SACRAMENTO - Businesses and legal scholars are weighing in on a request that the U.S. Supreme Court review, and then overturn, a decision out of California that penalizes companies over lead-based paint, forcing them to pay potentially hundreds of millions for clean up costs.
ConAgra Grocery Products, NL Industries, and Sherwin Williams, the defendants in the 18-year-old legal battle with some of the state's largest counties and municipalities, are seeking relief from the high court, arguing that their due process and free speech rights have been breached.
And the companies are warning that if rulings made in California courts stand, those decisions will have a profound effect on lawsuits against other industries, such as fossil fuels and pharmaceuticals.
The three were found by a trial court to be responsible for remediating lead-based paint in houses built before 1981. An appeals court largely upheld that decision, though narrowing it to those constructed before 1951. The California Supreme Court refused to review.
Ten municipalities and counties, led by Santa Clara County, accuse the companies of being responsible for the marketing and production of lead-based paint which then created a "public nuisance."
Richard A. Epstein, of the University of Chicago, representing legal scholars who filed a brief in support of the companies, questioned the failure of the California Supreme Court to intervene in "a real miscarriage of justice." Various business groups also have filed amicus briefs in support.
Epstein added that there were no allegations of concealment or false statements, nobody was sold any particular paint, and, he noted, the last advertisement made by Sherwin Williams was in 1904.
He characterized the situation with the question: "Let's suppose we have a piece of legislation that read as follows, 'The state of California hereby declares that all lead paint was, and was always known to be, a danger, and we hereby impose on all the manufacturers of lead paint in the year 1900, liability for x billion dollars.'"
"Somebody would look at that statute and say, 'This is not an effort to hold people responsible for the things that they did wrong. This is an effort to simply tax one group of individuals to engage in what you think to be an appropriate public health project.'
"You can't simply target people like that, unless you can show that they're somehow responsible for it, and you can't show that they're responsible for it unless you have some viable theory of liability and the four theories...over promotion, public nuisance, product liability and misrepresentation, all float," Epstein said.
Two of the companies, ConAgra and NL, filed one petition, Sherwin Williams a second.
ConAgra and NL are asking the court to consider whether imposing massive and retroactive "public nuisance” liability without requiring proof that the defendant’s nearly century-old conduct caused any individual plaintiff any injury violates the due process clause.
The alleged free speech, first amendment, violations relate to decades-old advertisements and promotion of the products.
Sherwin-Williams wants the high court to consider looking at whether a company can be held liable for "promoting a lawful product," and whether "grossly disproportionate public nuisance" costs can be imposed when the company's products were used in any house, or that anyone relied on the promotions .
The petition is set for conference Sept. 24, but could be delayed, according to legal experts.
Michael A. Carvin, of Jones Day law firm, which represents Sherwin Williams. said on a recent conference call with reporters that this is a "naked assault on the first amendment."
Carvin argued that courts "cannot penalize commercial, non-misleading lawful speech." There was no deception, he added.
He believes the Supreme Court should review - though it will not be decided on a split circuit decision - because this is an important issue, particularly with the trend of states and local governments now going after fossil fuel companies over alleged climate change and pharmaceutical firms over the sale of opioids.
Paul D. Clement, partner at Kirkland Ellis, which represents ConAgra, predicted the court will be interested in the due process argument, and echoed his colleague's claim over the wider effect if the paint companies lose.
"If it succeeds with lead paint, (it) will work with fossil fuels, opioid abuse," Clement said.
Following the state Supreme Court denial of review in February, the companies funded a ballot initiative that would have stripped of any liability for the lead paint, and authorize a $2 billion bond raising to help fund remediation and other measures.
In response, legislators filed a blizzard of bills designed to head off its impact, including increasing a charge on paint products and removing barriers to allow homeowners to sue more easily, should the initiative pass.
Enough signatures were gathered but the companies dropped the plan in July. The bills were all shelved.