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Three recent state court decisions have rejected the theory of “market share” liability in nuisance cases brought against the lead paint industry, casting doubt on the future viability of such cases nationwide. In opinions handed down within three days of each other, the supreme courts of Missouri and New Jersey held that municipal governments cannot sue paint manufacturers for the cost of remediating lead paint in residential and commercial buildings or for the cost of providing medical monitoring or direct medical care to residents of buildings containing lead paint. These decisions, and another decision from a trial court in California, have led the National Law Journal to speculate that “lead paint litigation is beginning to fade,” and signal that—for now, at least—traditional tort concepts of causation will protect businesses from being held liable for injuries they had no role in creating.1

In City of St. Louis v. Benjamin Moore & Co., the St. Louis municipal government sued a group of paint manufacturers for damages to fund the city’s program to assess, abate, and remediate lead paint.2 Recognizing that the manufacture and sale of lead paint was not prohibited by any law at the relevant time—the federal government did not ban lead paint until February 27, 1978—the city nonetheless argued that the distribution of lead paint prior to 1978 constituted a “public nuisance” at common law. The city was unable to prove that any specific defendant caused lead contamination in any specific building, but nonetheless argued that liability against the group of defendants was appropriate because each defendant “put lead paint into the stream of commerce.” In a 4-3 decision, the Missouri Supreme Court affirmed a trial court ruling that had dismissed the case for lack of causation.

The court began by observing that, “[i]n all tort cases, the plaintiff must prove that each defendant’s conduct was an actual cause, also known as cause-in-fact, of the plaintiff’s injury.” The court noted the city government’s argument that the “substantial factor” test of the Restatement (Second) of Torts somewhat relaxes traditional concepts of causation, but pointed out that, even under the Restatement approach, a defendant’s conduct “cannot be a substantial factor unless it first meets the test for actual causation.” Relying on precedents handed down during the DES pharmaceutical controversy of the early 1980s, the court held that tort liability cannot be imposed on a defendant based solely on a showing of the defendant’s market share with respect to an allegedly dangerous product. Instead, the court held that “where a plaintiff claims injury from a product, actual causation can be established only by identifying the defendant who made or sold that product.” The court went on to reject the city’s alternative argument that, whatever the merits of market-share liability in the private tort context, a governmental action to recover the cost of remediating public health hazards is not subject to normal causation rules. The court stated:

Although the city characterizes its suit as one for an injury to the public health and suggests that it is for this injury that it is suing, this is not the case. The damages it seeks are in the nature of a private tort action for the costs the city allegedly incurred abating and remediating lead paint in certain, albeit numerous, properties. In this way, the city’s claims are like those of any plaintiff seeking particularized damages allegedly resulting from a public nuisance.

Three dissenting justices urged a contrary result based on the proposition that, in a public nuisance action, “there is no injured person for whom it is necessary to determine which wrongdoer caused the particular personal injury.” The dissenters analogized the lead-paint controversy to a dispute over water pollution, in which “ten defendants pour toxic sludge... [into] a stream. The purpose of a nuisance lawsuit would be to require the polluters to clean up the sludge. The point of the lawsuit would not be to provide a remedy to an individual who claims to have been injured by the toxic sludge.”

Three days later, the New Jersey Supreme Court rejected the analogy of the Missouri dissenters. In the case of In re Lead Paint Litigation, the New Jersey court considered an action brought by various cities and counties for monetary relief to recover the costs of remediating lead paint in buildings, providing medical care, and educating citizens about lead paint dangers.3 Echoing the Missouri dissenters’ recognition that the public nuisance doctrine covers generalized environmental pollution as such, the New Jersey court held that governmental entities bringing public nuisance claims are limited to seeking abatement injunctions, and may not bring actions for monetary relief. While the New Jersey court held that private plaintiffs may sue for damages caused by a public nuisance, the court ruled that such damages are available “only if the private plaintiff has suffered harm of a kind different from that suffered by other members of the public.” Unlike the Missouri decision, the New Jersey ruling turned in part on the court’s interpretation of a state statute—the Lead Paint Act—which, in declaring the presence of lead paint in buildings to be a “public nuisance,” used the term in the limited sense recognized by the common law.

Two justices dissented from the New Jersey court’s decision, acknowledging that it was correct under traditional legal principles, but arguing that those principles should be modified to create broader liability where necessary to provide a remedy to a potentially dangerous product. The dissent, authored by Chief Justice James R. Zazzali, asserted that the New Jersey Supreme Court “has a duty to reconcile outdated formulations of the common law with the complexities of contemporary society. The common law must stand ready to adapt as appropriate, to shape, redress, and remedy so as to answer measure for measure the particular evil it pursues.” According to the dissenters, there is a legal “right to be free from the harmful effects of lead paint,” and imposing liability under the public nuisance doctrine would be “an appropriate and efficient means for vindicating” this right.

What some legal commentators have found most surprising about the Missouri and New Jersey decisions is not that they invoked the traditional elements of tort law to limit monetary recovery to those cases in which a particular injured party could prove that his injuries were caused by the conduct of a particular defendant—that principle has been in place literally for centuries. The surprising feature of the two decisions is that they were decided by such narrow majorities—4-3 in Missouri, and 4-2, with one justice abstaining, in New Jersey. These legal experts argue that the narrow majorities commanded by such time-honored common-law principles evidences the peril faced by businesses that have organized their operations in reliance on these principles, and reveals a serious threat to the rule of law as applied in the context of mass tort litigation. They point to the proposition stated by the New Jersey dissenters—that, in reviewing claims for retrospective monetary relief, courts should “adapt” and “shape” new remedies rather than adhering to “outdated formulations of the common law”—to prove this point, since the most basic feature of the rule of law is the law’s ability to be known in advance by persons seeking to comply with its requirements.

Perhaps a greater protection than the narrow majorities in Missouri and New Jersey is another recent decision from a California trial court that did not address the merits of a similar lead-paint lawsuit, but instead addressed something even more important: the validity of a contingency fee agreement between the municipal plaintiff and an outside law firm it had retained to prosecute its public nuisance claim. According to the California Superior Court judge overseeing County of Santa Clara v. Atlantic Richfield Co., such contingency fee arrangements are improper in public nuisance cases because they violate the neutrality required of attorneys representing the government. One thing is certain, whether market-share liability is valid or not as a matter of law in the world of lead paint litigation, the amount of litigation is likely to be significantly lower if the municipal plaintiffs are barred from hiring contingencyfee lawyers and are instead forced to internalize the costs of litigation.

 

Endnotes

1 Amanda Bronstad, National Law Journal (August 21, 2007), available at http://www.law.com/jsp/article.jsp?id=1187600822362#.

2 226 S.W.3d 110 (Mo. 2007).

3 924 A.2d 484 (N.J. 2007).

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