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Sherwin Williams Files Appeal on the California Lead-based Paint Case

Sherwin Williams (SW) and other companies were defendants in legal proceedings seeking recovery related to lead-based paint litigation cases. The Santa Clara County, California proceeding was initiated in March 2000 by 10 counties and cities in the state of California and asserted a claim for public nuisance, alleging that the presence of lead products for use in paint and coatings in, on and around buildings in the plaintiff’s jurisdictions constitutes a public nuisance.

On Dec. 16, 2013, a California Superior Court judge ordered SW and two other companies (ConAgra Grocery Products Co. and NL Industries) to pay $1.15 billion into a fund to be used to clean-up hazards from lead-based paint in homes in the state of California. The court entered final judgment on January 27, 2014, holding the defendants jointly and severally liable to pay $1.15 billion into a fund to abate the public nuisance.

On March 28, 2014, SW filed a notice of appeal to the Sixth District Court of Appeal for the State of California. The filing of the notice of appeal affects an automatic stay of the judgment without the requirement to post a bond. SW management believes that a decision by the Court of Appeals will take approximately 2-3 years.

Aside from the potential liability associated with the abatement costs, there is also increased possibility that the California decision could have broader ramifications by encouraging similar legal actions from other state and/or municipalities. Following the February 2006 jury verdict against SW and other defendants in the State of Rhode Island in a similar public nuisance case, the State of Ohio and several cities in Ohio individually initiated proceedings in state court in 2006 and 2007 against SW and other companies asserting claims for public nuisance. The actions in Ohio were subsequently voluntarily dismissed by the plaintiffs after the Rhode Island Supreme Court reversed the public nuisance judgment against the company and the other defendants in 2008.

Source: http://www.marketwatch.com/story/fitch-affirms-sherwin-williams-idr-at-a-outlook-stable-2014-05-09?reflink=MW_news_stmp


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