In a decision released on March 11, 2022, the California Court of Appeal held that Amazon was not immune from liability for failing to provide California Proposition 65 warnings on certain skin-lightening creams sold on its website. In Lee v., Inc., Court of Appeal Case No. A158275, the Court held that a plaintiff was not required to show that Amazon had actual knowledge of the presence of mercury in the products it sold on its website and the Communications Decency Act did not protect Amazon from liability. The decision may have wide-ranging implications for e-commerce, requiring web retailers to issue warnings to California residents when manufacturers do not.

Background of the Case

This case stems from a claimed violation of California’s Proposition 65 (Prop. 65). Prop. 65 prohibits businesses from knowingly and intentionally exposing individuals to certain harmful chemicals and toxins without providing a warning. Plaintiff Lee brought suit against Amazon alleging that it offered several skin-lightening creams on its website that contained levels of mercury above statutory limits but failed to give required warnings as part of the sales process.

The underlying statute, California’s 1986 Safe Drinking Water and Toxic Enforcement Act, Health & Safety Code 25249.5, states “No business shall knowingly or intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving a clear and reasonable warning.” Mercury is included in the list of toxic substances covered by the law.

The trial court determined that Amazon could not be held liable because it was protected by the provisions of the federal Communications Decency Act (CDA). The trial court also found that Lee failed to establish his case under Prop. 65. Lee appealed.

What Does California Prop 65 Require?

The applicable law in California states, “Prop. 65 is a right to know statute that requires companies that expose consumers to carcinogens or reproductive toxins to provide a reasonable and clear warning.” (Health & Safety Code §25249.6) “It is a remedial law designed to protect the public and thus we construe its provisions to broadly accomplish that protective purpose.” People ex. rel Lungren v. Superior Court (1996) 14 Cal.4th 294, 314. Courts interpreting this provision give broad deference to the public policy behind the law, which promotes the protection of consumers against exposure to toxic substances.

Did the Finding of Mercury in Samples of Certain Skin-Lightening Creams Prove That All Similar Products Contained Mercury?

Prop. 65 only requires that the Plaintiff show that a product contains a prohibited chemical substance. It does not specify a threshold level of actual exposure. In fact, mere exposure is enough under the statute. A business may not knowingly or intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning. Any amount of exposure to a specified substance can qualify as a violation under Prop. 65 if consumers are not warned before exposure or potential exposure occurs.

Experts on both sides of this case presented evidence of varying degrees of mercury present in the skin-lightening creams. Lee argued that the high levels found indicated that mercury was an intentional ingredient instead of an inadvertent contaminant, which would not be regulated by Prop. 65. Despite the high levels allegedly documented by Lee’s expert, Amazon argued that a high level of mercury in one sample of a skin-lightening cream did not provide a sufficient basis to extrapolate that all units of the same product contained high levels of mercury.

The appellate court agreed with the trial court and found that a high level of mercury in one sample product is an insufficient basis for drawing the conclusion that the same levels are present in other units. This concession, however, was not persuasive in the case as a whole and did not shield Amazon from liability for the failure to warn, whether intentionally or negligently.

Did Amazon Need Actual Knowledge That the Product Contained Mercury to be Liable?

Lee also appealed the lower court’s finding that he needed to show that Amazon had actual knowledge that the skin lightening creams contained mercury. Lee contended that constructive knowledge was sufficient to trigger a duty on the part of Amazon to issue a Prop 65 warning when the manufacturer or producer had failed to do so. The Court of Appeal agreed that constructive knowledge was sufficient to hold Amazon liable.

The general rule is that “proof of actual knowledge focuses on what information a defendant must have been aware of, while proof of constructive knowledge rests on a defendant’s duty to discover information.” People v. Conagra Products Co. (2017) 17 Cal.App.5th 51, 84-85. Constructive knowledge means, “knowledge that one using reasonable care or diligence should have and therefore that is attributed by law to a given person.” Black’s Law Dict. (11th ed. 2019) p. 1043 col.1; Castillo v. Toll Bros., Inc. (2011) 197 Cal. App.4th 1172, 1197.

