Damages Denied in Landmark US Lead Paint Case

Damages Denied in Landmark US Lead Paint Case

by PlanetArk

1st March 2006

PROVIDENCE - A judge Tuesday denied punitive damage claims against three US companies in a landmark lead paint case that had been expected to trigger a flurry of similar claims against the industry.

Rhode Island's case could influence court decisions in other states, counties and cities where lead-poisoning lawsuits are pending, and has drawn similarities with multi-billion-dollar judgments against tobacco makers.

The three former lead paint makers -- Sherwin-Williams Co, NL Industries Inc and Millennium Holdings LLC -- were found liable by a jury last week for creating a "public nuisance" and must clean up contaminated paint in the state, which could cost as much as $3 billion. A judge will determine the clean-up cost at a future date.

On top of clean-up costs, state prosecutors had argued that Rhode Island Superior Court Judge Michael Silverstein should allow a jury to set punitive damages.

"This court believes it has no alternative but to deny the punitive damage claims of the state as a matter of law," Silverstein told the court before dismissing the jury.

Rhode Island accused paint manufacturers of covering up the risk of lead paint, especially to children, in their lawsuit filed in 1999, the first to hold paint makers responsible.

"We're disappointed that he took away punitive damages but we're not surprised," Jack McConnell, a lawyer for the state, told reporters. "This case has always been about abating the problem, to rid the state of this nuisance once and for all, and that's what the jury awarded."

The stock price of Sherwin-Williams, the nation's largest paint maker and best known for its Dutch Boy, Krylon and Duron paint brands, shot up 7 percent, or $2.96, to $45.55 on the New York Stock Exchange after the judge's ruling. Shares in NL Industries leapt 4.2 percent.

Before Tuesday, Sherwin-Williams's stock had dropped about 19 percent since the jury gave its verdict on Feb. 22.

Lead paint was banned by the US government in 1978 after studies showed it caused health problems in children, including learning disabilities and permanent brain damage.

But it remains widespread, especially in older homes in the northeastern United States. Rhode Island children routinely test above the national average for blood-lead levels.

Rhode Island authorities say more than 30,000 children were poisoned by lead paint in the state, with an estimated 200,000 to 300,000 homes contaminated by the paint.

The National Paint & Coatings Association, an industry group that represents about 300 paint makers, has expressed confidence that the companies would win an appeal. Its Web site gives details of lead-pigment cases that have taken place in 17 states since the US ban.

"If you read the ruling, it really speaks to the fact that these cases are not really fair and there are better ways to address the problem," said Tom Graves, the association's general counsel. He said the denial of damages "bespeaks why the case at hand is going to be reversible on appeal."

The paint companies deny they are directly responsible, saying landlords, not paint makers, should be held accountable for conditions that expose children to lead.

(Additional reporting by Ben Berkowitz in New York and Karen Jacobs in Atlanta)

REUTERS NEWS SERVICE