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Supreme Court Denies CA Lead Paint Case

Tuesday, October 23, 2018

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Last week, the Supreme Court rejected hearing the appeal of a ruling that requires paint manufacturers to pay more than $400 million for lead-paint remediation in several municipalities in California.

Lawyers defending the manufacturers, ConAgra and The Sherwin-Williams Company, said that they fear the decision will greenlight more suits that hold manufacturers liable for damages inflicted in the past. Proponents of the decision argue that in this case, tens of thousands of children have been poisoned by lead paint and the manufacturers should be held responsible.

The Case

The original case—filed by Santa Clara County in Superior Court in 2000—was intended to hold several gas, paint and chemical companies accountable for what was deemed a massive public health crisis brought on by the presence of lead paint in a number of California homes and buildings.

© iStock.com / Marilyn Nieves

Last week, the Supreme Court rejected hearing the appeal of a ruling that requires paint manufacturers to pay more than $400 million for lead-paint remediation in several municipalities in California.

During the 2013 trial, Judge Kleinberg dismissed Atlantic Richfield and DuPont, subsequently ordering The Sherwin-Williams Company, ConAgra Grocery Products Inc. and NL Industries to pay $1.1 billion into a fund that would be distributed to the 10 cities and counties affected, as needed.

In 2014, the judge increased the liability to $1.15 billion. That same year, after being denied the vacation of an amended judgment and the granting of a new trial, the three defendants filed notices of appeal, which effected an automatic stay of the judgment.

In an August 2017 hearing, attorneys representing Sherwin-Williams, ConAgra and NL Industries argued for a reversal of the December 2013 ruling.

Primary points of the companies' argument included that moving forward with the abatement would uphold an unprecedented expansion of public nuisance law, and that the companies themselves should not be held liable for old advertisements that promoted the use of lead-based paint.

“The plaintiff historians were unable to provide a single advertisement where Sherwin-Williams advertised lead-based paint for interior use or white lead carbonate in old lead paint in any of its advertising,” Tony Dias, a partner at Jones Day, which is representing Sherwin-Williams for this case, told Durability + Design News at the time.

In the November 2017 ruling, the Sixth District Court of Appeal in San Jose rejected that free speech claim, but did drop the amount of cleanup that the companies are responsible for to homes build before 1951, instead of 1978. This took the $1.15 billion tag down to $400 million.

Then, in February 2018, a high court judge denied a review of the November 2017 ruling.

This Year

Just weeks before the February high court ruling, the three companies began to bankroll the Healthy Homes and Schools Act, an initiative that vied for a place on California’s November ballot that called for a $2 million bond that would fund the remediation of lead paint, mold, asbestos and other environmental dangers in homes, schools and senior citizen facilities.

Proponents at the time said that financing the clean-up with a bond could allow for more wide-ranging solutions, instead of just the court-mandated clean-ups that have so far only been in certain jurisdictions where lawsuits have been filed.

© iStock.com / XiFoto

Just weeks before the February high court ruling, the three companies began to bankroll the Healthy Homes and Schools Act, an initiative that vied for a place on California’s November ballot that called for a $2 million bond that would fund the remediation of lead paint, mold, asbestos and other environmental dangers in homes, schools and senior citizen facilities.

However, those opposed noted that if the measure passed, it would essentially reverse the court decision that required the companies to pay for the fixes. It would also effectively keep anyone else from filing such a lawsuit.

In May, NL Industries reached its own $60 million settlement with the 10 California municipalities, which applied to the abatement of interior paint in those houses build before 1951.

“The settlement amount with NL is not a reflection of the company’s share of total liability, but rather its ability to pay,” the counsel said in a statement. “Rather than seeking a higher amount that could drive NL into lengthy bankruptcy proceedings and result in pennies on the dollar for remediation, this settlement provides timely, unrestricted funding to clean up the hazards of lead paint and address the harms to children and other vulnerable populations resulting from toxic lead paint in homes.”

Also as part of the settlement, NL agreed to withdraw support from the ballot initiative and its lawyers were also adamant that the company did not admit to any wrongdoing.

Soon thereafter, in July, the ballot measure was scrapped altogether on the day of the deadline to withdraw initiatives from California’s November ballot.

Between January and July, half a dozen legislators authored bills that would penalize the companies beyond the appeals court ruling. In addition, two California counties filed a lawsuit to get the initiative taken off the ballot.

The Supreme Court

In August, a number of national groups began urging the Supreme Court to listed to the case.

The Association of National Advertisers and the Atlanta Legal Foundation filed a friend of the court brief that argued that the case threatens to erode companies’ rights to market their products based on the information they have at the time. ANA spokesman Dan Jaffe said that the California court had retroactively imposed “multi-millions of dollars of damages on Sherwin-Williams by applying today's scientific standards to ads that were published decades ago.”

© iStock.com / XiFoto

Between January and July, half a dozen legislators authored bills that would penalize the companies beyond the appeals court ruling. In addition, two California counties filed a lawsuit to get the initiative taken off the ballot.

American Coatings Association President and CEO J. Andrew Doyle also penned a letter in favor of a review, which read, in part:

“The case rested on two facts. First, a 1904 newspaper ad for paint that did not mention lead. Second, the company’s contribution of $5,000 to two promotional advertising campaigns sponsored by the Lead Industries Association between 1937 and 1941. Notably, the federal government did not ban interior lead-based paint until the late 1970s.

“The California court engaged in a retroactive re-characterization of then-truthful speech about a lawful product and found it ‘misleading’ based on decades of subsequent medical knowledge. The ruling utterly disregards U.S. Supreme Court precedents permitting the truthful promotion of lawful products.”

Lawyers for the municipalities maintain that the manufacturers have attempted to downplay their role, as even though the paint was still legal up until the late '70s, it was a known carcinogen.

“ConAgra’s South San Francisco plant—the largest paint factory west of the Mississippi—shipped an average of 200 tons of lead paint to California retailers for residential use daily, while Sherwin-Williams distributed more than [3] million pounds of lead pigment to its California warehouses and factories during a single four-year period,” the lawyers told the high court, according to the Los Angeles Times.

Monday’s decision to not hear the case follows the route consistently taken by Supreme Court justices to not intervene in state liability law cases.

Sherwin-Williams issued a response following the decision stating in part:

“While we are disappointed, the Supreme Court reviews very few cases. Its decision not to review is not a ruling on the merits of the important constitutional issues raised by defendants. California’s decision is an outlier and at odds with courts across the country which have correctly held that companies should not be held retroactively liable for lawful conduct and truthful commercial speech decades after they took place.”

   

Tagged categories: Laws and litigation; Lawsuits; Lead; Lead paint abatement; Regulations

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