Landmark Lead Paint Ruling Imposes Nuisance Liability Because Defendants “Must Have Known” Product Dangers, and Even If Their Product Not Used

The California Court of Appeal in People v. ConAgra Grocery Prods. Co. has upheld in part and reversed in part a decision that put the three defendants, ConAgra Grocery Products Company, NL Industries, and the Sherwin-Williams Company, on the hook for a $1.15 billion fund for the abatement of residential lead paint in parts of California. While the amount of the abatement fund will be reduced on remand, the decision stands as the first major lead paint public nuisance award, with implications for other companies that market products considered “defective” in hindsight.

Plaintiff, the State of California, representing 10 jurisdictions throughout the state, filed suit in 2011 alleging that the defendants created a public nuisance through their manufacture, promotion, and sale of lead pigment and lead paint for use in California homes. The trial court found that the defendants had actual knowledge of lead paint hazards when they promoted their products for residential use for decades before the sale of lead paint was eventually banned in 1978.

Defendants appealed the trial court judgment on multiple grounds. The appellate court agreed with defendants that there was insufficient evidence demonstrating that defendants promoted lead paint for residential use after 1951, and remanded the matter to the trial court to recalculate the amount of the fund so that it covered remediation only in pre-1951 homes. The rest of the trial court’s decision, however, was affirmed, with costs awarded to plaintiff.

An important takeaway from this decision is that the appellate court was satisfied that “must have known” was an adequate replacement for actual knowledge. The decision opined that it was neither speculation nor conjecture to infer that because the defendants were leaders in the paint industry at the time, they “must have”been aware of potential hazards of lead paint. “Indeed,” the panel stated, “it would be unreasonable to infer that, notwithstanding general knowledge of the hazard of their products within the industry, defendants somehow managed to avoid learning of this hazard.” Evidence that the defendants received information from a trade group in the 1930s on lead’s dangers of and children’s susceptibility was among what was found to constitute “substantial support” for the trial court’s actual knowledge findings. Acknowledging that the evidence presented by plaintiff on this point was circumstantial, the appellate court essentially all but admitted that its hands were tied under the deferential standard of review and it had no choice but to uphold the trial court’s actual knowledge findings.

Another startling portion of this opinion was the rejection of the defendants’ argument that they should not be held liable because plaintiff could not establish that their products were in any of the homes in the 10 jurisdictions. The court ruled that this “contention misconstrues the basis for defendants’ liability. Defendants are liable for promoting lead paint for interior residential use. To the extent that this promotion caused lead paint to be used on residential interiors, the identity of the manufacturer of that lead paint is irrelevant.” The court found that while the evidence plaintiff presented consisted of “generic” promotions that didn’t refer to any specific manufacturer, it nonetheless was a substantial factor which resulted in “the use of lead paint on residential interiors,” and that the evidence supported the court’s finding of causation on that basis.

Perhaps the greatest significance of this decision is that plaintiff prevailed on a public nuisance theory. Public nuisance claims in other contexts traditionally reserved for product liability (including asbestos abatement, MTBE, and firearms) have proven largely unsuccessful in part because of the difficulty of establishing the link between the alleged injury to a public rig ht and the manufacturer’s conduct, two occurrences often temporally separated by decades. In fact, many earlier lead paint cases filed in other jurisdictions under various theories of public nuisance often failed because the plaintiffs could not establish, among other things, the requisite proximate cause.

It is of stark importance that the ConAgra court rejected defendants’ arguments concerning actual knowledge and causation in this public nuisance claim. Plaintiff prevailed despite the absence of direct evidence that defendants had actual knowledge of the hazards of interior lead paint at the time they were promoting it, and without having to show that any of defendants’ products were present in any of the homes. Will courts begin to construe other “industry leaders” as having knowledge of all risks for all purposes? Can participation in trade groups which promoted the use of generic categories of products like asbestos-containing brake pads or herbicides expose specific companies to future liability? Could the reasoning that defendants were liable regardless of whether their paint was in fact used in any of the homes seep into the product liability arena, where such tenuous evidence would be insufficient to establish duty? This decision will likely have a short term impact on pending high-profile public nuisance cases, like opioids and climate change. We may also see long term ripples across industries in California where companies may face liability years—or even decades—down the road for a future, but presently unknown, harm in the form of public nuisance claims with vague legal standards and the potential for massive awards.

