Paint makers could face more lawsuits
Wed Feb 22, 2006 8:42 PM ET
ATLANTA, Feb 22 (Reuters) - U.S. companies are having a hard time shedding the ghosts of lead paint, which hasn't been sold in stores for nearly 30 years
Wednesday's verdict by a jury in Rhode Island could bring more trouble to companies like Sherwin-Williams Co. and NL Industries Inc., who along with Millennium Holdings LLC were found liable for creating a public nuisance and poisoning children.
Not only could the paint makers face millions in cleanup costs in Rhode Island, but some lawyers say they and other companies are sure to be targeted in future lawsuits.
"Because of this finding, I would assume that there would be additional cases," said Alan Mensh, an attorney with Ashcraft & Gerel in Baltimore who represents children who have lead-based paint poisoning.
Sherwin-Williams and NL Industries were among the top percentage losers on the New York Stock Exchange on Wednesday, and other paint stocks sold off.
Cleveland-based Sherwin-Williams and Dallas-based NL Industries are also defendants in a Milwaukee lawsuit that is expected to go to trial over the next year. Suits have also been filed against former lead paint makers by the cities of Chicago, San Francisco and St. Louis.
The National Paint & Coatings Association, an industry group that represents more than 300 paint makers, said in a statement that it was confident the Rhode Island defendants would win on appeal. Its Web site gives details of lead-pigment cases that have taken place in 17 states since the U.S. ban.
Lawyers said the Rhode Island case could give hope to more would-be plaintiffs and influence judges.
"The idea of creating a nuisance is a great theory that has not been applied too often outside the real estate arena," said Lawrence E. Feldman, a Philadelphia commercial litigation attorney. "It's a concept that should be applied to more things in society."
Ted Warshafsky, a trial lawyer representing the city of Milwaukee in the 2001 suit that charges NL Industries and Mautz Paint created a public nuisance by selling lead paint that eventually poisoned children who lived in older homes, said the Rhode Island verdict brings legitimacy to his client's claims. Sherwin-Williams acquired Mautz in 2001.
"I truly expect to win this case," Warshafsky told Reuters. "Lead paint is still a problem,"
Even though lead paint was banned by the U.S. government in 1978 after studies showed it caused health problems, FTN Midwest analyst Eric Bosshard said in a research note earlier this month that lead paint concerns have hung over Sherwin-Williams' stock for a number of years.
Sherwin-Williams said in a statement that it would vigorously defend itself in the Rhode Island case, but it and NL Industries did not return calls from Reuters for comment.
Sherwin-Williams, the top loser on the New York Stock Exchange, was down $9.37, or 17.8 percent, to $43.20, while NL Industries shed 8 percent, or $1.15, to $13.21. Other paint stocks fell, with Valspar Corp. down 4 percent, or $1.10, to $26.
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