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REGULATION BY LITIGATION
THE LEAD PAINT CASE


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The federal government and industry have been working both independently and cooperatively to protect children from the toxic effects of exposure to lead in paint. However, these productive efforts are being superceded by State and local government lawsuits. Armed with new legal theories, trial lawyers and politicians are uniting to sue paint and pigment manufacturers and the Lead Industries Association in order to seek recovery of government funds spent on medical care or to remove lead from housing.

These lawsuits are an example of the trend toward Regulation by Litigation. These cases are not part of the traditional type of litigation where private plaintiffs sue private defendants for the recovery of costs and damages incurred. Instead, States and cities are allying themselves with private attorneys in an effort to generate new revenues. It should be noted that these suits may often be undertaken following the refusal of their legislative bodies to appropriate funds (or additional funds) for lead clean-up activities.

Finding an Alternative Source of Funding

Rather than taking the refusal of their legislatures to provide the funds necessary as a signal to limit such activities, State and municipal governments have created a way to circumvent the normal budgetary processes under which they operate. The State and local governments bypass the budget process by working with private attorneys who specialize in bringing class action suits. In so doing, cities and States have identified a potential new source of revenue which might be obtained without going through the rigors of the appropriations process. In order to attract the attorneys they are working with, the governments have agreed to large contingency fees, ensuring that a significant portion of any revenues received go to attorneys, not lead-related activities.

For example, Rhode Island recently brought suit against the following companies and the the Lead Industries Association:

    Lead Pigment Manufacturers

  • Atlantic Richfield Co.
  • DuPont Co.
  • NL Industries

    Paint Manufacturers

  • Sherwin -Williams Co.
  • Glidden Co. (Imperial Chemical Industries PLC)
  • O'Brien Corp. (Purchased by ICI)
  • SCM Chemicals Inc.
  • American Cyanamid Co. (Paint liabilities were assumed by Cytec Industries)

Plaintiffs' lawyers will receive approximately seventeen percent of any verdict or settlement awarded in Rhode Island's favor.

At least a dozen other entities are currently contemplating such suits against paint manufacturers and the Lead Industries Association including the State of Maryland and the District of Columbia.

Public Policy Concerns

The suits against the paint companies and the Lead Industries Association raise a number of important public policy concerns. Among them are:

  • Is it appropriate for government agencies to ally themselves with plaintiffs' lawyers in order to jointly sue private third party entities?

  • Is it appropriate for government agencies to seek funds from court awards made by defendants and use these funds as a source of general revenues?

  • Should State and city legislatures be involved in the decisions of their executives to raise revenues from the proceeds of lawsuits?

  • Is it appropriate for State and city governments to target entire industries in an effort to obtain funds?

  • Should there be some form of legislative and executive check on the activities of these cities and states before they undertake lawsuits against entire industries?

  • Does the compensation arrangements made with the plaintiffs' attorneys represent a conflict of interest which is built into the suits?

Public Policy Concerns

An additional concern regarding Regulation by Litigation is that State and local governments use their governmental status to secure more rights in court than a private person could obtain. This, of course, provides these plaintiffs with a decided advantage vis-a-vis any private defendant. For example, in 1998, after an adverse ruling by a Baltimore judge, the Maryland General Assembly changed long-standing law to exempt itself from having to provide evidence on each smoker that was harmed and later treated at state expense.

The Long Term Implications of Regulation by Litigation

In closing, we cite Johnathan Turley, George Washington University Professor of Law, from his testimony to the Senate Judiciary Committee given on Tuesday November 11, 1999. In that testimony, Professor Turley characterized the public policy problems being created by this (the Lead Case) and other examples of litigation being used as an alternative to the normal legislative and regulatory processes.

I believe that the core principles underlying our government are being eroded under the pressures of political impulse and convenience˙Whole industries may fall, not by a vote of Congress, but by massive blows delivered in mass tort lawsuits.