Slumlords Are The Big Winners In California Judge's $1 Billion Lead-Paint Ruling

December 19, 2013
Forbes

One of the many curiosities in the sweeping, 114-page decision California Superior Court Judge James Kleinberg handed down this week against onetime lead-paint suppliers Sherwin Williams, NL Industries, and ConAgra Foods falls under the category of what the judge calls “remediation of interior surfaces.”

What Kleinberg means is that he wants to spend some $700 million of the $1.1 billion he plans to extract from the paint companies replacing windows and providing other repairs to run-down properties, many of them owned by investors who might properly be termed “slumlords.” Under the judge’s highly detailed, 13-point action plan, the money would flow first to properties with “substantial deferred maintenance,” defined as 10 or more code violations in the past four years, and in “high-risk census tracts or neighborhoods.”

In addition to ripping out and replacing the windows of these properties at an estimated cost of $7,000-$16,000 per unit, the judge wants to require “repair of building deficiencies that might cause the corrective measures to fail,” including water leaks. In other words, he wants to provide these owners with roof repairs, also on the paint companies’ dime.

Kleinberg’s decision against the paint suppliers is based on an inventive interpretation of public nuisance law, long supported by environmental activists and gun-control supporters, in which he defines as a “public nuisance” the products Sherwin-Williams and others made from the turn of the last century until the 1940s, when most lead in interior paint was phased out in favor of titanium oxide. The fact that lead paint was legal at the time (and in fact specified by government agencies), that it was applied to the walls by property owners who valued it for its ease of cleaning, and that the last of it might have been made in the 1930s, matters not to Kleinberg or the private lawyers who pursued this case on behalf of the cities in exchange for the chance of a 17% contingency fee.

“The way nuisance law is, as long as the nuisance still exists, the people who create that nuisance are still liable,” said Nancy Fineman, an attorney with Crotchett Pitre & McCarthy in San Francisco, whose firm represented the plaintiffs along with tobacco-litigation veterans Motley Rice.  “I know your readers are very conservative,” she told me, “but what they have to understand is, this is not the breaking of new law.”  (To read the entire article, please click HERE)