Although they prevailed after the longest civil jury trial in state history, paint manufacturers must cover their own multimillion-dollar legal bills in the case, the Rhode Island Supreme Court has ruled.

However, the state must reimburse the companies $242,121.21 for co-examiners employed in the case.

In addition, defendant Sherwin-Williams will be allowed to keep secret several PowerPoint slides from an internal presentation about litigation and costs, the court ruled in a separate, but related, matter.

Thus unfolded the latest rulings “in a case whose life begins to rival the age of the biblical Methuselah,” as one judge wrote in his ruling.

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Defendants in the case include NL Industries, which was known as the National Lead Company until 1971. NL Industries sold its Dutch Boy brand to Sherwin-Williams in 1976. Sherwin-Williams is also a defendant in the long-running suit.

Although the case was decided five years ago, another judge wrote, “it did little to end the contention between the parties.”

Making an Exception

In a decision issued Friday (May 10), the Rhode Island Supreme Court upheld Judge Michael A. Silverstein's rulings on court costs relating to State of Rhode Island v. Lead Industries Association Inc. et al.

The 15-page decision bucked the longstanding practice and presumption that the prevailing party in civil litigation typically recovers its costs from the losing side.

Exceptions may be made if “both the public and defendants substantially benefited from the commencement of the litigation.”

The state of Rhode Island argued that the lead litigation met that test, and the trial judge agreed.

14-Year Case

The case dates to 1999, when Rhode Island’s Attorney General filed suit against various former lead pigment manufacturers and Lead Industries Association, a national trade association of lead producers formed in 1928.

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The lead case dates to 1999, prompting one judge to quote Macbeth in his ruling: “To-morrow, and to-morrow, and to-morrow, Creeps in this petty pace from day to day.”

The principal manufacturer-defendants were Sherwin-Williams Co., NL Industries Inc., Millennium Holdings, LLC, Atlantic Richfield Co., American Cyanamid Co., Cytec Industries Inc., and ConAgra Grocery Products Co. Various other defendants were added and removed throughout the case.

The first trial in the case ended in a mistrial. A second trial ended in a verdict that held lead pigment makers responsible for “creating a public nuisance.”

After that verdict, the state asked that a $2.4 billion abatement begin immediately, funded by the paint companies, alleging “a continuing threat of harm” to children who live in homes with lead paint.

The paint makers, however, sought a stay of the abatement as they appealed the ruling and requested that examiners be appointed as part of that appeal.

In 2008, the Supreme Court reversed the trial judge’s ruling and the judgment of abatement.

That began a fresh legal stampede to settle millions of dollars in bills.

Assessing Costs

In June 2010, the trial judge, Michael A. Silverstein, ordered the defendants to pay their own costs and ordered the state to pay the $242,121.21 in examiners’ fees.

In assigning the paint makers to pay their costs, even though they prevailed, Silverstein found that:

• The state’s claim was not frivolous;
• The public “had a heightened interest because of the physical and environmental problems lead paint presented”;
• Assigning all costs to the state could deter it from making future environmental suits; and
• [B]oth the public and defendants substantially benefited from the commencement of the litigation.”

Sherwin-Williams

The judge departed from the typical practice of assigning costs to the case's losers, saying the litigation had raised important issues about lead paint safety that benefited the public.

The new ruling upholds those decisions and that reasoning, saying Silverstein “conscientiously and meticulously presided over this very lengthy and complex litigation.”

‘A Very Real Problem’

Sherwin-Williams declined Monday (May 13) to comment on the ruling.

Attorney General Peter F. Kilmartin said in a statement that he was “pleased” that the state would not have to shoulder the paint companies' costs, estimated at more than $10 million.

“Exposure to lead paint is a very real problem that has caused long-lasting health issues for many children,” Kilmartin said in a statement.

“This case brought the dangers posed by lead paint to the forefront nationally and, as Judge Silverstein and the unanimous Supreme Court found, both the public and the parties substantially benefited from the Attorney General's commencement of this action."

Slides and Secrets

In the other ruling issued Friday, the court found that Sherwin-Williams could prohibit the disclosure of several PowerPoint slides that had been part of a company presentation.

In a decidedly weary-sounding 28-page opinion that likened the litigation to a Shakespearean saga, the court found that the state had no compelling reason to force the public disclosure of three slides that were part of an 80-slide presentation to Sherwin-Williams’ Board of Directors in 2004.

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“Exposure to lead paint is a very real problem that has caused long-lasting health issues for many children,” said Rhode Island Attorney General Peter F. Kilmartin.

The slides, prepared by Sherwin-Williams' corporate counsel, were labeled "Insurance And Lead Litigation,” “Reimbursement of Lead Defense Costs,” and “Potential Insurance Coverage for Lead Liabilities,” the ruling said.

It is not clear how the state obtained the slides—indeed, the state refused a request by Sherwin-Williams to identify the source, the ruling says.

In any case, the state contended that the Cleveland-based paint maker had “not suffered any financial hardship” in fighting the lawsuit. In fact, the state contended that Sherwin-Williams “had benefited from significant insurance coverage when it defended the underlying [lead] lawsuit.”

The court found that the slides were not protected by attorney-client privilege because they were factual and did not include legal opinions, but it said they were “work product” that the state had not made a strong enough case to divulge.