When Packaging Becomes a Legal Exposure: What California Brands Don't Know About Their Materials Could Cost Them

For most California businesses, packaging decisions are made with product protection, brand aesthetics, and cost efficiency in mind. Legal liability rarely enters the conversation — until it does. And when it does, the consequences can be severe: product recalls, regulatory fines, class action lawsuits, and reputational damage that no marketing budget can easily repair.

The uncomfortable reality is that a growing number of California brands are discovering, often too late, that the materials inside their packaging carry risks that were never disclosed by their suppliers, never flagged during procurement, and never reviewed by legal counsel. This is not a problem confined to large corporations with complex supply chains. Small and mid-sized businesses across California are equally — and in some cases, more — exposed.

The Regulatory Environment Has Shifted, But Many Supplier Contracts Have Not

California has one of the most aggressive regulatory frameworks for packaging materials in the United States. SB 54, the Plastic Pollution Prevention and Packaging Producer Responsibility Act, imposes phased requirements on single-use plastic packaging. Proposition 65 requires businesses to provide clear warnings when products or their packaging expose consumers to chemicals known to the state to cause cancer or reproductive harm. The California Department of Toxic Substances Control (DTSC) maintains a Safer Consumer Products program that continues to expand its list of regulated chemicals found in packaging components.

These regulations are not static. They evolve, and the compliance obligations they create evolve with them. The problem is that many supplier contracts — particularly those executed two or three years ago — were written against a different regulatory baseline. What was permissible in 2021 may now be a liability in 2024. Brands that have not revisited their supplier documentation in the interim may be operating under agreements that no longer reflect current legal requirements.

This gap between regulatory reality and contractual language is where much of the legal exposure originates.

Greenwashing Claims Are Generating Litigation

Beyond regulatory compliance, California brands face an equally serious threat from consumer protection law. The state's False Advertising Law and Unfair Competition Law create private rights of action, meaning individual consumers — and their attorneys — can sue businesses for packaging claims that are found to be misleading.

The most active area of litigation involves sustainability claims. Terms such as "eco-friendly," "compostable," "biodegradable," and "recyclable" printed on packaging have been the subject of multiple class action lawsuits filed in California courts in recent years. In several cases, the brands being sued were not the ones who invented the claims — they were brands that printed language on their packaging based on representations made by their packaging suppliers, without independently verifying that those representations were accurate and legally defensible.

This distinction matters enormously. A supplier telling a brand that its material is "industrially compostable" is not the same as that material meeting the ASTM D6400 standard or being accepted at California composting facilities. If a brand prints that claim on its packaging and a consumer discovers the distinction — or a plaintiff's attorney does — the brand is the one facing the lawsuit, not the supplier.

What Compliance Gaps Look Like in Practice

The compliance gaps most likely to generate liability tend to fall into several identifiable categories.

Chemical disclosure deficiencies. Packaging materials, particularly inks, adhesives, coatings, and certain plastics, may contain regulated substances that require Proposition 65 warnings or that trigger DTSC reporting obligations. Suppliers are not always forthcoming with complete Safety Data Sheets, and brands rarely ask for them. A brand that unknowingly distributes packaging containing a Proposition 65-listed chemical without the required warning is exposed to enforcement actions and civil litigation.

Unverified recyclability claims. Printing a recycling symbol or the word "recyclable" on packaging without confirming that the material is accepted in California's municipal recycling programs is a common and legally risky practice. The Federal Trade Commission's Green Guides and California's own truth-in-labeling standards require that recyclability claims reflect actual infrastructure, not theoretical capacity.

Inadequate indemnification language. Many small and mid-sized brands enter custom packaging contracts without legal review. Standard supplier contracts often contain indemnification clauses that limit supplier liability for claims arising from the use of their materials. This means that if a brand faces a lawsuit or recall related to a material defect or a misleading claim, the supplier may have contractually insulated itself from responsibility, leaving the brand to bear the full cost.

Gaps in country-of-origin documentation. For brands sourcing packaging internationally, the documentation trail for material composition and chemical compliance is often incomplete. California regulators and plaintiffs' attorneys are increasingly sophisticated about tracing supply chains, and a brand that cannot produce documentation demonstrating what is in its packaging is in a weak defensive position.

Auditing Your Supplier Documentation: A Practical Starting Point

The brands that are best positioned to avoid packaging-related liability are not necessarily the ones with the most sophisticated supply chains. They are the ones that have asked the right questions and documented the answers.

A supplier documentation audit should address several core areas. First, request and review current Safety Data Sheets for all materials used in your packaging, including inks, coatings, laminates, and adhesives. Cross-reference the chemical components against California's Proposition 65 list and the DTSC's Candidate Chemicals List.

Second, obtain written certification from your supplier confirming the specific recyclability or compostability standard to which their material has been tested, and verify that this standard aligns with California's current infrastructure. A material certified to a standard that no California facility actually accepts is not a compliant material for purposes of labeling.

Third, review your existing contracts for indemnification language. If your current agreements do not require your supplier to indemnify you for claims arising from material composition or misrepresented properties, this should be corrected before your next purchase order.

Finally, establish a regular review cadence. Given how frequently California's packaging regulations change, an audit conducted once and filed away provides diminishing protection over time. Brands that treat supplier documentation as a living record — updated annually or when regulations change — are materially less exposed than those that treat it as a one-time exercise.

The Broader Principle

California's regulatory environment rewards businesses that treat compliance as an operational discipline rather than a legal formality. The brands that are currently facing packaging-related litigation are not, in most cases, brands that set out to mislead consumers or violate regulations. They are brands that delegated too much trust to their suppliers and asked too few questions.

In a state where the rules governing packaging materials continue to tighten, and where consumers and regulators alike have demonstrated a willingness to enforce those rules, asking those questions is no longer optional. It is a baseline requirement for operating responsibly — and for protecting the business you have built.