Is the Hotel California covered in lead paint?

It may be the summer doldrums in terms of issuing decision, but an interesting petition for cert was filed last week that may have a decent chance of being granted.  ConAgra Grocery Products Co. and NL Industries, Inc. v. People of California.

It certainly has firepower behind it, with Paul Clement as Counsel of Record, along with a host of others from Kirkland & Ellis and Reed Smith.   It also involves substantial $$ – hundreds of millions of dollars.  And it relates to an issue that I worked on years ago with a then-partner at PA named William Kayatta, now of the First Circuit:  to what extent can companies who long ago manufactured lead pigment or paint or their successors be held liable now in public nuisance for lead paint on buildings today?  The folks at Jones Day also filed a petition for cert in the same case.  Sherwin-Williams Company v. People of California.

Lead paint was banned in 1978, and you basically cannot trace a specific company’s paint on a specific building today.  Moreover, the plaintiffs in these actions – governmental bodies –  do not want to litigate building by building.  They seek huge monetary kitties in equity to remove any paint that might be still around on all houses within entire jurisdictions.  Historically, these actions based on product liability have failed, given lacuna in areas like proving causation.  So, as noted in the petitions, plaintiffs moved on to arguing liability under squishier public nuisance law.  Basically, these actions have also failed, including the case Judge Kayatta successfully argued, State v. Lead Indus. Ass’n, Inc., 951 A.2d 428, 442-58 (R.I. 2008).

But then there’s California. After the trial court rejected the claim, the Court of Appeals reversed and remanded, saying, inter alia, there was no statute of limitation problem because the plaintiffs sought abatement rather than damages, and the conduct for which the defendants could be held liable was their promotion of lead paint (in the first half of the twentieth century).  The trial court then found three companies jointly liable for the presence of lead paint inside all residences of the plaintiff jurisdictions because this promotion constitute at least a “very minor force” in the single, indivisible nuisance of contemporary presence of lead paint in these jurisdictions.  It was irrelevant that plaintiffs failed to prove that any of the defendants’ promotions increased the use of lead in paint or that they were the proximate cause of any unproven injury.  The trial court also found proof of reliance not an element of a public nuisance claim.  The court ordered the defendants to pay $1.15 billion into a fund to clear out all remaining lead paint in residences.  The Court of Appeals affirmed, although limiting remediation to residences built before 1951, since there was no evidence the defendants promoted lead paint for interior use after 1950.  That will cut down the liability to something in the hundreds of millions.  The Supreme Court of California, in a split decision, then declined review.

Say you think that this result – an outlier from all those other decisions rejecting similar claims – is wrong, wrong, wrong, and you want to petition for cert.  What’s your biggest hurdle?

Finding a federal claim.  The elements of a public nuisance claim are governed by state law, so if California wants to pronounce its nuisance law as embracing this liability, the California state court is the final arbiter of that common law.

Clement and friends, including at Jones Day, have lit upon two federal claims to argue:  Due Process, and the First Amendment.  Due process, because of all this retroactive-looking liability without any need to prove elements like causation, and the First Amendment because liability was based on marketing and promotion.  The speech claim also has the advantage, as I mentioned in a previous blogs, of looking sexy to the Supreme Court and building non-intuitive coalitions within the Court.  It also allows the Court in the end to issue a narrow decision limited to liability based on marketing, if it wants.

Stay tuned to see if the Court rises to the bait.  Expect all the big gun amici to be filing briefs urging a grant of the petition.  I, for one, hope that the petition gets granted because it could provide useful guidance regarding Due Process limits to state civil liability, and/or what protections are given these days to commercial speech.

A final muse:  is there also an argument that this state common law effects a taking under the ruling in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998)?  We’re talking money, not property, and it’s usually only the latter that triggers takings analysis.  But it was money in Eastern Enterprises, too, imposing retroactive liability.  The Kirkland petition cites Eastern Enterprises for the proposition that retroactivity is generally disfavored, but doesn’t go all in on a separate taking claim.  The decision in that case was only a plurality opinion, and Justice Kennedy concurred based not on takings but the Due Process clause.  Maybe the petitioners here thought that because the basis of liability in California was the common law and not a statute as in Eastern Enterprises, takings law didn’t apply.  But the Supreme Court has made clear its view (at least when Justice Scalia was around) that the Court will scrutinize how a state high court interprets its common law for any takings issues.

In any event, unsurprisingly, the Con-Agra petition is very well written petition, and so worth perusing for that reason alone.  It argues that the petition should be granted because the questions are important, while the Jones Day folks, whose petition is fine, too, focuses on arguing that the petition should be granted based on a conflict with existing law elsewhere, in particular, they say, an asbestos decision by then-Judge Alito.  By comparing the two petitions, you can also see some divergence in style, with the Jones Day petition using more literary flourishes, with more adjectives and throwing in a cite to Pliny the Elder.