Alameda County Superior Court Judge George C. Hernandez Jr. has tentatively dismissed a Proposition 65 enforcement action that alleges flooring giant Lumber Liquidators failed to adequately warn its customers about the potential exposure to formaldehyde from its laminate wood flooring products in violation of California’s Proposition 65.
Formaldehyde is a carcinogen listed by CALEPA under Proposition 65 and by the federal National Toxicology Program in its 2011 12th Report on Carcinogens.
Judge Hernandez said in his tentative ruling that the nonprofit Global Community Monitor did not prove that the warnings provided by Lumber Liquidators to consumers were not clear and reasonable.
In its complaint, Global Community Monitor alleged that clear and reasonable Proposition 65 compliant warnings were not provided by the company because they were not present on store shelves or on the product packaging. However, Judge Hernandez found in his tentative ruling that warnings provided prior to purchase satisfied the statute.
The flooring company filed its motion for judgment after completing a March bench trial. Its motion emphasized the company has it provided Proposition 65 warnings at the point of purchase since December 2010, documenting that each purchase of its flooring products had been accompanied by written terms and condition containing Proposition 65 warnings.
The company also posted warning information on signs in California stores at the front door, the cash register and customer loading docks since December 2014.
The plaintiffs objected to the point-of-purchase warnings, arguing that they do not comply with “Safe Harbor methods of communication.”
According to Global Community Monitor’s trial brief, the plaintiff alleges the laminate flooring products expose consumers to between 227 and 278 micrograms of formaldehyde per day.
The plaintiffs also objected to the company’s method of averaging of exposures over a 70-year period, calling the approach “junk science.”
But Judge Hernandez ruled that “Plaintiffs bear the burden of proving in this 65 enforcement action that defendant Lumber Liquidators knowingly and intentionally caused an exposure to a listed chemical without first providing a ‘clear and reasonable’ warning.”
Judge Hernandez ordered the company to prepare a final order consistent with his opinion by May 4.
Plaintiff’s counsel, Richard Drury of Lozeau Drury LLP, told reporters that Judge Hernandez did not explain his tentative decision in much detail. He said Global Community Monitor will oppose the statement of decision, he said.
Lead trial attorney James Schurz of Morrison & Foerster LLP told Prop 65 News that the company was unfairly targeted by Global Community Monitor and its Co-Plaintiff, Sunshine Park, a firm affiliated with private investment companies “that have substantial short financial exposure to Lumber Liquidators,” according to a statement released when the suit was first filed in July 2014.
The company stock plummeted following a segment of “60 Minutes” that aired in March 2015 that investigated the allegations of high levels of formaldehyde in Chinese made laminate flooring products sold by Lumber Liquidators.
Since the 60 Minutes segment aired, the company has been inundated by more than 100 lawsuits arising from its sale of laminate flooring manufactured in China. The litigation have been consolidated in Virginia for pretrial proceedings, allege that the flooring contains unsafe levels of formaldehyde.
Schurz contends that the participation of Sunshine Park in the suit was inappropriate.
Although stock speculation in Proposition 65 cases is uncommon, it is also not unheard of.
In 2010, Barry Minkow, who as a teenage had orchestrated a Ponzi scheme with his ZZZZ-Best carpet cleaning service, began taking short positions in stocks of some of the companies he sued for alleged Proposition 65 violations. His manipulation of the stock price of Lennar Homes resulted in his March 2011 conviction for securities fraud, and a five-year stretch in federal prison.
Last month, state regulators announced that the company would pay $2.5 million to settle claims it sold imported composite wood products that exceeded state formaldehyde limits and failed to ensure the products met public health guidelines.
The California Air Resources Board said its testing showed that the products exceeded air exposure limits for formaldehyde—which is both a toxic air contaminant, human carcinogen and respiratory irritant — according to regulations in California’s Airborne Toxic Control Measure for composite wood products.
The case cited by this article is: Global Community Monitor v. Lumber Liquidators, Inc. Alameda County Superior Court Case No. RG-14733979.