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Home Depot to Settle VOC Case for $8M

Wednesday, April 3, 2013

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The Home Depot Inc. has agreed to pay $8 million to settle claims that it sold architectural paints and finishes with higher-than-permitted VOC levels in Southern California.

The claims against the Atlanta, GA-based home-improvement retailer stem from two related lawsuits filed in June 2011 by the South Coast Air Quality Management District (SCAQMD) and local area governments.

Both actions were brought in the Superior Court of California, County of Los Angeles, and were scheduled to be tried together at a bench trial in May 2013.

The Home Depot
The Home Depot Inc.

The Home Depot has agreed to settle claims that it sold architectural finishes with higher-than-permitted VOC levels at dozens of stores in California.

However, the parties have arrived at a settlement of $6.9 million in civil penalties and $1.1 million fees and costs, according to The Home Depot’s SEC Filing disclosure, proposed March 29. This proposed settlement must be approved by the trial court.

Pair of Civil Suits

In the first lawsuit, the South Coast district alleges that The Home Depot sold products with volatile organic compound levels in excess of amounts permitted by district rules, namely Rule 1113, in Los Angeles, Orange, Riverside and San Bernardino counties. Rule 1113 is the nation’s toughest regulation on VOCs content in architectural coatings.

South Coast sought $30 million in civil penalties and injunctive relief against the big box retailer.

The second action was brought by Los Angeles City Attorney and the district attorneys of each county mentioned and alleged that the company engaged in unfair business practices and false advertising when selling the products in question. The suit sought unspecified civil penalties and injunctive relief.

VOCs in the Region

Architectural paints and coatings are one of the largest sources of air pollution, according to SCAQMD’s complaint, which estimated that architectural coatings generate 23 tons of VOC emissions per day.

“These emissions are equivalent to the emissions generated daily by approximately 1.5 million automobiles,” the district said.

VOCs combine in the atmosphere with nitrogen oxides to form ground-level ozone, also known as smog, South Coast said.

Los Angeles
Lan56 /  Wikimedia Commons

The South Coast Air Quality Management District regulates stationary sources of VOCs and other air pollutants in the Los Angeles region, long known for having the nation’s poorest air quality.

South Coast regulates stationary sources of VOCs and other air pollutants in the Los Angeles region, which has long been known for having the nation’s poorest air quality.

Non-Compliant Sales Alleged

The South Coast district alleged that one of its inspectors first discovered architectural coatings being sold at The Home Depot in Whittier, CA, in contravention of Rule 1113 in September 2009.

Additional inspections were performed throughout the counties involved, and multiple non-compliant products were offered for sale or sold, the district alleged.

The district says the stores continued to sell the coatings and finishes—even marking them on clearance—after  the retailer was notified that it was breaking local air regulation laws, the complaint alleged.

For example, it said, The Home Depot “offered for sale and sold for use within the Basin, a non-compliant coating … Clear Wood Finish, Semi-Gloss Brushing Lacquer."

“The label on this one-gallon container of lacquer listed the VOC content to be 680 grams per liter. This product was sold to an undercover inspector.”

The district said that formulation data obtained by the manufacturer, Deft Inc., indicated the coating had a VOC content of 668 grams per liter. The coating exceeded the VOC limit of 275 grams per liter for Clear Brushing Lacquers, the suit alleged.

Pro Finisher by Parks, 350 VOC Oil Base Polyurethane for Floors, Clear Gloss was another product noted in the complaint. The label on the five-gallon container of polyurethane listed the VOC content to be 350 grams per liter.

The product was sold to an undercover inspector in November 2009, the district said.

The district confirmed with the manufacturer Rust-Oleum Corp. that the polyurethane had a VOC content of 349.94 grams per liter and was manufactured in 2006. The coating exceeded the VOC limit of 275 grams per liter for Clear Wood Finishes (Varnish), SCAQMD said.

The Home Depot Response

The Home Depot maintains that it fully cooperated after it was advised of the violations.

“From the time we were contacted about this, we fully cooperated and quickly removed the products in question from our stores under SCAQMD’s jurisdiction,” a spokesman told D+D News.

The company’s “environmental program for the safe handling and disposal of products deemed hazmat is considered industry-leading, it’s been closely modeled by several other big box retailers, and it’s completely in line with the recommendations of CA CUPAs (Certified Unified Program Agencies, the state EPA agency),” said Stephen Holmes, The Home Depot’s senior manager corporate communications.

“It’s also important to note that The Home Depot has been at the forefront of introducing Low-VOC and No-VOC products to its shelves over the past few years,” Holmes added.

Founded in 1978, The Home Depot operates more than 2,200 retail stores throughout the United States, Canada and Mexico, with revenue of $18.9 billion.

Not Alone

The Home Depot is not the only big box retailer that has butted heads with the South Coast district.

In 2010, the district won settlements totaling more than $3 million from Lowe's and Wal-Mart after it sued the stores for selling such products, the Los Angeles Times reported. The newspaper said officials statewide have been aggressive in taking action “to crack down on pollution by large corporate stores.”

   

Tagged categories: Business matters; Home Depot; Laws and litigation; Retail; SCAQMD Rule 1113; VOC content; VOC emissions

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