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Lead paint suit may proceed to jury

Kessler

“There are genuine issues of material fact concerning each defendant’s involvement in an alleged conspiracy to promote and accomplish the sale of lead-based paint, knowing of its potentially hazardous properties.”

Hon. Joan Kessler
Wisconsin Court of Appeals

A city can sue a paint manufacturer for abatement of toxic lead hazards under public nuisance, conspiracy, and restitution theories, the Wisconsin Court of Appeals held on Nov. 9.

Mautz Paint was a paint manufacturer in the City of Milwaukee. Mautz, as did other paint manufacturers, sold paints containing large quantities of lead. In 1971, the federal government prohibited the sale of paint containing more than 0.5 percent lead, effective 1973. In 1978, lead was prohibited entirely by the federal government.

Although the paint was banned, many old houses in the City of Milwaukee still have lead-based paint on old wood windows. Weather and friction causes paint to peel, and small children ingest lead-based paint dust and chips.

The City has undertaken a window abatement program to eliminate the problem, at costs that some projections estimate may exceed $100 million.

The City brought suit against Mautz, alleging public nuisance and conspiracy. Mautz moved for summary judgment, and Milwaukee County Circuit Court Judge Timothy G. Dugan granted the motion.

Dugan concluded that the nuisance claim must fail because the City could not prove that Mautz was a cause of the damage, and that the conspiracy claim must fail because there was no underlying tort upon which a conspiracy could be based.

The City appealed, and the court of appeals reversed in a decision by Judge Joan Kessler.

Nuisance

The court held that the City stated a claim for public nuisance. Although it found no Wisconsin case that explicitly lists the elements for creation of a public nuisance, the court looked to the elements for maintenance of one, for guidance.

The elements for maintaining a public nuisance are set forth in Physicians Plus Ins. Corp. v. Midwest Mut. Ins. Co., 2002 WI 80, par. 2, 254 Wis.2d 77, 646 N.W.2d 277: "First, the existence of the public nuisance itself; second, actual or constructive notice of the public nuisance; and third, that the failure to abate the public nuisance is a cause of the plaintiff’s injuries. … We also look to public policy considerations because we conclude that similar to liability for negligence, liability for maintaining a public nuisance can be limited on public policy grounds."

In Physicians Plus, the Supreme Court distinguished cases involving the maintenance of a public nuisance from those involving the creation of one, noting that creation cases do not require proof that the defendant had actual or constructive notice of the hazardous condition that later developed.

Applying Physicians Plus to the case at bar, the court of appeals concluded that the same standards should apply, save for the notice element: "We hold that to establish a claim of creating a public nuisance, a plaintiff must prove that the defendant’s conduct was a substantial cause of the existence of a public nuisance and that the nuisance was a substantial factor in causing injury to the public, which injury is the subject of the action. Finally, public policy considerations must also be considered because, similar to liability for negligence, liability for creating a public nuisance can be limited on public policy grounds."

Mautz accepted, for summary judgment purposes, that a public nuisance exists, and that the City suffered damages, but contested the causation issues, and argued that public policy precludes liability.

What the court held

Case: City of Milwaukee v. NL Industries, Inc., No. 03-2786.

Issue: Can a municipality engaged in lead paint abatement sue a paint company that once manufactured lead-based paint for public nuisance and conspiracy?

Holding: Yes. Where the paint company continued to promote sales of lead paint, despite federal regulations that would imminently make it illegal to do so for health reasons, a factual question exists whether the company knowingly created a public nuisance, and conspired to commit a tortious act.

Counsel: Richard S. Lewis, Washington, D.C.; James J. Pizzirusso, Washington, D.C.; Ted M. Warshafsky, Milwaukee; Frank T. Crivello II, Milwaukee, for appellant; Jennifer Heisinger, Denver, CO; Elizabeth L. Thompson, Denver, CO; Timothy Hardy, Washington DC; James T. Murray Jr., Milwaukee; Michael J. Wirth, Milwaukee, for respondent

On the issue of causation, the City admitted that it cannot identify the specific manufacturer of any given paint in any particular house being abated, but argued that this admission was irrelevant to the public nuisance action.

