State by State Breakdown

California

People of the State California, et al. v. Atlantic Richfield Company, et al.

Location: Superior Court of the State of California, County of Santa Clara.

Capsule Summary: Originally filed on March 23, 2000 by the County of Santa Clara, this governmental suit purported to represent all non-state government entities in California. The lawsuit sought to recover costs for medical care, educational programs for children, inspections, and abatement. Five other counties, the cities of San Francisco and Oakland, the two cities’ housing authorities and school districts, and a redevelopment agency later joined the suit.

On July 8, 2003, the Superior Court for Santa Clara County granted defendants’ request for summary judgment and dismissed the case on statute of limitations grounds. The Court had previously dismissed the plaintiffs’ claim that lead paint constituted a public nuisance. In March 2006, the Court of Appeal upheld the trial court's dismissal of claims for monetary damages under a public nuisance theory for government-owned buildings, for trespass and for violations of the Unfair Competition Law. Public nuisance for abatement of buildings within plaintiffs’ jurisdictions and fraud claims were reinstated. The court also ruled that the tort claims for government-owned buildings had not accrued and were not time-barred.

In December 2006, plaintiffs requested leave to file an amended complaint that dismissed all claims other than for public nuisance. Additionally, several plaintiffs have dropped from the lawsuit, including the housing authorities, the school districts, the redevelopment agency, and two counties. The counties of Monterey and San Mateo and the cities of San Diego and Los Angeles were added to the lawsuit.

On April 4, 2007, the Superior Court in Santa Clara County ruled that the plaintiffs may not use contingency fee counsel to pursue this lawsuit. The Superior Court quoted a 1985 ruling by the California Supreme Court in People ex rel. Clancy v. Superior Court, in which the Court prohibited the use of contingency fee counsel in a public nuisance case. In Clancy, the California Supreme Court said: “The contingency fee arrangement between the City and [the contingency fee counsel] Clancy is antithetical to the standard of neutrality that an attorney representing the government must meet when prosecuting a public nuisance abatement action.” The Santa Clara County Superior Court ruled that "plaintiffs fail to persuasively distinguish Clancy, or otherwise persuasively articulate why their fee arrangements with outside counsel are proper.”

On April 8, 2008, the California Court of Appeal (6th District) reversed the trial court’s ruling that, under the California Supreme Court’s decision in Clancy, plaintiffs’ contingent fee agreement with outside counsel was invalid. The Court of Appeal held that plaintiffs could retain outside counsel on a contingent fee basis “so long as the public entities’ in-house counsel retain control over all decision-making.” Defendants filed a Petition for Review by the California Supreme Court on May 19, 2008.

In a ruling on July 26, 2010, the California Supreme Court acknowledged that the contingency fee prosecutors “have a conflict of interest that potentially places their personal interests at odds with the interest of the public and of defendants in ensuring that a public prosecution is pursued in a manner than serves the public, rather than serving a private interest.” The Court further recognized that its prior decision in Clancy, which relied on U.S. Supreme Court due process decisions, “arguably supports defendants’ position favoring a bright-line rule barring any attorney with a financial interest in the outcome of a case from representing the interests of the public in a public-nuisance abatement action.”

However, the Court went on to find that a contingency fee prosecution in County of Santa Clara would not deprive the defendants of their constitutional right to fundamentally fair procedures, so long as government attorneys control all “critical discretionary decisions,” such as the decision to settle the case, and the supervising government attorneys personally oversee the litigation. Because the existing contingency fee agreements with outside counsel did not meet the Court’s test, the Court reversed the Court of Appeal’s decision and remanded to allow plaintiffs to revise those agreements to comport with the Court’s decision.

On Oct. 22, 2010, the former manufacturers filed a petition for writ of certiorari seeking U.S. Supreme Court review of the California Supreme Court ruling. The U.S. Supreme Court denied certiorari January 10, 2011.

Pre-trial motions filed by the Defendants include a motion arguing that the Plaintiffs are not entitled to collect attorney fees in the case under California law. “The absence of any allegations showing entitlement to attorneys’ fees by virtue of a statute or a contract disposes of plaintiffs’ request” for fees, the motion said.

Judge James P. Kleinberg ruled on June 14, 2011, that the Plaintiffs cannot recover attorney fees. Granting the Defendants’ motion to strike attorney fees for Plaintiffs, he cited two California cases, including one which found that a public entity cannot recover attorney’s fees under California law.

Answering the plaintiffs’ fourth amended complaint, Sherwin-Williams on June 28, 2011, outlined the existing comprehensive and interrelated regulatory program at the federal, state and local levels to address the many environmental sources of lead. The “25-year-old regulatory effort in California has been particularly successful in reducing the incidence of elevated blood lead levels in children,” the answer said. It added that blood lead levels have dropped so substantially that there is no basis for the plaintiffs to claim the existence of a public nuisance.

The answer also said that the California legislature in 1986 passed the California Lead Poisoning Prevention Act, which established state and county lead poisoning prevention programs. Under the law, the costs of the activities are paid from annual fees assessed upon former or current lead product manufacturers. This plan, the answer said, “has achieved a rapid, continuing and substantial decline” in elevated blood lead levels.

Update:  A five-week bench trial began on July 15, 2013. Closing arguments were heard by Judge James P. Kleinberg on Sept. 23. On Dec. 16, Judge Kleinberg issued his proposed statement of decision, dismissing Atlantic Richfield  and DuPont and ordering the other three to pay $1.1 billion into an abatement fund to be managed by the State Childhood Lead Poisoning Prevention Branch and distributed to the 10 plaintiff cities and counties as needed by grants. The trial court also denied Sherwin-Williams’ Cross-Claim for declaratory relief. The three liable Defendants called the court’s decision “wrong under California law and wrong on the facts” and announced they would file objections with the trial judge.  If those are not accepted, they will file a motion for a new trial or mistrial, and if that is rejected, appeal the Court's decision.

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