ARNOLD & PORTER LLP GWENDOLYN M. …filecache.drivetheweb.com/mr5com_leadlawsuits/203389/...221 Cal....

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DEFENDANT ATLANTIC RICHFIELD COMPANY’S PROPOSED STATEMENT OF DECISION

ARNOLD & PORTER LLPSEAN MORRIS (S.B. #200368)ERIC MAY (S.B. #245770)GWENDOLYN M. OSTROSKY (S.B. #261801)777 South Figueroa Street, 44th FloorLos Angeles, California 90017-5844Telephone: (213) 243-4000Facsimile: (213) 243-4199

ARNOLD & PORTER LLPPHILIP H. CURTIS (admitted pro hac vice)WILLIAM H. VOTH (admitted pro hac vice)BRUCE R. KELLY (admitted pro hac vice)399 Park AvenueNew York, New York 10022Telephone: (212) 715-1000Facsimile: (212) 715-1399

Attorneys for DefendantAtlantic Richfield Company

ARNOLD & PORTER LLPJONATHAN L. STERN (admitted pro hac vice)555 Twelfth Street, NWWashington, DC 20004-1206Telephone: (202) 942-5000Facsimile: (202) 942- 5999

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SANTA CLARA

PEOPLE OF THE STATE OF CALIFORNIA,et al.,

Plaintiffs,

v.

ATLANTIC RICHFIELD COMPANY, et al.,

Defendants.

)))))))))))))))

Case No.: 1-00-CV-788657

DEFENDANT ATLANTIC RICHFIELDCOMPANY’S PROPOSED STATEMENTOF DECISION

Date: September 13, 2013Department: 1Judge: Hon. James P. Kleinberg

Action filed: March 23, 2000Trial date: July 15, 2013

AND RELATED CROSS-ACTION.))))

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TABLE OF CONTENTS

Page

I. PLAINTIFFS’ OWN EVIDENCE LIMITS THEIR CASE AGAINST ARC TOTWO AND ONE-HALF YEARS............................................................................................2

A. The Alleged Nuisance Is Composed Of Housing Built Over More Than ACentury, But The Bulk Was Built After 1939 .............................................................2

B. The Only Conduct Even Arguably Relevant To Plaintiffs’ Claim AgainstARC Is Limited To The Period From April 1937 To November 1939 .......................3

II. PLAINTIFFS FAILED TO PROVE THAT AN ALLEGED ARCPREDECESSOR PROMOTED LEAD PAINT FOR RESIDENTIAL USE WITHTHE REQUISITE KNOWLEDGE OF THE HAZARD IT WOULD CREATE....................5

A. There Is No Evidence That An Alleged ARC Predecessor Ever HadActual Knowledge Of “The Hazard” ...........................................................................5

B. Constructive Knowledge Imputed To An Alleged ARC Predecessor IsInsufficient Legally And Cannot Be Found Factually .................................................6

III. THE EVIDENCE DOES NOT SHOW THAT ANY PROMOTION (WITH ORWITHOUT KNOWLEDGE) BY AN ALLEGED ARC PREDECESSORSUBSTANTIALLY CONTRIBUTED TO THE PRESENCE OF WHITE LEADCARBONATE IN RESIDENTIAL PAINT IN THE JURISDICTIONS................................8

A. The Law Of Causation Requires Proof That A Defendant’s Conduct WasA Substantial Factor In Causing The Public Nuisance ................................................8

B. Promotions By An Alleged ARC Predecessor Did Not Cause Lead PaintTo Be Present In The Jurisdictions ..............................................................................9

1. Advertisements From April 6, 1937 To November 1939 ..............................10

2. Advertisements Prior To April 6, 1937..........................................................11

3. The LIA’s White Lead Promotion Campaign................................................12

C. There Is No Evidence That Anaconda White Lead Was Sold For Use InResidential Paint Within The Jurisdictions, And Correspondingly NoEvidence That Any Anaconda White Lead Is On Any ResidentialBuildings Within The Jurisdictions Today ................................................................13

IV. THE EVIDENCE DOES NOT SUPPORT PLAINTIFF’S CLAIM THAT THEREIS A WIDESPREAD PRESENCE OF WHITE LEAD PIGMENT IN ALL PRE-1978 HOUSING OR THAT IT POSES A SUBSTANTIAL ANDUNREASONABLE INTERFERENCE WITH THE PUBLIC HEALTH ............................16

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V. THE REMEDY PROPOSED BY PLAINTIFFS IS IMPERMISSIBLE AS AMATTER OF LAW...............................................................................................................18

A. The Abatement Plan Plaintiffs Propose Is Inappropriate, IncludingBecause The Beck Development Factors Are Not Met ..............................................18

B. Plaintiffs’ Request For A Fund Violates California Law And Due Process..............19

C. The Doctrines Of Undivided Injury, And Joint And Several Liability DoNot Apply To This Case ............................................................................................22

VI. PLAINTIFFS’ CLAIM AGAINST ATLANTIC RICHFIELD FAILS FORMULTIPLE OTHER REASONS ..........................................................................................23

A. The First Amendment Issue Recognized By The Supreme Court In ThisCase Precludes Imposition Of Liability .....................................................................23

1. The Supreme Court Acknowledged That Plaintiffs’ Claims InvolveCommercial Speech Subject To First Amendment Protection ......................23

2. The Advertisements Offered Against ARC Were ProtectedCommercial Speech And Cannot Be The Basis Of Liability.........................24

B. Imposition Of Liability On ARC Based On The Alleged Predecessors’Conduct Seven Or More Decades Ago Would Violate The Due ProcessAnd Takings Clauses Of The Fifth Amendment........................................................26

C. Plaintiffs Failed To Prove That ARC Is The Legal Successor To ALPC..................28

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TABLE OF AUTHORITIES

Page(s)STATE CASES

Aguimatang v. Calif. State Lottery,234 Cal. App. 3d 769 (1991)..................................................................................................14

Baba v. Bd. of Supervisors of City of San Francisco,124 Cal. App. 4th 504 (2004).................................................................................................24

Beck Development Co. v. Southern Pacific Transportation Co.,44 Cal. App. 4th 1160 (1996).................................................................................................18

Bronco Wine Co. v. Jolly,129 Cal. App. 4th 988 (2005).................................................................................................24

Calif. Viking Sprinkler Co. v. Pac. Indemn. Co.,213 Cal. App. 2d 844 (1963)..................................................................................................13

Carlotto Ltd. v. County of Ventura,47 Cal. App. 3d 931 (1975)....................................................................................................22

City of Modesto Redevelopment Agency v. Superior Ct.,119 Cal. App. 4th 28 (2004).....................................................................................................8

Conner v. Grosso,41 Cal. 2d 229 (1953) ............................................................................................................22

County of San Luis Obispo v. Abalone Alliance,178 Cal. App. 3d 848 (1981)..................................................................................................19

Cty. of Santa Clara v. Atlantic Richfield Co.,137 Cal. App. 4th 292 (2006)...................................................................................5, 7, 19, 20

Cty. of Santa Clara v. Superior Ct.,50 Cal. 4th 35 (2010) .......................................................................................................23, 24

Franklin v. USX Corp.,87 Cal. App. 4th 615 (2001)...................................................................................................29

Frieman v. San Rafael Rock Quarry, Inc.,116 Cal. App. 4th 29 (2004)...................................................................................................22