Requiring Objectivity in Evaluating Private Nuisance

Our nation’s courts are mindful that private nuisance is only actionable if an interference with use and enjoyment of land is both “substantial and unreasonable.” Courts are cognizant that lots of people, who sometimes speak too loudly, smell badly or otherwise do not show proper regard for their neighbors, are thrown together in close proximity, particularly in urban settings,  To permit these petty annoyances to be actionable as private nuisance would result in flooding our court system with trivial and nonsensical disputes. 

It was with this consideration no doubt in mind that the Court of Special Appeals of Maryland, in David S. Schuman v. Greenbelt Homes, No. 2020 (September Term, 2011),  affirmed on June 27, 2013, a Maryland trial court decision, which had concluded that a townhouse resident could not recover in private nuisance for the annoyance caused by secondhand smoke from a neighbor smoking on his back porch. 

You have to love an appeals court decision, which captured the flavor of the matter by opening with the lyrics of an old hit song:

"A Mills Brothers hit from the 1930’s asks the musical question:

Where do they go,
The smoke rings I blow each night?
Oh, what do they do,
Those circles of blue and white?"
 

After a six day trial, the Maryland trial court determined that the neighbor, who enjoyed four to six cigarettes on his back porch every evening was not a nuisance. Although the smoking created an odor, the claimant stressed potential adverse health impacts caused by secondhand smoke. Therefore, it was surprising that the plaintiff failed to produce any medical records showing an actual injury resulting from the smoke. Yet lack of medical proof was not the determinative finding in the court’s ruling. 

As is often the case with these disputes between long time neighbors (who lived in adjoining townhomes in a housing cooperative in Greenbelt, Maryland), friction first arose fifteen years prior to the trial. At that time, the plaintiff claimed that the neighbor’s cigarette smoke was seeping into his home through cracks in the walls. In response to this complaint, the coop attempted to mitigate plaintiff’s exposure to the cigarette smoke by sealing the walls. 

The sealed walls apparently did the trick until 2008 when the plaintiff renovated his home. In addition to the seepage issue reappearing, the neighbor now complained that he was bothered by secondhand smoke from his neighbors smoking on their back patio.  As a result, smoke came into his home when the windows were open.

In rejecting plaintiff’s nuisance claim, the appeals court held “If this Court were to hold that any amount of secondhand smoke entering from one cooperative housing member’s home to another’s constituted a nuisance, we would be one step away from banning smoking in all private homes,” Judge Robert A. Zarnoch said, writing for a four-judge panel. The appeals court also affirmed that the small amount of smoke involved did not amount to a nuisance in fact under Maryland law.

In so holding, the court determined that its ruling was consistent with the approach taken by other courts. In particular, it cited in a New York Appellate Division case, Ewen v. Maccherone, 927 N.Y.2d 274, which determined that “the law of private nuisance would be stretched beyond its breaking point if we were to allow a means of recovering damages when a neighbor merely smokes inside his or her own apartment in a multiple dwelling building.” 

As framed by the New York State Court of Appeals in Copart Indus. v. Con. Edison Co., 41 N.Y.2d 564, 394 N.Y.S.2d 169 (1977), one of the leading private nuisance cases in New York, a plaintiff seeking to establish a private nuisance must demonstrate the invasion of the interest in the private use and enjoyment of land is (1) intentional and unreasonable, (2) negligent or reckless, or (3) actionable under the rules governing liability for abnormally dangers conditions or activities. 

