Paint makers reach $305 million settlement in California, ending marathon lead poisoning lawsuit

Original story appeared in Reuters

OAKLAND, Calif. (Reuters) – After a 19-year legal struggle, three former makers of lead paint have agreed to a $305 million settlement with California county and city governments to mitigate poisoning dangers still present in old housing.Common sources of lead found in homes, including lead-based paint, are seen displayed at the Alameda County Healthy Homes Department in Oakland, California, U.S., June 18, 2019. Picture taken June 18, 2019. REUTERS/Kate Munsch

Under the deal, disclosed in a filing in Santa Clara County Superior Court on Wednesday, defendants Sherwin-Williams, ConAgra Grocery Products Co. and NL Industries agreed to pay out the sum over six years, starting with a $75 million payment later this year.

The defendant paint companies did not admit any wrongdoing under the settlement.

Most of the money will go toward a remediation program to eliminate lead paint hazards in older homes across the 10 jurisdictions that participated in the suit. These include Los Angeles, San Francisco, Alameda, and Santa Clara counties, as well as individual cities such as Oakland and San Diego.

During the litigation, the plaintiffs had sought a far larger judgment mandating removal of lead paint from hundreds of thousands of older homes. Just how many homes can be made safer with the settlement funds isn’t clear.

Last year, Santa Clara County Superior Court estimated that inspecting one housing unit would cost around $140 on average, while lead paint remediation would cost around $1,500 per unit.

Some of the settlement money – 17% – is also due to outside counsel hired by local governments during the case.

The home clean-up program will be free for property owners who qualify to participate, and officials have said the remediation efforts could prevent thousands of new lead exposure cases.

“This landmark settlement will allow thousands of homes to be remediated, and as a result current and future generations of California children will no longer face the threat of lead poisoning,” said James Williams, Santa Clara County Counsel.

Sherwin-Williams said the settlement was favorable, limiting its liability. It pledged to fight other lawsuits over its legal advertising or sales of lead paint many decades ago, before U.S. sales were banned.

“Sherwin-Williams is pleased to have reached an agreement to resolve this litigation, and it will continue to vigorously and aggressively defend against any similar current or future litigation,” the company said in a statement.

Michael Cummins, a spokesman for ConAgra, said the company is “pleased to have reached a resolution to put this nearly 20-year old litigation behind us.”

TOXIC DANGER

The local governments first brought the lawsuit in 2000 with the aim of making the companies pay billions for the clean-up. They claimed the companies knew of the toxic dangers of lead paint when they marketed it for decades before the U.S. government banned its use in homes in 1978.

The companies contended they did not continue marketing leaded paints once the risks were known. They also argued that private property owners were responsible for the upkeep of homes to ensure potential paint hazards would not harm residents.

The settlement represents a rare success for plaintiffs suing paint companies under the so-called public nuisance doctrine, which allows public entities to sue parties whose activities negatively impact broad communities by infringing upon a public right.Slideshow (3 Images)

Public nuisance cases against former lead paint makers have failed in other states, including Rhode Island, Illinois and Missouri.

Still, the $305 million falls far short of what the plaintiffs had counted on until recently. In a 2014 trial verdict, the companies were ordered to pay $1.15 billion, but in 2017 an appeals court decision led to the judgment being reduced to $409 million. Taken together, the court decisions also restricted how the money could be spent.

For instance, the funds could only be used to fix paint hazards in the interior of homes built before 1951, though lead paint continued to be sold into the 1970s and exterior paint also harms children. The plaintiffs had also faced a short, four-year window to complete the clean-up program, after which unspent funds would be returned to the companies.

In striking a compromise for a lesser amount, the California jurisdictions managed to get those terms lifted, giving them more leeway and no time constraint on using the remediation funds, the court filing showed.

County and city officials said the settlement with Sherwin-Williams Company, ConAgra Grocery Products Company and NL Industries allows them to receive funding for cleanup soon, without further delay from ongoing litigation.