Gerawan Farming, Inc. v. Lyons,24 Cal. 4th 468 (2000) ...........................................................................................................24

Hardin v. Sin Claire,115 Cal. 460 (1896) .................................................................................................................9

In re RegO Co.,623 A.2d 92 (Del. Ch. 1992)..................................................................................................29

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In re Tobacco Cases II,41 Cal. 4th 1257 (2007) .........................................................................................................25

In re Tobacco Cases II,No. SDSC 719446, 2002 WL 31628649 (Cal. Sup. Ct. Nov. 22, 2002)................................24

Johnson v. Am. Standard, Inc.,43 Cal. 4th 56 (2008) ...............................................................................................................7

Jordan v. City of Santa Barbara,46 Cal. App. 4th 1245 (1996).................................................................................................22

L.A. Teachers Union v. L.A. City Bd. of Ed.,71 Cal. 2d 551 (1969) ............................................................................................................13

Malloy v. Fong,37 Cal. 2d 356 (1951) ............................................................................................................13

Mangini v. Aerojet-General Corp.,12 Cal. 4th 1087 (1996) .........................................................................................................18

Mangini v. Aerojet-General Corp.,230 Cal. App. 3d 1125 (1991)..................................................................................................9

McClung v. Empl. Dev. Dep’t,34 Cal. 4th 467 (2004) ...........................................................................................................26

McCollum v. CBS, Inc.,202 Cal. App. 3d 989 (1988)..................................................................................................24

Myers v. Philip Morris Cos.,28 Cal. 4th 828 (2002) ...........................................................................................................26

Newhall Land & Farming Co. v. Superior Ct.,19 Cal. App. 4th 334 (1993).....................................................................................................9

People ex rel. Clancy v. Superior Court,39 Cal.3d 740 (1985) .............................................................................................................23

People ex rel. Gow v. Mitchell Bros.’ Santa Ana Theater,114 Cal. App. 3d 923 (1981)..................................................................................................20

Potlatch Corp. v. Superior Court,154 Cal. App. 3d 1144 (1984)................................................................................................29

Ray v. Alad Corp.,19 Cal. 3d 22 (1977) ........................................................................................................29, 30

Selma Pressure Treating Co. v. Osmose Wood Preserving Co.,221 Cal. App. 3d 1601 (1990)..............................................................................................7, 9

Shurpin v. Elmhirst,148 Cal. App. 3d 94 (1983)......................................................................................................9

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Thomas ex rel. Gramling v. Mallett,285 Wis. 2d 236 (2005)..........................................................................................................27

Van’t Rood v. Cty. of Santa Clara,113 Cal. App. 4th 549 (2003).................................................................................................13

Viner v. Sweet,30 Cal. 4th 1232 (2003) .......................................................................................................8, 9

Wilshire Westwood Assocs. v. Atl. Richfield Co.,20 Cal. App. 4th 732 (1993).....................................................................................................8

FEDERAL CASES

44 Liquormart, Inc. v. Rhode Island,517 U.S. 484 (1996) ...............................................................................................................25

Allapattah Servs., Inc. v. Exxon Corp.,333 F.3d 1248 (11th Cir. 2003)..............................................................................................21

Bolger v. Youngs Drug Prods. Corp.,463 U.S. 60 (1983) .................................................................................................................24

Bridge v. Phoenix Bond & Indem. Co.,553 U.S. 639 (2008) ...............................................................................................................21

Calif. ex rel. Cooper v. Mitchell Bros.’ Santa Ana Theater,454 U.S. 90 (1981) .................................................................................................................20

Central Hudson Gas & Elec. Co. v. Public Serv. Comm’n,447 U.S. 557 (1980) .........................................................................................................24, 25

Eastern Enterprises v. Apfel,524 U.S. 498 (1998) .........................................................................................................26, 27

Gibson v. American Cyanamid Co.,719 F. Supp. 2d 1031 (E.D. Wis. 2010)...........................................................................27, 28

Ileto v. Glock, Inc.,349 F.3d 1191 (9th Cir. 2003) ..................................................................................................7

Ileto v. Glock, Inc.,565 F.3d 1126 (9th Cir. 2009) .................................................................................................7

Klier v. Elf Atochem North Am., Inc.,658 F.3d 468 (5th Cir. 2011)..................................................................................................22

Landgraf v. USI Film Prods., Inc.,511 U.S. 244 (1994) ...............................................................................................................26

Lorillard Tobacco Co. v. Reilly,533 U.S. 525 (2001) .........................................................................................................24, 25

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McLaughlin v. Am. Tobacco Co.,522 F.3d 215 (2d Cir. 2008)...................................................................................................21

NAACP v. Claiborne Hardware,458 U.S. 886 (1982) ...............................................................................................................24

Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,259 F.3d 154 (3d Cir. 2001)...................................................................................................20

Philip Morris USA v. Williams,549 U.S. 346 (2007) ...............................................................................................................28

State Farm Mutual Auto Ins. Co. v. Campbell,538 U.S. 408 (2003) ...............................................................................................................28

Woodruff v. North Bloomfield Gravel Mining Co.,18 F. 753 (9th Cir. 1884)..........................................................................................................7

STATUTES & CONSTITUTIONS

Cal. Code Civ. Proc. § 731.................................................................................................................20

Cal. Const., art. I ................................................................................................................................24

U.S. Const. Amend. 1 ..................................................................................................................26, 27

U.S. Const. Amend. 5 ............................................................................................................23, 24, 25

OTHER AUTHORITIES

5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 50 ............................................................22

Restatement (Second) of Torts § 432...................................................................................................8

Restatement (Second) of Torts, § 433A.......................................................................................22, 23

Restatement (Second) of Torts § 834 cmt. d........................................................................................9

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- 1 -DEFENDANT ATLANTIC RICHFIELD COMPANY’S PROPOSED STATEMENT OF DECISION

The public entity plaintiffs’ public nuisance claim against Atlantic Richfield Company

(“ARC”) required them to prove that: (1) an alleged ARC predecessor promoted lead paint made

with white lead carbonate pigment for residential use with knowledge of the hazard it would

create; (2) such knowing promotion by the alleged predecessor and resultant sales caused lead

paint containing white lead carbonate to be widely present in the jurisdictions, and (3) the presence

of such lead paint in the pre-1978 housing stock in each jurisdiction constitutes a public nuisance.

Plaintiffs failed to prove these elements.

Lead paint was used in homes for more than a century. But Plaintiffs’ claim against ARC

boils down to eight advertisements in paint trade journals published between April 1937 and

November 1939. This is so because that claim required proof that three distinct events happened

in a particular chronological sequence. Plaintiffs had to prove that an alleged ARC predecessor

acquired knowledge of the hazard. They had to prove that the alleged predecessor, having

acquired that knowledge, then promoted paint containing white lead carbonate for residential use

and sold white lead carbonate for such use. And they also had to prove that homes within the

jurisdictions were painted with such paint as a result of the alleged predecessor’s conduct-with-

knowledge. The proof at trial showed that the earliest time when an alleged predecessor even

arguably acquired the requisite knowledge was in April 1937. For earlier times, Plaintiffs did not

offer any proof that an alleged ARC predecessor knew of any danger to children from the

application of lead paint in homes. Plaintiffs offered no proof of promotion by an alleged

predecessor after November 1939 and acknowledged that ARC’s alleged predecessor left the

white lead pigment business in 1946.

