Housing Shortage, Lead Paint, and Children (as well as investors) at Risk

Increasingly, it looks like the U.S. Supreme Court (SCOTUS) will be operating with eight members. The odds seem against Brett Kavanaugh’s being confirmed as the next justice.

Therefore, reports Tony Mauro in Law.com, justices seem to be shelving the review of cases which might result in 4–4 ties. So, it’s no surprise that on September 20th, SCOTUS removed from its review conference the controversial cases about public nuisance in California. They have been rescheduled for a future unspecified date.

They are:

“The Sherwin-Williams Company v. California,” and

“ConAgra Grocery Products v. California.”

There has been intense lobbying for SCOTUS to review these.

Both companies were convicted in a bench trial of creating a public nuisance through lead paint. If the conviction stands, they will have to pay funds to fix the health hazard of lead paint in older housing stock in designated locations in CA.

When children ingest the residue of lead paint, that lead in their blood can result in medical problems such as cognitive impairment. Yet, because of the shortage of affordable housing, those buildings must be retained. Otherwise the number of homeless families could surge. In New York City public housing, recently more than a 1,000 children tested positive for lead in their blood.

Actually, that’s a small part of what the consequences could be if the convictions are upheld. The CA Supreme Court refused to review the cases. The CA appeals court upheld the convictions but lowered the amount due for the “fix.”

The bigger fallout could be that other locations in CA and other states, counties, and cities decide to file class action public nuisance lawsuits loosely modeled on the successful CA one. It is not unthinkable that such litigation could be The Next Tobacco or The Next Asbestos.

Sherwin-Williams, obviously a deep pocket, is especially vulnerable.

The Wall Street Journal outed an internal memo from 1900 indicating the hazards of lead. Yet, a few years later the corporation promoted lead paint in advertising. That’s the kind of “smoking gun” which, for example, other state attorneys general could leverage in class action public nuisance lead paint litigation.

Could Sherwin-Williams and other former lead paint manufacturers/marketers wind up going bankrupt fighting myriad such lawsuits both in CA and throughout the U.S.? Could be. But they could avoid that fate the way tobacco companies had through negotiating an analogue to the Tobacco Master Settlement. The tobacco industry paid billions but it survived.

Meanwhile, aggressive plaintiff lawyers may have decided to not wait for SCOTUS to review or not review the public nuisance cases and then to issue a ruling. Instead they can sell this kind of litigation to state attorneys general and others.

Those state attorneys general who initiate such a lawsuit in the public interest can enhance their brand — and political futures.

They can position and package themselves as heroes of the people.

In Rhode Island, Sheldon Whitehouse set in play the infamous lead paint litigation which went through two trials. There was one mistrial. And one conviction of Sherwin-Williams and two other defendants. Several years after the latter, the RI Supreme Court threw out the whole case.

However, Sherwin-Williams, represented by law firm Jones Day, had to pay years and years of legal fees. The value of its stock went on a roller-coaster. Currently, Whitehouse is a U.S. Senator.

Investors in corporations saddled with a lead paint legacy have to be aware of the litigation risks. Filings of lawsuits don’t have to wait until SCOTUS makes or doesn’t make its move.

Full Disclosure: I blogged the RI class action lead paint public nuisance second trial (11/1/05–2/22/06).

Ghostwriting on matters of litigation, regulation, legislation, and the business of law. For a complimentary consultation please contact janegenova374@gmail.com’