Lead paint ruling against companies mostly affirmed, but payout will be trimmed

SAN JOSE — The 6th District Court of Appeal on Tuesday largely affirmed a trial court ruling that three onetime manufacturers of lead paint created a public nuisance and must pay into a state fund to remediate lead-tainted homes.

The justices, however, remanded the case to Santa Clara County Superior Court to recalculate the amount of money to remediate only pre-1951 homes — not pre-1981 houses as Judge James P. Kleinberg concluded. People v. ConAgra Grocery Products Co. et al., 2017 DJDAR 10795.

The pre-1951 limit’s financial impact on the $1.15 billion damage award is uncertain — although attorneys for Santa Clara County hailed the ruling as a victory and a representative of the defendant companies vowed to appeal it.

The defendants — ConAgra Grocery Products Co., NL Industries Inc. and The Sherwin-Williams Co. — said they would appeal the decision to the state Supreme Court.

“Even though the appellate court reversed the trial court’s decision in part, it is at odds with California law and judicial decisions from seven other states that have uniformly rejected similar public nuisance claims,” the companies said in a statement issued by public affairs company Keller Maxson Inc. “The defendants will ask the Supreme Court of California to review the intermediate appellate court’s decision at the appropriate time.”

Seven counties and three cities in California sued the lead paint manufacturers in 2000, arguing that their promotion of lead paint throughout the first half of the 20th century — while knowing its deleterious health effects on children’s brains — created a public nuisance.

At the end of a 2013 trial, Kleinberg ordered the three companies to pay into a fund to remediate the interiors of more than 3 million homes.

In the Tuesday ruling, Justice Nathan D. Mihara— using a standard of review that gave substantial deference to Kleinberg — wrote that the justices accepted the inference that pre-1951 lead paint promotion increased the use of such paint.

But, he added, “We reject the plaintiff’s claim that it is a reasonable inference that the impact of those promotions may be assumed to have continued for the next 30 years. … We therefore conclude that we cannot uphold the trial court’s judgment requiring defendants to remediate all houses built before 1981 because there is no evidence to support causation as to the homes built after 1950.”

Justices Eugene Premo and Franklin Elia joined the opinion.

The 6th District panel also ordered that an evidentiary hearing be held to determine whether the Childhood Lead Poisoning Prevention Branch, a division of the state Department of Public Health, is the appropriate receiver to oversee the fund.

Danny Y. Chou, the deputy Santa Clara County counsel who argued the plaintiffs’ case, said, “We’re thrilled with the decision. Obviously we would’ve liked to have all the houses cleaned up, but a judgment to clean up pre-1950 housing addresses a lot of housing in the 10 cities and counties. But most importantly, it addresses most of the houses that contain lead paint.”

Chou, however, was unsure how many homes were built before 1951, or how the trial court will ask for that evidence. Once the case is remanded, a judge’s decision will likely reduce the $1.15 billion proportionally.

Tony Dias of Jones Day, an attorney for Sherwin-Williams Co., said, “We’re still troubled with the decision as a whole because we think the entire trial court’s decision should have been reversed, including the application of the public nuisance theory in this case.”

Dias does not believe the plaintiffs satisfied the 6th District’s 2006 definition of public nuisance: “conduct far more egregious than simply producing a defective product or failing to warn of a defective product. ... A public nuisance cause of action is not premised on a defect in a product or a failure to war but on affirmative conduct that assisted in the creation of a hazardous condition.”

“Probably most troubling is the impact this decision will have on property owners, particularly those of pre-1951 homes,” Dias said. “Those properties, even if well-maintained, are a public nuisance.”