But even for the short period from 1937 to 1939, Plaintiffs’ proof failed. The proof at trial

did not establish that: (1) at any time an alleged ARC predecessor promoted white lead carbonate

pigment, it had (or could have had) knowledge of the concern with low-level asymptomatic lead

exposure that Plaintiffs say establishes a public nuisance and warrants abatement today; (2) any,

even blameless, promotion or sale by an alleged ARC predecessor ever reached any of the

jurisdictions and was a substantial factor in causing lead to be present; or (3) white lead carbonate

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pigment in paint is widely present in housing in the jurisdictions today and constitutes a public

nuisance.

For these and other reasons discussed below, the Court finds in favor of ARC and that it is

not liable for the alleged public nuisance.

I. PLAINTIFFS’ OWN EVIDENCE LIMITS THEIR CASE AGAINST ARC TO TWOAND ONE-HALF YEARS

A. The Alleged Nuisance Is Composed Of Housing Built Over More Than ACentury, But The Bulk Was Built After 1939

Plaintiffs claim that all pre-1978 housing constitutes a single public nuisance as a result of

the presence of paint containing white lead carbonate (or lead sulphate). (7/1/13 Pretrial Br. (Dkt.

# 3257), at 2:5-6 (“the presence of lead paint in and around homes in California constitutes a single

public nuisance”) (emphasis original); Ex. 1315-00005 [Interrog. No. 13] (Plaintiffs’ allegations

limited to “white lead carbonate and basic lead sulphate.”)) They asserted in their opening

statement, in mini-arguments and through their witnesses that all such housing should be presumed

to contain paint with at least some form of lead; the abatement remedy they seek would begin with

inspection of each of those houses, using x-ray fluorescence technology that can identify the

presence of lead but not the type (TR. 3077:24-3078:11 [Bierwagen]), to see whether any of the

multiple painted surfaces within them in fact contain lead of some form. (TR. 22:15-16, 23:15-26

[opening], TR. 530:17-19 [July 22 mini argument], TR. 1137:15-28 [July 29 mini argument]; see

also TR. 905:20-22, 905:25-906:20, 911:8-17, 916:7-20 [Dr. Fenstersheib], TR. 1465:16-1467:18

[Dr. Jacobs].) Plaintiffs’ abatement expert Dr. Jacobs suggested that some categories of housing

(e.g., mobile homes) might be excluded from the abatement plan, but those marginal adjustments do

not significantly change the scope of the claimed nuisance. (TR. 1480:20-1485:23.) According to

census data, approximately 4.7 million existing residences within the ten plaintiff jurisdictions were

built before 1980. (TR. 1478:3-12.)

The great majority of pre-1978 residences were not built -- and therefore never painted --

until after 1939. Census housing construction data for Santa Clara County proffered by Plaintiffs’

expert Paul Mushak in Exhibit 216 establishes that 93% of currently extant pre-1978 homes were

built from 1940 on; only 7% were built before 1940. A comparable calculation for the other

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jurisdictions using Dr. Mushak’s census data (Exs. 208, 213, 214, 217, 219-222) yields similar

results, with some local variations, as shown by the table below.

Percentage of Housing ComprisingAlleged Lead Paint Public Nuisance

Built After 1939

Alameda County(including Oakland)

71%

Los Angeles County 80%

Monterey County 89%

City of San Diego 88%

San Francisco 43%

San Mateo County 89%

Santa Clara County 93%

Solano County 87%

Ventura County 94%

Moreover, from 1939 to 1946 (i.e., during the World War II years), the war effort -- not

housing -- consumed the bulk of all white lead carbonate, and interior use of lead paint had ended.

(Ex. 1029 [Twombly]; TR. 607:2-11, 609:5-20, 712:2-22, 730:21-731:6, 731:15-732:15, 741:1-7,

762:6-16, 762:23-26 [Dr. Rosner].) Plaintiff’s expert, Dr. Markowitz, confirmed that no U.S.

medical or public health professional called for restricting lead paint use on residential interiors

before November 1943, when Drs. Byers and Lord suggested such a ban. (TR. 1770:19-1771:8.)

It also is undisputed that the alleged predecessors ceased manufacturing white lead carbonate

altogether in 1946. (TR. 670:18-21 [Dr. Rosner]; Ex. 285_002-003.)

B. The Only Conduct Even Arguably Relevant To Plaintiffs’ Claim Against ARC IsLimited To The Period From April 1937 To November 1939

Plaintiffs did not provide any evidence that even arguably establishes knowledge by an

alleged ARC predecessor prior to April 1937 of any health effects to children from exposure to

residential lead paint. Plaintiffs did introduce Exhibit 154, a transcript of an April 6, 1937,

conference that chiefly addressed occupational lead poisoning among adult factory workers but

also included limited references to childhood lead poisoning. (TR. 1750:11-17, 1764:9-1766:3.)

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The transcript contains remarks by Dr. Aub of Harvard Medical School about two previously

published case reports of symptomatic lead poisoning in children with very high blood lead levels;

it says nothing about whether those children ingested lead from paint. (Ex. 154_006-008.) As

Plaintiff’s expert acknowledged, one of the published case reports that Dr. Aub described showed

that the child had ingested lead from water; the other did not say what the source of the child’s

lead exposure was. (TR. 1750:11-17, 1752:1-17, 1752:25-28, 1764:9-1766:3.)

While the list of approximately 45 attendees at this conference includes two from an

alleged ARC predecessor, there is no evidence that either of them actually heard the portions of

the program relating to children. Nevertheless, Plaintiffs assert that Exhibit 154 establishes that an

alleged ARC predecessor acquired knowledge of lead paint hazards at this conference sufficient to

establish that the handful of later advertisements for Anaconda brand white lead pigment

constitute the “promotion with knowledge” that the Court of Appeal said could be the basis for

liability in this case. (The only other evidence showing the alleged predecessors’ knowledge

about health effects of lead consists of correspondence to and from an alleged predecessor from

approximately 1920, but this correspondence discussed only factory workers’ occupational

exposure to large amounts of dust and said nothing about exposure of children. (Ex. 168.))

The sole evidence of promotion by ARC’s alleged predecessors consists of advertisements.

The latest such advertisement is from Western Paint Review dated November 1, 1939. (Ex. 1_40-

43.) Although Exhibit 1 contains an additional document dated after 1939 (a pamphlet entitled,

“The Story of Anaconda White Lead” bearing a copyright date of 1940 (Ex. 1_4-16)), this

pamphlet must be disregarded because there is no evidence that it was ever disseminated

anywhere. (TR. 700:10-701:5 [Dr. Rosner].)

Accordingly, the only arguably relevant period for ARC is from April 1937 (i.e., the date

of alleged actual knowledge from the LIA conference) to November 1939 (i.e., the date of the last

advertisement).

