the alcoholic beverage product.
Presumably OEHHA did not believe it necessary to identify
3 Thisdocument can be found online at
https://oehha.ca.gov/media/downloads/crnr/art6fsor090116.pdf
(as of May 2, 2018).
18
alcohol in the new safe harbor warning for alcoholic beverages
because the presence of alcohol is obvious to consumers.
New Food and Beverage Exposure Warning. For foods that
contain one or more listed chemicals, the new safe harbor
warnings will require, for the first time, the identification of at
least one chemical for each applicable health risk—cancer and
reproductive harm. Because “beverages” are “foods” (§ 25600.1,
subd. (g), effective Aug. 30, 2018, citing Health & Saf. Code,
§ 109935, subd. (a)), this new safe harbor warning also applies to
beverages, and, at the election of the entity providing the
warning, may be used for alcoholic beverages. (OEHHA Final
Statement of Reasons, Sept. 2, 2016.)
For foods and beverages that expose consumers to both
carcinogens and reproductive toxicants, the new safe harbor
warning provides: “Consuming this product can expose you to
chemicals including [name of one or more chemicals], which is
[are] known to the State of California to cause cancer and [name
of one or more chemicals], which is [are] known to the State of
California to cause birth defects or other reproductive harm. For
more information go to www.P65Warnings.ca.gov/food.”
(§ 25607.2, subd. (a)(4), operative August 30, 2018.)
For foods and beverages that expose consumers to a single
chemical that is both a carcinogen and reproductive toxicant, the
new safe harbor warning provides: “For exposure to a chemical
that is listed as both a carcinogen and a reproductive toxicant,
the words, ‘Consuming this product can expose you to chemicals
including [name of one or more chemicals], which is [are] known
to the State of California to cause cancer and birth defects or
other reproductive harm. For more information go to
19
www.P65Warnings.ca.gov.’” (§ 25607.2, subd. (a)(5), operative
Aug. 30, 2018.)
“Where a warning is being provided for an exposure to a
single chemical the words ‘chemicals including’ may be deleted
from the warning content set out in subsections (2), (3), and (5).”
(§ 25607.2, subd. (a)(6).) The new safe harbor warnings for foods
and beverages that expose consumers to more than one listed
chemical are deemed to be “clear and reasonable” provided at
least one of the listed chemicals is disclosed, regardless of the
number contained in the product. (See OEHHA Final Statement
of Reasons, Sept. 2, 2016.)
II
Plaintiffs argue that providing the safe harbor warning for
general consumer products (§ 25603.2) would result in a
“stronger” warning than the alcoholic beverage warning
(§ 25603.3). Assuming this is true, the different messages
provided in the general warning and the alcoholic beverage
warning are based on a balancing of risks, a process that OEHHA
is best equipped to determine.
Plaintiffs contend the safe harbor warning for alcoholic
beverages is incomplete because it does not alert consumers to
the presence of inorganic arsenic, and by this omission, the
warning misleads consumers into believing their exposure is
limited to a single listed chemical, alcohol. But the purpose of
Proposition 65 is to warn consumers of the two health risks—
cancer and reproductive harm—associated with exposure to a
listed chemical, and the alcoholic beverage warning complies with
the regulations drafted by OEHHA to accomplish that objective.
20
Plaintiffs contend that providing a separate warning for
inorganic arsenic is required unless the level of exposure falls
below the “maximum allowable dose level” (MADL) for arsenic in
wine. They assert that the party seeking an exemption from the
warning requirement—in this case, defendants—must bear the
burden of proof at trial for establishing the MADL for arsenic in
wine, and due to the existence of a triable issue of material fact,
the demurrer is improper. This assertion overlooks the fact that
defendants are not seeking an exemption from the warning
requirement. It also ignores the regulatory process that
authorizes the lead agency to determine whether, in addition to
the alcoholic beverage warning, a separate warning for inorganic
arsenic is required.
