State of Rhode Island Ordered to Reimburse Lead Pigment Defendants for Abatement Examiners' Costs in State's Unsuccessful Public Nuisance Suit
On January 22, 2008, the trial court in State of Rhode Island v. Lead Industries Association, et al., ordered the State to reimburse Defendants The Sherwin Williams Company, NL Industries, Inc. and Millennium Holdings, LLC for costs paid to co-examiners appointed by the court in connection with formulating a remedy to abate lead paint in buildings throughout the State of Rhode Island. The State unsuccessfully argued that the doctrine of sovereign immunity barred a claim for reimbursement against it.
Following the longest trial in Rhode Island history, a jury found that the cumulative presence of lead in paints and coatings on buildings throughout the State of Rhode Island constituted a public nuisance. Thereafter, the trial court entered a judgment of liability against the Defendants for abatement of the nuisance. Defendants appealed the judgment as well as numerous pre-trial and post-trial orders to the Rhode Island Supreme Court. Despite the pending appeal, the State urged the trial court to begin immediately the abatement process and appoint examiner(s) to aid in the implementation of a complex remedial scheme. Defendants requested a stay of the abatement proceeding pending appeal. The issue of allocation of costs associated with the co-examiners was raised at the hearing on Defendants’ motion to stay. The State argued that the Defendants should be responsible for the cost of the co-examiners and in response to direct inquiry by the court, represented that if the verdict was reversed, the Defendants could seek reimbursement for the costs. The court denied Defendants’ motion to stay the abatement process but it also declined to make a final ruling regarding cost allocation and ordered that, in the interim, the Defendants would be jointly responsible for costs related to the co-examiners.
On July 1, 2008, the Rhode Island Supreme Court reversed the jury verdict against the Defendants and vacated the judgment of abatement, finding that the case should have been dismissed at the pleading stage. Subsequently, the Defendants filed a motion for the court to make a final determination regarding allocation of the co-examiners fees and expenses. Defendants sought reimbursement from the State of all costs associated with the co-examiners’ activities in connection with an abatement remedy.
In response, the State asserted that an award of costs against it was barred by sovereign immunity, which it argued only can be waived by the General Assembly. The court rejected the State’s argument, noting that the State was not sued as a defendant here, but voluntarily availed itself of the judicial system by filing a lawsuit against the Defendants. Accordingly, because the State voluntarily filed an affirmative claim, the State waived its sovereign immunity and may be subjected to costs in the same manner as a private litigant.
In making its determination regarding allocation of costs related to the co-examiners, the court considered a number of factors, including (1) which party ultimately prevailed in the matter, (2) which party insisted upon incurring the fees over the objection of its opponent, (3) the State’s prior statements that the defendants could be reimbursed if the judgment of abatement was vacated, citing judicial estoppel, and (4) fairness issues. After weighing the factors, the court found that requiring the Defendants to bear the cost of the co-examiners would cause them to suffer an “unfair detriment” as they had been formally vindicated of all liability for the action brought by the State. Therefore, the court held that the State must reimburse all costs and expenses associated with the co-examiners, in an amount totaling over $225,000.
The court did not address whether the State was entitled to shift payment of the costs to its contingency fee counsel, Motley Rice, under a contingency fee agreement as that issue was not before the court.
For questions regarding lead pigment and/or public nuisance litigation, contact:
Karen Ventrell
202.662.2051
Tony Jones
202.662.2074
Rose Stafiej
202.662.2064