Council for Educ. & Research on Toxics v. Starbucks Corp.
| Citation | 84 Cal.App.5th 879,300 Cal.Rptr.3d 729 |
| Decision Date | 26 October 2022 |
| Docket Number | B309227,B310481 |
| Parties | COUNCIL FOR EDUCATION AND RESEARCH ON TOXICS, Plaintiff and Appellant, v. STARBUCKS CORPORATION et al., Defendants and Respondents. |
| Court | California Court of Appeals |
Metzger Law Group, Raphael Metzger, Long Beach, and Scott P. Brust for Plaintiff and Appellant Council for Education and Research on Toxics.
Gibson, Dunn & Crutcher, Daniel M. Kolkey, San Francisco, Theodore J. Boutrous, Jr., Patrick W. Dennis, Perlette M. Jura, Los Angeles, Blaine H. Evanson, Irvine and Alexander P. Swanson, Los Angeles; Morrison & Foerster and James Schurz, San Francisco, 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, 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, Riverside, for Defendant and Respondent Stater Bros Markets.
O'Melveny & Myers, Dawn Sestito, Adam Levine, and Kate Ikehara, Los Angeles, for Defendants and Respondents Trader Joe's Company and Mountanos Brothers Coffee Company.
Blaxter Blackman and J.T. Wells Blaxter, San Francisco, 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, Auburn, for Defendant and Respondent L. Paul Phillips.
Arnold & Porter Kaye Scholer, Trenton H. Norris, San Francisco, and Brian K. Condon, Los Angeles, for Defendant and Respondent Dunkin’ Brands, Inc.
Rogers Joseph O'Donnell, Renee D. Wasserman, and Alecia Cotton, San Francisco, for Defendants and Respondents Costco Wholesale Corporation and Bristol Farms
Nixon Peabody, Gregory P. O'Hara and Lauren M. Michals, San Francisco, for Defendants and Respondents Ralphs Grocery Company and The Kroger Co.
Norton, Rose Fulbright US, Jeffrey B. Margulies, Los Angeles, 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, Los Angeles, 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.
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 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 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 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 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.
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 proposition-65/proposition-65-list> [as 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...
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