Lead Paint Travesty

On February 26, a Rhode Island court ruled that the paint industry is liable for a statewide “public nuisance” because long ago, paint companies sold lead paint in Rhode Island, at a time when doing so was perfectly legal.

The paint companies have been collectively held liable based on their share of lead paint sales in America as a whole, not Rhode Island in particular. Under the court’s decision, an out-of-state paint manufacturer is liable even if there was no proof that any building in Rhode Island actually contains paint that it sold. Moreover, the trial court specifically instructed the jurors who held the paint companies liable that “the act or failure to act by a Defendant need not be intentional or negligent to impose liability.”

The paint companies’ lack of wrongdoing didn’t stop former Rhode Island attorney general Sheldon Whitehouse from hiring greedy trial lawyers, who contributed to his political campaigns, to sue the paint companies in exchange for a lucrative contingency fee. Their suit alleged the presence of lead paint in thousands of old homes and buildings in Rhode Island. Getting rid of lead paint in all those buildings could cost billions, and the more it costs, the more money is likely to end up in lawyers’ pockets.

(Overlawyered has an interesting discussion of the case, complete with a link to the court’s opinion).

Treating lead paint as a nuisance is silly since most of the lead paint in buildings is buried under several layers of non-lead paint. It is not a health hazard if properly maintained, and if it’s not properly maintained, that is the fault of the landlord, not the paint manufacturer. Allowing such an industry-wide suit also opens the door to geographic exploitation, allowing governments in one region to sue manufacturers located in another and setting the stage for states to engage in a policy of beggar-thy-neighbor. If local governments can sue paint manufacturers located in other counties or states for the costs of fixing paint in public housing, why can’t the State of Vermont sue automakers in Michigan for wear-and-tear on its roads caused by heavy trucks? And why can’t counties in one state sue softdrink manufacturers located in other states for Medicaid dental costs resulting from children’s consumption of soda? A government can impose enormous costs on a manufacturer for its products under the Rhode Island court’s public nuisance theory, even though selling the product was entirely legal, and if the manufacturer is out-of-state, it will be tempting for state courts to do so, since state residents will receive the benefits, without paying the costs, which will be borne by investors and employees in other states.

Allowing a lawsuit over products liability to be brought as a nuisance allows the law of nuisance to devour in one gulp the entire law of tort, and to displace ordinary products liability law, making it largely irrelevant. Accordingly many other courts, in cases such as San Diego v. U.S. Gypsum (1994) and Modesto v. Superior Court (2004), have ruled that nuisance law can’t be used to circumvent limits on products liability. The Rhode Island court just ignored those well-reasoned decisions.

Rhode Island’s lawsuit is just an end-run around the statute of limitations for product liability cases, which ran out long ago. (Public nuisance doesn’t have a statute of limitations, although equitable considerations should bar Rhode Island’s lawsuit). The paint companies sued by Rhode Island started phasing lead out of paint way back in the 1950’s, and stopped selling it entirely on or before 1978, when lead paint’s production was sharply restricted by federal law.

Treating lead paint as a nuisance is an end-run around state laws dealing with lead-based paint hazards, such as Rhode Island’s Lead Poisoning Prevention Act (LPPA), which even today treat lead paint as a hazard only when it has deteriorated, and do not deem intact lead paint buried under non-lead paint as per se objectionable.

If nuisance law actually did regulate lead paint, holding the lead paint sellers for conduct that occurred decades ago, then the recent laws like the LPPA would be superfluous. Treating those laws as superfluous conflicts with the legal principle that statutory provisions are not assumed to be without effect or redundant, but rather are to be given independent force.

Treating lead paint as a nuisance is dangerous in the long run to homeowners, since nuisance law applies not just to manufacturers, but also to property owners and, in some cases, mortgage lenders. So treating lead paint as a nuisance creates the specter of potential liability for homeowners and banks in future litigation. That could cause mortgage lending to dry up, harming the housing market, and reducing the saleability, and thus the value, of the single-biggest asset most people have: their home. Removing intact lead paint under the theory that it is a “nuisance” (as some trial lawyers advocate) is often itself hazardous, as the laws of some states, such as California, recognize in classifying the “disturbing” of lead paint as a nuisance. (See Cal. Health & Safety Code § 17920.10 (a)).

Moreover, the lead-paint lawsuit was based in part on speech by the lead paint trade association, the Lead Industries Association (LIA), which mounted a public campaign against a total ban on lead paint. That raises serious First Amendment problems.

The Noerr-Pennington immunity, a First Amendment doctrine recognized by both the U.S. Supreme Court and the California Supreme Court, immunizes companies and people from liability under the First Amendment for lobbying campaigns that would otherwise trigger liability. See BE&K Construction v. NLRB, 536 U.S. 516 (2002) (company immune from suit under federal law); White v. Lee, 227 F.3d 1214 (9th Cir. 2000) (citizens immune from liability under Fair Housing Act).

The Rhode Island judge tried to get around this by claiming that the jury did not punish paint companies for the LIA trade association’s speech itself, but rather only considered the trade association’s speech to show that individual paint companies “had knowledge of the LIA’s lobbying activities” and to shed light on the “purpose and character” of their actions.

That is a specious distinction. Similar reasoning was rejected by then-judge (now Supreme Court Justice) Samuel Alito in his decision in Pfizer v. Giles, 46 F.3d 1284 (3d Cir. 1995). In that decision, a federal appeals court overturned a trial judge’s refusal to dismiss a lawsuit against Pfizer, which manufactured asbestos, because the trial judge had relied on Pfizer’s membership in an asbestos trade association that engaged in lobbying, some of which was allegedly deceptive. That violated the First Amendment, which protects membership in a trade association that engages in protected speech, even if it also engages in some unprotected speech. (By contrast, there is no proof that the paint industry trade association engaged in any unprotected speech).

The number of public nuisance lawsuits against manufacturers seems to be going up, even as old-fashioned tort, property, and contracts lawsuits diminish in number each year.

Almost any lawful product can be misused. When I worked at McDonalds, eating almost exclusively McDonald’s food (I worked there every day for about 4 to 5 hours a day, 6 or 7 days a week), I lost ten pounds. Yet there are people who manage to become obese off of its food, and thereby impose costs on states’ Medicaid programs. But surely states should not be able to sue over that as a “public nuisance.”