City of Philadelphia v. Lead Industries Ass'n, Inc.

Page 112

994 F.2d 112

CITY OF PHILADELPHIA and Philadelphia Housing Authority v. LEAD INDUSTRIES ASSOCIATION, INC., NL Industries, Inc. Atlantic Richfield Company, Sherwin-Williams Company, SCM Corporation, Glidden Company and Fuller-O'Brien Company Philadelphia Housing Authority, Appellant (Appellant in No 92-1419) City of Philadelphia, Appellant (Appellant in No. 92-1420). Atlantic Richfield Company, NL Industries, Inc., The Sherwin-Williams Company, The Glidden Company, SCM Corporation, Lead Industries Association, Inc. and Fuller-O'Brien Corporation, Appellants (Appellants in No. 92-1463).

Nos. 92-1419, 92-1420 and 92-1463.

United States Court of Appeals, Third Circuit.

Argued Jan. 21, 1993.

Decided May 11, 1993.

Denise J. Baker, Philadelphia Housing Authority, Philadelphia, PA, Nicholas E. Chimicles (argued), Greenfield & Chimicles, Haverford, PA, Arthur H. Bryant, Trial Lawyers for Public Justice, Washington, DC, for City of Philadelphia, Philadelphia Housing Authority.

Thomas M. Kittredge, Morgan Lewis & Bockius, Philadelphia, PA, for Lead Industries Ass'n, Inc.

Bennett G. Picker, Ellen R. Rogoff, Bolger, Picker, Hankin & Tannenbaum, Philadelphia, PA, John M. Walker, Kirkland & Ellis, Washington, DC, Donald E. Scott (argued), Kirkland & Ellis, Denver, CO, for NL Industries, Inc.

Robert C. Heim, Mary A. McLaughlin, Dechert Price & Rhoads, Philadelphia, PA, Philip H. Curtis and Murray R. Garnick (argued), Arnold & Porter, New York City, for Atlantic Richfield Co.

Paul M. Pohl (argued), Jones, Day, Reavis & Pogue, Pittsburgh, PA, for Sherwin-Williams Co.

Mark M. Wilcox, Drinker, Biddle & Reath, Philadelphia, PA, for Glidden Co. and SCM Corp.

Andre L. Dennis, Elliot A. Kolodny, Stradley, Ronon, Stevens & Young, Philadelphia, PA, Charles W. Siragusa, Wade R. Joyner, Crowley, Barrett & Karaba, Ltd., Chicago, IL, for Fuller-O'Brien Corp.

Edmund B. Spaeth, Jr., Pepper, Hamilton & Scheetz, Philadelphia, PA, for amicus-appellees Business Roundtable, Product Liability Advisory Council and Chamber Commerce US.

Sandra W. Cuneo, Law Office of Jonathan W. Cuneo, Washington, DC, for amicus-appellants Alliance To End Childhood Lead Poisoning, Consumers Union, Consumer Federation of America, US Conference of Mayors, and National Community Development Ass'n.

Before STAPLETON and COWEN, Circuit Judges and BARRY, District Judge. ^*

OPINION OF THE COURT

COWEN, Circuit Judge.

The City of Philadelphia ("City") and the Philadelphia Housing Authority ("PHA") brought this action against manufacturers of lead pigment and their trade association to recover the costs of abating hazardous lead-based paint which plaintiffs must incur pursuant to newly promulgated federal regulations. Plaintiffs allege that for decades defendants knew their product, lead pigment, caused lead poisoning in children. Nevertheless, defendants marketed lead pigment for use in paint intended for residential buildings and refused to warn consumers of the potential harm.

We hold that the statute of limitations bars the City, but not PHA, from asserting claims for negligence, strict products liability, breach of warranty and fraud. As an agency of the Commonwealth of Pennsylvania, PHA is exempt from the statute of limitations under the doctrine of nullum tempus. Because plaintiffs concede they are unable to link a specific manufacturer to the lead pigment in any particular property, they propose three theories of collective liability--alternative liability, market share liability and enterprise liability--to establish the causation element of each of their causes of action. We hold that plaintiffs may not proceed under these theories because Pennsylvania law has not adopted any of them in products liability cases or sent an authoritative signal that it would do so. As a federal court in a diversity case, we may not significantly expand state law without a clear indication that the Pennsylvania Supreme Court would do the same. We therefore will affirm the district court's order dismissing the plaintiffs' amended complaint.

I. FACTUAL AND PROCEDURAL BACKGROUND

According to the Department of Health and Human Services, lead poisoning is a serious threat to the health of American children. See U.S. Dep't of Health and Human Services, The Nature and Extent of Lead Poisoning in Children in the United States: A Report to Congress 1 (July 1988). Children may ingest lead by chewing on surfaces covered with lead-based paint or by breathing air that contains dust from crumbling paint. Exposure to lead paint occurs in homes, schools and day care centers. Inner city residents are the highest risk population segment because older city buildings, which predominate in the inner city, are most likely to have unremoved lead paint on the walls.

