R.I. Court Throws Out Lead Paint Case

Published September 1, 2008

The Rhode Island Supreme Court has unanimously ruled paint companies are not liable for $2.4 billion required to abate deteriorating lead paint in 240,000 privately owned residences.

The court ruled the public nuisance case had no legal basis and violated well-established Rhode Island law.

The Rhode Island Supreme Court’s blistering July 1 opinion was a very public humiliation for plaintiffs’ lawyers, who had attracted nationwide attention on the case. In addition, the lower court judge who forced the companies into eight years of litigation came under withering criticism from the state’s high court.

There may be more pain to come for Rhode Island taxpayers, as attention turns to how these companies and their shareholders can recover the huge costs they incurred in defending themselves against the lawsuit.

Nuisance Theory Invalid

State attorneys and the Motley Rice law firm argued lead paint was “cumulatively” a public nuisance because so many residences are involved. The court ruled their claim was absolutely false. Lead paint in private homes is a private injury, not a public one, no matter how many homes are involved, the court held.

The court’s decision said a defendant accused of creating a public nuisance must have “control” over the “instrumentality” of the nuisance–in the current case, that meant the paint and the wall it was on. Once the paint was sold, the defendants had no control over it and no way to prevent its deterioration. The case should have been thrown out of court eight years ago, the court said.

“The law of public nuisance never before has been applied to products, however harmful,” the court noted. Its decision continued, “In declining to adopt such a widespread expansion of the law, we are mindful of the words of Edmund Burke that ‘bad laws are the worst sort of tyranny.'”

Dangerous Precedent Averted

Analysts note the danger in using public nuisance to replace product liability is that a public nuisance can be almost anything–it’s defined as “something that unreasonably interferes with a right common to the general public.”

As The Heartland Institute wrote in its amicus brief in the Rhode Island case, “No product is safe from untrammeled attacks by contingent fee lawyers in hot pursuit of unconscionable profits, such as the one presented in the present case. No industries are safe, no manufacturing-related jobs are safe, no state economies are safe, and no governmental property tax assessment bases are safe from the devastating consequences that would be unleashed” if the court affirmed the jury verdict.

Other Remedies Exist

Rhode Island residents and their injured children are not without remedies, the court said. Under existing law, they can sue landlords who refuse to make repairs, and the state can sue for fines and penalties.

Ron Motley of the Motley Rice firm literally invented the public nuisance theory for defective product cases such as this one, as a way to evade product liability law, which has long been viewed as fair to both plaintiffs and manufacturer defendants.

Under that law, manufacturers of products sold in Rhode Island are strictly liable to plaintiffs injured by defective products, but this liability exists only during the 10-year period after the product was sold. Similar laws are in effect in almost every state. The defendant companies last sold lead paint in 1955.

Other States Agree

There is no statute of limitations on public nuisance cases, though, so Motley and others at the Motley Rice firm shopped the public nuisance theory to attorneys general across the country.

Motley Rice’s fees in the Rhode Island case alone would have amounted to about $40 million. But Motley’s theory has now been thoroughly rejected in Rhode Island, Missouri, New Jersey, Illinois, New York, and Wisconsin. The Wisconsin case is now on appeal, and other cases are pending in California and Ohio.

Stockholders Took a Beating

The Rhode Island case cost the defendants–Sherwin-Williams, NL Industries, Inc., and Millennium Holdings LLC–tens of millions of dollars in legal fees, and Sherwin-Williams’ stock alone lost $1.8 billion in market capitalization after the 2006 jury verdict in the state’s favor, which now has been reversed.

The language in the court’s opinion is so strong that defendants and legal observers are researching whether the companies can move for financial sanctions under Rhode Island procedural Rule 11. That rule says when attorneys sign a pleading, they certify to the best of their “knowledge, information, and belief there is good ground to support it.”

“The defendants will take a very close look at our right to recover the cost of litigation,” Pittsburgh attorney Charles H. Moellenberg, who represented Sherwin-Williams, noted in a July 1 press statement.

“Today’s ruling is a landmark victory for common sense and for responsible companies that did the right thing,” Moellenberg said. “Blood lead levels in Rhode Island are at historic lows, and are continuing to decline dramatically.”

Maureen Martin ([email protected]) is senior fellow for legal affairs for The Heartland Institute.

For more information …

The Heartland Institute’s amicus curiae brief in State of Rhode Island v. Lead Industries Association: http://www.heartland.org/Article.cfm?artId=22769