Court of Appeal Upholds Counties and Cities’ Right to Use Contingency-Fee Outside Counsel and Proceed With Public Nuisance Action against Lead Paint Makers
SAN JOSE, CALIF.- The California Court of Appeal for the Sixth Appellate District issued a significant ruling this week that allows 10 major California cities and counties to proceed with their public nuisance suit against various lead paint companies. In the suit, the cities and counties seek to hold the companies responsible for concealing the dangers of lead and promoting lead paint for interior use, despite their knowledge of the serious health hazards associated with lead paint. Because of the ruling, the cities and counties may now litigate the merits of their suit against the lead paint companies – which seeks to remove the lead paint hazard from their public and private buildings.
“This victory is extremely important,” said County Counsel Ann Ravel. “It affirms public agencies’ right to retain outside counsel for a contingency fee in cases that often involve the most egregious offenses and allows us to focus on the real issue – companies’ responsibility for wrongfully subjecting the public to lead paint health hazards. Without this right, governments would be severely handicapped in our ability to enforce the law against wealthy corporations that spend vast sums for legal counsel.”
The Court of Appeal decision overturned a trial court order that had barred the cities and counties from obtaining assistance from private law firms working on a contingency fee basis. In so doing, the Court reaffirmed that, “[p]rivate counsel serving in such a subordinate role do not supplant the [government] attorneys, who must be absolutely neutral, and are not in a position where their interest in maximizing their contingent fee can influence the balancing of interests or any of the other decisions that are made exclusively by the [government] attorneys.”
“The appellate court decision ensures that local governments retain the ability to protect the public interest by preserving their ability to enlist outside support when necessary,” said City Attorney Dennis Herrera. “This is an excellent result for public law offices and by extension, the residents they serve.”
The Court also rejected the lead paint companies’ argument that contingency fee arrangements would encourage overzealous prosecution of the public nuisance action. Instead, it concluded that the active participation in and control over the case by public attorneys was more than sufficient to guarantee fairness to the defendants. In contingency fee cases, law firms forego hourly payment for their services and are paid a portion of the award when they are successful.
The Court of Appeal’s decision removes a serious threat to the ability of cities, counties, and other public entities to remedy large-scale, serious and ongoing public health and environmental hazards. Local governments often file public nuisance suits in response to major environmental calamities and public health crises in order to safeguard the health of their residents. Given their budgetary constraints, these governments often cannot afford to bring these important cases without the assistance of private counsel, who are paid only at the end of the case out of the recovery, if any. Retaining private attorneys on a contingency fee basis allows local governments to level the playing field in litigation against well-heeled defendants, who would otherwise get a free pass for their misconduct.
In its order, the Court of Appeal, referring to the case law stated:
“… 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 County of Santa Clara v. Atlantic Richfield Co. et al., 6th District Court of Appeal No. H031540. The case was filed by Santa Clara County in March 2000. In a decision issued in 2006, the same panel of the Court of Appeal ruled that the Cities and Counties had stated valid public nuisance claims against the lead paint defendants. County of Santa Clara v. Atlantic Richfield Co. (2006) 137 al.App.4th 292. In addition to Santa Clara County, the current plaintiffs include the City and County of San Francisco, the Counties of Alameda, Los Angeles, Monterey, San Mateo and Solano, and the Cities of Los Angeles, Oakland and San Diego. Several local government and public interest organizations also filed briefs in support of the Cities and Counties’ position. These organizations included: the California State Association of Counties; the League of California Cities; the Association of California Water Agencies; Public Justice; the Healthy Children Organizing Project; and the Western Center for Law and Poverty.