Products Liability Law Daily Court reverses, remands judgments against Sherwin-Williams, DuPont, and Armstrong in lead paint case
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Tuesday, April 20, 2021

Court reverses, remands judgments against Sherwin-Williams, DuPont, and Armstrong in lead paint case

By Joshua Frumkin, Esq.

The lower court erred in expanding the applicability of the risk-contribution theory, in allowing a claim for negligence in the absence of a product defect, and in finding that the defendants had a duty to warn for purposes of strict liability but not for negligence.

In a case concerning brain injuries allegedly caused by the ingestion of paint containing toxic white lead carbonate pigment, the U.S. Court of Appeals for the Seventh Circuit reversed and remanded a decision by a federal district court in Wisconsin finding three manufacturers of white lead carbonate and other paint products liable for claims of strict liability and negligence. The appellate panel found that The Sherwin-Williams Co. was entitled to judgment as a matter of law on both claims, that Armstrong Containers, Inc. was entitled to judgment as a matter of law on the strict liability claim, and that E.I. du Pont de Nemours and Co., Inc. was entitled to a new trial on both claims (Burton v. E.I. du Pont de Nemours and Co., Inc., April 15, 2021, St. Eve, A.).

Three young men were diagnosed with lead poisoning as children in the 1990s and 2000s. They lived in homes built between 1899 and 1922 that had paint containing toxic white lead carbonate pigment (WLC). In 2005, they sued several manufacturers and sellers of WLC and paints containing WLC. They relied on the risk-contribution theory of liability, whereby liability is apportioned among a pool of entities that could have caused the injury. The claimants pleaded claims for strict liability and negligence, seeking to hold the manufacturers collectively liable for brain damage and other injuries resulting from ingestion of WLC. At the close of the liability phase of the trial, the jury found three manufacturers liable: E.I. du Pont de Nemours and Co., Inc. (DuPont); The Sherwin-Williams Company (Sherwin-Williams); and Armstrong Containers, Inc. (Armstrong). All manufactured, advertised, and sold WLC and WLC-containing paint products to the Milwaukee, Wisconsin, market during the relevant time period. The three companies chose to settle before the apportionment phase of the trial and filed numerous post-trial motions, almost all of which were denied [see Products Liability Law Daily’s September 20, 2019 analysis]. The manufacturers appealed.

Risk-contribution theory. In 1984, the Wisconsin Supreme Court established the risk-contribution theory of liability in Collins v. Eli Lilly Co., 342 N.W.2d 37, where it was applied to aid a consumer who could not identify which drug company manufactured or marketed the medication she took. That medication was a "fungible drug produced with a chemically identical formula" manufactured and marketed by numerous companies. Under the risk-contribution theory, the claimant in that case was required to sue at least one entity and prove that: (1) she ingested the medication; (2) the medication caused injury; (3) the defendant produced or marketed the medication; and (4) producing or marketing the drug constituted a breach of a legally recognized duty to the claimant. Upon making this showing, the burden would shift to the defendant to show that it did not produce or market the medication during the relevant time or place. The doctrine of comparative negligence empowered the jury to apportion liability among entities unable to satisfy that burden.

In 2005, the Wisconsin Supreme Court applied the risk-contribution doctrine to WLC in Thomas v. Mallett, 701 N.W.2d 523. There, the claimant was required to prove that manufacturers produced or marketed WLC for use during the relevant time period, i.e., the duration of the home's existence. In 2009, in Godoy v. E.I. du Pont de Nemours & Co.,768 N.W.2d 674, the state high court ruled against a claimant using that theory, on the ground that WLC was not defectively designed, as defective design claims could not be maintained when the alleged defect (lead) was essential to the product's intended design. The court also held that the doctrine could apply only to WLC and not to paint containing WLC, as finished paint products are not chemically fungible.

In 2011, the Wisconsin legislature passed a statute limiting application of the risk-contribution theory to very narrow circumstances, i.e., when claimants have no other remedy, their injuries stem from a completely integrated product, and that product was produced in chemically and physically identical forms and sold in generic packaging. Effectively, the legislature barred relying on this theory for lead paint claims. Subsequently, the Seventh Circuit held in Gibson v. American Cyanamid Co. [see Products Liability Law Daily’s July 25, 2014 analysis] that applying that statute retroactively to extinguish active WLC claims would violate the Wisconsin Constitution’s due process guarantee; the Wisconsin Supreme Court then split 3-3 on that issue (with one justice not participating).

Risk-contribution theory applied only to manufacturers of WLC. The manufacturers argued that the risk-contribution theory applied to them only in their capacity as manufacturers of WLC and not in their capacity as manufacturers of paint products containing WLC produced by other parties, and the Seventh Circuit agreed. Evidentiary decisions based on a legal error are an abuse of discretion, the court noted. Evidentiary errors warrant a new trial if the error had a substantial and injurious effect on the jury determination and the result was unjust.

The district court ruled at trial that the claimants could introduce evidence of the manufacturers' sale of paint containing WLC manufactured by other entities, and stood by that ruling when it denied the motions for a new trial. However, the appellate panel determined that the Wisconsin Supreme Court had applied the risk-contribution theory only to WLC manufacturers to the extent that they manufactured WLC. Further, the panel held that Thomas foreclosed a broad understanding of "marketing." That term referred only to the marketing of the WLC pigments themselves, and not products containing them. As such, the panel held that the district court erroneously extended Thomas and that the manufacturers could not be held liable for paint products sold or marketed that contained WLC manufactured by other parties. The panel concluded that this error justified a new trial because it significantly and prejudicially expanded the scope of the manufacturers' potential liabilities and the evidence at trial.

