Lawsuits Are the Latest Source of State Government Revenue
MARCH 01, 2002 by LARRY SCHWEIKART
The scenario became clear about five years ago: neither the federal government nor the states could hope to raise taxes any further without a major revolt at the ballot box. At the same time, politicians hesitated to take any unpopular steps that might result in fiscal responsibility, especially at the national level. Numerous budget “caps” and “resolutions” and “agreements” led to sustained deficits in the 1980s. Then, because of the still-vibrant economy, government revenues suddenly eased past expenditures to produce several years of surpluses. But the important fact remains that neither during times of deficits nor during times of surpluses did the growth of government slow, let alone halt.
This produced some uncomfortable feelings in Washington, which as much as possible had shifted the burden of programs related to the environment, law enforcement, and other policies to the states, which in turn found themselves financially struggling. The result was an awareness that while voters still wanted their programs, they also refused further tax hikes to pay for them. What to do?
Into this dilemma jumped the American trial lawyers, first latching onto the tobacco litigation by persuading the attorneys general of a majority of states to tag along on a class-action suit against the tobacco companies. What was the hook to reel in the greedy state governments? Use the tobacco-settlement money to offset state health outlays caused by cigarettes! As the tobacco litigation wound its way through the courts–ultimately to be settled–a few states began to have second thoughts about the likelihood that the funds would ever end up in their coffers. Several of them pressured the trial lawyers to reduce their percentage of the take in this massive heist.
The details of the tobacco settlement are, for our purposes, irrelevant. What is important was the precedent set: state governments, strapped for cash, refused to make citizens face the reality of scarce resources. Instead, the states resorted to a type of alternative funding via the lawsuit. However, even that temporary solution yielded another problem. With the tobacco companies now immunized, where could states get more cash?
The answer, literally, was painted on the walls. In 1999, Rhode Island State Attorney General Sheldon Whitehouse (a Democrat) opened talks with the litigation firm Ness Motley, and soon Raymond Motley filed suit against the lead companies that have produced lead-based paint since the 1930s. It did not matter that the federal government only banned white lead paint for use in residential areas in 1978 or that Motley’s firm, along with six other major litigation firms, contributed more than $8 million to the 2000 election campaigns, virtually all of it to the Democratic Party.1 All that mattered was that cities (and, soon, states) saw a new golden goose. San Francisco already had a four-attorney team called the “affirmative litigation” department charged with going to industries with threats of litigation to extort money.
Straight in the crosshairs of the new suits were long-established American companies such as Sherman-Williams and Dutch Boy and British-owned Glidden. Having brought the asbestos companies to their knees, Motley and Peter Angelos of Baltimore (and another major Democratic National Committee fundraiser) set out to prove a “conspiracy” on the part of the paint companies to foist deadly lead-based paint on unsuspecting urban parents. Attempting to drum up victims, the lawyers scoured through the data on children with learning disabilities and poor school performance. Although any actual links to lead would be almost impossible to prove to reasonable citizens, court trials often don’t involve reasonable people. Carefully screened emotional juries are set up to pit “the children” against “Big Lead.” We know who wins that one.
National Lead, the major producer of lead that made Dutch Boy paint, was not a fat enough target for the litigators. They needed to tie in all the paint companies, and that involved the conspiracy aspect; the litigators sought to prove that the evil paint companies knew decades ago that their product damaged children, and covered it up. Arguing that the companies (like “Big Tobacco”) knew the dangers and continued to sell–even to advertise!–the paint, the lawyers claim, proves the conspiracy.
The Power to Define
In fact, as historical research done by a colleague of mine shows, the companies’ advertising at the time was constrained only by the laws that specifically dealt with toxicity. Since lead paint was not intended to be eaten, no one even considered putting warning labels on paint cans, such as, “Warning! This is paint! Don’t eat it!” Moreover, even after the paint companies began to sponsor a series of studies at respected universities such as Johns Hopkins and Harvard in the 1950s, the measures used to determine either lead levels in blood or the danger levels that any particular “threshold” posed were hotly debated.2 As with voting, it ultimately came down not to the data itself, but to who was allowed to define what the data meant. Once progressive “reformers” began to define lead poisoning as only a tiny fraction of what had before been considered tolerable, the attorneys had their “damages.”
Still, the results so far have not been favorable to the litigators. A 2000 study of children in Illinois, which had higher proportions of children with elevated blood-lead levels than the national average, found only one child in 1,000 had lead at 10 micrograms or higher–the danger point. Moreover, this study covered only the worst high-risk lead-paint neighborhoods. If the litigators can’t squeeze blood out of a turnip there, they will be hard pressed to show across-the-board damages.
The defendants’ attorneys have not sat on their hands. One of their necessary but utterly absurd (in a reasonable world) practices is to keep an attorney on the road attending city council meetings to parry suggestions from the ever-present lead lawyers who only want to be the city’s friend. These defense attorneys literally have to pre-empt and counteract efforts by the lead zealots to consider new class-action suits in cities from Milwaukee to Marietta.
And the battle has been joined in the halls of academia. Noted business historian David Sicilia and chemical historian John Heitmann have plowed through some three million documents trying to establish the historical time line for what the paint companies knew and didn’t know; what the reliability of blood-lead levels in 1930, 1940, and 1950 were; and how the companies advertised their products, not only to the public, but to lead and paint trade associations. It is all-out war, and if the trial lawyers succeed with paint, they will be back a year from now with yet another “dangerous” product. And if they don’t succeed with paint? Unfortunately, they’ll be back a year from now anyway, with state attorneys general in tow, whispering in their ears the names of new suckers to hit up for supplemental “contributions” to state budgets.
Larry Schweikart teaches history at the University of Dayton.
- Table accompanying Michael Freedman, “Turning Lead into Gold,” Forbes, May 14, 2001“.
- John Heitmann, “Absolutely the Right Tool for the Job: Atomic Absorption Spectroscopy and Childhood Lead Poisoning,” paper presented at the Chemical Heritage Foundation, 2000, and “‘Getting the Lead Out?‘ The International Labor Organization and Its Efforts to Prohibit Lead in Paint, 1919-1940,” a paper presented to the European Social Science History Conference, 2001, both in author’s possession.