Ceramic Industry

CERAMIC DECORATING: Proposition 65 and Refillable Bottles

November 1, 2006
PepsiCo recently settled an enforcement action that was brought by California Attorney General Bill Lockyer and the Los Angeles City Attorney regarding Proposition 65 allegations of exposure to lead from decorated refillable Pepsi bottles produced in Mexico. Shortly after this settlement, the Attorney General sued The Coca-Cola Co. over similar allegations related to bottles from Mexico. Coca-Cola indicated that it would "vigorously defend itself against outlandish allegations" in the lawsuit.

The allegations against Pepsi had originally been filed by Whitney Leeman, who is represented by Cliff Chanler. As part of the Pepsi settlement, the company agreed to immediately switch to unleaded labels for new refillable bottles produced for products from Mexico and to eliminate all decoration in the lip/rim area of the bottles (top 20 mm of the outside rim of the bottle). The settlement defines "lead free" as a decorating material that contains less than 0.06% lead by weight of the decoration, and "cadmium free" as a decorating material that contains less than 0.48% cadmium by weight. Pepsi agreed to eliminate cadmium from the imported refillable bottles in three years. Pepsi also agreed to eliminate all refillable bottles that are decorated with leaded colors within 10 years, and to hit specific interim compliance targets.

In addition, Pepsi agreed to take steps related to the bottle refilling process in Mexico, and to establish supply chain inspection procedures to prevent Mexican bottles from entering California. The company also agreed to pay significant penalties and attorneys' fees, and could face additional penalties if it fails to meet the phase-out targets for existing bottles with leaded labels.

The agreement also refers to PepsiCo efforts to develop a polymer coating process that would encapsulate lead and cadmium in refillable bottle decorations in Mexico. Should PepsiCo determine that the polymer coating process is feasible, the company would seek approval from the Attorney General to incorporate that process as part of the compliance effort.

In the consent judgment, PepsiCo noted that "for the past 16 years, it has made a considerable effort at great expense to prevent Mexico Pepsi from being sold to consumers in California." The company had resorted to court action on 24 occasions to stop imported bottles from being illegally sold in the U.S. without its consent or permission.

Facing similar allegations, The Coca-Cola Co. has announced that it has tried to reach a settlement with the plaintiff and had offered "significantly more" than what the plaintiffs agreed to as part of their settlement with Pepsi. Coca-Cola noted that every bottle made for Coca-Cola for the U.S. market is already unleaded, as is every bottle of authorized Coca-Cola from Mexico sold in California. It also indicated that the bottles referred to in the lawsuit are no longer being made, and that the refillable bottle for Mexico Coke in question was never authorized for sale in California. Already, 20% of bottles being refilled by Coca-Cola in Mexico are unleaded, and that number is growing steadily, according to the company.

There have been approximately 350 new Proposition 65 notices related to glass and ceramicware filed since the August 2005 Boelter settlement. A large number of these allegations remain to be either settled or litigated. Although there is no official state warning threshold for non-food contact surfaces of glass and ceramicware, Proposition 65 warnings are an option for companies that want to establish a defense against allegations that ware exposes consumers in California to lead or cadmium.

District Attorneys in several California counties have taken over Proposition 65 suits that were originally filed by private plaintiffs. Except in one case, the defendants are described as "small local businesses." According to Ed Weil of the state Attorney General's office, it is likely that the settlements in these cases will closely resemble the Boelter settlement; however, penalties and fees related to the settlements are likely to be reduced.