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Trial
Lawyers Inc. Health Care:
The Lawsuit Industry's Effect on American Health, 2005
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Trial
Lawyers Inc.:
A
Report on the Lawsuit Industry, 2003
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Trial
Lawyers Inc. California:
A
Report on the Lawsuit Industry in California, 2005
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No 3, July 2007
JUDICIAL
LEAD-ERSHIP:
State Courts Are Rebuffing the Trial Lawyers' Attack on Paint
Manufacturers
Trial Lawyers, Inc. is always searching for its next big
payday, and America's paint manufacturers have recently loomed
as the litigation industry's latest target. The trial bar's
legal assault has combined two of the oldest and most successful
strategies in the lawyers' playbook: going after long-ago
manufacturers of lawful products (as in asbestos litigation);
and co-opting allied state attorneys general to back the private
lawyers' claims (as in the lawsuits against the tobacco industry).
After years of unsuccessful efforts, the litigation industry's
hopes of extracting money from paint makers began to look
promising when the trial bar won a major victory last year.
In February 2006, a Rhode Island superior court found three
paint manufacturers—Sherwin Williams, Millennium Holdings,
and NL Industries—liable for the costs of removing lead paint
from 240,000 public and private buildings, under a novel "public
nuisance" theory (see box, next page). The estimated
price tag on the court-ordered cleanup is as much as $3 billion.[1]
But recent court decisions in other states—including New
Jersey, Ohio, and Missouri—have evinced a more traditional
understanding of the issues raised in Rhode Island, and each
of these state courts has rejected the litigation industry's
lead paint claims.[2]
Early Lead Paint Suits Smothered
Paint manufacturers have been fighting lead paint litigation
for two decades even though they voluntarily ceased making
lead paint for interior use in 1955, after it was found to
cause neurological problems in children who ingested its dust
or flakes. The federal government banned its use in 1978.[3]
Although lead exposure can be harmful, the level of lead
in children's blood has been dropping nationwide since the
1970s. (In Rhode Island, new cases of lead poisoning dropped
by 75% over the ten years prior to the 2006 verdict.)[4]
The decrease is largely due to the elimination of several
major sources of lead poisoning—most important, the federal
prohibition of the sale of leaded gasoline (see box, page
3).
Regulations passed by state and local governments have also
been effective. For example, 36 years ago Massachusetts began
to require that landlords abate lead paint in homes with children.
A recent study found that the incidence of lead poisoning
in children in Worcester, Massachusetts, is now one-third
the rate in nearby Providence, Rhode Island.[5]
Regulatory, rather than legal, remedies have thus proven effective,
though in the beginning, lead poisoning lawsuits aimed at
neglectful landlords were helpful in compelling them to properly
maintain their properties.
But in the mid-1980s, spurred on by business scourge Ralph
Nader—whom we've dubbed Trial Lawyers, Inc.'s president of
public relations—the plaintiffs' bar began to bring product
liability suits against paint manufacturers, testing a smorgasbord
of legal theories, including conspiracy, fraud, negligence,
collective liability, and risk contribution. Skeptical courts
dismissed virtually every lawsuit or else plaintiffs withdrew
them, having failed to prove wrongdoing on the part of the
defendants or to link decades-old paint to a specific maker.
Motley's Crew Scores a Hit
 The
real primer for lead paint litigation was applied by Motley
Rice—the law firm of Ron Motley, whom we've called the
founder and chairman of Trial Lawyers, Inc. for his role in
long-standing asbestos and tobacco lawsuits. Employing the
tactic that had proven so effective in their shakedown of
the tobacco industry, Motley Rice tried to enlist states and
cities to front their claims.
Motley
succeeded in Rhode Island, a state in which the entrenched
Democratic machine takes care of its own. Motley Rice partner
Jack McConnell set up shop in Providence, the firm gave huge
sums to the state Democratic Party, and McConnell even became
the party's state treasurer.[6] So it
was little surprise when then—state attorney general,
and now U.S. senator, Sheldon Whitehouse hired Motley Rice
in a contingency deal that guaranteed the firm 16.7% of any
payout and gave McConnell free rein to choose what to claim,
whom to sue, and whether and when to settle. The deal ceded
enough state power to Motley Rice that it shocked the superior
court judge; the judge rebuked the state attorney general
and ordered him to amend the agreement and take back the state's
prerogative to direct the lawsuit.[7]
Motley Rice advanced the theory that lead paint is akin to
a public nuisance, like air pollution—and that defendants
could be deemed responsible even without proof that they sold
the paint in question. Such facile legal reasoning makes it
"nearly impossible for paint companies to defend themselves
or, frankly, for plaintiffs to lose," wrote Wisconsin
Supreme Court Justice David Prosser in his dissent in a Wisconsin
lawsuit that mirrored the Rhode Island case.[8]
What's a "Public Nuisance"?
