Commentary On Lead Paint Litigation In California
by Robert Ragland, Deputy County Counsel, County of Los Angeles, CA
Counties and cities in California initiated controversial litigation when they filed suit against former producers of lead pigment in paint ("lead paint"), such as Sherwin-Williams, DuPont, and the Atlantic Richfield Company. Lead is a toxic substance that once was widely used in paint products. Later on, the use of lead in paints was prohibited because lead is dangerous and when ingested by children can cause severe neurological problems, including decreased IQ levels, hearing, and growth. Ingestion may occur directly from chipped paint, or paint chips that have been ground into dust and contaminated the surrounding area or soil.
The California plaintiffs contend that these companies or their predecessors-in-interest created a lead poison hazard that continues to endanger the health of the public. This article examines the basis for, and the struggles involved in, this lengthy California litigation, and the influence of political forces that are attempting to shape its outcome.
This California litigation is just a chapter in the nationwide effort by local and state governments to hold lead paint manufacturers responsible for lead blood-poisoning of the public. The plaintiffs have been forced by the statutes of limitations applicable to product liability tort actions to rely on public nuisance as their legal theory for recovery. Public nuisance is an equitable cause of action that permits an equitable remedy. This path has been successful in some jurisdictions and not in others. The most notable success was in 2006 when the State of Rhode Island obtained a jury verdict against many of these same former manufacturers of lead paint. The verdict found that the manufacturers were responsible for the public nuisance caused by the presence of lead paint in Rhode Island homes, and that they should be required to abate the hazard. That case is currently on appeal. In other jurisdictions, courts have been unwilling to permit a public nuisance action because of a lack of causation evidence or nexus between the alleged nuisance and a specific manufacturer.
Like all of the lead paint litigation, the California litigation is contentious for two main reasons. First, a finding of culpability against the manufacturers would not only be costly to the industry but, more importantly, would set a standard for future government public interest litigation using the public nuisance theory against different business interests. Second, it represents a pitting of a variety of classic interests against each other: public health interests versus business/economic interests; the use of legislative solutions to remedy known health hazards versus the use of litigated judicial solutions; and the trial lawyers versus tort reform. Moreover, the litigation represents the deep rift regarding the concept of prosecutorial neutrality in government-driven public interest litigation. The interests are amplified in the positions staked and the arguments made in the California litigation.
California Litigation: County of Santa Clara, et al. v. Atlantic Richfield Co., et al.
Plaintiffs' Use of Public Nuisance to Attain Relief
The legal basis for the lawsuit (now in its seventh year and on its second trip to the Court of Appeal, while still in the pleading stage) has been pared down to a single cause of action: creation of a public nuisance. Plaintiffs are proceeding mainly under California Civil Code § 731, which permits a civil action to be brought on behalf of the State of California to abate a public nuisance. California law defines a nuisance as "[A]nything which is injurious to health ... or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property ..." A public nuisance is one that affects at the same time an entire community or neighborhood, or any considerable number of persons, although the extent of the annoyance or the damage inflicted upon individuals may be unequal.
California courts have found public nuisances to be offenses against, or interferences with, the exercise of rights or collective social interests common to the public. The interference must be both substantial and unreasonable and be enjoinable or abateable. Importantly for the plaintiffs' statute of limitation concerns, "[n]o lapse of time can legalize a public nuisance, amounting to an actual obstruction of public right." It is against this broad equitable backdrop that the California plaintiffs press their claims.
As noted, the gravamen of the California suit is that lead poisoning presents an ongoing danger to the health and well-being of the population, especially children, and that the nuisance was caused by defendants' promotion of the use of lead pigment in paint for interior use even though they then knew that lead was hazardous to human beings. Plaintiffs contend that it was defendants' affirmative conduct in marketing and promoting lead paint to the public as safe which led to its use in buildings and created the nuisance.
The Sixth District of the California Courts of Appeal previously found that Plaintiffs have stated a viable representative public nuisance cause of action under these allegations. The Court determined that "liability for nuisance does not hinge on whether the defendant owns, possesses or controls the property, nor whether he is in a position to abate the nuisance; the critical question is whether the defendant created or assisted in the creation of the nuisance." In separating the public nuisance claim from a products liability claim, the Court upheld the viability of the public nuisance cause of action, which allows "a plaintiff to obtain relief before the hazard causes any physical injury or physical damage to property." The Court explained its finding in the following passage from its decision:
A public nuisance cause of action is not premised on a defect in a product or a failure to warn but on affirmative conduct that assisted in the creation of a hazardous condition. Here, the alleged basis for defendants' liability for the public nuisance created by lead paint is their affirmative promotion of lead paint for interior use, not their mere manufacture and distribution of lead paint or their failure to warn of its hazards.
