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Paint Makers Contest $Billion Dollar Judgment

Sherwin-Williams Co. and two former lead pigment makers urged a California appellate panel Thursday to reverse a $1.15 billion judgment requiring them to abate lead paint contamination in millions of homes, as dozens of attorneys packed the courtroom and an overflow room to watch the high-stakes hearing play out.

During a hearing in San Jose, attorneys for Sherwin-Williams, ConAgra Grocery Products Co. and NL Industries Inc. took turns arguing why the three-judge panel should reverse the trial court’s December 2013 ruling. They each emphasized that upholding the abatement would constitute an unprecedented expansion of public nuisance law. Also, the companies shouldn’t be liable for ads promoting toxic lead paint that are decades old, they said.

“Defendants could not have known the standards of science, which they’re being held liable for today,” NL Industries’s attorney Jameson Jones of Bartlit Beck Herman Palenchar & Scott LLP told the court.

Many of the attorneys who attended the hearing Thursday had represented one of the 10 city and county plaintiffs over the course of the 17-year-old lawsuit that was initially filed in 2000. The suit sought to hold multiple gasoline, paint and chemical companies responsible for the “massive public health crisis” caused by lead in California’s homes and public buildings, the complaint said.

California filed its fourth amended complaint in March 2011 on behalf of residents, alleging that the defendants’ production and sale of lead-based paint created a public nuisance and seeking complete abatement of all lead from public and private homes, buildings and properties in the 10 counties and cities.

In December 2013, Judge Kleinberg tentatively ruled that Sherwin-Williams, ConAgra and NL Industries should pay a $1.1 billion judgment but dismissed claims against two other defendants, Atlantic Richfield Co. and DuPont Co. The judge replaced his tentative order the following January, tacking on an additional $50 million penalty.

The three paint companies appealed the judgment, and on Thursday the attorneys argued that lead-based paint is only one potential source of the toxin. Up to 85 percent of lead found in individuals comes from gas pollution, they argued. They also took issue with the fact that the plaintiffs never identified the specific homes at issue, and as a result there’s no way of knowing which company is purportedly responsible for the lead paint in the various homes across the state.

Sherwin-Williams’ attorney Paul Michael Pohl of Jones Day argued that Sherwin-Williams had “nothing to do” with lead paint after 1947, and the risks of lead use were unclear until decades later. Even so, Sherwin-Williams never promoted its paints as having lead, he said. Ultimately, the court should reverse the order, because abatement would “blacklist” homes that have lead paint, impacting their market value, and forcing homeowners to undertake onerous tasks to purportedly abate lead contamination that may not exist on their properties, Pohl said.

Pohl also argued that the trial court erred in giving each side only 40 hours each to argue its case, which was not enough.

But Danny Yeh Chou of the County of Santa Clara, who argued on behalf of the municipalities, told the panel that each side clearly had enough time to present its case before the lower court, noting the number of cities and counties involved and that many of the attorneys in the room had appeared.

Chou said it’s also clear that the companies knew about the risks of lead paint in the 1920s, if not earlier. But despite knowing those risks, they still chose to promote lead paint, and even encouraged children to chew on the lead in some Dutch Boy Paint ads, he said. Sherwin-Williams acquired Dutch Boy in 1980, two years after the U.S. Consumer Product Safety Commission banned companies from making household paint with lead.

Chou said the case is different than other product liability cases, because the companies’ ads explicitly encouraged children to use lead paint in a way that put them in danger, even though they knew of the risks.

Chou also argued that the companies had presented a way to apportion the abatement, but the lower court rejected it, finding it wasn’t supported by evidence. Chou added that California’s real estate market has been skyrocketing, particularly in the Bay Area, and home values wouldn’t be affected by being included on a so-called blacklist.

During the first half of the arguments, Associate Justices Franklin D. Elia compared the paint industry to the sugar industry. The judge questioned whether under the municipalities’ theory a sugar company would be held liable, if sugar is found to cause cancer in 10 years.

“How much liability does a company have that something happens in the future that they’re not fully aware of?” Justice Elia asked.

After both sides seized on the analogy to further argue their own positions, the judge said he regretted making the comparison.

The judges took the matter under submission.

Acting Presiding Justice Eugene Premo, Associate Justices Franklin D. Elia and Nathan D. Mihara sat on the panel.

The municipalities were represented by Danny Yeh Chou of the County of Santa Clara.

Sherwin-Williams was represented by Paul Michael Pohl of Jones Day, ConAgra Grocery Products Co. was represented by Raymond A. Cardozo of Reed Smith LLP and NL Industries Inc. was represented by Jameson Jones of Bartlit Beck Herman Palenchar & Scott LLP.

The case is The People of the State of California v. Atlantic Richfield Co. et al., case number H040880, in the Court of Appeal of the State of California, Sixth Appellate District.

By Dorothy Atkins

Source: https://www.law360.com/

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