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In re Lead Paint Litigation

June 15, 2007

IN RE: LEAD PAINT LITIGATION


On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The litigation that is the subject of this appeal began in December of 2001 when the City of Newark and its Mayor sued a large number of manufacturers of lead pigments or lead paints, or the corporate successors to those manufacturers. The complaint alleged fraud, public nuisance, civil conspiracy, unjust enrichment, and indemnification. Shortly thereafter, twenty-five other jurisdictions filed complaints similar to the complaint filed by the City of Newark. By order dated February 11, 2002, the Court designated all pending and future litigation regarding lead-based paint as a mass-tort and all twenty-six complaints were consolidated and assigned to one judge for case management.

The defendant manufacturers (defendants) moved to dismiss the complaints for failure to state a claim on which relief could be granted. The trial court granted defendants' motion, finding that the plaintiff public entities' (plaintiffs) overstepped their powers and were not authorized to maintain suit, regardless of any particular theories asserted. In regard to plaintiffs' public nuisance argument, the trial court rejected it because: 1) the damages sought would be barred by the municipal cost recovery doctrine; 2) defendants' acts were governed exclusively by products liability theories; and 3) the Legislature, in enacting the Lead Paint Act (LPA), intended to act comprehensively, with the result that other remedies, including the common law remedy of public nuisance, were not available to plaintiffs. The trial court also rejected the complaints based on a proximate cause analysis, reasoning that defendants' lack of control of the premises where the nuisance could be found was fatal to any recovery of damages.

The Appellate Division reversed only the trial court's dismissal of the public nuisance claim, affirming all of the trial court's other conclusions. The panel found that allowing plaintiffs' public nuisance claim to go forward would not subvert any legislative goals reasoning that, absent any express legislative limitation, courts must assume that the LPA was not intended to bar any inconsistent common-law remedy. The panel also found no separation of powers violation, referring to the goals of the complaints as "complementary" to the remedies authorized by the LPA. The Appellate Division also rejected the trial court's municipal cost recovery analysis, questioning the continued viability of that theory and its application to public nuisance claims. In addition, the panel held that a public nuisance claim is permissible even if the only allegation is that defendants failed to advise of the risks associated with an ordinary consumer product lawfully made and sold decades before. The panel concluded that the plaintiffs were not impermissibly suing on behalf of third parties but had suffered their own, unique damage. The Appellate Division also rejected the defendants' argument that plaintiffs' claims were barred by the Product Liability Act (PLA), finding instead that their claims were precluded from the scope of the PLA because of that statute's exception for environmental tort actions. Finally, the panel concluded that plaintiffs' claims were not barred by the remoteness doctrine, plaintiffs' identifying a sufficient link between defendants' conduct and the alleged damages.

The Supreme Court granted certification to address issues relating to the tort of public nuisance.

HELD: Plaintiffs cannot state a cognizable claim consistent with the well-recognized parameters of the common-law tort of public nuisance. To find otherwise would be directly contrary to legislative pronouncements governing both lead paint abatement programs and products liability claims.

1. Lead, a naturally occurring metal, has been linked to serious health risks, especially in young children. There are many forms of lead contamination, including that caused by lead paint most often ingested through chipping, peeling, or dust resulting from deteriorating conditions of older homes. As of 2000, the Centers for Disease Control considered childhood lead exposure, which can cause learning disabilities, retardation, hyperactivity, or even death, a major environmental problem. (Pp. 10-14)

2. Congress passed and continued to amend legislation to fund grants to investigate, address, and remediate continued lead paint contamination in residential units throughout the country. In New Jersey, through the LPA and other statutes, the Legislature has separated the statutory scheme for the abatement of lead paint in buildings from the programs devoted to the health care aspects of lead exposure and lead poisoning. There are many and varied funding sources for addressing the health concerns arising from lead exposure. In contrast, under the LPA, responsibility for the costs of abatement rests largely on the property owner, with the statute specifically empowering local boards of health to sue owners to recover abatement costs. It is within this statutory framework that the parties' arguments must be evaluated. (Pp. 14-22)

3. The Legislature's use of the term "public nuisance" in the LPA is in keeping with the term's historic meaning and intent. Thus, if the Court were to agree that there is a basis sounding in public nuisance for plaintiffs' claims, it would be creating a remedy entirely at odds with the pronouncements of the Legislature. Essential to the concept of public nuisance is the interference with the interests of the community at large. An example of such a public nuisance is a pond breeding malarial mosquitoes or the storage of explosives. The tort has been historically linked to the use of land by the one creating the nuisance. The modern concepts of the term are found in the Restatement (Second) of Torts, but the definitional language continues to adhere to the traditional notion that the tort of public nuisance fundamentally involves the vindication of a right common to the public. (Pp. 22-30)

