Lead Paint Nuisance Ruling Could Have Big Impact

November 8, 2017

By Peter Hayes

Sherwin-Williams Co., NL Industries Inc. and ConAgra Grocery Products Co. are expected to learn before Thanksgiving whether a California trial court validly ordered the manufacturers to pay $1.15 billion to remove or abate lead paint hazards from hundreds of thousands of California homes.

How an intermediate California Court of Appeal rules in the long-running public nuisance suit brought by several California cities and counties could have big ramifications. The ruling could extend well beyond California, broadly affecting public nuisance litigation in a wide range of areas, from climate change to opioids, attorneys following the litigation tell Bloomberg Law.

The judgment, if affirmed, would be the first major lead paint public nuisance victory, but would also “register beyond that context,” Professor Craig Johnston at Lewis & Clark Law School in Portland, Ore., said.

Ripple Effects

If the plaintiffs win, “it will have significant ripple effects beyond lead paint, and will convince judges that the law is moving” in favor of allowing public nuisance claims generally, Johnston said.

“And the law needs to move—climate change and opioids call out for some response and evolving doctrines in the area of tort law,” he said.

Those problems affect the public broadly yet aren’t readily addressable via standard product liability claims that require more of a direct link to a manufacturer’s products, advocates of public nuisance claims say.

Professor Sean Hecht at the UCLA School of Law in Los Angeles agrees the lead paint case could have a significant impact in other areas where public authorities have alleged nuisance, including in climate change suits also pending in California.

There, a number of California municipalities have sued petroleum companies, alleging greenhouse gases tied to their products have caused sea levels to rise and resulting damages to their cities and residents.

“The outcome of the lead paint litigation will impact the viability of these cases,” Hecht said. “If the court here takes a negative view of public nuisance, it could have a chilling effect on the public nuisance litigation.”

Hecht is co-executive director of UCLA Law’s Emmett Institute on Climate Change and the Environment. He previously served as a deputy attorney general for California, working on environmental and public health matters.

‘Not Revolutionary’

Santa Clara County and the nine other California cities and counties that sued the manufacturers say upholding the 2014 trial court order to pay $1.15 billion to fund lead abatement is vital to protecting children in the state ( People v. Atlantic Richfield Co., Cal. Ct. App., H040880, oral argument 8/24/17 ).

But counsel for Santa Clara County also says the predictions of a public nuisance explosion are misplaced.

“It’s not revolutionary,” Danny Chou, assistant county counsel for the County of Santa Clara told Bloomberg Law.

Chou pointed to a critical 2006 California appeals court decision in the case that the plaintiffs could proceed with their public nuisance claims, but only if they proved the companies affirmatively promoted their products while knowing they would be creating a public health hazard.

“We haven’t seen a spike in public nuisance claims since the 2006 decision,” he said. “The case applies regular principles of California public nuisance law.”

“It’s a big deal,” Chou said, only “because of how hazardous lead paint is for young children.”

Remoteness

But defense attorneys keeping tabs on the litigation disagree, both with the litigation’s merits and its potential repercussions.

The decision is an outlier, allowing a manufacturer to be held liable “for a nuisance caused by the user” long after a consumer product is sold and legally used for its intended purpose, attorney Peter Hsiao with Morrison & Foerster LLP in Los Angeles told Bloomberg Law.

The trial court also “blurred the requirement to show causation by creating a common fund to remedy the problem,” which requires the manufacturers to pay to clean up some homes “where their product was never used,” Hsiao said.

Hsiao’s practice includes environmental and chemical toxic tort law. He formerly worked as an Assistant U.S. Attorney for the Central District of California.

If the decision is reversed, “California law would return to conforming with the vast majority of decisions in other states requiring a specific showing of proximate causation before a manufacturer is held responsible in tort,” he said.

If the paint companies lose on appeal, however, “there would be the risk of a flood of public nuisance litigation over a variety of products,” Hsiao said.

Defense attorney Richard Faulk, with Davis Wright Tremaine LLP in Washington, concurred.

The judgment, if upheld, “would almost certainly stimulate a trend of similar cases—not only in California, not only regarding lead paint and pigments, but also regarding a variety of other products, conditions and circumstances created by manufacturers of finished and component products, as well as fuels, additives, and environmental conditions associated with industrial activities,” Faulk said.

“Opioids are the big thing,” said Faulk, who has written extensively on nuisance litigation. “The pharmaceutical industry liability if this tort is allowed is immense.”

The problem with public nuisance cases in general, Faulk said, is a lack of clear standards by which a manufacturer can predict whether it will face liability.

“After 10, 20, 30 years, how far can you push a duty to people who were not your customers?,” Faulk asked. “It is an exercise in remoteness; that’s where the lack of a duty comes from.”

One of a Kind

If the California court upholds the judgment, it would be the first state appeals court to find manufacturers liable under nuisance law for creating a lead paint hazard.

In 2008, the Rhode Island Supreme Court overturned a nuisance jury verdict in that state against Sherwin-Williams, NL Industries, and former lead paint maker Millennium Holdings LLC.

Antonio Dias, lead counsel for Sherwin-Williams in the California litigation, told Bloomberg Law that “all other states the have considered the issue” have similarly rejected lead paint nuisance claims, including Ohio, Mississippi, New Jersey, Illinois, New York, and Wisconsin.

The case is ripe for reversal, Dias said, because the trial court failed to hold the plaintiffs to the standard set by the 2006 appeals court ruling.

“The appeals court established that the proof required would be much higher than in a product liability case, but the trial court didn’t follow that,” Dias, a partner with Jones Day in Washington, said.

“The plaintiffs are trying to hold companies liable for something unknown and unknowable at the time,” he said.

Faulk said that regardless of how the California appeal court rules, the state’s top court will ultimately be asked to decide the validity of the judgment.

Professor Nancy White, chair of the Department of Finance and Law at Central Michigan University in Mount Pleasant, Mich., said that because of the enormity of the stakes involved, even California Supreme Court review might not end the matter. “Whichever way the courts come down on the situation the legislature could come in later and fix it,” White told Bloomberg Law.

“The ultimate issue is who bears the costs of injuries caused by products: the manufacturers or the injured?” White said.

“If the defendants win then it will be business as usual: The cost of these unforeseen injuries will be borne by the injured. To some extent the cost will also be on the state to the extent tax dollars are spent on health care and remediation,” she said.

But if the plaintiffs win, “the California view on public nuisance could slowly seep into the case law of other liberal states,” White said.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.


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