Three paint manufacturers who have been in a tug-of-war with several California counties regarding potential liability for lead paint resorted to a state balloting process to shift the potential exposure. The battle started to intensify earlier this year when the California Supreme Court declined to review a 2014 state appeals court ruling that held manufacturers Sherwin-Williams Co., NL Industries Inc. and ConAgra Grocery Products Co. liable for $1.15 billion dollars in costs associated with remediation of lead paint in housing built before 1951 in California, effectively ending 18 years of litigation in connection with the case. Several California counties had sued the paint companies in 2000 alleging that they had continued to sell lead paint despite emerging knowledge that it was highly toxic to children. The court ruled that the companies had created a public nuisance through their sale of lead paint throughout the state. The residential use of lead-based paint was banned in 1978.
While continuing to wrangle over appellate issues and remediation costs, the three paint manufacturers strategically proposed a 2018 California state ballot initiative called the “Healthy Homes and Schools Act,” that would establish that lead paint is not a public nuisance in California, and that would ear-mark an estimated $4 billion dollars in tax payer money to address the remediation costs, effectively negating the financial burden of the verdict against them. In anticipation of approval of the initiative, California state lawmakers had introduced several bills that could become law in August of this year that would have shielded California residents from some of the effects of the proposed Act. These new laws would have added fees to the sale of all paint in the state to offset remediation costs, increased the number of paint inspectors in the state, extended statutes of limitations for homeowners to sue paint companies, shifted the burden of proof so that paint companies would have to demonstrate that they didn’t sell lead paint during relevant time periods, and would have protected homeowners from being sued themselves if they have lead paint in their homes. In May, NL Industries agreed to pay ten California counties $60 million dollars and withdraw its support of the ballot initiative to settle its share of the case.
In late June, the initiative qualified for the November 6 ballot, and two California counties immediately sued the paint companies in an attempt to disqualify what they characterized as a “highly deceptive” initiative. The paint companies and the California legislature conferred and came to an agreement to withdraw the proposed legislation. Sherwin-Williams and ConAgra continue to battle over final settlement amounts and it remains to be seen whether these highly publicized events will have any effect on their bargaining position.