At low levels, lead poisoning causes IQ reduction, shortened attention span, hyperactivity, aggressive behavior, loss of appetite, vomiting and abdominal pain. Ingestion of lead in higher quantities may cause convulsions, brain damage and eventually death. Currently, fifteen percent of all preschoolers, approximately 3,000,000 children, have elevated lead levels sufficient to impair their neurological development. See U.S. Environmental Protection Agency, Strategy for Reducing Lead Exposures 1 (February 21, 1991). A study estimates that sixty-two percent of all Philadelphia children between the ages of six months and five years have lead levels in their blood capable of causing learning and central nervous disorders. See Environmental Defense Fund, Legacy of Lead: America's Continuing Epidemic of Childhood Lead Poisoning A-5 (March 1990). The damage caused by lead is irreversible. Therefore, the sole cure for lead poisoning is prevention of exposure to lead. See Centers for Disease Control, Preventing Lead Poisoning in Young Children: A Statement by the Centers for Disease Control 39 (Oct. 1991).

Preventing future injury through lead-based paint abatement is critical, but also enormously expensive. United States Department of Housing and Urban Development ("HUD") regulations, promulgated pursuant to the Lead-Based Paint Poisoning Prevention Act, 42 U.S.C. §§ 4821-46 (1988 & Supp. II 1990), require the City and PHA to notify all tenants of residential HUD-associated housing constructed prior to 1978 about the dangers of lead poisoning and the appropriate precautions to be taken, see 24 C.F.R. § 35.5(a) (1992), and to cover or remove lead-based paint from HUD housing units built before 1978, see 24 C.F.R. § 35.24(b) (1992). HUD provides no funding to aid compliance with the regulations.

To shift their large financial burden to the parties alleged to be primarily responsible for the lead poisoning public health crisis, the City and PHA brought this lawsuit. ¹ Plaintiffs seek damages from NL Industries, Inc., Atlantic Richfield Company, The Sherwin-Williams Company, The Glidden Company and Fuller-O'Brien Corporation, all of which are lead pigment manufacturers, and the Lead Industries Association ("LIA"). ² Plaintiffs seek compensatory damages in excess of $100,000,000 for the costs of (1) inspecting HUD and privately owned housing; (2) removing lead paint from public and private residential properties built or painted prior to 1950; (3) testing individuals to detect elevated lead blood levels; (4) treating city residents for exposure to lead paint; (5) educating the public about the hazards of lead paint; and (6) recovering liability imposed on plaintiffs in their capacity as property owners for personal injury arising from the ingestion of lead paint. Plaintiffs also seek punitive damages and injunctive relief to require the defendants to eliminate the hazards caused by lead paint on the walls of City properties.

Plaintiffs' amended complaint asserts claims for negligent product design, strict product liability, negligent failure to warn, breach of warranty, fraud and misrepresentation, indemnification, restitution and punitive damages. Because the procedural context of this appeal is a motion to dismiss, we assume that plaintiffs' allegations are true. The amended complaint alleges the following. Defendants knew of the severe hazards of lead paint since the early 1900s, long before this information was widely circulated to the public. Defendants also were aware that non-toxic pigments, such as zinc-oxide pigment, were available as substitutes for lead pigments in paint. Despite this knowledge, defendants continued to promote their product for use in paint intended for residential interior surfaces and refused to warn potential consumers of the known hazards.

The LIA, organized by some of the defendants in 1928, collected literature addressing the toxicity of lead pigment and attempted to discredit studies documenting the hazards of lead paint. The LIA also funded its own medical research to refute scientific evidence concerning the dangers of lead. Through expensive advertising campaigns, the LIA misrepresented the safety of lead paint to the consumer public. Through vigorous lobbying, it also misled legislative bodies considering regulating or banning lead paint. All of the defendants were members of the LIA at some point, though at different times and for different lengths of time.

Plaintiffs concede they have been aware for years that lead paint is dangerous to children. In the 1940s and 1950s, plaintiffs "began to be aware of the hazards of lead paint to young children...." Amended Complaint p 73, App. at 290-91. Philadelphia made lead poisoning a reportable disease in 1950, and throughout the 1950s and 1960s, it operated programs to determine the extent to which lead paint caused lead poisoning in children. In 1966, Philadelphia enacted an ordinance that prohibited the use of lead paint on residential walls, regulated the labeling of lead paint, and required property owners to remove lead paint from buildings posing a health hazard to children. See Philadelphia, Pa., Code § 6-403(2)(a), (3), (4)(b) (196...