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II. PLAINTIFFS FAILED TO PROVE THAT AN ALLEGED ARC PREDECESSORPROMOTED LEAD PAINT FOR RESIDENTIAL USE WITH THE REQUISITEKNOWLEDGE OF THE HAZARD IT WOULD CREATE

A. There Is No Evidence That An Alleged ARC Predecessor Ever Had ActualKnowledge Of “The Hazard”

Assuming arguendo the existence of a public nuisance (which as demonstrated below has

not been proved here), an alleged ARC predecessor could not be liable unless Plaintiffs prove that

it engaged in “promotion of lead paint for interior use with knowledge of the hazard that such

use would create. . . . [T]he alleged basis for defendants’ liability for the public nuisance created

by lead paint is their affirmative promotion of lead paint for interior use, not their mere

manufacture and distribution of lead paint or their failure to warn of its hazards.” Cty. of Santa

Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292, 309-10 (2006) (italicized emphasis in

original; bolded emphasis added).

“The hazard” that Plaintiffs allege exists today is the presence of lead paint in and on pre-

1978 residential housing, which they say results in “at least 10,000 children who are poisoned”

each year. (TR. 22:24-25 [opening].) But Plaintiffs’ assertion that approximately 10,000 children

are “poisoned” each year rests on the number of children in the jurisdictions with blood lead levels

well below any level considered to be harmful when any alleged ARC predecessor was engaged in

the white lead pigment business.

It is only relatively recently that science has raised concerns about low-level lead

exposures based on research suggesting that lead may cause harm below any identifiable threshold

dose (see Ex. 45 [CDC 2012 Advisory Committee Report]) and that children might be exposed to

such harms via ordinary house dust. (Ex. 7_025 [CDC 1991].) In the 1930s and 40s, the

mainstream scientific view placed the toxic threshold of blood lead at 80 µg/dL and the onset of

true lead poisoning in the range 100-200 µg/dL. (Exs. 1026, 1377; TR. 2686:12-2687:6, 2687:19-

2688:16 [English], TR. 1264:7-11 [Kosnett].) Even into the 1970s, lead poisoning was considered

as first occurring mildly at 60 µg/dL and acutely above 80 µg/dL, levels at which a patient is

symptomatic. (Ex. 1047_008 [col. 2]; TR. 2637:14-2638:9 [English].) The concept of non-

symptomatic lead poisoning at lower levels emerged only as the 1970s ended. (TR. 379:4-16

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[Lanphear], TR. 2655:16-2657:28 [English].) In the 1980s until 1991, the CDC considered a

blood lead level of 25 µg/dL to be the “threshold for action” (Ex. 7_008); in 1991, the CDC stated

that there was new data regarding levels “previously believed to be safe” and set 10 µg/dL as the

“level of concern” (id.), and only changed that policy in 2012 when it stated that 5 µg/dL should

be used as a “reference level.” (Ex. 20.) This history, and the “hindsight” nature of Plaintiffs’

claims, is more fully discussed in the NL Industries Proposed Statement of Decision at pages 4-12,

which is adopted here as well.

ARC’s alleged predecessors ceased all promotion of lead pigment, and left the lead

pigment business, decades before research on the risk of low-level exposures in asymptomatic

children began to be published in the late 1970s and over a half century before the CDC reduced

its “level of concern” to 10 µg/dL and then (very recently) the “reference level” to 5 µg/dL.

Knowledge of the risk of symptomatic lead poisoning from high-dose exposures is insufficient to

make a defendant liable, because symptomatic lead poisoning is virtually unheard of in the

plaintiff jurisdictions today, and the risk of symptomatic lead poisoning is certainly not the reason

why Plaintiffs advocate the abatement of lead paint. (E.g., Ex. 1402 [summary of California blood

lead levels reporting zero cases, regardless of source, over 70 µg/dL in 2010 and zero in 2011].)

Consequently, there is no evidence of knowledge of the low-level exposure hazard Plaintiffs allege

today at the time any promotion by an ARC alleged predecessor occurred, nor could there be.

B. Constructive Knowledge Imputed To An Alleged ARC Predecessor IsInsufficient Legally And Cannot Be Found Factually

Plaintiffs assert that they need only prove that promotion occurred with constructive rather

than actual knowledge of the hazard, i.e., what a defendant “should have known.” (8/14/13 Opp.

to Mot. for Judgment (Dkt. # 3427), at 4-5.) That is incorrect. The Court of Appeal’s decision

requires actual rather than merely constructive knowledge. That decision made no reference to

constructive knowledge as a basis for liability, and distinguished the claim it was permitting the

plaintiff jurisdictions to pursue from a product liability claim based on failure to warn -- i.e., a

claim that can be based on a manufacturer’s constructive knowledge.

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The public nuisance claim pleaded in the Third Amended Complaint, the pleading

considered by the Court of Appeal in its 2006 decision, did not rely on a disjunctive “knew or

should have known” allegation but instead alleged actual knowledge without qualification. (E.g.,

3d Am. Compl. ¶ 3 (alleging defendants “knew of the severe health risks associated with Lead”).)

In finding that the case could proceed based on that allegation, the Court of Appeal stated that

Plaintiffs thus would need to prove “promotion of lead paint for interior use with knowledge of

the hazard that such use would create,” conduct that the Court described as “distinct from and far

more egregious than simply producing a defective product or failing to warn of a defective

product.” Cty. of Santa Clara, 137 Cal. App. 4th at 309 (italicized emphasis in original). The two

decisions Plaintiffs have cited on this issue do not support their argument that constructive

knowledge is enough. In Selma Pressure Treating Co. v. Osmose Wood Preserving Co., the

complaint alleged actual, not constructive, knowledge; the Court’s reference to what the defendant

“should have known” was dictum. 221 Cal. App. 3d 1601, 1620 (1990), disapproved of on other

grounds by Johnson v. Am. Standard, Inc., 43 Cal. 4th 56, 70 (2008). In Ileto v. Glock Inc., a

public nuisance action against gun manufacturers, the complaint did indeed allege that the

defendant “knew or should have known” of the hazard, but the Court’s approval of that allegation

was not supported by any California authority. 349 F.3d 1191, 1214 (9th Cir. 2003). The Court

cited only a decision by the Supreme Court of Ohio in a similar gun case and Woodruff v. North

Bloomfield Gravel Mining Co., 18 F. 753 (9th Cir. 1884), a public nuisance case about release of

mining wastes into the Sacramento River. There was no issue about the Woodruff defendant’s

knowledge of the harm that such releases would cause; the defendant relied solely on the defense

that its conduct was lawful. Id. at 770. Ileto is of no precedential value in view of its absence of

citation to relevant state law and the later decision by Congress to preclude public nuisance claims

against gun manufacturers of the type Ileto permitted. Ileto v. Glock, Inc., 565 F.3d 1126, 1146

(9th Cir. 2009).

Even if constructive knowledge of the hazard would suffice to make a defendant’s

promotion of lead paint a basis for liability, the evidence fails to establish that any ARC

predecessor can be charged with such constructive knowledge. The hazard of which Plaintiffs

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complain in this case regarding residential lead paint was unknown (and unknowable) until long

after any alleged ARC predecessor left the lead pigment business. (See also NL Proposed

Statement of Decision at 4-12 (recounting the history of developing knowledge of lead

poisoning).)