In essence, the appeals court advised the plaintiff to get over it. “In this case, if Schuman does not want to be harmed by or to smell smoke, the only inconveniences he has are that he cannot sit on his porch to up to an hour and a half each evening and has to shut his windows at that time.” The court also recognized that merely because a claimant has a particular sensitivity to the smell of smoke that sensitivity cannot be the basis for a nuisance finding. 

Rather, courts examine nuisance claims brought by “sensitive” individuals, such as Schuman, by applying an objective standard, i.e. whether the smoke would cause physical discomfort and annoyance in persons of ordinary sensibilities. It is noteworthy that plaintiff’s expert, James L. Repace, determined that the nicotine levels in the air at the courthouse – where smoking was prohibited – was similar to air readings taken at plaintiff’s house.

As the New York Court of Appeals wrote over forty years ago, “Persons living in organized communities must suffer some damage, annoyance and inconvenience from each other. If one lives in the city he must expect to suffer the dirt, smoke, noisome odors and confusion incident to city life.” Nussbaum v. Lacopo, 7 N.Y.3d 311, 315, 265 N.E.762, 317 N.Y.S.2d 347 (1970).

During the pendency of the appeal, the case garnered considerable attention.  The Tobacco Control Legal Consortium of the Public Health Law Center filed an amicus brief on behalf of plaintiff arguing that exposure to secondhand smoke poses a severe and immediate health risk, not a mere annoyance.   Despite a strong appeal to the science in the amici brief, the Maryland appeals court did not take the bait. 

Private nuisance cases can be troublesome to defend if the plaintiff is one of many who finds the defendant’s conduct a nuisance. If several unit owners at the Greenbelt Coop found defendant’s smoking problematic, the case would have been that much more difficult to defend. 

In the absence of third-party corroboration of the nuisance, defense counsel in these cases should stress the absence of objective evidence of the nuisance, such as in Schuman, where the plaintiff’s complaints were not associated with any medical complaints.  The objective evidence Schuman did possess–air testing–was determined to be unpersuasive after it was determined that  nicotine levels found in plaintiff’s home were no higher than background levels. 

Where the defendant has objective data–such as VOCs readings from a Draeger cannister in petroleum odor nuisance case–and the plaintiff does not have an expert who has performed testing to document plaintiff’s claims, it may be possible in some jurisdictions to seek dismissal as a matter of law.  

In what may be some small measure of consolation to the losing plaintiff, since this litigation commenced, the Coop has initiated a procedure pursuant to which coop owners along a row of units can now voluntarily revise their Mutual Ownership Contracts to indicate that smoking in these units is not permitted. 

Hydrofracking And The Debate Over Municipal Infrastructure

On February 11, 2013, the IADC conducted a lively, interactive panel discussing the risks and benefits of shale oil and gas extraction at the IADC Mid-Winter Meeting. The panel represented the spectrum of political, regulatory and scientific views on the issue and debated perceived potential risks to human health and the environment.

In addition to me,  the panel consisted of Blaine D. Edwards, Assistant General Counsel at Superior Energy Services, Inc.; Raymond G. Mullady, Jr., a partner at Blank Rome LLP in Washington, D.C.; and Niall A. Paul and Nathan D. Atkinson, partners at Spilman Thomas & Battle PLLC. Eric Lasker at  Hollingsworth LLP in Washington, D.C. assisted in the preparation and coordination of the event.

Ray Mullady presented his paper, “Defending Marcellus Shale Groundwater Contamination Claims: The Case Against Class Actions and Other Theories of Liability,” which he co-authored with other lawyers at his firm. I presented my paper titled, “Shale Oil and Gas Development: The Stakeholder Perspective.”