4. In the area of public nuisance, there is a distinction between suits for money damages and proceedings for the injunctive remedy of abatement. A private plaintiff can sue for money damages caused by a public nuisance only if the private plaintiff has suffered harm of a kind that is different from that suffered by other members of the public (a special injury). Conversely, a public entity only has the right to abate. There is no right either historically or through the Restatement (Second) for a public entity to seek to collect money damages, in general. (Pp. 30-34)

5. The Legislature's use of the term "public nuisance" can only have been intended in its strict historical sense. By attaching a criminal penalty, by ordering an abatement through a public entity, and by maintaining a focus on the owner of premises as the actor responsible for the public nuisance itself, the Legislature's approach remained tethered to the historical bases that have defined public nuisance throughout the years. Nor is there any basis to conclude that the Legislature, in using the term "public nuisance" in the LPA and in creating a remedial scheme consistent with the historical understanding of the term in both criminal and tort antecedents, had nonetheless expected that its use of that term would be the springboard for the expansive reading suggested by plaintiffs. (Pp. 34-38)

6. There is no basis for recognizing a public nuisance cause of action in plaintiffs' complaints. The Legislature, consistent with traditional public nuisance concepts, recognized that the appropriate target of the abatement and enforcement scheme must be the premises owner whose conduct has, effectively, created the nuisance. Plaintiffs' view that defendants' product is a public nuisance would improperly stretch the theory to the point of creating strict liability to be imposed on the manufacturers of ordinary consumer products which, although legal when sold, and although sold no more than twenty-five years ago, have become dangerous through deterioration and poor maintenance by the purchasers. (Pp. 38-42)

7. In applying these above referenced principles to plaintiffs' complaints, the inevitable conclusion is that the complaints do not state a claim in public nuisance. First, the complaints seek damages rather than abatement and, as such, fall outside the scope of remedies available to a public entity plaintiff. Therefore, the plaintiffs may only proceed in the manner of private plaintiffs. Assuming that is permissible, they must identify a special injury to which an award of money damages may attach. Plaintiffs have not and cannot do that because all of the injuries they have identified are general to the public at large. Rather, plaintiffs' claims are cognizable only as products liability claims. The language of the Products Liability Act encompasses both the products at issue and the harms suffered. Nor are the claims raised excluded from the scope of the PLA, which excludes claims seeking coverage for exposure to toxic chemicals or substances. Lead paint exposure is not within the environmental tort exclusion. Although there may be room, under other circumstances, for an expanded definition of public nuisance, there is no basis in this record to conclude that plaintiffs have stated such a claim. (Pp. 42-51)

Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law Division for entry of a judgment in favor of defendants.

CHIEF JUSTICE ZAZZALI, dissenting, in which JUSTICE LONG joins, is of the view that the Court has a duty to reconcile outdated formulations of common law with the complexities of contemporary society and, as such, he would not allow those responsible for polluting this State's residential environment to avoid liability simply because past applications of the public nuisance doctrine do not mirror the circumstances of this case. Justice Zazzali finds the public nuisance doctrine an appropriate and efficient means for vindicating the public's right to be free from the harmful effects of lead paint. The majority's holding unfairly places the cost of abatement on taxpayers and private property owners, while sheltering those responsible for creating the problem. The common law doctrine of public nuisance is an appropriate means of shifting the costs of abatement to those who unfairly profited at the expense of the general public.

JUSTICES LaVECCHIA, WALLACE, and RIVERA-SOTO join in JUSTICE HOENS' opinion. CHIEF JUSTICE ZAZZALI filed a separate dissenting opinion in which JUSTICE LONG joins. JUSTICE ALBIN did not participate.

The opinion of the court was delivered by: Justice Hoens

Argued November 28, 2006

In these consolidated complaints, twenty-six municipalities and counties seek to recover, from manufacturers and distributors of lead paints, the costs of detecting and removing lead paint from homes and buildings, of providing medical care to residents affected with lead poisoning, and of developing programs to educate residents about the dangers of lead paint. Although the complaints initially sought recovery through a wide variety of legal theories, we are called upon to consider only whether these plaintiffs have stated a cognizable claim based on the common law tort of public nuisance. Because we conclude that plaintiffs cannot state a claim consistent with the well-recognized parameters of that tort, and because we further conclude that to find otherwise would be directly contrary to legislative pronouncements governing both lead paint abatement programs and products liability claims, we reverse the judgment of the Appellate Division and remand for dismissal of the complaints.

I.