III. THE EVIDENCE DOES NOT SHOW THAT ANY PROMOTION (WITH ORWITHOUT KNOWLEDGE) BY AN ALLEGED ARC PREDECESSORSUBSTANTIALLY CONTRIBUTED TO THE PRESENCE OF WHITE LEADCARBONATE IN RESIDENTIAL PAINT IN THE JURISDICTIONS

A. The Law Of Causation Requires Proof That A Defendant’s Conduct Was ASubstantial Factor In Causing The Public Nuisance

The law governing causation requires Plaintiffs to prove that an alleged ARC

predecessor’s conduct was a “substantial factor” in causing the alleged harm of widespread

presence of paint containing white lead carbonate pigment within pre-1978 private residences

throughout the plaintiff jurisdictions. Subject to one exception, a defendant’s act cannot be a

“substantial factor” in causing an alleged harm if the harm would have existed even if that

defendant had not committed the act (“but for” causation). The exception arises where harm

results from concurrent independent causes, each of which would have been sufficient by itself to

bring about the harm. Viner v. Sweet, 30 Cal. 4th 1232, 1240 (2003); Restatement (Second) of

Torts § 432.

Plaintiffs have argued that a defendant can be held liable if its conduct incrementally

expanded the scope of the alleged nuisance, even though that nuisance would have existed without

the conduct, because the defendant in that scenario would have “assisted in” creating the nuisance.

(2/22/13 Opp. to ARC Mot. for Sum. J. (Dkt. # 2858), at 9 (arguing that Plaintiffs “must simply

show” that without ARC’s contribution, the “nuisance would have been less extensive”).) But that

reading of “assisted in” is inconsistent with Viner and the Restatement, and the seven reported

decisions using the “assisted in” language do not support it. None of those cases applied any

standard of causation other than the “but for” standard; none held that a defendant could be held

liable for “assisting in” the creation of a nuisance that would have existed in the absence of the

defendant’s claimed wrongful conduct. City of Modesto Redevelopment Agency v. Superior Ct.,

119 Cal. App. 4th 28 (2004); Wilshire Westwood Assocs. v. Atl. Richfield Co., 20 Cal. App. 4th

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732 (1993); Newhall Land & Farming Co. v. Superior Ct., 19 Cal. App. 4th 334 (1993); Mangini

v. Aerojet-General Corp., 230 Cal. App. 3d 1125 (1991); Selma, 221 Cal. App. 3d 1601; Shurpin

v. Elmhirst, 148 Cal. App. 3d 94 (1983); Hardin v. Sin Claire, 115 Cal. 460 (1896). The

Restatement uses examples to show that mere incidental participation in a chain of events leading

to a public nuisance does not create liability unless the actor’s conduct was a “substantial factor”

in bringing the nuisance about. The comment cross refers to the other sections of the Restatement

relied upon in Viner establishing that an actor’s conduct cannot be a “substantial factor” in causing

a nuisance unless the conduct was its but-for cause. Restatement (Second) of Torts § 834 cmt. d.

In sum, there is no California authority holding, or even suggesting, that a defendant may be held

liable for “assisting in” the creation of a nuisance that would have existed in the absence of the

defendant’s claimed wrongful conduct.

Regardless of the definition of “assisted in” one uses, however, ARC cannot be held liable

for the alleged public nuisance, because as described below Plaintiffs presented no evidence that

any conduct by an alleged ARC predecessor caused any portion of the alleged public nuisance.

B. Promotions By An Alleged ARC Predecessor Did Not Cause Lead Paint To BePresent In The Jurisdictions

The evidence fails to show that promotion by an alleged ARC predecessor caused

application of lead paint on homes within the jurisdictions.

Plaintiffs’ experts supervised an extensive search of newspapers published within the

plaintiff jurisdictions for advertisements promoting any lead paint or pigment products

manufactured by any of the defendants. (TR. 1631:22-1632:7, 1632:27-1633:6, 1634:1-20,

1976:1-15; Ex. 233.) The search yielded no newspaper advertisements promoting Anaconda

brand products or purporting to have been published on behalf of an alleged ARC predecessor at

any time. (TR. 1865:21-1866:7, 1866:13-17, 1869:16-22, 1870:15-19, 1871:1-6, 1871:17-24.)

Thus, no alleged ARC predecessor promoted lead paint or pigment in the plaintiff jurisdictions

through newspaper advertisements.

Nor is there any evidence that an alleged ARC predecessor promoted lead paint or pigment

at any time through broadcast media, billboards, or point-of-sale advertisements in stores.

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The sole evidence of “promotion” by any alleged ARC predecessor consists of magazine

advertisements contained within Exhibit 1, a compendium of documents. Those advertisements

break down into two categories: advertisements published after the April 1937 conference when

there is evidence (insufficient, for reasons discussed above) of the alleged predecessors’

knowledge, and advertisements published before that conference.

1. Advertisements From April 6, 1937 To November 1939

For the period after April 6, 1937, Exhibit 1 includes eight advertisements. (Ex. 1 at 18,

19, 20, 34, 35, 36, 37, and 40-43.) The latest such advertisement is dated November 1939, as

noted above; the next latest is dated November 1938. (Ex. 1 at 34, 40-43.) Each advertisement

appeared in one or more trade journals directed to paint manufacturers (Drugs, Oils & Paints;

Paint, Oil & Chemical Review; Paint & Varnish Production Manager; American Paint Journal;

Western Paint Review) or to professional painters (American Painter & Decorator; Painter &

Decorator; National Painters’ Magazine).

These advertisements promoted a brand of white lead carbonate pigment (not paint), and

sought to induce paint manufacturers or painters -- who Plaintiffs’ expert acknowledged were

“skilled professional[s]” (TR. 872:15-20) -- to purchase Anaconda brand white lead carbonate

pigment products in preference to competing brands. (TR. 647:20-25, 648:3-6, 669:3-5, 693:11-

694:11.) They made no comparative claims about paints containing white lead carbonate

pigments versus non-lead paints, and there is no reason to conclude that someone would be

influenced by them to use lead paint rather than non-lead paint. These trade journal

advertisements therefore do not constitute “promotion of lead paint for interior use” within the

meaning of the Court of Appeal’s opinion.

Moreover, there is no evidence that the trade journals that carried these advertisements

circulated, or were read by anyone, within California. Plaintiffs’ expert acknowledged that he had

no data showing such circulation. (TR. 694:12-16, 694:26-695:18.) Plaintiffs offered no

evidence, and stipulated they know of no evidence, identifying anyone who bought or used lead

paint on homes in the jurisdictions or elsewhere in California after reading, seeing or hearing any

promotion by an alleged ARC predecessor. (Court Ex. 12 [8/29/12 Stip. Concerning Def. ARC],

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at ¶¶ 2, 5, 6].) There also is no evidence that these advertisements were effective by any other

measure, and no witness testified that they were.

Given the absence of evidence that these advertisements had any effect within the

prosecuting jurisdictions, and the record discussed above establishing that most of the buildings

comprising the claimed public nuisance did not exist when the advertisements were published,

these eight advertisements cannot be found to have caused the claimed public nuisance. There is

no non-speculative basis on which the Court could find that the alleged nuisance would not have

existed if these advertisements had not been published, nor, indeed, could it find that they “created

or assisted in creating” the alleged nuisance.

2. Advertisements Prior To April 6, 1937

Exhibit 1 also includes 51 advertisements promoting Anaconda brand white lead carbonate

that appeared before April 6, 1937, in the same journals directed to paint manufacturers and

professional painters as the post-April 6, 1937 advertisements, at various times during two brief

periods: 1920-22 and 1935-37. (Ex. 1 at 3, 17, 21-25, 27-33, 38-39, 44-89 and 90-115.) As

discussed above, these advertisements all pre-date Plaintiffs’ only arguably relevant proffered

evidence of knowledge by an alleged ARC predecessor of any lead risk to children in a residential

setting. These advertisements therefore do not constitute promotion with knowledge.