OEHHA does not require defendants to provide two
separate warnings for alcoholic beverages that contain an
additional listed chemical. In the new warnings that will take
effect on August 30, 2018, OEHHA requires the disclosure of only
one listed chemical per health risk and allows each business to
decide whether to list additional chemicals in the warning they
choose to provide. Under the current regulatory scheme, the
failure to provide a separate arsenic warning is not a violation of
the regulations or the initiative itself. Whether an additional
warning should be required for inorganic arsenic in wine is a
matter for the Legislature or OEHHA to consider. (See
Environmental Law Foundation, supra, 134 Cal.App.4th at p. 68,
fn. 8 [adequacy of safe harbor warning for mercury in dental
amalgam is matter for OEHHA or Legislature to determine]; see
also Coshow v. City of Escondido (2005) 132 Cal. App. 4th 687,
706–707 [fluoridation of drinking water is legislative function].)
21
III
As to the defendants that participated in the Bonilla
consent judgment, the demurrer was properly asserted on the
ground of res judicata and is affirmed that basis. ‘“Under the
doctrine of res judicata, a valid, final judgment on the merits is a
bar to a subsequent action by the parties or their privies on the
same cause of action.”’ (Villacres v. ABM Industries, Inc. (2010)
189 Cal. App. 4th 562, 575–576 (Villacres), quoting Amin v.
Khazindar (2003) 112 Cal. App. 4th 582, 589–590.)
The second aspect of the res judicata doctrine is collateral
estoppel (Frommhagen v. Board of Supervisors (1987) 197
Cal. App. 3d 1292, 1299), which precludes litigation of a claim that
was related to the subject matter of the first action and could
have been raised in that action, even though it was not expressly
pleaded. (Villacres, supra, 189 Cal.App.4th at p. 576, citing
Interinsurance Exchange of the Auto. Club v. Superior Court
(1989) 209 Cal. App. 3d 177, 181–182.) This preclusive effect
applies where, as here, the previous action was dismissed with
prejudice based on a court-approved class action settlement
agreement. (Villacres, at p. 577.)
The Bonilla consent judgment constitutes a full, final, and
binding resolution “of any violation of Proposition 65 that has
been or could have been asserted in the public interest against
the Releasees arising out of exposure to the Covered Products.”
“Covered Products” is defined as alcoholic beverage products that
expose consumers to listed chemicals, “including ‘alcoholic
beverages, when associated with alcohol abuse[,]’ ‘ethyl alcohol in
alcoholic beverages,’ and ‘ethanol in alcoholic beverages.’”
Plaintiffs contend the word “including” imposes a limitation that
excludes non-enumerated chemicals such as inorganic arsenic
from the scope of the consent judgment. We do not agree. In our
22
view, the word “including” does not denote exclusivity. (See
Hasson v. Mercy American River Hospital (2003) 31 Cal. 4th 709,
717 [“the word ‘including’ in a statute is ‘ordinarily a term of
enlargement rather than limitation’”].) As we read the Bonilla
consent judgment, any claims that could have been asserted in
that case are included in the scope of the consent judgment and
may not be raised in a subsequent action. Because the present
claim is based on a violation of Proposition 65 arising out of
exposure to a listed chemical in a Covered Product, it qualifies as
a claim that could have been asserted in Bonilla and therefore is
barred by the consent judgment.
Plaintiffs argue that Consumer Advocacy Group, Inc. v.
ExxonMobil Corp. (2008) 168 Cal. App. 4th 675 (Consumer
Advocacy) precludes the res judicata defense. We disagree.
Consumer Advocacy was preceded by a settlement agreement and
stipulated judgment in another action between the same parties
(the “CBE” action). (Id. at p. 681.) That agreement contained a
provision that expressly released all claims that could have been
raised arising out of any alleged discharge of or exposure to two
specific chemicals, benzene and toluene. (Id. at p. 688.) Lead,
the chemical at issue in the subsequent Consumer Advocacy
action, was not mentioned in the previous settlement agreement,
either by name or more generally as a “gasoline constituent.”