Although Prop. 65 itself does not define “knowingly” or use the terms constructive or actual knowledge, the policy underlying the law shows that the legislature intended that those with either actual or constructive knowledge must inform potential users of the chemicals in the product. Amazon argued that it was the manufacturer or producer’s task to provide the warning to consumers in California.

Amazon pointed to Health & Saf. Code section 25600.2 which states, “The retail seller is responsible for providing the warning….for a consumer product exposure only when… the retail seller had actual knowledge of the potential consumer product exposure requiring the warning, and there is no manufacturer, producer, packager, importer, supplier, or distributor of the product who is a person in the course of doing business.”

The appellate court found that generally the duty to warn remains with the manufacturer or producer because they have direct knowledge of a product’s formulation. However if Amazon had knowledge or reasonably should have known the creams contained ingredients regulated by Prop. 65, Amazon also had a duty to warn consumers.

Amazon argued that it is not a retail seller but instead offers a marketplace. The Court disagreed and found that Amazon is part of the chain of distribution of the products and therefore bears some responsibility. The court noted that Amazon has control and oversees all third party product sales on its website including payments and refunds, acts as the channel of communication between buyers and sellers, stores the products and even provides delivery in many circumstances. In addition, Amazon collects a fee for each completed purchase transaction. For all of these reasons, constructive knowledge was sufficient to hold Amazon liable for failure to warn.

Did the Plaintiff Have to Show that Consumers of the Product Actually Used It?

Plaintiff Lee argued that the trial court erred in finding that he had to prove actual use of the creams by consumers. He maintained that this requirement would thwart enforcement of the law given the impossibility of tracking down and collecting evidence of all of the consumers who purchased the product and used it. In addition, many purchasers may want to remain anonymous or not participate in litigation. Proof of individual consumer use is also unnecessary according to Lee because common sense indicates that purchasers bought the product for the purpose of using it. He pointed to the maxim “[t]hings happen according to the ordinary course of nature and the ordinary habits of like.” Civ. Code §3546.

Amazon asserted that showing actual exposure to the product was important because the total sales were low and a public health campaign discouraged the use of skin-lightening creams. A buy-back program for the products was even available and successfully recovered some of the products before use.

The court found fault with Amazon’s assumption that “exposure” only occurred through application of the cream to a purchaser’s skin. To the contrary, the court found that exposure included not only actual exposure, but also potential exposure.

A plaintiff need not show that consumers actually used the product in question. The court found that a purchaser of the product is exposed to the contents merely by possessing it even if it is not used and Prop. 65 warnings must be in place regardless.

Does Section 230 of the Communications Decency Act Protect Amazon?

The trial court found that Amazon was immune from liability under section 230 of the Federal Communications Decency Act (CDA), which states “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” In essence this provision protects interactive computer service providers from shouldering legal responsibility for information created and developed by third parties. “State law plaintiffs may hold liable the person who creates or develops unlawful content, but not the interactive computer service provider who merely enables that content to be posted online.” Nemet Chevrolet, Ltd., v., (4th Cir. 2009) 591 F.3d 250, 254.

The appellate court disagreed that Amazon was protected from liability based on this statute. Prop. 65 does not require Amazon to monitor, review, or revise product listings. The court pointed to the fact that if Amazon sold its products in a physical store, it would be required to provide the warning for any product falling under the purview of Prop. 65. Selling online does not exempt Amazon from this responsibility when product manufacturers and producers fail to take adequate measures under California law.

Many parties further up the chain of distribution are located outside of the United States and may not be compelled to provide a warning even if aware of the Prop. 65 requirement. But Amazon is required to make reasonable efforts to provide such warnings for products it knows fall within the enforcement regime of Prop. 65. This requirement does not violate the CDA because Amazon is not solely a publisher or speaker of the third party seller’s content.

Important Takeaways

  • Prop. 65 only requires a Plaintiff to show that a product contains a prohibited chemical substance. It does not specify a minimum threshold for exposure. In fact, mere exposure, or potential exposure, is sufficient under the statute.
  • Constructive knowledge is sufficient to trigger responsibility to provide warnings under Prop. 65.
  • Proof of actual use by consumers is not necessary to prove liability.
  • Amazon is not insulated from liability by the CDA and must provide Prop 65 warnings when applicable.

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