Plaintiffs have sought the remedy of abatement and attorney's fees and costs.
To assist in the litigation of these claims the California plaintiffs have contracted with private attorneys. These attorneys are retained on a contingency fee basis.
Defendants' opposition has taken both a substantive and procedural approach. The substantive approach focuses on how intact lead paint in buildings does not constitute a public nuisance, and that current building codes assign abatement responsibility on the property owner. The procedural approach is currently focused on the California public entity's retention of private counsel on a contingency fee basis.
Defendants' Substantive Approach: Property Owners Are Responsible for Maintaining Their Property to Keep It Free From Lead Hazards.
Defendants view this litigation as an unwarranted expansion of public nuisance law. The decision by the California Court of Appeal to permit the plaintiffs to proceed on the creation of a public nuisance theory opens the door to potential liability being assigned to manufacturers and distributors of potentially dangerous products far into the future. In the case of lead paint, California law already contains mechanisms to combat lead poisoning in the population. They contend that through this litigation plaintiffs are abandoning their building inspection and regulation responsibilities under these statutes, and ignoring that statutory scheme provided to prevent and remediate lead paint exposure.
The former lead paint manufacturers contend that they are not responsible for abatement and point their fingers at the present landowners who have allowed the subject property to deteriorate into a state that increases the chances for ingestion of lead. Under California State Housing Law, it is illegal to for a building to contain a lead hazard. The Legislature defined a lead hazard to include deteriorated lead-based paint, lead-contaminated dust, lead-contaminated soil, or disturbing lead-based paint without containment. Because the lead-based paint must be in a deteriorated condition to be considered a hazard, defendants contend that the individual landowner must remediate the hazard since the landowner has allowed the deterioration. Accordingly, the landowner is the appropriate target of any government nuisance abatement action.
Legislated Regulatory Solutions Are Already In Place.
In 1995, California has enacted the Childhood Lead Poisoning Prevention Act, created to establish the Childhood Lead Poisoning Prevention Program (CLPPP), which collects surveillance regarding the prevalence, causes, and geographic occurrence of high childhood blood lead levels. CLPPP analyzes this information to design and implement programs of medical follow-up and environmental abatement of lead for children whose blood have elevated levels of lead.
CLPPP is funded by the state through fees imposed on "manufacturers and other persons formerly, presently, ... engaged in the stream of commerce of lead or products containing lead, or who are otherwise responsible for identifiable sources of lead, which have significantly contributed historically, currently contribute, or both ... to environmental lead contamination." These fees are to be assessed on the basis of a person or entity's past and present responsibility, and "market share" responsibility for environmental lead contamination. Currently, the fees are set by regulation and have been assessed on sources attributable to architectural coatings, leaded gasoline, and facilities releasing lead into the ambient air. Sources attributable to leaded gasoline pay 85.25% of the annual fee, while sources of lead attributable to architectural coatings pays 14.125%. Thus, industries are already contributing to childhood lead poisoning prevention and environmental clean-up efforts by California public health officials.
CLPPP efforts, however, are mainly accomplished using a disease surveillance model based upon laboratory reported elevated blood lead levels in a child. Accordingly, the efforts are in reaction to an identified case, with a coordinated case management effort to prevent continued lead poisoning of that case. The regulatory scheme is a piecemeal intervention toward individually identified cases and high-risk populations. It is not a preventative solution that plaintiffs are seeking.
Defendants' Procedural Approach: Raise The Issue of Prosecutorial Neutrality By Attacking the Contingency Fee Arrangement Between the Public Entities and Private Counsel.
To hinder the California public entity plaintiffs' ability to proceed with this lawsuit, defendants, in April 2007, successfully challenged at the trial court level the use of outside counsel retained on a contingency fee arrangement. The challenge is based on a 1985 Supreme Court of California case, People ex rel. Clancy v. Superior Court, and made on the ground that when a local government elects to use its authority to abate a public nuisance, it takes on the role of a public prosecutor. In this role, the prosecutor or government attorney has the duty of neutrality. Under the Clancy facts, the Court found that this neutrality, which is essential to the fairness of the justice system, is violated when an attorney representing the government has a financial stake in the outcome.
