BOSTON (Reuters) - Rhode Island’s top court on Tuesday overturned a landmark lower court ruling that found three former manufacturers of lead paint liable for creating a public nuisance by covering up the health risks of lead paint.
Sherwin-Williams Co, NL Industries Inc and Millennium Holdings had asked the Rhode Island Supreme Court to reverse a February 22, 2006, jury verdict that could have forced them to spend at least $2.4 billion on cleaning up contaminated paint around the state.
The decision after nearly nine years of litigation could influence court decisions in other states, counties and cities where lead-poisoning lawsuits are pending. The case had drawn comparisons to the tobacco lawsuits that ultimately led to a settlement that cost cigarette makers more than $200 billion.
“However grave the problem of lead poisoning is in Rhode Island, public nuisance law simply does not provide a remedy for this harm,” the court said in a unanimous 4-0 opinion that followed oral arguments on May 15.
But the court suggested one possible avenue for future litigation, saying the “proper means of commencing a lawsuit against a manufacturer of lead pigments for the sale of an unsafe product would be through a products liability action.”
It added that landlords who allowed lead paint to decay on their properties could also be liable.
Rhode Island Attorney General Patrick Lynch called the ruling “enormously disappointing.”
“I disagree with it in the strongest terms,” he told a news conference, before conceding that the largest lawsuit in state history in terms of lawyers, staff and resources appeared to be over. “This is the end of the line for us. We gave it our all.”
Shares in Cleveland-based Sherwin-Williams, the nation’s largest paint maker and best known for its Dutch Boy, Krylon and Duron paint brands, climbed 6.38 percent to end at $48.86 on the New York Stock Exchange after the decision, while Dallas-based NL Industries added 4.62 percent to $9.97.
Sherwin-Williams’ stock had been hammered to two-year lows after the 2006 verdict, losing about $1.8 billion of its market capitalization at the time.
Rhode Island authorities say more than 30,000 children were poisoned by lead paint in the state, with an estimated 200,000 to 300,000 homes contaminated by the paint. The cost of cleaning one home is estimated at up to $15,000.
The state accused paint manufacturers of covering up the risk of lead paint in its lawsuit filed in 1999, the first in the nation to seek to hold paint makers responsible.
The state, however, failed to “establish that defendants interfered with a public right or that defendants were in control of the lead pigment they, or their predecessors, manufactured at the time it caused harm to Rhode Island children,” the court said.
The U.S. government banned lead paint in 1978 after studies showed it caused health problems in children, including learning disabilities and permanent brain damage.
But its presence remains widespread, especially in older homes in the Northeastern United States. Rhode Island children routinely test above the national average for blood-lead levels.
The companies denied that they were directly responsible, saying landlords, not paint makers, should be held accountable for conditions that expose children to lead.
“Today’s ruling is a landmark victory for common sense and for responsible companies that did the right thing,” Charles Moellenberg, an attorney representing Sherwin-Williams and Millennium Holdings, said in a statement.
“This case never should have been filed — it was factually wrong and legally flawed,” he added.
The Rhode Island Supreme Court said a trial judge erred by denying the defendants’ motion to dismiss.
“In reaching this conclusion, we do not mean to minimize the severity of the harm that thousands of children in Rhode Island have suffered as a result of lead poisoning,” the court said.
Editing by Gerald E. McCormick, Leslie Gevirtz