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Companies Settle in 19-Year-Long CA Lead Case

Tuesday, July 30, 2019

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A nearly 20-year-old court battle ended earlier this month when three manufacturers agreed to a $305 million settlement in a lead paint case out of California.

The companies—The Sherwin-Williams Company, ConAgra Grocery Products Company and NL Industries—agreed to the settlement, which officials say will aid the 10 counties and cities across California with cleanup programs for lead paint.

“Today’s settlement holds former manufacturers of lead paint responsible for the harm they have caused to generations of California’s children,” Santa Clara County Counsel James R. Williams said in a statement, according to the Times-Herald.

“This settlement is a victory for children and families throughout California. We have fought to hold these companies accountable for nearly twenty years and will finally have needed funds to devote to protecting our children from lead poisoning.”

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

A nearly 20-year-old court battle ended earlier this month when three manufacturers agreed to a $305 million settlement in a lead paint case out of 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 PaintSquare Daily 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.

Fighting Back

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

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.

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 2018, NL Industries reached a separate $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 2018, 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.

In August, a number of national groups began urging the Supreme Court to listen 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.”

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.

© iStock.com / XiFoto

The settlement will be divided among San Francisco, Oakland, San Diego and the counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura based on the number of homes with lead paint in each municipality.

“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 maintained 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.

In October 2018, the Supreme Court rejected hearing the appeal.

Now What?

The settlement will be divided among San Francisco, Oakland, San Diego and the counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura based on the number of homes with lead paint in each municipality.

While the companies still overall disagree with the ruling, the resounding response primarily focuses on the ability to now put the 19-year case in the past.

“This litigation, which started nearly 20 years ago, challenged the companies’ legal advertising of lead-based paints over a century ago when lead-based paints were the ‘gold standard’ and specified for use by the federal government, as well as state and local governments across the country,” Sherwin-Williams said in a statement Wednesday.

“While Sherwin-Williams continues to believe that this litigation was unfair, unwarranted and unwise, the resolution announced today will enable all parties to move forward and is in the best interests of the company and its shareholders,” the company statement said.

   

Tagged categories: Business matters; Good Technical Practice; Laws and litigation; Lawsuits; Lead; Lead paint abatement; NA; North America

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