Lead paint verdict sends shock waves across the nation

R.I. case is the first lost by the manufacturers

A jury verdict against The Sherwin-Williams Co., the nation’s largest paint retailer, and two other companies could cost the former lead paint makers $1 billion or more as they face the prospect of paying for the removal of lead hazards across Rhode Island.

The verdict against Sherwin-Williams, NL Industries and Millennium Holdings LLC, which came after six days’ deliberations and more than six years of court battles, sent shock waves across the country, and shocked an industry that’s won dozens of similar lawsuits.

“This is a precedent-setting case,” Roberta Hazen Aaronson, director of the Child Lead Action Group in Providence, said outside Superior Court, Providence, after the verdict. “It’s going to open the floodgates to paint litigation across the country.”

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Attorney General Patrick C. Lynch, who inherited the case from his predecessor, Sheldon A. Whitehouse, and chose to keep going despite a 2002 hung jury and critics’ arguments that it was a lost cause, pronounced himself “thrilled.”

“You’re talking about the biggest civil finding ever in the history of Rhode Island, and one of the biggest in the nation,” he said in an interview. “There’s also a host of appellate issues … but the victory is one that has rocked the nation. It’s an enormously important victory.”

Sherwin-Williams shares fell rapidly, by 18 percent, the most in almost five years, erasing about $1.3 billion of market value. The company issued a statement vowing to “vigorously defend itself” in further proceedings.

“The jury verdict … is only a part of a long legal process,” the company said. “We continue to believe that the facts and the law are on our side. The court still has to rule on various remaining issues before the next steps in the legal process can be determined.”

Aside from a potential appeal, two major steps remain: The jury is returning Feb. 28 to determine whether the paint makers should pay punitive damages, and then Judge Michael A. Silverstein will decide whether they must pay for lead removal, or a less-costly abatement.

Lead paint is present in the majority of Rhode Island’s housing stock; Lynch said about 330,000 units would be affected, each at a cost of as much as $15,000. The defendants themselves, he noted, have pegged the cost of the verdict at $2 billion to $3 billion.

“This is great news for taxpayers, great news for public health, but particularly … great news for tens of thousands of Rhode Island children who have been poisoned or have been threatened with being poisoned,” Lynch said.

Lead paint became illegal in 1978, but it continues to harm children today, especially in urban areas with old housing. As of 2004, 1,685 Rhode Island children under age 6 were known to be lead-poisoned, including 1,167 cases newly identified that year – 3.7 percent of those screened.

And those numbers reflect more than a decade’s effort to control the problem. In 1994, the lead poisoning rate was 18.8 percent, according to the R.I. Department of Health.

Whitehouse, who is now seeking a U.S. Senate seat, sued the paint companies in 1999, drawing national attention both from other states and public-health advocates, and from the industry. The case went to trial in 2002, but it ended with a hung jury.

Whitehouse was exultant after last week’s verdict.

“These companies intentionally and deliberately used toxic levels of lead in our homes,” he said in a statement. “This verdict sends a clear message to them and to any industry that harms our children: In Rhode Island, we will not sit by quietly. We will fight, and we will win. My heart and soul has been in this case since we started it, and I am overjoyed at the jury’s verdict.”

Courts in California, Illinois and New Jersey have dismissed similar claims in the past three years. But the plaintiffs’ lawyers in Rhode Island’s case persuaded the jury that lead paint manufacturers had known as early as 1908 that the lead pigment used to make paint more durable and easier to clean was hazardous to children.

Lawyers for former lead-paint makers have argued that the mere presence of lead pigment in paint doesn’t pose a health risk, but rather, risks arise only when homeowners or landlords let the paint deteriorate.

DuPont Co., the third-largest U.S. chemical maker, was a defendant in the Rhode Island suit before agreeing to pay $11.85 million last June for lead paint remediation, public education and compliance programs in the state in a deal that DuPont insisted was not a “settlement.”

Lawrence Horan, an analyst at Janney Montgomery Scott LLC in Pittsburgh, told Bloomberg News that an appeal of last week’s verdict is likely. Lawyers for the defendants have asked Silverstein to bar jurors from punishing the companies with further damages.

“The industry won’t give up easily on this one,” said Horan.

With Bloomberg News reports.

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