July 3, 2008

Rhode Island High Court Rejects State’s Public Nuisance Claim

Also Addresses Issue of State Use of Private Lawyers Retained under Contingent Fee Arrangements

In an 81-page opinion, the Rhode Island Supreme Court overturned a verdict that would have required paint manufacturers to pay an estimated $2.4 billion to clean up lead paint from contaminated homes under a public nuisance theory.  State v. Lead Industries Association Inc. et al., slip op. 04-63 (July 1, 2008).  The court, in its 4-0 decision, overturned a 2006 jury verdict that held three former lead pigment producers, Sherwin-Williams, NL Industries and Millennium Holdings, liable for creating a public nuisance by manufacturing and selling a toxic product over 30 years ago, and then covering up the health risks.  In addition, the court promulgated guidelines on the use by the State’s Attorney General of private lawyers retained under contingent fee agreements.

The chief holding of the Rhode Island Supreme Court was that the lead paint manufacturers could not be held liable because they did not have control over the paint at the time the damages occurred.  Because the principal relief available for public nuisance is abatement, liability must fall on someone in a position to abate the nuisance.  Here, that was the landlords and other property owners.  The court also held, as an independent ground for dismissal, that the State failed to establish any public right that defendants had interfered with.

In reaching this result, the court emphasized that its ruling did not “leave Rhode Islanders without a remedy.”  It stated that injunctions could be sought against landlords who allow lead paint in their buildings to decay.  Moreover, the court said that the “proper means” of suing the manufacturers of lead pigments was to bring products liability actions against them.  On that score, the court stated that “[t]he law of  public nuisance never before has been applied to products, however harmful” and that “public nuisance and products liability are two distinct causes of action, each with rational boundaries that are not intended to overlap.”

In addition to rejecting the State’s public nuisance claim, the court also addressed the propriety of the hiring of private lawyers under contingent fee arrangements by the State’s Attorney General to litigate the State’s business.  The retention by state attorneys general of private contingent fee lawyers has been the subject of significant controversy.  While the court upheld the right of the Attorney General to enter into such arrangements, it conditioned such approval on a senior member of the Office of the Attorney General being personally involved in a case and the Office of the Attorney General retaining complete control of the conduct of a case with the right to veto any decisions by outside counsel.  The court further required that any payments to outside counsel be subjected to judicial oversight before being made.

The Rhode Island decision reverses the only such verdict against the lead paint industry, and marks a growing body of case law rejecting sweeping public nuisance claims against manufacturers of potentially dangerous products.  Other states, such as Illinois, Missouri, New York, and New Jersey have rejected similar public nuisance claims against manufacturers, and this decision by the highest Rhode Island court will likely influence cases pending in other states where such claims have been brought.  Moreover, the court’s decision on a state’s hiring private lawyers to litigate its business under contingent fee arrangements may also influence the law in other states.