Thursday, July 3, 2008

Lead Paint Cinch

Yesterday was a good day for justice in Rhode Island, where the state Supreme Court stopped cold an attempt to turn lead paint into the next tobacco or asbestos.

The 4-0 ruling overturned a 2006 jury verdict that was the first court decision swallowing the theory that lead paint is a "public nuisance." Under that legal reasoning, the state claimed lead paint harmed public health – and companies that once made the product could be held liable whether or not there was even an injured party.

Writing for the court, Chief Justice Frank Williams explained that "the state has not and cannot allege any set of facts to support its public nuisance claim." When the case came before the court in May, Justice Paul Suttell compared the state's argument to the story of Seven Blind Men and an Elephant – some of the pieces may make sense, but none of them add up to a coherent whole.

The lead paint as "nuisance" theory was ginned up by Motley Rice, the South Carolina firm famous for its tobacco shakedowns. The law firm found a partner in then-Rhode Island Attorney General (and now U.S. Democratic Senator) Sheldon Whitehouse, who brought the first lead nuisance suit in the country. The theory was picked up by current AG Patrick Lynch, who has worked hand-in-wallet with Motley Rice and others, dishing them a contingency contract worth 16.67% of any settlement.

Yesterday's decision should deny them that jackpot injustice. But the cost of fighting these suits over nearly a decade has still been steep for the three paint company defendants. Sherwin-Williams Co. saw its stock plummet after the 2006 verdict, erasing about $1.8 billion in market cap, a third of its value at the time. The British "loser pays" rule is designed to deter precisely this kind of legal abuse by making the loser pay for bringing frivolous cases.

Yesterday's ruling should help guide states like California and Ohio where lead-paint cases are pending. The decision makes Rhode Island the third state Supreme Court – after New Jersey and Missouri – to reject attempts to use the "public nuisance" theory in lieu of more straightforward product liability litigation.

There's no question that lead paint can be dangerous to children who ingest it, a risk in places where walls are peeling in old and poorly maintained buildings. But there's also no question the risk has declined precipitously. The Centers for Disease Control noted in 2005 that prevention efforts had produced a "dramatic decline" in the number of children with elevated levels of lead in the blood over the past several decades. By 2007, the incidence of lead exposure in Rhode Island children was 1.3% – below the national average.

Yesterday's ruling is good news for paint makers and consumers, and even better news as a rebuke to the plaintiffs bar and its political patrons. Industries that make lawful products should not be held hostage to bogus legal theories whose only purpose is looting honest companies.

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