The court agreed: "Mautz denies that it sold lead paint for interior use and attempts to distinguish its sales of lead paint for exterior residential use as negligible, asserting that such sales, as a matter of law, cannot be a substantial cause of the alleged public nuisance. However, there does not appear to be agreement on what would be a ‘negligible’ amount of sales in the context of paint sales over many years. Nor does there appear to be agreement on how ‘negligible’ is to be measured during the relevant time. The determination of such questions is for a jury rather than this court."

The court also found Mautz’ knowledge of the hazards of lead paint to be a jury ques
tion. The City presented evidence that, in 1972, as the 1973 ban was nearing, Mautz informed its sales force to make sure that retailers were rotating their stock, so the older paint would be sold first, reducing the amount of lead-based stock that would have to be dumped after the beginning of the new year.

The court reasoned, "Evidence that Mautz and NL Industries each promoted the use of lead paint directly to the public and through sales staffs creates a genuine issue of material fact for the jury on the question of whether defendants knowingly participated in the creation of a public nuisance of childhood lead poisoning in the City of Milwaukee."

Public Policy

Having determined that material issues as to causation were present, the court turned to public policy considerations, but declined to address them, finding that such concerns are more appropriately addressed after trial, based on a complete factual record.

In Alvarado v. Sersch, 2003 WI 55, 262 Wis. 2d 74, 662 N.W.2d 350, the Wisconsin Supreme Court held that summary judgment was improperly granted to a defendant on public policy grounds, prior to a trial, explaining, "It is desirable to have a full trial to precede the court’s determination because the issues in this case are complex and the factual connections attenuated."

Applying the same reasoning to the case at bar, the court of appeals likewise declined to address the public policy considerations before trial, concluding, "Findings as to the existence of a public nuisance, its cause, and the resulting damages will be material and helpful in evaluating the public policy considerations raised in this case."

Conspiracy

Finally, the court reversed the dismissal of the conspiracy claim, again finding material issues of fact for the jury.

A civil conspiracy in Wisconsin is defined as "a combination of two or more persons by some concerted action to accomplish some unlawful purpose or to accomplish by unlawful means some purpose not in itself unlawful." Onderdonk v. Lamb, 79 Wis. 2d 241, 246, 255 N.W.2d 507 (1977).

The elements are: (1) the formation and operation of the conspiracy; (2) the wrongful act or acts done pursuant thereto; and (3) the damage resulting from such act or acts.

The court concluded that sufficient evidence of these elements was presented to survive summary judgment, noting, "The City has produced evidence that both defendants were active in trade associations that promoted the use of lead in paint to be sold to the public. There is also evidence that defendants continued to promote the use of lead paint despite knowledge of the risk to health brought about by its use in homes."

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Case Analysis

The court noted that, in September 1972, the executive vice-president of Mautz wrote a letter, stating as follows: "As many of you are aware, the lead laws are still very much up in the air. Nobody really knows exactly what is happening and what the future of these laws will be. Right now the National Paint and Coatings Association is trying to stop the present legislation, but frankly, this does not look as if it is going to come through. At the present time the law stands that on December 31 no paint containing 0.5% lead is to be sold for home use. Supposedly, it can be sold for commercial use or anything besides toys, interior and exterior surfaces of homes, or anything around the home."

The letter goes on to identify batches of Mautz paint that can, and cannot, be sold in 1973, and offering a discount on the soon-to-be illegal lead paint.

From this, the court concluded, "The existence of this letter, as well as documentation of NL Industries’ involvement in lead paint promotion and opposition to regulatory legislation, lead us to conclude there are genuine issues of material fact concerning each defendant’s involvement in an alleged conspiracy to promote and accomplish the sale of lead-based paint, knowing of its potentially hazardous properties These disputed issues of material fact preclude summary judgment."

Accordingly, the court reversed.

Click here for Case Analysis.

David Ziemer can be reached by email.

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