The Key Legal Issue in Rhode Island's Massive Lead Paint Tort Case:
|By ANTHONY J. SEBOK
|Tuesday, May. 20, 2008|
Last week, hundreds, if not thousands, of Wall Street analysts, business journalists and lawyers listened, either in person or via webcast, to a fascinating, historic four-hour oral argument at the Rhode Island Supreme Court. The argument concerned whether the lead paint industry will have to pay up to $2 billion to remove lead paint from 180,000 homes in the state. (Interested readers can find the webcast at http://126.96.36.199/content/RI_Courts/Lead_Paint_Appeal_2008_05_15/msh.htm.)
In this two-part series of columns, I will discuss the core legal issue at the heart of the appeal.
The Context: Lead Paint Litigation and Its Origins
The Rhode Island appeal comes at the end of an eight-year lawsuit, which was begun by then-Attorney General Sheldon Whitehouse (now a Senator from Rhode Island). The suit resulted in a jury trial, and the jury issued a verdict in favor of the state of Rhode Island and against the entire lead paint industry, for the cost of protecting the State's children from the threat of lead poisoning in their homes.
Lead paint litigation is a legacy, for better or for worse, of the state Medicaid reimbursement litigation against the tobacco industry, which produced a famous $250 billion settlement in the late '90s. It is also, in a way, the latest innovation from the same group of plaintiffs' lawyers that perfected mass tort litigation against the asbestos and pharmaceutical industries.
In fact, the law firm that then-Attorney General Whitehouse chose to act as "special attorney generals" in the lead paint litigation (in exchange for a 16% contingency fee if the state won) is Motley Rice, a South Carolina plaintiffs' firm famous for suing asbestos companies and helping the states sue the tobacco industry.
The state Medicaid reimbursement suits were brought under a somewhat flimsy claim of unjust enrichment: The plaintiffs' attorneys claimed that the tobacco industry was enriched because it should, by law, have paid for medical expenses that the states paid instead. The asbestos cases were brought under old-fashioned products liability theories.
However, the lead paint suits were brought under the doctrine of "public nuisance" – an ancient, obscure legal theory. It is on that theory, which is really quite unique, that I will focus this series of columns.
The Unique Legal Theory Underlying the Appeal: Public Nuisance
The public nuisance doctrine is often confused with the much more familiar doctrine of private nuisance, which is often invoked by property owners whose ability to "enjoy" their land has been disturbed by someone else—usually a neighbor, but sometimes a distant polluter engaged in an especially noisy or smelly activity. But public nuisance does not involve interference with the enjoyment of land.
Rather, public nuisance involves the interference of a member of the public in their enjoyment of a "public right." Here is the classic, from Blackstone: A traveler encounters a tree that has its roots on private land, but has fallen onto a public highway. The traveler can sue the landowner, regardless of whether the tree fell due to negligence or not. But the suit must seek not damages but injunctive relief – such as a court directing the landowner to remove the tree (and repair the road) at his own expense.
How the Public Nuisance Doctrine Was Invoked in the Lead Paint Cases
What does any of this have to do with lead paint? Lead is known now to be an extremely toxic substance, especially for children, whose brains and nervous systems can be severely damaged if they ingest lead during their critical developmental years. However, this knowledge was acquired slowly. By the 1970s, the use of lead paint was prohibited. But should the lead paint industry (including well-known companies like Sherwin-Williams and Glidden, which owned both the lead pigment companies and the paint manufacturers who bought the pigment) have done something earlier to mitigate the risk?
The lead pain industry claimed that its companies learned about the hazards of lead paint at the same time as the rest of the public and the government.
However, as with tobacco and asbestos, the true story was more complicated and possibly more sinister. Public health activists and plaintiffs' lawyers claimed that they could demonstrate that, just as in other well-known mass torts, the lead paint industry knew about, but concealed, the risks of lead pigment from the public and the government.
The problem was that, even if this were true, efforts to sue the lead paint industry in tort would have gone nowhere, for a variety of reasons, including the impossibility of product identification – that is, the ability to match paint to its manufacturer -- in most (but not all) cases.
Enter the doctrine of public nuisance. The theory is that by creating and selling lead pigment, the paint industry interfered with the public right to a healthy residential environment. Accordingly, whether or not the industry was negligent, it -- like the owner of the fallen tree in the example drawn from Blackstone -- should be required to remove the paint, so that the public can enjoy its right to live without being exposed to a toxin.
A negligence suit would have asked for damages. But as noted above, a public nuisance claim, by its nature, asks not for money damages but a court injunction. Here, the desired type of injunction would have directed the industry to pay the cost of removing ("abating") the lead paint from any home where it may be. This would be a massive endeavor whose real cost, if done nationwide, no one really knows. Yet it is clear that, even in a small state like Rhode Island, having to pay abatement costs could bankrupt the entire paint industry.
A Trial Judge Embraced the Public Nuisance Theory for Lead Paint – But the Rhode Island Supreme Court May Not Do the Same
Almost every court that has been asked to apply public nuisance to the problem of lead paint has rejected the theory. In Rhode Island, however, Whitehouse found a sympathetic trial judge and a Supreme Court that refused every entreaty from the defendants to accept interlocutory appeal (that is, appeal in the midst of the case, rather than at its conclusion).
After two jury trials, the State of Rhode Island received a jury verdict finding that the industry had created a public nuisance. Now, the trial judge is hearing evidence on how much the industry should pay the state to clean up every house in the state that might contain lead paint. And, finally, the Supreme Court of Rhode Island agreed to hear the paint industry's appeal.
Like many observers, I predict that the Rhode Island Supreme Court will reverse the trial court's verdict. The trial judge took too many liberties with the law, including, it seems, permitting the state to hide critical evidence from the jury. But such a ruling will not necessarily end the litigation. That's because the real question now is whether the industry will face yet another trial, meant to be free of the problems and errors that plagued the last, or whether the Rhode Island Supreme Court will reject the public nuisance theory entirely, and shut this litigation down forever.
Why the Case Is Complex: Neither Side Has Depicted Rhode Island Public Nuisance Law In an Entirely Fair and Accurate Way
In my next column, I will argue that the Rhode Island Supreme Court has a very difficult task before it. After listening to the oral argument, I have become convinced that while the state of Rhode Island may have played fast and loose with the law of public nuisance in order to "get" the paint industry, the industry played fast and loose with their characterization of the law of public nuisance in Rhode Island, too.
In fact, if the court decides in favor of the industry—as I believe it should—it will have to overcome its own precedents, and rewrite the law of public nuisance. This would not be a bad thing. However, as I will argue in my next column, it is not as easy a task the lawyers arguing on behalf of the industry suggested last week.