The appeals court rejected the manufacturers' other challenges to the risk-contribution theory. Two of the manufacturers requested that the court review and overrule Gibson. The court declined to do so because circuit court decisions on unsettled issues of state law are binding until state courts issue a ruling. The Wisconsin Supreme Court has yet to rule conclusively on Gibson and, thus, the Seventh Circuit upheld it. Further, the appeals court rejected Armstrong's argument that chemical fungibility was a question for the jury and not for the district court judge. Fungibility was not a fact question because the Thomas court granted summary judgment on that issue. Because a finding of fungibility is a prerequisite to applying the risk-contribution theory, courts must consider it when determining whether a claimant has a remedy at law.

Negligence. The appellate panel agreed with Sherwin-Williams' attack on the product defect element of the negligence verdict, but rejected the company’s other arguments. Wisconsin has adopted the Restatement (Second) of Torts’ products liability rule, which is expressly not exclusive. While strict liability and negligence are separate theories with substantially different elements, they both require an underlying product defect. Product defects in Wisconsin include manufacturing defects, design defects, and defects based on a failure to adequately warn. Sherwin-Williams argued that the district court erred in finding it negligent in the absence of a product defect. The district court held that the manufacturers could be found negligent because they sold WLC for residential use while knowing its dangers, following the Learned Hand's famous Carroll Towing BPL formula. The appellate panel held that the district court erred in applying federal law instead of Wisconsin law. Under Wisconsin law, the manufacturers could not be found liable for negligence absent a product defect.

Strict liability. Sherwin-Williams and Armstrong challenged the strict liability verdict, arguing that the district court erred in ruling that they had a duty to warn for purposes of strict liability but not for negligence and that the claimants failed to prove that any failure to warn caused their injuries. The appeals court agreed with both arguments, but rejected the other arguments presented.

The claimants predicated their strict liability claims on a failure to warn theory. While negligence required a duty to warn the claimants, strict liability required a duty to warn ordinary users and consumers who purchased or used the products when they were sold. The district court found that there was a genuine issue of material fact as to whether ordinary consumers of paints containing WLC would have needed a warning, given the lack of knowledge of the dangers in the early 20th century. The Wisconsin Supreme Court did not address whether there is a difference between the two theories' duties, but this court found that other jurisdictions had treated them as materially identical when applying Wisconsin law. The district court had differentiated between the two duties based on Thomas, which required as the first element of strict liability that the WLC was defective when it left the possession or control of the manufacturer. The appeals court found that the district court erroneously shifted focus away from the claimants and toward ordinary consumers living decades earlier. Instead, the district court should have focused on ordinary consumers who were in the claimants' position-namely, today. The appeals court found that the lower court erred in finding that the manufacturers had a duty to warn for purposes of strict liability but not for negligence, and stated that this ruling compelled judgment as a matter of law for both manufacturers on the strict liability claims.

The district court had found that causation did not require specialized technical or medical knowledge and ruled that the claimants did not need to present expert testimony to prove causation. The claimants presented no evidence that the manufacturers' alleged failure to warn caused their injuries, and instead appealed to the jury's "common sense." The appeals court determined that the district court, in denying the manufacturers' motion for a new trial, departed from its original theory and held that the claimants did not need to show that appropriate warnings would have changed consumer behavior. Instead, the district court implicitly placed the burden on the manufacturers to show that their warnings were sufficient to render the otherwise dangerously defective product safe. This court held that the claimants needed to prove that the manufacturers' failure to warn caused their injuries and that they failed to present that evidence. However, the court concluded that granting a new trial would be redundant because it held earlier that Sherwin-Williams and Armstrong were entitled to judgment as a matter of law on the strict liability claims.

Other issues. The manufacturers raised numerous issues of expert testimony concerning two of the claimants' experts: a neuropsychologist and a pediatric critical care physician. The appeals court held that the district court did not abuse its discretion by permitting the neuropsychologist to testify that the claimants had brain damage. Moreover, the district court committed harmless error by permitting the neuropsychologist's causation testimony because it was within its discretion to admit the pediatrician's causation testimony, and both experts had agreed. Any issues with that testimony were properly addressed in cross-examination. However, the district court had erred in permitting the pediatrician's testimony about the claimants' IQ loss, as it did not rest on reliable methodology. The appeals court found that this justified a new trial because there was a significant chance that the jury's $2 million damages awards rested on that evidence.

In addition, the manufacturers contested the district court's decision to bifurcate the trial into a liability phase and an apportionment phase, but the appeals court did not find any abuse of discretion. The appeals court also rejected the manufacturers' argument that Wisconsin public policy required overturning the jury verdicts against them, refusing to find that the state supreme court would create a cause of action based on judicial policy considerations only to later hold that it would violate judicial policy. The appeals court also rejected Armstrong's insistence that it was not the proper successor-in-interest to John R. MacGregor Lead Company in this matter. Finally, the court rejected Sherwin-Williams' argument that the district court violated its First Amendment rights by allowing the claimants to introduce certain evidence of its advertisements, as the First Amendment only bars admission of such evidence when the protected activity itself was the basis of liability, which was not the case here.

The case is No. 20-1774.

Attorneys: Frederick C. Baker (Motley & Rice) for Glenn Burton. Paul E. Benson (Michael Best & Friedrich LLP) for E.I. DuPont De Nemours and Co., Inc. Robert P. Alpert (Morris, Manning & Martin LLP) for Armstrong Containers Inc. Leon F. Dejulius, Jr. (Jones Day) for The Sherwin-Williams Co.

Companies: E.I. DuPont De Nemours and Co., Inc.; Armstrong Containers Inc.; The Sherwin-Williams Co.

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