Briefly, in Clancy, an adult bookstore opened in the City of Corona. A few months later, the City adopted two zoning ordinances regulating adult bookstores. The City was unsuccessful in enforcing these ordinances against the bookstore, and those zoning ordinances were held unconstitutional in federal court. The City then proposed a new ordinance to regulate businesses "in which obscene materials constitute all of the stock in trade," and hired private attorney Clancy under a contingency fee arrangement to abate nuisances under that newly proposed ordinance. The arrangement paid Mr. Clancy more for successful prosecutions than for unsuccessful prosecutions. The City enacted the ordinance and declared the adult bookstore a public nuisance. Clancy filed an action for abatement of a public nuisance. The adult bookstore owner challenged the arrangement between the City and Mr. Clancy, and sought Mr. Clancy's disqualification.
The Clancy court likened public nuisance abatement actions to eminent domain and criminal prosecutions in their benefit to the public. The Clancy court viewed "a public or common nuisance" to be a "species of catch-all criminal offense, consisting of an interference with the rights of the community at large." The remedy for these offenses lie within the realm of the government's statutory and/or police powers in either civil or criminal actions. The Court analytically bound the civil public nuisance action to the criminal prosecution in order to cement in a prosecutorial duty of neutrality in civil public nuisance actions. It held that "the contingent fee arrangement between the City and Clancy is antithetical to the standard of neutrality that an attorney representing the government must meet when prosecuting a public nuisance abatement action," and ordered Clancy to be disqualified from the case.
In April 2007, in the California litigation, the trial court adopted this view, and ordered the plaintiffs to be precluded "from retaining outside counsel under any agreement in which the payment of fees and costs is contingent on the outcome of litigation."
On May 11, 2007, the California public entity plaintiffs sought immediate appellate relief from this order by seeking a writ of mandate. They sought to distinguish their litigation from Clancy. The factors cited were the lack of constitutional concerns in this litigation, the fact that the public entities have not ceded control of the litigation to private counsel, that private counsel is necessary in this instance for the public entities to properly discharge their duties, and the importance of the public health policy interests driving this litigation. That is when things got interesting.
Political and Public Opinion Actions and Reactions.
On May 16, President Bush issued an Executive Order to Protect American Taxpayers for the Payment of Contingency Fees. This Order prohibits all United States Government Agencies from entering into contingency fee agreements for legal or expert witness service that are contingent upon the outcome of litigation or other proceedings, unless the Attorney General has determined that the agency's entry into the agreement is required by law.
Because of the significance that this case may have on future public health policy and litigation, there has been no shortage of interested parties filing amicus briefs. Lining up to support the defendants are the United States Chamber of Commerce, the American Tort Reform Association, the American Chemistry Council, and the Civil Justice Association of California. The plaintiffs are being supported by Public Justice,the California State Association of Counties and the Association of California Water Agencies.
On June 28, the Appellate Court issued an order to show cause as to why a peremptory writ should not issue directing the trial court to vacate its order granting the defendants' motion to bar payments to contingency fee counsel. This put the Clancy ball back in the defendants' court. The Court has not yet set a date to hear the matter.
On July 5, the Wall Street Journal published an editorial in its Opinion section entitled "Prosecution For Profit." Citing President Bush's earlier Executive Order, the editorial opined that there is full-size legal battle raging across the country regarding prosecutorial neutrality. Its message was that "public officials are increasingly violating this ethic by outsourcing legal work to tort lawyers who profit from prosecuting public claims." The editorial specifically refers to the California trial court's rejection of the contingency fee arrangement between the California public entities and its retained counsel. And it further lauds the trial court's recognition of the "impossibility of determining how much control a government attorney must exercise to make a contingency fee deal legitimate" under Clancy. In a prescient manner, it alludes that the contingency fee issue will likely be finally decided by the Supreme Court.
In the California public nuisance litigation, the interests are pitted and the positions have been staked. It is the equitable nature and open-ended time frame of bringing a public nuisance action that has brought the parties to this entrenched point. The decision on the Clancy issue, depending on the authority of the issuing court, may dictate the national future of this type of public health related litigation.
Lead poisoning is a man-made disease. Recently, Americans have been reminded of the dangers associated with this disease by the recall of toys and products manufactured in China using toxic lead paint. Public opinion in response to those recalls shows that the distribution of products to consumers that contain excessive levels lead is unacceptable. Those products are being immediately removed from the shelves when identified.
All agree that lead paint is toxic and that environmental exposure must be eliminated. The question, as for all public policy questions, is the balance between the harm and the cost. Is the harm adequately addressed through legislative solution that spreads the cost to the polluter over many years, or does it require a litigated resolution, with the estimated abatement cost awarded to the government? It is a classic question, and the answer with regard to lead paint is ... only time, and the court, will tell.