Traditionally, the law has defined a "nuisance"
as "the actual invasion of interests in land."
Common nuisance claims have included toxic chemical
runoff onto another's property or "stray voltage"
from electrical facilities. The distinction between
a "public" and a "private" nuisance
dates back to at least 1535 in the English common law.
Fundamentally, public nuisance covers dispersed harms—for
instance, air pollution or damage to city streets limiting
access to property; the law forecloses legal action
by individuals who are not peculiarly or disproportionately
harmed relative to the broader population.[9]
The Rhode Island decision is remarkable in its treatment
of public nuisance law. To begin with, lead paint in
buildings is hardly an "invasion" of homeowners'
property in the normal sense: owners themselves, not
the paint manufacturers, bought and applied the paint.
Moreover, the government's remedy in public nuisance
actions has typically been enforced through regulatory
action or criminal prosecution, not state-sponsored
tort litigation (and states with strong lead paint regulations
have shown significant progress reducing the incidence
of lead poisoning). Finally, in contracting a public
nuisance claim out to a private party rewarded through
a contingency fee, arrangements such as the one in Rhode
Island chip away at the long-standing public-private
distinction in nuisance law.
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But Motley's logic was embraced by Rhode Island Superior
Court Judge Michael Silverstein in Rhode Island's 2005 retrial
after a 2002 hung jury. Ignoring centuries of established
common law and any reasonable standard of accountability,
Silverstein instructed the jury that the mere presence
of lead paint was enough to find the defendants liable even
without proof that they had ever sold a drop of paint in the
state or injured a single person.[10]
Unsurprisingly, a unanimous jury found the companies liable.
Absent from the decision was any assignment of culpability
to negligent landlords or to the government's desultory enforcement
of lead paint regulations. The decision accomplished what
two decades of product liability arguments had failed to do,
namely, pin responsibility on paint manufacturers for individual
and government failure. Earlier this year, Silverstein rejected
a defense motion that would have delayed his multibillion-dollar
abatement order until the case was fully litigated on appeal.[11]
After years of investment, Trial Lawyers, Inc.'s lead paint
litigation investment appeared finally to have paid off.
Lead Paint Suits Running Thin
The Rhode Island decision sent shock waves through the legal
community, and states and municipalities around the country
began renewing efforts to go after paint makers.
At least initially, Trial Lawyers, Inc. has had difficulties
replicating its Rhode Island success. Last month, New Jersey's
Supreme Court rejected the lead paint public nuisance theory
as inconsistent with "the well-recognized parameters
of the common-law tort of public nuisance," and "directly
contrary to legislative pronouncements governing both lead
paint abatement programs and products liability claims."[12]
Also last month, the Missouri Supreme Court rejected a lead
paint public nuisance suit on causation grounds, refusing
to attach liability to defendant companies based on "market
share" when no evidence of actual sales causing damage
exists.[13] And on June 20, the Ohio
Supreme Court let stand a lower court decision dismissing
a lead paint public nuisance claim filed by the state and
five of its cities.[14]
Lead Poisoning: Where Are We Now?
We now know that high exposure to lead can adversely
affect neural development in children, although scientists
differ as to the level of risk. Because of these concerns,
lead-based paint has been banned from the market since
1978, and had been largely relegated to outdoor use
as early as the 1950s. Lead paint continues to be present,
however, in some older homes and apartments.
Over the last 30 years, lead paint regulations, combined
with improvements in drinking water and the elimination
of lead-based gasoline, have caused a dramatic reduction
in children's blood lead levels. Based on earlier safety
thresholds, the risk has virtually been eliminated,
but over the last 15 years the Centers for Disease Control
has lowered its safe-exposure measure from 25 micrograms
per deciliter to ten micrograms. Even under this new
level, however, only 1.6 percent of young children fall
above the CDC threshold, a 98 percent reduction from
the late 1970s. Ironically, public nuisance lead-abatement
suits have burgeoned even as the risk from lead poisoning
has been approaching the nonexistent.
