California cities including Los Angeles may use private lawyers to sue lead paint manufacturers for the cost of treating lead-induced illness and other actions to protect the public from the toxic product, a California appeals court has ruled.
Manufacturers had argued cities could not hire outside counsel, relying on a State Supreme Court decision which banned municipalities' use of private counsel working on a contingency fee basis, but the Court of Appeal for the 6th Appellate District in San Jose, Calif., found it was permissible under proper circumstances.
In addition to medical treatment costs, cities are seeking to recover costs for inspections, educational programs and other remedies.
In its ruling, the appeals court said the State Supreme Court precedent itself does not bar the communities from hiring private lawyers on a contingent fee basis, "so long as the public entities' in-house counsel retain control over all decision-making."
If it stands, the appeals court ruling would have a broad impact because communities suing the paint makers also include San Francisco, Oakland, San Diego, Santa Clara, San Mateo, Monterey, Solano and Alameda.
The case has been underway since 2000. The cities argue that use of poisonous lead pigment by manufacturers "decades ago is a public nuisance," and wants the manufacturers to pay the cost of "abating" the potential harm to the communities.
The lower court in Santa Clara had ruled against the communities in April 2007.
In its decision, the appeals court said the actions of the companies in seeking to bar cities retaining private attorneys "threatened not only to deprive the public entities of their choice of counsel but also to preclude them from appealing the lower court decision."
The case is among a number of attempts by states and local governments to collect money from lead paint manufacturers for damages or for action to abate the danger of lead paint.
Manufacturers and their insurance companies have won a number of cases recently on the issue, in New Jersey, Missouri, Illinois and Milwaukee County, Wis.
A verdict against the paint manufacturers last year in Rhode Island is being appealed to that state's Supreme Court. Oral arguments in that case are set for May 15.
The appeals court acted despite the California State Supreme Court's decision in 1985 that said local communities couldn't use outside counsel being paid on a contingency fee basis.
That high court decision, the Clancy case, had rejected use of private lawyers being paid on a contingency fee basis because the court found it "improper for an attorney representing the government to have a financial stake in the outcome of an action to abate a public nuisance."
The communities contended in the latest case that the earlier precedent does not bar all contingent fee agreements in public nuisance abatement actions, and that their contingent fee agreements are valid.
In saying that cities could use private attorneys when the municipalities' in-house counsel retained control over decision-making, the appeals court mentioned that the "record before us contains absolutely no evidence that private counsel have ever engaged in any conduct that invaded the sphere of control exercised by the public entities' in-house counsel."
The panel added: "No authority supports barring private counsel from assisting the public entities under a contingent fee arrangement in this litigation. Therefore, the superior court's order is unjustified, and we will direct the court to set it aside."
The case is titled County of Santa Clara, et al, Petitioners, vs. The Superior Court of Santa Clara County, respondent; Atlantic Richfield Company, et al, real parties in interest.
The U.S. Chamber of Commerce and the American Tort Reform Association submitted a friend of the court brief for the manufacturers.
The brief argued that permitting the communities to "contract out" their enforcement powers to private lawyers "can lead to prosecution of government lawsuits on the basis of profitability, not public interest."
And, on the merits, the brief argues that contingent fee arguments between public entities and private lawyers in pursuit of public nuisance claims "are unconstitutional and violate legal ethics."
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