A New York County Supreme Court has rejected a lawsuit filed by Lloyds of London and fifteen other insurers and has upheld a requirement that they pay over $100 million into a California lead abatement fund on behalf of NL Industries regarding the sale of lead-based Dutch Boy Paint in the early decades of the 20th century. The insurance companies argued that the details of the judgment should preclude them from being responsible.
As reported by Claims Journal, Lloyds of London argued that it should not have to cover this payout, as NL Industries and other paint companies named in the suit knew of the dangers of lead paint, yet continued to include that ingredient in their product. The court, however, rejected that argument, stating that there was no indication that the paint companies intended to harm anyone through the use of lead paint, even if they were aware that the substance was poisonous.
Nearly 100 years ago, however, lead paint was considered one of the best quality paints available and the benefits of lead paint were heavily promoted, even to young children, as can be seen in this publication from Dutch Boy in 1923. “One of the most important uses of lead is in paint,” says the booklet, which also touts the use of lead in ammunition, and reminds us that “lead” in pencils isn’t really lead, but graphite.
A fine line decision
There were a lot of insurance-based issues in this case, which covers many decades of lead paint application. According to court documents, the action involved over 320 insurance policies spanning 70 years. However, in her ruling, the judge stated that, “there is a distinction between knowledge of a risk of hazardous consequences of one’s actions and the intention to cause harm.” In other words, while the companies knew about the hazards of the product, they were not specifically trying to harm their customers.
According to an article in Paint Square News, the judge also rejected the argument that the court order wasn’t a result of “damages,” as the original order was put in place to remediate the dangers caused by lead paint in approximately five million homes across the state, which, according to the order, met the requirement for “damages under the relevant policy language.” The original ruling in the case added the court, never stated that the paint companies involved acted intentionally.
This case dates back over 20 years when in 2000 the city of Santa Clara, California filed suit against several manufacturers including NL Industries, The Sherwin-Williams Company, and ConAgra Grocery under California’s public nuisance law. Shortly after, nine California cities and counties joined the suit, which sought payment of approximately $1 billion for lead remediation, alleging that the companies knew their product was harmful as early as the 1890s but promoted it anyway. The claims against other defendants, Atlantic Richfield Company and DuPont, were dismissed. DuPont was not held liable on the grounds that it never manufactured white lead pigments in the state, while the court found that Atlantic Richfield only promoted the use of lead paint for a couple of years, and only to the trade.
When all was said and done, the case was resolved for $305 million, with each of the three companies agreeing to an equal split.