This litigation began on December 14, 2001, when the City of Newark and its mayor filed a complaint asserting claims sounding in fraud, public nuisance, civil conspiracy, unjust enrichment, and indemnification. Named as defendants were a large number of companies that had manufactured lead pigments or lead paints, or that were the corporate successors to the manufacturers of those products.*fn1 Shortly thereafter, twenty-five other plaintiffs*fn2 filed complaints similar to the one filed by the City of Newark. By order dated February 11, 2002, this Court designated "all pending and future litigation involving damages or other relief arising out of the manufacture, sale, distribution and/or use of lead-based paint" as a mass tort. See R. 4:38A. Pursuant to that order, all of the complaints were transferred to a single vicinage and assigned to one judge for management.

A.

Defendants moved to dismiss the complaints for failure to state a claim on which relief could be granted. See R. 4:6-2(e). After briefing and oral argument, the trial court issued an order granting defendants' motion, accompanied by a lengthy written decision.*fn3

The trial court rejected the complaint both generally and based upon a count-by-count analysis. As a general proposition, the trial court concluded that because plaintiffs are municipalities and similar governmental entities, they had only such powers as are granted to them by statute or our constitution. Viewed in that light, the trial court first criticized plaintiffs' complaints generally as overstepping those powers, referring to the complaints as "seek[ing] an unwarranted and impermissible expansion of [plaintiffs'] role as local government entities to act on behalf of the public." The trial court therefore found that these plaintiffs were not authorized to maintain the action, regardless of any of the particular theories asserted.

The court also addressed each of those theories, and, in particular, rejected plaintiffs' argument that their complaints sounded in public nuisance. First, noting that plaintiffs drew their support for this theory of recovery from the legislative declaration of public nuisance contained in the Lead Paint Act, the court reasoned that all of the damages plaintiffs sought to recoup would be barred by the municipal cost recovery doctrine. Second, the trial court reasoned that all of defendants' acts that plaintiffs asserted gave rise to their public nuisance claims were, in reality, governed exclusively by products liability theories. Third, the court reasoned that the Legislature, in enacting the Lead Paint Act, intended to act comprehensively, with the result that other remedies, including the common law remedy of public nuisance, were not available to these plaintiffs. Finally, the trial court rejected the complaints based upon a proximate cause analysis, reasoning that defendants' lack of control of the premises where the nuisance could be found was fatal to plaintiffs' recovery of damages.

B.

The Appellate Division's analysis of the public nuisance claim led it to reach the opposite conclusion. First, the appellate panel rejected the trial court's conclusion that "to permit this action to proceed would offend the constitutional principle of separation of powers by sanctioning a remedial process independent of that created by the Legislature" when it enacted the Lead Paint Act. Instead, the panel reasoned that permitting plaintiffs' public nuisance claim "to proceed would not subvert the goals of the [Legislature], . . . . [because it would] proceed on a parallel track that need not ever intersect with the mechanism set forth" by the Legislature. In so concluding, the panel utilized a preemption analysis and coupled it with the observation that "[a]bsent [an] express limitation, courts must assume that the statute was not intended to bar any [inconsistent] common-law remedy." Referring to the goals of the complaints as "complementary" to the remedies authorized by the Lead Paint Act, the panel found no separation of powers violation.

The Appellate Division also rejected the trial court's municipal cost recovery rule analysis, questioning the continued viability of that theory and its application to public nuisance claims. Having therefore rejected the trial court's general grounds for dismissing the complaints, the panel then turned to a discussion of the trial court's more specific conclusions about the viability of this public nuisance claim.

In analyzing the parameters of a public nuisance claim, the panel held that parties, like defendants, may be liable for a public nuisance even if those parties do not control, at the time the nuisance is created or exists, the instrumentality causing the nuisance or the property where the nuisance is found. Thus, the Appellate Division held that a public nuisance claim is permissible even if the only allegation is that defendants failed to advise of the risks associated with an ordinary consumer product lawfully made and sold decades before. In doing so, the panel reasoned that public nuisance no longer requires proof of defendants' interference with the use of land, with the result that the legal theory could extend to the activities of these defendants.

As part of this analysis, the panel rejected the assertion that plaintiffs were impermissibly suing on behalf of third parties harmed by lead paint. Instead, it found that plaintiffs had suffered "their own, unique damages." The panel, however, did not address whether a public entity could sue for damages caused by a public nuisance only if it could allege that it had sustained "special damages" as that term is utilized in public nuisance doctrine.