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Still, Trial Lawyers, Inc.'s lead paint line of business
is far from finished. The Wisconsin Supreme Court in 2005
gave the go-ahead to lead paint public nuisance claims based
on market share liability—though a jury last month rejected
Milwaukee's suit on causation grounds.[15]
And in March 2005, a California appellate court reinstated
a lead paint suit that had been filed on behalf of all counties
and municipalities in the state. But the value of that decision
for the litigation industry in the Golden State was thrown
into question as well when a judge held in April that private
attorneys could not receive contingency fees in the action,
relying on a thoughtful 1985 precedent that held such arrangements
"antithetical to the standard of neutrality that an attorney
representing the government must meet when prosecuting a public
nuisance abatement action."[16]
 The
spate of recent commonsense rulings throws into serious doubt
earlier worries that lead paint might become the next asbestos.
All eyes will now be on Rhode Island, to see whether its supreme
court reverses the multibillion-dollar verdict or upholds
the state's lead paint public nuisance claim contrary to the
fundamental tort requirements linking injury to wrongdoing
by a specific actor. If the decision stands, it could pave
the way for lawsuits against countless other industries—think
fast food, soft drinks, and alcohol—that legally
and in good faith produced a product that was misused or later
discovered to be harmful.
In sum, although Trial Lawyers, Inc. scored a major victory
with the Rhode Island lead paint decision, last month's rulings
were a victory for the American economy and the American civil
justice system. Let's hope that reformers continue to push
to clarify public nuisance law, get sensible judges on the
bench, and restrict attorneys general from contracting out
state business to their contingency fee buddies in the plaintiffs'
bar.
Notes
- Eric Tucker, Judge to Appoint Special Master to Advise
on Lead Paint Cleanup, Associated Press, Feb. 26, 2007.
- See generally http://www.pointoflaw.com/cgi-bin/mt-search.cgi?search=lead+paint.
- U.S. Consumer Product Safety Commission, Release No. 77-096,
Sept. 2, 1977, available at http://www.cpsc.gov/CPSCPUB/PREREL/prhtml77/77096.html;
Alastair Walling, Lead Paint, Regulation, June 22,
2006.
- Rhode Island Department of Public Health, Childhood
Lead Poisoning in Rhode Island, The Numbers 17 (2006),
available at http://www.health.ri.gov/lead/databook/2006_Databook.pdf.
- Adrian J. Bailey et al., A Tale of Two Counties: Childhood
Lead Poisoning, Industrialization, and Abatement in New
England, 74 Econ. Geography 96, 96-111 (1998).
- Brian C. Jones, Rhode Island's Billion-Dollar Man, The
Phoenix (Rhode Island), Feb. 28, 2007.
- Rhode Island v. Lead Industries Ass'n, No. 99-5226 (R.I.
Super. Ct. Aug. 29, 2003).
- J.R. Ross, Court Allows Teen to Sue Lead Paint Makers
for Injuries, Associated Press, July 18, 2005.
- See generally Richard Epstein, Cases and Materials
on Torts, 639, 639-50 (8th ed. 2004).
- Jane Genova: Speechwriter-Ghostwriter, Interview with
Gerald Lenau, Jury Foreman, Mar. 2, 2006, at http://speechwriting-ghostwriting.typepad.com/speechwriting_ghostwritin/2006/03/conviction_came.html.
- Rhode Island v. Lead Industries Ass'n, No. 99-5226 (R.I.
Super. Ct. Feb. 26, 2007).
- In Re: Lead Paint Litigation, No. A-73-05, slip op. at
4 (N.J. June 15, 2007).
- St. Louis v. Benjamin Moore & Co., No. SC88230 (Mo.
June 12, 2007).
- Peter Krouse, Court Upholds Lead-Paint Dismissal,
The Plain Dealer (Cleveland), June 22, 2007.
- See Ross, supra note 8; It's Official:
City Loses Lead Paint Case, Posting of Marie Rohde to
NewsWatch, http://www.jsonline.com/watch/
(June 22, 2007, 1:57 CDT).
- See County of Santa Clara v. Atlantic Richfield Co.,
No. 1-00-CV-788657, slip op. at 2 (Cal. Super. Ct. Apr.
4, 2007) (quoting People ex rel. Clancy v. Superior Court,
705 P.2d 347, 353 (Cal. 1985)).
Center
for Legal Policy
Manhattan Institute for Policy Research
52 Vanderbilt Avenue
New York, NY 10017
(212) 599-7000
www.manhattan-institute.org
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