SAN DIEGO, Calif. — Hundreds of California businesses are being sued by a group that alleges the retailers and restaurants put consumers in harm’s way by having a toxic chemical in their receipt paper.
The lawsuit filed in San Francisco Superior Court by Environmental Health Advocates alleges the defendants "knew or should have known the Products contained BPS" and that their actions "were deliberate and not accidental."
BPS is a chemical and acts as almost an invisible ink used to make words show up on thermal receipt paper.
In 2023, California added it to a list of chemicals known to cause reproductive harm. Under the state’s Prop 65 law, businesses are required to warn customers before they’re exposed to listed toxins.
Jensen’s, a grocery store in Point Loma, is one of the businesses now being sued.
“Are they doing this really for the public's benefit or are they doing it to reach settlements and make money? I don't see where the public really is benefiting from these,” said Adam Zack, the store’s owner.
He went public in an interview with Team 10 last year after getting a Prop 65 violation notice from Environmental Health Advocates that was signed by attorneys with the Entorno Law firm in San Diego.
Business owners asked to sign NDAs
Zack believed the notice was sent in error because the receipt paper his store uses was marked BPS-free.
"The boxes say BPS, BPA-free, and so we feel we're in compliance," Zack said.
He said his supplier confirmed with lab testing the paper didn’t have the chemical and refused to pay a settlement to make the issue go away.
Several small business owners told Team 10 last year they were pressured into paying thousands of dollars in settlements after getting violation notices. They told Team 10 they were asked by attorneys with Entorno Law to sign NDAs before they could see the test results that formed the basis of the claims against them.
One small business owner, who spoke anonymously out of fear of repercussions, said they were concerned a lawsuit could wipe them out.
Costly settlements
The entrepreneur said the Entorno Law firm offered to settle the matter outside of court for no less than $20,000.
“I think they're generally trying to make it look like they're fighting in the public's best interest. But the millions and millions of dollars that they've collected in this effort says otherwise because if they genuinely wanted to act in the public's best interest, they would go after the manufacturers.”
Last year, following the end of a grace period, a flood of violation notices started getting sent out by Environmental Health Advocates to businesses across the state alleging BPS was found in receipt paper.
Environmental Health Advocates shares a downtown San Diego office with the Entorno Law firm.
State law allows private groups and individuals to enforce Prop 65 and collect attorney’s fees and other costs.
'We don't want to settle'
Attorney Michael Gleason, who defends business accused of violating the law, explained that 75% of Prop 65 settlements go to the state while 25% goes to the private enforcer. Attorney’s fees and costs are collected on top of the penalty.
For example, state records show Rubio’s Restaurant Group paid a $3,000 civil penalty but $24,000 in attorney’s fees and costs for a total settlement of $27,000 last year to resolve a claim from Environmental Health Advocates the restaurant had BPS in a receipt.
“I've heard a lot of frustration for businesses being hit by these notices of violation,” Gleason told us last year after enforcement ramped up.
Zack chose not to settle and is now among the hundreds of businesses named in the lawsuit.
"We are not in the wrong, and we don't want to settle.”
Accredited lab used for testing: EHA
Alfredo Duran, the new CEO of Environmental Health Advocates, sent Team 10 an emailed statement defending the lawsuit.
"EHA always obtains laboratory testing results from an accredited lab," Duran said, adding the group "only files a (notice of violation) when an expert in environmental health certifies in writing the product at issue violates Prop 65 for reproductive and developmental toxicity."
Records with the Office of the Secretary of State show Duran replaced Allan Cate as CEO of Environmental Health Advocates in January.
Cate is a La Jolla attorney who previously represented a disabled client who alleged a Chinese restaurant failed to have accessible seating.
A judge threw out the ADA lawsuit after finding the client “lacked credibility" and lied about the enormous number of lawsuits he had filed against other restaurants.
Group says funds used to promote public health
Duran said the state attorney general "vets all of the notices, lab results and expert analysis, including any settlements, to ensure the public interest has been advanced and the costs claimed are fair and reasonable."
He confirmed that EHA asks businesses to sign confidentiality agreements but said the group will produce test results without an NDA in litigation. He also said EHA provides the test results and expert reports to the Attorney General for vetting.
Duran told Team 10 EHA rejects any characterization the group targets small businesses. He said the organization is "focused primarily on major U.S. retailers, restaurants, banks, and grocery chains" and only files notices against businesses with multiple locations and more than 10 employees.
Duran said any settlement requires a binding commitment from the retailer to switch to BPS-free paper — thereby preventing any further toxic exposures to California consumers.
“Funds received by EHA are exclusively designated to promote public health initiatives.”
Contact Investigative Reporter Austin Grabish by email: austin.grabish@10news.com
