Plaintiff win in California lead paint case could threaten business, hit homeowners hard

SAN JOSE, Calif. (Legal Newsline) - From Timothy Hardy's perspective, all companies should be worried if a California judge finds that old, lead-based paint in private homes constitutes a public nuisance.

He contends that 10 of the state's largest cities and counties are using today's science to characterize the dangers of lead-based paint. However, he says, that science has changed dramatically since the companies actually manufactured or sold the paint.

"I do believe that industry in general should be concerned if we were to lose on the hindsight issue," said Hardy, who represents NL Industries Inc., a defendant in the case. "It is unfair and illegal to hold companies to what's known about today's science when they sold the product many, many decades ago."

In The People of California v. Atlantic Richfield Co., et.al., the plaintiffs - Santa Clara County, San Francisco City, Alameda County, Los Angeles County, Monterey County, Oakland City, San Diego City, San Mateo County, Solano County and Ventura County - also asked Santa Clara County Superior Court Judge James Kleinberg to order five paint manufacturers to pay $1.2 billion to abate lead-based paint in homes built before 1978.

In addition to NL Industries, the defendants are The Sherwin-Williams Co., ConAgra Grocery Products, DuPont and Atlantic Richfield Co.

Like Hardy, many legal and business advocates argue that a ruling against these companies will not only threaten their bottom line and their industry, but also adversely affect the entire business community.

James Copland, the director of the Manhattan Institute's Center for Legal Policy, points out that in the short term, defendants could face billions of dollars in lead-based paint abatement costs. They could also face higher litigation costs if they decide to appeal a decision against them.

"For defendants, obviously, that's an expensive tab," Copland said. "Even though these are really big companies, it'll have a negative impact."

Beyond that, he continues, a ruling against defendants could also create risks and uncertainty in the real estate market in California. It could also complicate the process for buying, selling or even renovating homes.

"If lead paint is well maintained, it's not really a risk," Copland said. "But if it's under a lot of layers of paint, it's a major process even if someone else is footing the bill."

Angela Logomasini, a senior fellow at the Competitive Enterprise Institute, who researches environmental regulatory issues, agrees that in the end, a ruling against defendants will hit homeowners the hardest.

She points out that in this case, all homeowners - even those without children - will be required to abate lead-based paint in their homes. However, she contends, it's children who eat pieces of lead-based paint or breathe in dust from the paint who face the greatest risk.

"If you don't have kids in the home, you have almost no risk," Logomasini said. "But you still have to pay for it."

She adds that California could fall in line with Washington, D.C., and Maryland, which uphold strict lead-based paint abatement requirements and hand out heavy penalties for noncompliance. Instead, she says, states should do more to balance all of the known facts about lead-based paint.

"If you're in the inner city in a 100-year-old townhome with peeling lead paint all over the place, and people can't afford to clean it up, there could be significant risks," Logomasini said. "Those are the risks we should be looking for and addressing properly."

Donald Scott, a founding partner at Bartlit Beck Herman Palenchar & Scott LLP in Denver, who also represents NL Industries, points out that California already succeeded in managing its lead risks. For instance, he says, children's blood lead levels there are lower than the national average, and still declining.

"When the lawsuit ends, the cities and counties can get back to doing their job with the lead programs, which, we think, they know how to do and have done very well," he said.

Copland contends that the broader business community will also suffer if the judge rules that private homes with lead-based paint constitute a public nuisance. He explains that the public nuisance law that exists in California and other states came from an old common law that was called on if a tree blocked a road or a river used for commerce. The law evolved further in the 19th century to include brothels and gambling halls as public nuisances.

"It's a very strange leap from this type of public nuisance law to, well, it's a public nuisance that this product is potentially harmful," Copland said. "I think it's an over-stretch of the law."

Copland argues that if plaintiffs prevail, any company that has manufactured a product should worry about a broad application of the public nuisance law. Plus, he says, companies that already view California as a problem state may finally decide to take their business elsewhere.

"It's yet another risk that any rational person running a business would have to consider in terms of California," Copland said. "It already has higher taxes. It already has arguably higher regulatory burdens than other states. And here, you have a legal burden that will be on top of it."

Additionally, Copland points out that the Rhode Island and New Jersey Supreme Courts held that the public nuisance law didn't apply to lead-based paint. He contends that a different decision in this case could force California out of step with those other states.

"And these aren't states with right wing, Republican Supreme Courts," he said. "We're talking about Rhode Island and New Jersey here."

Logomasini agrees that a plaintiff win in the California case could set a bad precedent.

She explains that lead-based paint was once widely accepted by everyone, including government, because they appreciated the benefits of the product without fully understanding the risks and how to manage them. However, she says, California's large-scale, remediation approach could cause just as much harm.

"Now, we've gone to the other extreme," she said. "We're looking for a zero-risk, perfect society, and we're never going to find that. We can actually be more counterproductive."