As with the post-April 1937 advertisements, there is no evidence that these advertisements

caused the alleged public nuisance. There is no evidence that the trade journals that carried them

circulated, or were read by anyone, within California. Plaintiffs offered no evidence, and

stipulated that they know of no evidence, identifying anyone who bought or used lead paint on

homes in the jurisdictions or elsewhere in California after reading, seeing or hearing them. (Court

Ex. 12 [Stip.], at ¶ 2.) There is no evidence that these advertisements were effective by any other

measure, and no witness testified that they were.

Given the lack of evidence that these advertisements had any effect within the prosecuting

jurisdictions, and the record discussed above establishing that most of the buildings comprising

the claimed public nuisance did not exist when they were published, these advertisements, like

those published after April 1937, did not cause the claimed public nuisance under the legal

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standards for proof of causation. There is no non-speculative basis on which the Court could find

that the alleged nuisance would not have existed if these advertisements had not been published.

3. The LIA’s White Lead Promotion Campaign

Plaintiffs have asserted that an alleged ARC predecessor was legally responsible for the

White Lead Promotion Campaign conducted by the LIA. That campaign began in 1939 and ended

in 1942. Dr. Rosner opined that “Anaconda” made a financial contribution to the LIA in support

of this campaign. (TR. 584:20-22.) The evidence regarding the White Lead Promotion Campaign

does not carry Plaintiffs’ burden of proving causation, for both factual and legal reasons.

Factually, there is no evidence that the White Lead Promotion Campaign caused any lead

paint to be applied to any house in California. Plaintiffs offered no evidence, and stipulated they

know of no evidence, identifying anyone who bought or used lead paint on homes in the

jurisdictions or elsewhere in California after reading, seeing or hearing any LIA promotion.

(Court Ex. 12 [Stip.], at ¶¶ 2, 3.) Plaintiffs put in evidence internal memoranda of the LIA that

make impressionistic, hopeful statements about the possibilities of the campaign’s success, but the

same documents acknowledge that their authors did not know whether the campaign was

succeeding or failing. (Exs. 118_012, 2503.1; TR. 733:5-734:24, 735:3-738:8, 741:17-743:1,

744:21-26, 746:10-16, 747:8-11.) Other facts make implausible any claim that the White Lead

Promotion Campaign was the “but for” cause of the claimed nuisance.

The campaign lasted for only a few years and occurred when the nation was engaged in a

massive defense buildup and a world war. Lead pigments were used for defense needs, not to

paint civilian housing. (TR. 607:2-11, 609:5-20, 712:2-22, 730:21-28, 731:2-732:15, 741:1-7.)

The residential use of white lead carbonate had diminished before and during the war years to the

point that by 1944 a federal official characterized its use for residential interior paint as

“negligible.” (TR. 762:6-16, 762:23-26; Ex. 1029.) Moreover, there is no evidence that the

financial contributions of an alleged ARC predecessor were the “but for” cause of the White Lead

Promotion Campaign itself.

Legally, there is no basis for holding ARC responsible for the LIA’s White Lead

Promotion Campaign. Plaintiffs rely on the theory that the LIA conducted that campaign as agent

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for its members. Plaintiffs bear the burden of establishing an agency relationship. See Calif.

Viking Sprinkler Co. v. Pac. Indemn. Co., 213 Cal. App. 2d 844, 850 (1963). They failed to carry

that burden. Dr. Rosner’s testimony characterizing the LIA as “agent” must be disregarded

because he is not competent to testify on the existence of an agency relationship, which is a

question of law for the Court. See L.A. Teachers Union v. L.A. City Bd. of Ed., 71 Cal. 2d 551,

556 (1969) (application of law to fact is “not the subject of . . . ‘expert’ testimony”). An agency

relationship may be found where the agent has agreed to work under the principal’s supervision

and control. See Malloy v. Fong, 37 Cal. 2d 356, 370 (1951); Van’t Rood v. Cty. of Santa Clara,

113 Cal. App. 4th 549, 571-572 (2003). In this case there is no evidence that individual LIA

members had the right to control the LIA’s actions, either generally or with specific reference to

the White Lead Promotion Campaign. Dr. Rosner conceded that no single member had the right

or ability to control the LIA’s activities. (TR. 704:1-705:2, 705:20-706:4, 707:7-9.)

Plaintiffs also asserted through Dr. Rosner that “Anaconda” partially funded the LIA

Forest Products Better Paint Campaign. Dr. Rosner had no documentary support for this opinion,

he was impeached with his prior inconsistent testimony, and he conceded “I may be wrong.” (TR.

708:11-18, 709:6-18, 710:6-17.) Absent documentary support, the Court does not accept Dr.

Rosner’s speculation concerning “Anaconda’s” funding of that campaign.

C. There Is No Evidence That Anaconda White Lead Was Sold For Use InResidential Paint Within The Jurisdictions, And Correspondingly No EvidenceThat Any Anaconda White Lead Is On Any Residential Buildings Within TheJurisdictions Today

In addition to a failure of proof that promotion by an alleged ARC predecessor had any

effect in California, there also is no evidence that an alleged predecessor actually sold white lead

carbonate pigment for use in residential paint in California. Plaintiffs conducted an extensive

investigation to identify defendants’ stores and dealers in California and found none for any of

ARC’s alleged predecessors. (Ex. 234; see also TR. 1637:3-1638:3 (description of investigation

process).)

The only manufacturing facility for Anaconda White Lead was in Indiana (Ex. 285_002-

003), putting Anaconda White Lead at a severe competitive disadvantage for any California sales

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compared to white lead brands manufactured by companies with California plants. Anaconda

White Lead also was a late entrant into the market, attempting to sell its product at a time when

demand overall was decreasing. The summary of the history of U.S. white lead production since

1884 proffered by Dr. Mushak shows that most white lead carbonate was produced in the decades

before 1920 and that the peak year was 1922, just two years after Anaconda White Lead began to

be produced. (See Ex. 230.) Dr. Mushak’s chart shows, and Dr. Rosner agreed, that white lead

production declined thereafter so rapidly that by the late 1930s total white lead production was

only half of what it had been in the early 1920s. (Ex. 230; TR. 711:11-20, 742:15-18, 760:10-13.)

Plaintiffs have suggested that three pieces of evidence show that Anaconda white lead

pigment was sold for use in paint for residential applications in California, but the evidence they

cite would not support such a finding. They cite (i) advertisements in Drugs, Oils & Paints

between February 1921 and November 1921 that list Los Angeles and San Francisco, among 14

other cities outside California, as places where Anaconda Lead Products Company had

warehouses (Ex. P001_070-089) (similar advertisements in the same journal in later months omit

California locations from the list of places where warehouses were maintained), (ii) statements in

a memorandum submitted to the FTC (Ex. 285) to the effect that the alleged predecessors’

nationwide system for pricing sales of white lead carbonate included a methodology for

determining prices of any sales that might occur in California, and (iii) trial balances from the

accounting records of Anaconda Sales Company for fiscal years ending in 1931, 1934, and 1935

(Exs. 258-260), which show accounts receivable balances due from various entities, including

some in California, but do not make it possible to determine whether the balances arose from sales

of white lead or sales of zinc oxide, a non-lead pigment. (TR. 1884:23-26, 1885:9-14, 1887:5-14.)

