Once approved by the Attorney General's office and a judge, the settlement will require association members willing to participate in the agreement to post new warnings and guidelines in compliance with Prop 65--the Safe Drinking Water and Toxic Enforcement Act of 1986.
The settlement is the result of the association's attempts to mitigate the impact of lawsuits brought by "bounty hunters"--private attorneys who sue for millions of dollars in fines on behalf of the general public alleging violations of Prop 65 by hotel operators.
Section 25249.6 of the act is the provision at issue here. The section provides that "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 to such individual."
With a list that started with alcohol and then added second-hand smoke, then swimming pool chlorine, followed by the lead-based glaze on tableware and on faucet fittings, and smoke from fireplaces, the list of applicable chemicals has expanded to more than 600. As the list has grown, these attorneys have continued to file more and more suits, forcing hotel owners to pay off $5,000 - $10,000 on each claim instead of facing court costs and attorney's fees every time a claim is made. According to Jim Abrams, EVP of the CH&LA, more than 4,000 claims were filed in December 2001 to beat the Jan. 1, 2002 effective date the new Prop 65 language.
"Our members believe Proposition 65 is a good thing – we certainly want to make sure the public knows when they're exposed to such things as second-hand smoke or other carcinogens," said Abrams. "However, at the same time, we're seeing aggressive attorneys seeking excessive fees from both large and small lodging operators over minor infractions, and even when there might not be any infraction at all. This adds significantly to the cost of running a hotel or an inn, and it therefore takes a tremendous toll on the state's economy."
Under terms of the settlement agreement, association members have until April 8 to decide whether or not to participate. If they do, a one-time payment of $750 is required of hotels with fewer than 25 rooms, or larger hotels which have paid $2,000 or more to settle a Prop 65 claim in the past. All other members must pay $1,250. Members who join in will be contacted by the association's lawyers regarding the paperwork and payment involved.
Once approved by a judge, a final binding judgment will be entered that can never be refiled. A separate agreement must be paid for and filed for each property a member owns. Through a special arrangement with the association's lawyers, members will pay a reduced lawyer's fee of $2,750 for the first property and $1,250 for each property thereafter.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