In addition, the appellate panel rejected defendants' alternate argument that plaintiffs' claims were governed by, and therefore precluded by, the Product Liability Act (PLA), N.J.S.A. 2A:58C-1 to -11. Although conceding that plaintiffs alleged that defendants were liable because they had failed to disclose or warn of the products' dangers, the panel found no bar to plaintiffs' public nuisance claim as a result. Rather, the panel reasoned that the claims were excluded from the scope of the PLA because of that statute's exception for environmental tort actions. See N.J.S.A. 2A:58C-6.

Finally, the appellate panel concluded that plaintiffs' claims were not barred by the remoteness doctrine, reasoning that the complaints sufficiently identified, for purposes of a proximate cause analysis, a link between plaintiffs' alleged damages and defendants' conduct.

C.

We granted defendants' petition for certification, 185 N.J. 391 (2005), in order to address these several issues relating to the tort of public nuisance. Our consideration of this matter must begin with an explanation of the historical background of lead paint and with a review of the statutory responses to the public health impact of lead at the federal and state levels. We next consider separately the history and modern development of the common law tort of public nuisance. With that historical and legislative framework in mind, we then consider whether plaintiffs' complaints sound in public nuisance, whether these complaints are consistent with or barred by the Legislature's intent as expressed in the Lead Paint Act, and whether, in actuality, the complaints sound not in public nuisance but in products liability.

II.

For purposes of the proceedings that have given rise to this appeal, many of the facts and much of the historical data relating to lead paint and lead pigments are not contested. We recite them here only to explain the context in which this dispute arises.

A.

Lead is a naturally occurring metal. Centers for Disease Control and Prevention (CDC), Third National Report on Human Exposure to Environmental Chemicals 38 (2005). For many years, lead has been used for a wide variety of purposes and has found numerous applications, including use in batteries, paints, glassware, and plastics. Ibid.

Lead, however, has also been linked to serious health effects. The most recent annual report prepared by the New Jersey Department of Health and Senior Services (DHSS) describes lead paint and the risk it poses as follows:

When absorbed into the human body, lead affects the blood, kidneys and nervous system. Lead's effects on the nervous system are particularly serious and can cause learning disabilities, hyperactivity, decreased hearing, mental retardation and possible death. Lead is particularly hazardous to children between six months and six years of age because their neurological system and organs are still developing.

[Childhood Lead Poisoning in New Jersey: Annual Report 4 (2005) [hereinafter Annual Report].]

In addition, according to the United States Department of Health and Human Services, children tend to absorb lead more readily than do adults, because most lead ingested by adults is excreted, while children typically only excrete about one-third of the lead they ingest. See Agency for Toxic Substances & Disease Registry, Draft Toxicological Profile for Lead 8 (2005).

Because "[l]ead was removed from gasoline in the United States in the early 1980's . . . the level of lead in the air and thereby the amount inhaled by children" has been greatly reduced. See Annual Report, supra, at 4. In 2000, the CDC warned that the primary lead hazard for children today comes from lead-based paint, particularly in homes, where it is the major source of lead exposure among children nationwide. See Recommendations for Blood Lead Screening of Young Children Enrolled in Medicaid 2 (Morbidity & Mortality Wkly Rep. Vol. 49, 2000) [hereinafter Recommendations]. More specifically, the presence of "leaded paint that is peeling, chipping, or otherwise in a deteriorated condition; [and] lead-contaminated dust created during removal or disturbance of leaded paint in the process of home renovation" places children "at particularly high risk." Annual Report, supra, at 4. At the same time, the United States Environmental Protection Agency has continued to advise that "[l]ead-based paint is usually not a hazard if it is in good condition, and it is not on an impact or friction surface, like a window." Protect Your Family from Lead in Your Home 5 (2003).

Although lead-based paint was banned in the United States in 1978, see 16 C.F.R. § 1303.1, most homes constructed in the United States before 1978 contain some lead paint, U.S. Dep't of Hous. & Urban Dev. (HUD), Lead Paint Poison: Is Your Family at Risk? (2001), and lead exposure in children today most commonly results from their "chronic ingestion of lead-contaminated dust." Recommendations, supra, at 2. Despite the decline in average blood lead levels among the population of the United States, as of 2000, the CDC considered childhood lead exposure to be "a major environmental health problem." Id. at 3.

According to DHSS, houses in New Jersey built before 1950, "when paints contained a very high percentage of lead," present the "highest risk" of lead poisoning for children. Annual Report, supra, at 4. As of 2005, DHSS estimated that thirty percent of all housing in our State, comprising nearly one million housing units, was built before 1950. See ibid. However, through our statewide testing and abatement program, the percentage of children who underwent lead poisoning testing has increased. Id. at 7. Additionally, the percentage of children with elevated blood levels identified through our testing programs has continued to decline. Id. at 16-20.