Each of the above-listed items of evidence is at most consistent with, but not probative of,

the possibility that an alleged ARC predecessor sold some white lead carbonate pigment in

California for some purpose. That is not enough to permit the inference that such sales occurred.

A permissible inference is “more than a surmise or a conjecture,” and “cannot be based on mere

possibilities; it must be based on probabilities.” Aguimatang v. Calif. State Lottery, 234 Cal. App.

3d 769, 800 (1991) (citations omitted). The Court therefore declines to draw that inference.

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Even if the Court were to infer -- incorrectly, for reasons stated above -- that some sales of

Anaconda white lead carbonate pigment occurred in California, that would not establish a factual

link between an alleged ARC predecessor and the alleged public nuisance, which consists of paint

containing white lead carbonate pigment that is now present in homes. Plaintiffs still would have

to prove that:

(i) such pigment was used to make paint rather than a non-paint product (such as

ceramics);

(ii) the paint was applied to one or more residences within the plaintiff jurisdictions

rather than to some other structure that is not part of this case; and

(iii) the residence(s) to which it was applied are still standing.

Plaintiffs offered no evidence on these points; they stipulated that they had no such

evidence any of them. (Court Ex. 12, at ¶¶ 1, 5, 6.) Indeed, point (iii) cannot be established

absent proof identifying residences that were painted with paint containing white lead carbonate

pigment made or sold by an alleged ARC predecessor. Plaintiffs have not even attempted to

adduce such proof.

Plaintiffs also have referred to that portion of Exhibit 1 that includes two newspaper

advertisements by the DeGregory Paint Company, one from 1940 and another from 1934,

advertising unbranded “lead and zinc paste.” (Ex. 1_001-002.) These documents do not

constitute promotion by an alleged ARC predecessor, because there is no evidence that any

alleged predecessor placed the advertisements and the advertisements do not mention the

Anaconda brand. (TR. 1891:6-11, 1895:15-26.) Plaintiffs have asserted that DeGregory

purchased Anaconda white lead, suggesting that the lead pigment contained in the unbranded

“Lead and Zinc Paste” advertised by DeGregory somehow must have been supplied by an alleged

ARC predecessor. This argument is rejected, for multiple reasons.

First, the DeGregory advertisements do not identify white lead carbonate as the type of lead

pigment contained in DeGregory’s “lead and zinc paste.” Undisputed testimony from an expert

witness, Dr. Bierwagen, establishes that there were multiple different types of lead pigments in use in

addition to white lead carbonate. (TR. 3077:11-19.) There is no evidence that DeGregory’s “lead

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and zinc paste” contained white lead carbonate rather than some form of lead pigment that the alleged

ARC predecessors did not sell. Second, Plaintiffs have cited in support of their argument Exhibits

259 and 260, which are trial balances from the accounting records of Anaconda Sales Company.

These documents show accounts receivable balances due from DeGregory, but they do not establish

any sales of white lead carbonate pigment to DeGregory (or to any other paint manufacturer in

California) because they show only dollar amounts and do not make it possible to determine whether

the balances arise from sales of white lead or sales of zinc oxide, a non-lead pigment. (TR. 1884:23-

26, 1885:9-14, 1887:5-14.) Dr. Markowitz’s opinion that they show sales of white lead pigment is

unsupported by the documents, and the Court rejects that opinion as speculation.

Exhibit 1 also includes six newspaper advertisements for unbranded “pure white lead” by

Kunst Bros., a paint retailer in Oakland, dated in 1934 and 1935. These documents do not

constitute or establish promotion by an alleged ARC predecessor, because there is no evidence

that they placed the advertisements and the advertisements do not mention the Anaconda brand.

(TR. 1891:6-11, 1895:15-17.) Plaintiffs try to use these documents in the same way as the

DeGregory advertisements, and their argument fails for similar reasons. Plaintiffs argue that

Kunst Bros. purchased white lead from an alleged predecessor, but they have no evidence to prove

this. They rely on Exhibits 258 and 259. As noted above, Exhibit 259 is an Anaconda Sales

Company trial balance that shows account receivable balances from various companies, including

Kunst Bros., but does not say whether the balances arose from sales of zinc oxide or white lead.

Plaintiffs’ assertion that it must be one rather the other is unfounded speculation. Exhibit 258, a

similar document dating from the 1931 fiscal year, is irrelevant for the same reason.

IV. THE EVIDENCE DOES NOT SUPPORT PLAINTIFF’S CLAIM THAT THERE IS AWIDESPREAD PRESENCE OF WHITE LEAD PIGMENT IN ALL PRE-1978HOUSING OR THAT IT POSES A SUBSTANTIAL AND UNREASONABLEINTERFERENCE WITH THE PUBLIC HEALTH

As discussed in detail in the Proposed Statement of Decision submitted by co-defendant

NL Industries and incorporated here, the evidence does not establish either (i) the widespread

presence of lead based paint in, on or around private residences, or (ii) that lead based paint in, on,

or around private residences has a substantial and unreasonable effect on public health as needed

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to support a finding of public nuisance. (See NL Proposed Statement of Decision at 18-26.)

Plaintiffs did not present any evidence of the presence of paint containing white lead

carbonate in, on, or around any actual residences. None of Plaintiffs’ experts performed any

investigation to attempt to determine which -- or even how many -- residences within the

jurisdictions actually contain any lead-based paint, let alone such paint containing white lead

carbonate as opposed to some other lead pigment. (E.g., TR. 1531:27-1532:1 [Jacobs].) Nor was

any such investigation undertaken by any of the jurisdiction-specific witnesses. (E.g., TR. 920:3-

27 [Fenstersheib], TR. 2071:1-6 [Walseth].) Plaintiffs’ abatement expert acknowledged that it is

impossible to know where any homes with lead based paint are located until an actual

investigation is conducted. (TR. 1465:16-26, 1505:21-24 [Jacobs].)

The plaintiff jurisdictions instead proceeded with this case on a theory that they were

entitled to a presumption that all pre-1978 housing contains lead paint. That presumption is not

evidence in this case, nor is it controlling here, particularly where Plaintiffs’ own evidence

undermines it. The national surveys upon which Plaintiffs’ experts relied, while providing no

evidence of what portion of the pre-1978 housing stock in any of the jurisdictions actually

contains lead paint, suggests that significantly less than half of all such housing might contain any

amount of lead paint, let alone lead paint in a location accessible to children. (See Ex. 16_039

(Table 4-1) (less than half of pre-1978 homes within “West” region contain any lead-based paint,

and even that number includes homes designated as containing “lead-based paint” solely due to

lead in ceramic tile); see also TR. 1465:21-24.) Moreover, that national survey does not state

whether paint is identified as “lead based” because it contains white lead carbonate (the only

product an alleged ARC predecessor made) as opposed to one of the many other lead pigments

used in paint, such as red or yellow lead. (See Ex. 16_019, 16_034-035 (defining lead and noting

lead based paint as identified in the study via XRF readings); see also TR. 1063:10-1065:10

[Gottesfeld].)