“Today’s settlement holds former manufacturers of lead paint responsible for the harm they have caused to generations of California’s children,” Santa Clara County Counsel James R. Williams said in a statement. “This settlement is a victory for children and families throughout California. We have fought to hold these companies accountable for nearly twenty years, and will finally have needed funds to devote to protecting our children from lead poisoning.”

Wednesday’s settlement in the closely watched litigation marks a significant blow to the paint companies. Sherwin-Williams noted that seven other states had rejected public nuisance claims similar to those brought in California, while cases in Ohio, Rhode Island, Missouri, New Jersey, Illinois, New York and Wisconsin were all rejected or voluntarily dismissed.

“This is a huge momentum swing,” said Justin Berger, a partner with the Cotchett, Pitre and McCarthy firm that helped the local governments in their case. “Other cities, states and counties have been watching this case, and this will encourage other public institutions to take on similar toxic hazards in their communities.”

The companies did not admit wrongdoing in the settlement and said it allows them to finally resolve the uncertainty over the long-running case.

“Conagra is pleased to have reached a resolution to put this nearly 20-year old litigation behind us,” the company said in a statement Wednesday. “This ensures that our focus will remain where it should be — on making great food and driving shareholder value.”

“Although NL disputes that it has any liability for any nuisance,” the company said Wednesday, “NL looks forward to bringing this decades-long litigation to an end.”

The settlement will be divided among San Francisco, Oakland, San Diego and the counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura based on their number of homes with lead paint in each jurisdiction to bolster local cleanup programs.

Santa Clara County Supervisor Dave Cortese said the money will start the process to inspect and remove lead-contaminated materials from pre-1951 homes and also to launch a public education program to remind owners and tenants of these homes that there is not a safe amount of lead.

Lead has been used in paint for generations to make it more efficient and durable, but its dangers particularly to children who ingest paint chips or dust also have been well-established for decades. It can cause brain damage and learning disabilities.

The U.S. banned lead paint for residential use in 1978, but it remains in millions of homes across the state. More than 10,331 children throughout California tested positive in 2014 for lead poisoning, county officials said, and lead paint-related hazards are the most significant environmental hazard for children in California and elsewhere.

The counties and cities had accused the manufacturers of promoting the use of lead paint in homes despite knowing it could cause lead poisoning in children.

The manufacturers said they stopped advertising residential lead-based paint in 1951 and denied promoting it after its dangers were proven.

“This litigation, which started nearly 20 years ago, challenged the companies’ legal advertising of lead-based paints over a century ago when lead-based paints were the ‘gold standard’ and specified for use by the federal government, as well as state and local governments across the country,” Sherwin-Williams said in a statement Wednesday.

“While Sherwin-Williams continues to believe that this litigation was unfair, unwarranted and unwise, the resolution announced today will enable all parties to move forward and is in the best interests of the company and its shareholders,” the company statement said.

The landmark case dates back to 2000 when Santa Clara County filed the lawsuit. The nine other cities and counties joined the litigation thereafter.

After a six-week trial in 2013, a Santa Clara County Superior Court judge ruled that three former lead paint manufacturers — Sherwin-Williams, ConAgra Grocery Products and NL — were liable for knowingly marketing toxic lead paint. The judge ordered them to put $1.1 billion into a state-held fund toward cleaning up lead paint inside homes built before 1978 in the ten cities and counties.

In 2017, an appellate court upheld the decision but limited the companies’ liability for clean up to homes built before 1951. The California Supreme Court and United States Supreme Court each declined to review the appellate court’s decision.

Last year, the companies sponsored a failed $2 billion statewide ballot measure that would have declared that lead paint is no longer a public nuisance and absolved them of cleanup costs, a move that prompted outrage from lawmakers in Sacramento.

Before the settlement, the governments and manufacturers were continuing to litigate issues related to the final judgment and the process through which the companies would pay for the court-ordered cleanup.

“These funds will make it possible to clean up the homes of our most vulnerable residents, and the settlement reaffirms that these companies are accountable for the harm their products continue to cause to California’s children,” Oakland City Attorney Barbara J. Parker said.

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