Settling Prop 65 Cases for Smaller Manufacturers
This article is general information about California Proposition 65, not legal advice, and does not create an attorney–client relationship. Consult qualified counsel about your specific facts.
No manufacturer enjoys dealing with Proposition 65 claims, but for smaller businesses the burden can be especially severe. Most lack the resources to wage a prolonged, principle-driven defense. For that reason, settling Prop 65 cases efficiently for smaller manufacturers is not only a strategic necessity—it is a survival tactic. Understanding how to resolve these claims with minimal disruption and maximum predictability is essential, and it should be about efficiency and practicality, not ego or principle.
Why Smaller Manufacturers Should Settle Prop 65 Claims Efficiently
The barrier to entry for Prop 65 litigation is incredibly low. A plaintiff can initiate a claim with nothing more than a 60-day notice letter and a plausible allegation of violation—an allegation that survives to litigation the moment a food product tests positive for a listed chemical. The statutory exemption for businesses with fewer than 10 employees applies so narrowly that it covers almost no real-world food producers, which means most small manufacturers end up facing costly lawsuits regardless of size. Because the claim is easily generated and the statutory defenses are so meager, it is favorable for smaller manufacturers to achieve an efficient settlement as early as possible.
Small businesses do retain one strategic advantage, however. Because penalties are calculated per unit, small production runs automatically cap the value of a claim—the number of units sold limits the plaintiff’s maximum recovery. As a result, it is almost always possible to reach a rational settlement amount. The key is negotiating from a position of accurate, well-documented data that narrows the scope of exposure.
What Smaller Prop 65 Settlements Actually Cost
Budget-anxious owners want a number. As a practical, experience-based anchor, most smaller-manufacturer Prop 65 settlements resolve in roughly the $10,000–$40,000 range, driven primarily by California unit volume and the plaintiff firm’s attorney-fee demand. Every matter is different and this is not a quote—but it is the order of magnitude a sub-$10M manufacturer should plan around, and it is a fraction of the cost of litigating through trial.
How Smaller Manufacturers Settle Prop 65 Claims Efficiently
Courts directly link damages to the number of product sales in Prop 65 cases, so efficient, cost-effective settlements depend on accurate sales data—specifically, data that reduces exposure and supports a lower damage calculation. The key is right there in the regulation: “No person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning…”
Here are three ways smaller manufacturers can prepare for settlement by limiting “exposure”:
- Test retained samples. Using the lab your attorney hired (which maintains attorney-client privilege over the results), attempt to replicate the plaintiff’s result. If the violation cannot be replicated, that is not a guarantee the plaintiff’s firm drops the claim—a single positive test is enough to create a triable issue of fact—but a good result is a powerful lever in settlement negotiations.
- Track production lots and batch numbers with precision. High-fidelity batch tracking identifies the specific lots involved and limits the number of affected units. Third-party testing can confirm which lots, if any, contain the chemical—just make sure legal counsel commissions and directs the testing to preserve privilege, so you do not create evidence that works against the defense. Uncontrolled third-party analysis can be compelled through discovery.
- Document sales to customers, not just shipments. Proposition 65 defines a violation as a sale to a consumer in California—not a shipment to a distributor. A manufacturer should count only retail sales within California in any exposure calculation. Documenting these sales avoids inflating the numbers and overpaying in settlement.
Final Thoughts
The smartest approach for small businesses is to control the pace of negotiation by containing the numbers. With precise data, a focused legal strategy, and an understanding of how Prop 65 penalties scale, smaller manufacturers can negotiate from a position of strength. In most cases, settling efficiently is not about avoiding responsibility—it is about resolving claims in a way that protects the business and preserves its future. For sub-$5M manufacturers, this work usually fits a flat-fee or hourly engagement rather than a subscription. Contact us to scope it.
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Jason Foscolo
Founder of The Food Law Firm — fractional general counsel for food & beverage businesses nationwide.
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