(Ibid.) Accordingly, Consumer Advocacy held that the release in
the CBE action did not bar a subsequent action concerning
discharge of or exposure to lead. (Id. at p. 689 [“While
ExxonMobil is not entitled to full summary judgment or to
summary adjudication that CAG’s entire action is barred by res
judicata, this is only because the CBE action did not resolve
claims relating to lead.”].) Here, the Bonilla consent judgment
23
included a release of future claims based on exposure to a listed
chemical in a Covered Product. Because this case falls within the
terms of that release, it is barred by the previous consent
judgment.
In plaintiffs’ view, resolution of this issue on demurrer is
improper because extrinsic evidence will be admissible at trial to
interpret the consent judgment and settlement agreement in
Bonilla. But extrinsic evidence is not admissible to provide a
“‘meaning to which [an instrument] is not reasonably susceptible’
[citations], and it is the instrument itself that must be given
effect.’ [Citations.]” (G & W Warren’s, Inc. v. Dabney (2017) 11
Cal.App.5th 565, 576 (G & W); see Pacific Gas & Elec. Co. v. G.W.
Thomas Drayage & Rigging Co. (1968) 69 Cal. 2d 33, 37
[admissibility of extrinsic evidence to explain contract based not
on whether contract language is clear on its face, but on whether
it “‘is relevant to prove a meaning to which the language of the
instrument is reasonably susceptible’”].) Evidence of the
undisclosed intent or understanding of the parties is not relevant
to contract interpretation where, as here, the language of the
consent judgment and settlement agreement are susceptible to
only one reasonable interpretation. (G & W, at pp. 574–575.)
Finally, the public policy argument raised by plaintiffs does
not require a different result. The consent judgment in Bonilla
was governed by the 2001 amendments to Proposition 65 that
were adopted to address the concern that “allowing a settlement
by one private enforcer to preclude claims by a different private
enforcer will encourage collusive settlements.” (Consumer
Advocacy, supra, 168 Cal.App.4th at p. 685.) “In response to this
concern, the Legislature did not strip Proposition 65 settlements
of preclusive effect, but instead increased oversight of settlements
24
involving private enforcers. The 2001 amendments included the
addition of section 25249.7, subdivision (f)(4), which mandates
court review and factual findings before approval of any
settlement in a private enforcement action, and subdivision (f)(5),
which requires that these settlements be submitted to the
Attorney General, who may then participate in the settlement
approval process. (Legis. Counsel’s Dig., Sen. Bill No. 471 (2001–
2002 Reg. Sess.) Stats. 2001, ch. 578.)” (Id. at p. 685, fn.
omitted.) The Bonilla court documents indicate the Attorney
General reviewed the settlement agreement. If the public
interest is not sufficiently protected, the Attorney General may
appeal from a consent judgment in a Proposition 65 private
enforcement action. (See Consumer Defense Group v. Rental
Housing Industry Members (2006) 137 Cal. App. 4th 1185, 1204–
1205.)
Richards v. Jefferson County, Ala. (1996) 517 U.S. 793,
cited by plaintiffs, is distinguishable. Richards involved a class-
action complaint filed by Jason Richards and Fannie Hill to
invalidate a county tax that had been upheld in an earlier action,
Bedingfield v. Jefferson County (1988) 527 So. 2d 1270. The
previous action was brought by three taxpayers (Bedingfield
plaintiffs) who did not sue on behalf of a class. (Richards, at
p. 801.) The judgment the Bedingfield plaintiffs received did not
purport to bind any county taxpayers who were nonparties, such
as Richards and Hill. (Id. at pp. 801–802.) In concluding the
judgment in Bedingfield was not binding on Richards and Hill,
the Supreme Court stated: “[T]here is no reason to suppose that
the Bedingfield court took care to protect the interests of
[Richards and Hill] . . . [or] that the individual taxpayers in
Bedingfield understood their suit to be on behalf of absent county
25
taxpayers. Thus, to contend that the plaintiffs in Bedingfield
somehow represented [Richards and Hill], let alone represented
them in a constitutionally adequate manner, would be ‘to
attribute to them a power that it cannot be said that they had
assumed to exercise.’ [Citation.]” (Id. at p. 802.)