My paper concerning stakeholder perspectives was presented against the backdrop of the debate in New York concerning whether to permit fracking to occur. In researching this issue, I learned that some stakeholders representing county and municipal interests expressed deep concern regarding perceived secondary societal impacts of fracking, including diminution of property value; increased demands placed on community infrastructure, particularly roads; increased crime rates and rental prices associated with an influx of out-of-state workers; and the fragmentation of rural landscapes with pipelines, roads and staging areas. Surprisingly, for these stakeholders, these concerns outweighed environmental or health concerns.

These stakeholders express deeply held fears – whether rational or not – that gas exploration will be detrimental to their established way of life in rural upstate New York.
The natural gas industry possesses both the science and the practical know-how to be confident that fracking can be performed without causing the contamination of groundwater and surface water. However, social concerns raise questions beyond purely environmental issues. In a largely rural region that is unaccustomed to the perceived sprawling industrial impact of natural gas drilling, unlike other parts of the country, there is apprehension that adverse societal effects may outweigh the predicted economic benefits.

There are a number of tools an industry can utilize to address concerns over infrastructure impacts of hydrofracking. Better public relations to win over the hearts and minds of upstate New Yorkers is paramount.  Perhaps because public relations efforts have not been necessary in other areas of the country long accustomed to natural gas exploration, there may not have been a perceived need for PR in upstate New York.  

Explaining how horizontal drilling works is an important first step in reassuring folks that gas exploration will not bring about an end to their semi-agrarian way of life.  For example, there is a superb animation that explains how horizontal drilling works on the website of the Oklahoma Oil & Natural Gas Producers & Royalty Owners.  In the immediate vicinity of drilling operations, companies can provide, among other things, Value Assurance Programs (“VAPs”) to homeowners to protect them against diminution of property value as a result of their living in an area where industrial activity is taking place. As discussed in other articles on this blog, a VAP is a contractual commitment to the community that assures homeowners that the proposed activity will not result in loss of investment in their homes.  

Any day now, the blue ribbon panel appointed by NYS Health Commissioner, Dr. Nirav Shah, to assist in the NYSDOH’s consideration of the health risks of fracking, will issue its report.  The panel experts – Lynn Goldman, dean of George Washington University’s School of Public Health and Health Services; John Adgate, chair of the Environmental and Occupational Health Department at the Colorado School of Public Health; and Richard Jackson, chair of the Department of Environmental Health Sciences at UCLA’s Fielding School of Public Health – are among the foremost experts in the country in their respective fields and in the field of health impact assessment. Environmental advocacy groups, including NRDC, were extremely pleased with these appointments. It is likely that the issuance of the panel’s report will re-energize the hydrofracking debate.

Lead Pigments in Paint and Public Nuisance Law

Lost in the learned treatises written in the wake of the Rhode Island Supreme Court’s decision in State of Rhode Island v. Lead Industries Association, Inc.  (July 1, 2008),  which properly held that manufacturers of lead pigment are not liable under a nuisance theory for the harm caused by the use of lead paint, is discussion of the significant loss of market capitalization and shareholder value to Sherwin Williams and other manufacturer defendants who have been defending these nuisance claims for the past several years.  Apparently, there is no mechanism in Rhode Island for a defendant to file an interlocutory appeal to challenge a trial court’s denial of a defendant’s motion to dismiss a complaint as a matter of law.  Had an interlocutory appeal been available to the lead pigment manufacturers, there is no doubt that the Rhode Island Supreme Court would have ended years ago the State Attorney General’s misguided crusade to have the defendants pay billions of dollars to remediate lead contamination in an estimated 240,000 houses  and apartments, 12,969 seasonal housing units, 419 child care centers and 339 elementary schools.  Notions of basic fairness suggest that a defendant facing a potential liability of this magnitude should be able to obtain appellate review of the plaintiff’s right to proceed before having to incur the cost and uncertainty of a court trial.  A defendant with less resources than the lead pigment manufacturers might have been forced into a premature settlement with the State or even sought bankruptcy protection prior to waiting out the lengthy appeals process.