Pennsylvania Record

Friday, April 10, 2020

Third Circuit sends Pennsylvania lead paint litigation to state courts in win for private lawyers hired by counties

Federal Court

By Nicholas Malfitano | Mar 4, 2020

Leadpaint

PHILADELPHIA – According to a panel of judges from the U.S. Court of Appeals for the Third Circuit, public nuisance cases filed by two Pennsylvania counties against manufacturers who provided lead-containing paint for use in housing developments were properly remanded to state court for a lack of jurisdiction.

On Feb. 26, Third Circuit judges Felipe L. Restrepo, Jane R. Roth and D. Michael Fisher ruled on the appeal, with Fisher having authored the Court’s opinion.

The plaintiffs, Montgomery County and Lehigh County, sued several paint manufacturers and successors-in-interest to such manufacturers in state court, asserting state law claims concerning the alleged public nuisance the manufacturers created, by contributing to the presence of lead paint throughout the counties’ housing stock.

The paint manufacturers removed the cases to federal court, but the District Court remanded them back to state for lack of subject-matter jurisdiction – which led the manufacturers to appeal.

However, the Third Circuit affirmed the District Court’s ruling.

“The manufacturers argued that the District Court erred in concluding that the actions were not properly removed pursuant to the federal officer removal statute. The statute enables removal when ‘the allegedly culpable behavior took place while the defendant was acting under the direction of a federal officer or agency,” Fisher stated.

“The District Court ruled that the manufacturers were required, but failed, to establish that they were ‘acting under the United States, its agencies, or its officers,’ and that the claims against them ‘are for, or relating to an act under color of federal office.’ We agree.”

According to Fisher, the manufacturers argued that the counties’ claims are based upon their conduct “acting under” the United States because they “supplied paints to the government for governmental purposes pursuant to federal specifications.”

In their notices of removal, the manufacturers alleged that defendant Sherwin-Williams “supplied the federal government with significant quantities of paint products” during the World Wars, and, at the same time, the federal government “directed and recommended the use of lead-based paint on a variety of public and private buildings,” including federal housing projects.

“However, a private entity’s ‘acting under’ must involve an effort to assist, or to help carry out, the duties or tasks of the federal superior”; it “does not include simply complying with the law,” Fisher said.

“Aside from the general suggestion that they ‘supplied’ lead paint to the federal government, the manufacturers do not assert that they acted under any contract with or directive from the federal government. ‘Without evidence of some such special relationship’ beyond ‘the usual regulator/regulated relationship,’ the manufacturers fail to meet the ‘acting under’ requirement.”

Fisher explained the counties’ claims do not “relate to” acts the manufacturers supposedly took under the auspices of federal office, as there must be a connection showing this – and further, Fisher commented that the manufacturers’ allegation that the federal government specified the use of lead-based paint on federal housing projects during the same time that Sherwin-Williams “supplied” the federal government with paint “for ships and military purposes” was “too tenuous.”

“We agree with the District Court that absent ‘any allegation that the manufacturers supplied any such lead-based paint for these federal housing projects in these counties at the direction of the federal government, pursuant to a federal contract, or to meet federal specifications,’ the manufacturers fail to demonstrate an adequate association between the counties’ claims and federal officers or agencies,” Fisher said.

The case considers the issue of “public nuisance,” rejected in similar lead paint cases in several states, like Ohio and Rhode Island, but was received favorably by California courts in a lawsuit that lasted 18 years.

A trial court in 2013 found the three companies to be responsible for the lead-based paint in houses built before 1981. An appeals court largely upheld that decision, though narrowing it to those constructed before 1951. The Supreme Court of California refused to review the lawsuit, leading to its appeal to the U.S. Supreme Court.

But, the U.S. Supreme Court decided on Oct. 15, 2018 not to take up the case.

In Pennsylvania, Montgomery County’s lawsuit was filed just 11 days before the SCOTUS decision, and Lehigh County’s contract with law firm Anapol Weiss was signed on Aug. 28, stipulating a contingency fee for the firm of 33.3 percent.

It is that same one-third contingency fee that Sherwin-Williams said is at the heart of the motivation behind the current legal wranglings.

“Their financial incentive may explain why counsel has solicited the County to pursue litigation rather than public policy alternatives; defined the purported public nuisance in the broadest way possible, even though Pennsylvania law precludes such a claim; identified as defendants companies with the 'deepest pockets,' regardless of these companies’ actual contributions to the presence of lead in the County,” Sherwin-Williams argued last year.

“[They] disregarded the legal obligations of landlords to maintain their properties and protect their tenants from lead hazards; ignored the interests of owners and tenants whose residences would be declared to be public nuisances without their participation in the lawsuit; and sought a remedy that has a large financial payout, regardless of whether this remedy is in the public’s best interest.”

U.S. Court of Appeals for the Third Circuit cases 19-2352 & 19-2353

U.S. District Court for the Eastern District of Pennsylvania cases 2:18-cv-05128 & 5:18-cv-05140

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com

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