CA appellate court upholds most significant portions of $1.15B abatement judgment against lead paint manufacturers

In a unanimous 138-page decision issued on November 14, 2017, which departed from appellate courts in every other jurisdiction that have considered the issue, the California Sixth District Court of Appeal in People v. ConAgra Grocery Products Company, et al., Case No. H040880, upheld the most significant portions of a representative public nuisance action filed by residents of several California cities and counties against The Sherwin-Williams Company, ConAgra Grocery Products Company, LLC, and NL Industries, Inc. (the Defendants), upon findings that the Defendants or their predecessors created a public nuisance in the subject jurisdictions by affirmatively promoting white lead pigment for use in interior residential paint in the decades prior to 1950 while possessed of actual knowledge that its high toxicity.

The original judgment was based on the Plaintiff's contention that, every year, thousands of California children continue to be poisoned by deteriorating lead paint that was used in residential units prior to 1980. However, the Court of Appeal reversed and remanded for further proceedings on the cost of abatement based on a narrower scope of work. The lower court's judgment of $1.15 billion was based on the cost of investigation and clean-up of residential units in the Plaintiff's jurisdictions built prior to 1980. The Court of Appeal directed the trial court to determine the amount necessary to abate only residential units built prior to 1951. The clean-up contemplated by the Court of Appeal decision would entail stripping lead paint from doors, windows and floors of residential housing and removal of lead-containing dust, and sealing off or carting away contaminated soil from those homes. Notwithstanding the limitation to residences built prior to 1951, abatement may still be required for more than 1.5 million residences.

The point of departure by the California Court of Appeal from courts in other states—and the reason why this decision is important—is its extraordinarily expansive use of public nuisance law in a manner that circumvents the traditional burdens, limitations and protections of product liability jurisprudence. While public nuisance law has existed for many centuries, it is most often used by public entities to oppose ongoing activities sought to be terminated or abated, not as a remedy to address alleged deleterious effects of defective products promoted, distributed and used many decades in the past. The Defendants' argument—that affirmation of the trial court's decision on the merits would present a dangerous injustice for all companies in all industries that may have ever sold a product at one time that was later found to have public health consequences—was rejected by the Court of Appeal. Its decision effectively holds that the use of public nuisance law is perfectly appropriate for this type of case.

The Court of Appeal's decision is anchored in its determination that substantial evidence, including expert opinions, written promotional materials and ads of the Defendants, and promotional materials of lead paint industry associations of which the Defendants were active members, supported the trial court’s factual findings that the Defendants affirmatively promoted the use of lead paint for interior residential purposes to painters, architects, retailers and consumers at times when they possessed actual knowledge that lead paint and dust could pose a danger to children exposed to it.

In reaching its decision, the Court of Appeal discussed and determined the following:

  1. Affirmed the trial court’s finding that lead poisoning, with resultant irreversible brain effects, is the number one environmental health problem for children in California;

  2. Affirmed the trial court’s finding that the medical profession and certain government agencies recognized that lead paint was a poison prior to the 1900s;

  3. Affirmed the trial court’s finding that the Defendants were leaders in the lead paint industry and actually knew by the early 20th century that lead dust was poisonous and that lead paint “powders and chalks” soon after it is applied;

  4. Affirmed the trial court’s finding that two trade associations in which the Defendants were active members heavily and successfully promoted the use of lead paint, including in residential interiors prior to 1950;

  5. Rejected the Defendants’ argument that no remediation is necessary because the national average of lead poisoning in children has dropped 90 percent between 1980 and 2008;

  6. Rejected the Defendants’ argument based on evidence that leaded gasoline was largely responsible for soil lead and dust, and that exposures to lead in paint has had very little impact on community lead blood levels;

  7. Rejected the Defendants’ argument based on evidence that current medical understanding of the low threshold for effects of childhood lead poisoning was unknown prior to 1970;

  8. Rejected the Defendants’ arguments relating to the fact that prior to 1971, the medical community’s understanding of lead poisoning was that it did not cause significant symptoms in children until blood lead levels exceeded by an amount at least 8–10 times the amount considered dangerous today;

  9. Rejected the Defendants’ argument that its promotions were protected by the First Amendment, based on the court’s determination that the communications constituted knowing concealment and deception concerning the safety of lead paint for interior home use;

  10. Rejected the Defendants’ argument that the Plaintiff was required to present evidence that the Defendants' promotions had a quantifiable impact on the public's use of lead paint on residential interiors;

  11. Rejected the Defendants’ argument that their wrongful promotions were too remote in time to be the cause of the current public health hazard;

  12. Rejected the Defendants’ argument that the current public health hazard is largely caused by owner neglect; intervening actions of architects, painters and tenants; failure of landlords to maintain property; renovations; repainting, etc., as opposed to the original layer of lead based paint painted onto the interiors of residences prior to 1950;

  13. Accepted the Defendants’ argument that they should not be responsible for remediation of homes built after 1950, based on evidence that they recommended use of non-lead paint on interiors from that point forward;

  14. Rejected the Defendants’ argument that the Plaintiff was required to show that each Defendant's lead paint was currently present in a large number of homes within the affected jurisdictions, based on the court’s view that the source of the lead paint was irrelevant as liability arose from the defendants' promotion of lead paint in general;

  15. Rejected the Defendants’ argument that due process requires that responsibility for remediation be proportionate to each Defendant’s relative contribution, based on the court’s determination that liability would be purely joint and several;

  16. Rejected the Defendants’ argument that the Plaintiff failed to establish that interior residential lead paint interferes with any “public right,” holding instead that “anything” that is injurious to health is a public nuisance.

  17. Rejected the Defendants’ argument that to constitute a public nuisance, interior lead paint must have violated regulatory standards at the time the promotions were made;

  18. Rejected Defendants’ argument that the decision violates constitutional separation of powers, i.e., that the Legislature and not the courts should be creating public policy on lead paint and remediation, which it already does;

  19. Rejected the Defendants’ argument that they should have had the right to inspect each claimed affected property before liability could attach to them;

  20. Rejected the Defendants’ argument regarding the need for proportionality and due process, holding that abatement orders do not constitute damage awards;

  21. Rejected the Defendants’ argument that they were unfairly denied their constitutional right to a jury trial, once again based on the court’s determination that a public nuisance case is one in equity, where damages are not awarded; the right to a jury trial is limited to cases determining damages; and

  22. Rejected the Defendants’ argument that the abatement fund order is merely a disguised damages award.

It is expected that the Defendants will seek review from the California Supreme Court. If they do, their petition is due on or before December 26, 2017. The Plaintiff also has the ability to seek review of the portion of the Court of Appeal's decision limiting abatement to pre-1951 residences.