Billion Dollar Lead Paint Public Nuisance Award in California

12/23/2013

On December 16, 2013, after a five week bench trial, Santa Clara County Superior Court Judge James Kleinberg ordered Sherwin-Williams Co., NL Industries Inc., and ConAgra Grocery Products LLC to pay $1.1 billion to several California counties in California v. Atlantic Richfield Co. The award will go toward covering the costs of abating lead paint in millions of homes built prior to 1978 and developing outreach and inspection programs for lead paint and lead poisoning. The ruling is significant in that the court found against the paint companies on public nuisance grounds, thereby ignoring the holdings of prior courts across the United States that lead paint claims were appropriate only in the context of individual plaintiffs on a case-by-case basis. In fact, seven other states have unsuccessfully brought lawsuits against the paint industry using arguments virtually identical to plaintiffs' arguments in Atlantic Richfield.

The California counties which were plaintiffs in the Atlantic Richfield case alleged that the defendants created a public nuisance through the sale of lead paint, since they placed millions of tenants, homeowners, and children at risk for lead poisoning. Crucial to plaintiffs' case was the issue of whether the defendants continued to promote the sale of lead paint despite having actual or constructive knowledge of the hazards of the product. Plaintiffs cited scientific articles from throughout the 1900s that discussed the hazards associated with exposure to lead. However, a key piece of evidence for plaintiffs was a report on the dangers of lead poisoning from a 1937 Chicago gathering of staff doctors for each of the paint companies. Physicians attending the conference were instructed not to tell anyone about the meeting or their findings. Plaintiffs argued that the 1937 report demonstrated not only actual knowledge of the hazards associated with lead paint, but also the active concealment of that knowledge from the public.

The defendants countered that the 1937 report dealt with the occupational exposure of industrial workers to lead and did not address the more de minimus exposures to lead paint that homeowners or tenants may have had from paint in their homes, about which there was no information until shortly before 1978. Defendants also argued that there are numerous other sources of exposure to lead other than lead paint, so annual statistics presented by plaintiffs showing the number of children who are diagnosed with lead poisoning are unfairly biased against the paint industry, as they do not correct for other possible sources of lead exposure. Finally, defendants argued that under California law, companies cannot be required to pay damages or to fund the costs of abatement for lead paint since the issue of lead paint is a site-specific, individual assessment of an alleged "nuisance" and therefore does not constitute a "public nuisance."

Judge Kleinberg found that there were a significant number of documents, both corporate and scientific, showing that the defendants knew of the hazards of lead paint dating back to the early 1900s. For example, the judge cited to a Sherwin-Williams newsletter from 1900 conceding that lead-based paint was a "deadly cumulative poison" and a 1922 company advertisement claiming that its paint was safe and he concluded that Sherwin-Williams knew of the hazards of lead paint and yet continued to sell lead paint products for nearly a century. In addition, Judge Kleinberg found the arguments regarding other sources of lead exposure unpersuasive, noting that "it does not change the fact that lead paint is the primary source of lead poisoning for children in the jurisdictions who live in pre-1978 housing."

The defendants have fifteen days to object to the ruling, and can move for a mistrial or appeal should their objection fail. The likely focus of any appeal will be the issue of whether California law permits the award of damages in public nuisance cases and whether lead paint constitutes a public nuisance at all. Several prior cases brought against the paint industry in other states for reimbursement of costs to abate lead paint were dismissed, as the courts held that damages for lead paint poisoning must be brought by individuals actually harmed by lead paint and could not be awarded under theories of public nuisance.

The Atlantic Richfield decision is a troubling development for companies defending claims alleging damages on a public nuisance basis. If the Superior Court decision stands or if the California high court upholds the decision, it will provide renewed vigor for using similar "public nuisance" arguments by states, cities, and municipalities looking to recoup the cost of lead paint abatement from the paint industry. More importantly, the ruling could give new life to claims against other companies in other industries under the guise that the products or substances in question constitute a "public nuisance."


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