IV
Plaintiffs contend they are entitled to amend their
complaint. Plaintiffs have not alleged a viable theory for
imposition of a duty to provide two warnings, one for inorganic
arsenic and another for alcoholic beverages.
The non-Proposition 65 claims are based on a common
theory of misrepresentation by omission. The underlying premise
is that the warning provided by defendants—the safe harbor
warning for alcoholic beverages—is deceptive and misleading to
consumers because it fails to disclose the presence of a second
listed chemical, inorganic arsenic, in the subject wines. But this
theory is flawed for the reasons previously discussed.
Where, as here, the UCL claim is based on an invalid
Proposition 65 claim, dismissal is proper. (Cf. In re Vaccine Cases
(2005) 134 Cal. App. 4th 438, 458–459 [plaintiff may not bring
UCL claim based on violation of Proposition 65 that is barred for
lack of compliance with 60-day notice requirement].) The same is
true of the CLRA claim, which is indistinguishable from the UCL
claim given the absence of a claim for monetary damages.
Although plaintiffs reserve the right to seek monetary damages
under the CLRA, they have not provided statutory notice under
Civil Code section 1782 despite the opportunity to do so. (See
Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal. App. 4th
1235, 1259–1261 [failure to comply with notice requirement
precludes monetary damages under CLRA];) This indicates the
26
principal relief sought under the CLRA claim is restitution and
injunctive relief, and because such relief is precluded by the
failure to allege a viable Proposition 65 claim, dismissal is proper.
(See Melton v. Boustred (2010) 183 Cal. App. 4th 521, 543
[nuisance cause of action was merely clone of invalid cause of
action for negligence, and thus falls with that cause of action].)
The same is true of the FAL claim and causes of action for
unjust enrichment, breach of the implied warranty of
merchantability, and negligent misrepresentation. Because they
are based on the identical theory—that the safe harbor warning
for alcoholic beverages is deceptive and misleading due to the
omission of any reference to inorganic arsenic—leave to amend
was properly denied for the reasons already stated.
The final contention—that plaintiffs have alleged a
separate violation of consumer protection laws based on the
addition of inorganic arsenic to wine—does not compel a different
result. Although the complaint mentions arsenic poisoning in a
conclusory fashion, the primary right alleged in the pleading is
the right of consumers to receive a separate Proposition 65
warning for inorganic arsenic in wine. There is no allegation of
personal injury or death caused by the unknowing consumption
of inorganic arsenic in the subject wines (cf. Major v. R.J.
Reynolds Tobacco Co. (2017) 14 Cal.App.5th 1179 [cigarette
manufacturer liable in negligence and product liability for
smoker’s death from lung cancer]), or improper manufacture or
sale of adulterated wines (cf. Health & Saf. Code, § 110445
[addition of poisonous or deleterious substance renders food
unsafe unless within regulatory limits].) Regardless whether
properly pleaded allegations of improper manufacture or sale of
27
adulterated wines may be raised in another lawsuit, they are not
before us now.
To summarize, the implementation of Proposition 65 is
assigned to the lead agency, OEHHA, and it has authority to
determine the content and manner of displaying safe harbor
warnings. Because it is undisputed defendants provided the safe
harbor warning for alcoholic beverages, and because OEHHA has
deemed this to be a “clear and reasonable” warning, any alleged
deficiency in the warning message—that it does not disclose the
presence of inorganic arsenic—is not a violation of the
regulations. Instead, it “is a matter for consideration by OEHHA
and the Legislature, rather than the court.” (Environmental Law
Foundation, supra, 134 Cal.App.4th at p. 69, fn. 8.) Under the
circumstances in this case, the safe harbor warning for alcoholic
beverages provides a complete defense. “[W]here the nature of
the plaintiff's claim is clear, and under substantive law no
liability exists, a court should deny leave to amend because no
amendment could change the result.” (City of Atascadero v.
Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal. App. 4th
455, 459.)
28
DISPOSITION
The judgment (order of dismissal) is affirmed. Defendants
are entitled to their costs on appeal.
CERTIFIED FOR PUBLICATION
EPSTEIN, P. J.
We concur:
WILLHITE, J.
MANELLA, J.
29