The 7th Circuit Court of Appeals recently dashed the hopes of lead paint manufacturers that wanted the federal courts to dismiss pending cases as unconstitutional.
Gibson v. American Cyanamid Co. originally was filed in Milwaukee County. Gibson alleged he suffered lead paint poisoning and sued seven former manufacturers or successor companies that made white lead carbonate pigments.
His suit is based on the risk-contribution theory of tort liability that was extended to these cases in 2005 by the Wisconsin Supreme Court in Thomas v. Mallet.
The Thomas precedent
In Thomas, then-Justice Louis Butler authored the 5-2 decision applying risk-contribution theory to lead paint cases. The premise of the theory is that each defendant “contributed to the risk of injury to the public and consequently, the risk of injury to individual plaintiffs.”
Accordingly, instead of proving which individual defendant manufactured the lead paint at issue in a particular residence, the plaintiff, usually a minor, proves that he or she was injured by lead paint pigment, and that the defendants manufactured lead paint pigment. The burden then shifts to each defendant to prove that it did not market or distribute lead paint either in the relevant time period or in the geographic area of the residence.
The shift in the burden of proof recognized that manufacturers of lead carbonate pigment knew of its harm yet continued to manufacture and promote it.
According to Gibson, “In addition to the culpability of the defendants and the innocence of the plaintiff, Thomas also relied on the view that the defendants are in a better position to absorb the cost of the injury because the defendants can insure themselves against liability, absorb the damage award, or pass the cost along to the consuming public as a cost of doing business.”
Risk-contribution theory already was rooted in Wisconsin jurisprudence since 1984 in the DES case of Collins v. Eli Lilly Co. Nonetheless, Thomas was widely scorned as judicial activism run amok. There were two powerful consequences of the uproar: Butler was defeated when he stood election in 2008, and in 2010 the legislature enacted sec. 895.046, abolishing the Collins-Thomas risk-contribution theory in Wisconsin.
District court proceedings
Gibson filed his suit prior to the enactment of sec. 895.046. The defendants successfully removed the case to federal court based on diversity jurisdiction. It was assigned to Judge Rudolph Randa of the Eastern District of Wisconsin.
The defendants moved for summary judgment arguing the risk-contribution theory violates the substantive aspect of the Due Process Clause. In agreeing with the defendants, Randa used the 1998 U. S. Supreme Court case of Eastern Enterprises v. Apfel.
There, in a somewhat analogous case, a four-justice plurality opinion decided in favor of Eastern Enterprises with a concurrence in the judgment by one justice. Four other justices dissented.
The plurality opinion used a Takings Clause analysis; the concurrence and dissent used a Substantive Due Process analysis. Because the analytic framework in the concurrence and dissent was the same, Randa decided the case could be used as precedent and found a substantive due process violation in Gibson’s allegations. He therefore dismissed the case.
7th Circuit opinion
In a unanimous opinion written by District Judge Edmond Chang (sitting by designation with Circuit Judges Joel Flaum and Michael Kanne) the 7th Circuit Court of Appeals reversed Randa. It first focused on whether Gibson’s lawsuit, which was filed prior to the 2010 enactment of sec. 895.046, was extinguished by that enactment. Applying Wisconsin case law on retroactivity, the court concluded that a vested interest in a pending lawsuit could not be retroactively undermined by subsequent legislative enactment.
It next reviewed Randa’s analysis. It rejected Eastern Enterprises as binding precedent because in that plurality decision there was no single controlling principle.
Although the concurrence and dissent used the same constitutional analysis, they came to diametrically opposite conclusions. Moreover, the concurrence and the plurality agreed only in the judgment, each using a different constitutional analysis. Therefore, Eastern Enterprises simply decided that case for those litigants but cannot be relied upon as precedent.
The court then began a de novo review of the defendants’ constitutional challenges. One constitutional principle at issue is that economic legislation does not violate substantive due process unless the law is arbitrary and irrational. The court pointedly noted, “The question is not whether a law is wise or not; we test only whether the law is arbitrary and irrational.”
The court focused on the development of state common law as “a fundamental feature of our legal system.” Common law is developed incrementally and by the reasoned development of precedent. The only due process limit on retroactivity in case law development is if the judicial decision “is unexpected and indefensible by reference to the law which had been expressed prior to the conduct in issue.”
The court concluded that the risk-contribution theory is not arbitrary and irrational. The Thomas court recognized that it was relaxing the traditional standard of causation after it “balanced the tortious conduct of pigment manufacturers in distributing an unreasonably dangerous product with the possibility of leaving the non-culpable plaintiff without a sufficient remedy.”
The Thomas court did not entirely eliminate causation, not did it make liability automatic. In fact, when Thomas’ case was remanded for jury trial, Thomas lost.
The risk contribution theory also was not unexpected or indefensible. Other mass-tort theories of liability had been developed by other states’ courts, including enterprise liability and market-share approaches. Moreover, the Collins case was part of Wisconsin common law for more than 20 years when Thomas was decided.
The Gibson defendants also challenged Thomas’s constitutionality under the Takings Clause, the procedural aspect of the Due Process Clause and the Commerce Clause. The court briefly rejected each of these challenges in turn.
Since the Thomas case, upon which Gibson based his lawsuit, withstood all four constitutional challenges, Randa’s judgment in favor of the defendants was reversed and the case was reinstated for further proceedings.
This is a well-crafted, beautifully written judicial opinion, making it an eminently readable 49-page decision. It is a legal writer’s pleasure to navigate.
The defendants made a valiant attempt to have a second kick at the cat for risk-contribution cases by taking the case through federal court. The result, however, is the same: the risk-contribution tort theory survives for still-pending lead paint cases.