Supreme Court Orders Lead-Paint Companies to Pay Cities' Removal Costs

by | October 16, 2018

By Michael Hiltzik

The lead paint industry's efforts to avoid a cleanup bill for more than $400 million has reached the end of the road.

The U.S. Supreme Court on Monday refused to review California state court rulings finding Sherwin-Williams, Conagra and NL Industries responsible for lead paint contamination in thousands of homes built before 1951. That date is when the companies said their predecessor firms ceased actively advertising lead-based paint as a residential product.

The court's action closes a key chapter in an 18-year legal battle waged by 10 California cities and counties, including Los Angeles County and the city of San Diego. Their lawsuit, originally filed in state court in Santa Clara in 2000, asserted the residual lead in old homes was contributing to severe health problems in children exposed to the paint. "It's at the top of our list of environmental threats," Jeffrey Gunzenhauser, the interim health officer and medical director for Los Angeles County, told me last year.

Although the rate of lead poisoning has come down sharply in recent years, more than 2,000 children still test positive for lead in their bloodstream each year in L.A. County. The actual number is almost certainly higher because children aren't routinely screened for lead unless they're seen by a pediatrician. Nationwide, the Centers for Disease Control and Prevention estimates that more than 4 million American households have children exposed to high levels of lead.

In 2014, Judge James P. Kleinberg held the three companies liable for the cost of inspecting more than 3.5 million California homes and apartments and removing or abating residual lead hazards. That means painting over deteriorating surfaces and removing lead chips and dust, especially in units housing children.

Kleinberg assessed the companies $1.15 billion, with most of the money, $632.5 million, designated for Los Angeles County, where the vast majority of suspect units are located.

In November 2017, a California appeals court narrowed the abatement program to homes built before 1951, when the paint companies said they ceased actively advertising residential lead-based paint. The companies were ordered to contribute to an abatement fund of $409 million.

"We are delighted that the Supreme Court did the right thing," Nanci E. Nishimura, an attorney for several of the jurisdictions, said Monday. "The message is clear: We have to move this fund ahead to remove lead that is still poisoning children."

A spokesperson for Conagra and Sherwin-Williams called the California decision "an outlier ... at odds with courts across the country which have correctly held that companies should not be held retroactively liable for lawful conduct and truthful commercial speech decades after they took place." The companies observed that "the Supreme Court reviews very few cases."

The material effect on the companies is uncertain, but is not likely to be large. Sherwin Williams recorded a profit of $1.8 billion on $15 billion in revenue in 2017, Conagra earned $808 million on revenue of $7.9 billion, and NL recorded a loss of $23 million on sales of $109 million.

One major concern raised by business lobbies that filed friend-of-the-court briefs with the Supreme Court was the California judiciary's novel application of "public nuisance" doctrine to find the paint companies responsible.

The doctrine is typically applied to combat ongoing activities, such as a homeowner operating a crack house or a factory with noxious emissions, "not to something that happened decades ago," Sean Hecht, an environmental law expert at the UCLA Law School, told me last year.

Business groups are alarmed that the new notion of a public nuisance could "impose massive retroactive liability against American businesses for decades-old conduct that was lawful when it occurred," according to a brief the U.S. Chamber of Commerce filed with the high court. That could make companies liable for the effects of climate change or environmental pollution, among other problems.

After the California appeals court ruled against them, the lead paint companies tried the end run of promoting a ballot initiative that would absolve them of liability and create a $2-billion bond-financed fund to abate the lead problems. They disingenuously labeled their measure the Healthy Homes and Schools Act of 2018, but Atty. Gen. Xavier Becerra put the kibosh on that subterfuge by issuing his own title and summary for the initiative, redefining it as a measure that "eliminates certain liability for lead-paint manufacturers." A few months later, the companies withdrew the initiative.

The basis of the California lawsuit was that the defendant companies' predecessors understood the health hazard of lead paint but nevertheless energetically promoted its use as a key to improving the durability and water-resistance of house paint. The dangers of lead had been known "since antiquity," Judge Kleinberg observed, and as early as the 19th century manufacturers were taking steps to warn their own workers against breathing lead dust on the factory floor.

Articles warning about children's propensity to gnaw on painted surfaces and become poisoned with lead were common in medical journals by the 1920s: "A child lives in a lead world," advised a 1924 paper. By the 1930s, parents were warned to avoid using lead-based decorative materials in children's nurseries and bedrooms.

Yet the industry kept advertising residential lead paint _ "Lead helps to guard your health," declared a 1923 magazine ad for Dutch Boy lead paint placed by National Lead Co., the precursor to NL Industries. "Property owners ... are using white-lead paint to prolong the lives of their houses."

The Supreme Court's decision returns the case to the Superior Court in California, where the plaintiff communities will move to have a receiver appointed to oversee the $409-million fund.

(c)2018 Los Angeles Times