Although the focus of the lead poisoning control efforts by all levels of government has been largely on lead paint in housing, other sources of lead contamination are well known. The New Jersey Department of Community Affairs (DCA) continues to warn residents that homes built prior to 1987 may also include lead-soldered plumbing lines, which may be a source of lead in their drinking water. See Frequently Asked Questions: Lead Hazard Assistance (LHCA) Fund (2007).*fn4 Other sources of lead contamination include "old painted toys and furniture[,] . . . food and liquids stored in lead crystal or . . . pottery[,] . . . [h]obbies that use lead[,] . . . [and] folk remedies." Ibid. In addition to these sources, the CDC has recently warned of lead contaminated toys, children's jewelry, and imported candies, see Lead Program: Frequently Asked Questions,*fn5 and the New York City Health Department has released an alert concerning lead-based cosmetics, Press Release, New York City Dep't of Health & Mental Hygiene, Health Department Warns New Yorkers Not to Use Imported Eye Makeup that Contains Lead at 1 (Apr. 26, 2007).

B.

Congress first addressed the nationwide problem of lead paint exposure in 1971 through the passage of the Lead-based Paint Poisoning Prevention Act (LPPPA), Pub. L. No. 91-695, 84 Stat. 2078 (1971) (formerly codified at 42 U.S.C.A. §§ 4801 to 4846 (1971)). Initially, the LPPPA authorized a series of grants to discover the extent of the effects of lead exposure in children. See ibid.; see also Ashton v. Pierce, 716 F.2d 56, 58 (D.C. Cir. 1983). At the same time, Congress authorized the HUD Secretary to promulgate regulations to eliminate the harms of lead-based paint from federally-owned or -funded housing. See Ashton, supra, 716 F.2d at 58-59. Through amendments to the LPPPA, and through promulgating increasingly strict regulations, by the late 1970s, the federal government had effectively banned the general use or sale of paint containing lead and was moving "to eliminate as far as practicable" the existing hazards in federal housing. Ibid.

Thereafter, the LPPPA was further expanded and supplemented, including through the 1992 passage of the Residential Lead-based Paint Hazard Reduction Act (RLPHRA), Pub. L. No. 102-550, 106 Stat. 3897 (1992) (codified at 42 U.S.C.A. §§ 4851 to 4856 (1992)). That Act sought to address the continuing problem of deteriorating lead paint in residential units throughout the country. See 42 U.S.C.A. § 4851(6). As a part of its legislative findings, Congress recognized that federal assistance to create an appropriate infrastructure was still required. See 42 U.S.C.A. § 4851(8). The RLPHRA therefore created a system of grants for the purpose of educating the public, identifying housing with lead contamination, and remediating the hazard in certain target housing. See 42 U.S.C.A. § 4852(e). Congress has continued to appropriate funds for these programs since that time. See, e.g., Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act of 2006, Pub. L. No. 109-115, 219, 119 Stat. 2396, 2456 (2005).

C.

New Jersey also responded to the problem posed by lead paint through the 1971 enactment of legislation known as the Lead Paint Act. See L. 1971, c. 366 (originally codified at N.J.S.A. 24:14A-1 to -12). The sponsor of the bill that eventually became the Lead Paint Act described the purposes of the Act and the concerns that motivated its passage as follows:

The incidence of the disease of lead poisoning especially among children in substandard housing has become a major public concern both in our State and at the Federal level. There is presently pending in the United States Senate a bill [subsequently enacted as the LPPPA], passed by the House of Representatives which would provide Federal funding for up to 75% of the cost of certain local lead poisoning screening programs and State-conducted demonstration and research projects designed to study the extent of the lead-based paint poisoning problem and the methods for lead-based paint removal.

This bill is designed to set up a comprehensive program both at the State and local level to eliminate the causes of lead poisoning in New Jersey, to treat the incidents thereof, and to enable both State and local government units to take advantage of Federal funding for such programs.

[Statement to Senate Bill No. 998, at 3 (Dec. 10, 1970).]

As initially enacted, the Lead Paint Act prohibited anyone from "knowingly apply[ing] lead paint to toys, furniture, or the exposed interior surfaces of any dwelling . . . or facility occupied . . . by children." L. 1971, c. 366, § 1 (codified at N.J.S.A. 24:14A-1). The Act made violations a disorderly persons offense. See id. at § 3 (codified at N.J.S.A. 24:14A- 3). In addition, the Act included a provision that declared the "presence of lead paint upon the interior of any dwelling causing a hazard to the occupant . . . to be a public nuisance," id. at § 5 (codified at N.J.S.A. ...


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