Testimony by Plaintiffs’ witnesses that they personally were aware of some number of

homes with lead paint does not provide any evidence of whether the presence of lead paint --

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whether it contained white lead carbonate or some other type of lead pigment -- in the jurisdictions

was widespread or not.

With respect to the health effects of whatever lead-based paint is present in private

residences, the evidence demonstrated that the State’s existing program of education and

maintenance, pursued over the last decade and a half without the massive and unprecedented

abatement scheme Plaintiffs ask the Court to impose, has worked. Both geometric mean blood

lead levels (about 1.0 µg/dl) and prevalence of elevated blood lead levels are at historic lows, and

falling. (TR. 2478:17-2479:28, 2492:18-2494:5; Exs. 3004-3006.) Much of the residual incidence

of EBLs is attributable to non-paint sources. (See NL Proposed Statement of Decision at 20-22.)

Under these circumstances, there is no basis to find that any lead paint public nuisance exists in all

pre-1978 housing.

V. THE REMEDY PROPOSED BY PLAINTIFFS IS IMPERMISSIBLE AS A MATTEROF LAW

A. The Abatement Plan Plaintiffs Propose Is Inappropriate, Including BecauseThe Beck Development Factors Are Not Met

Plaintiffs failed to demonstrate that abatement is necessary and can be accomplished “at a

reasonable cost by reasonable means.” Mangini v. Aerojet-General Corp., 12 Cal. 4th 1087, 1103

(1996). In Beck Development Co. v. Southern Pacific Transportation Co., the Court noted that

cases such as these require weighing “the relative benefits and burdens of remediation,” including

“the costs of remediation and the actual detriment to the plaintiff from a failure to remediate.” 44

Cal. App. 4th 1160, 1221-22 (1996). Where a proposed abatement would be “significantly

burdensome,” with little or no benefit, it is proper for a court to refuse to enter an injunction. Id.

The benefits of Plaintiffs’ proposed abatement would be highly speculative, while its cost

and possible detriments would be great. Testimony by defense expert Steven Washburn

demonstrated that -- at most -- only a small fraction of mean community-wide blood lead levels

can be attributed to lead paint. (TR. 2551:1-2553:4; Ex. 3028.) Thus, even if all lead based paint

were removed in a perfectly performed abatement, community-wide blood lead levels would not

decline appreciably. But it would be unrealistic to assume that abatement always will be perfectly

performed. Plaintiffs’ abatement plan calls for disturbing intact lead paint and creating lead dust;

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the evidence demonstrated that such remediation, even if done carefully, can cause blood lead

levels to rise, particularly where they are low at the beginning. (TR. 3200:22-3201:19 [Heckman];

Exs. 1436, 1071-00004 [Clark et al. studies].) The Proposed Statement of Decision submitted by

Sherwin Williams discusses these risks more fully at pages 30-31, and is incorporated here as

well.

The cost of Plaintiffs’ proposed plan would be great. Dr. Jacobs testified that the proposed

abatement plan, including the necessary costs of investigation to determine which homes even

contain lead paint, could cost as much as $2.5 billion. (Ex. 263 [Jacobs demonstrative].)

Moreover, because abatement can occur only with voluntary participation of property

owners, who may opt out of the abatement plan if they wish, there is no evidence that the

proposed program will achieve anything. Plaintiffs have adduced no evidence to demonstrate how

many property owners would agree to participate, whether those who would so agree actually have

lead paint on their homes, the condition of any lead paint they have, or what non-paint sources of

lead also exist at those homes. Without such information, Plaintiffs have not demonstrated that

the claimed public nuisance is reasonably abatable.

In addition, the abatement plan and oversight Plaintiffs seek would require the Court to

enter into areas best considered and addressed by the legislature (and, indeed, a system of laws and

regulations regarding environmental lead exposure already is in place). For the reasons set forth in

the Proposed Statement of Decision submitted by Sherwin Williams at pages 24-31, the Court

would abstain from entering judgment in Plaintiffs’ favor or ordering the abatement requested.

B. Plaintiffs’ Request For A Fund Violates California Law And Due Process

A common fund could not have been established in this case. The only remedy available

to the plaintiff jurisdictions would have been an injunction for abatement. Defendants could not

have been be required to pay damages or fund any “reimbursement” for remediation of the alleged

public nuisance. See Cty. of Santa Clara, 137 Cal. App. at 310-11 (rule that there is no “damage

remedy in actions brought on behalf of the People to abate a public nuisance” cannot be

“avoid[ed] . . . by seeking damages in the form of the ‘costs of abatement’”), quoting County of

San Luis Obispo v. Abalone Alliance, 178 Cal. App. 3d 848, 859-60 (1981) (“the general provision

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permitting government entities to abate public nuisance, has been squarely held not to authorize

the government to recover the costs of abatement”) (citation omitted); see also People ex rel. Gow

v. Mitchell Bros.’ Santa Ana Theater, 114 Cal. App. 3d 923, 930 (1981) (although county and city

attorneys are empowered under Section 731 of the Code of Civil Procedure to bring actions for

public nuisance, “[a]batement, however, is the sole relief that section 731 authorizes the city [or

county] attorney to seek.”), judgment rev’d on other grounds by Calif. ex rel. Cooper v. Mitchell

Bros.’ Santa Ana Theater, 454 U.S. 90 (1981).

There is no meaningful analytical distinction between a damages award, on the one hand,

and an “injunction” that would require a defendant to pay costs into a fund, on the other. Either

would dramatically expand the cause of action the Court of Appeal allowed to proceed in this case

-- i.e., “a public nuisance action brought on behalf of the People seeking abatement.” Cty. of

Santa Clara, 137 Cal. App. 4th at 309. If a common fund were ordered, the case would be

transformed into an action for damages, which the Court of Appeal said was improper. Id. (if

damages were permitted, the case would become “a products liability action ‘in the guise of a

nuisance action’”).

Moreover, Plaintiffs’ demand that each defendant pay into a fund would violate due

process. Plaintiffs apparently seek the creation of a fund into which each defendant would pay,

but which defendants would not control. Instead, the fund either (i) would be controlled -- in

substantial part -- by a newly created administrative body (called an “Oversight Entity”) that

would be “funded by the Defendants but unrelated to the People or the Defendants” and that then

would “design the hazard control, post-hazard control clearance, and other quality control testing”

(see Ex. 262_004; see also id. at 262_013); or (ii) simply would be turned over to the “local

government entities [to] implement a primary prevention program” of abatement. (TR. 1526:7-25

(author of the plan Dr. Jacobs testifying that “it could be done either way”).)

Payment of money into either type of fund by ARC would be improper because it would

not provide for mechanisms necessary to ensure that ARC’s due process rights are protected. See

Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 191-92 (3d Cir. 2001) (a

recovery fund does not eliminate the fact that “actual injury cannot be presumed” and defendants

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have a right to raise defenses to recovery against any fund). Some examples illustrate the

problems.

First, Plaintiffs have not presented any evidence -- and have stipulated they have none --

demonstrating or even estimating the amount (if any) of white lead carbonate used for residential

paint that is present in any residence in any of the jurisdictions today as a result of conduct by an

alleged ARC predecessor. Thus, if ARC were ordered to pay into any fund, there is no method

upon which to base a calculation. See McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231-32 (2d

Cir. 2008) (a defendant has “substantive right to pay damages reflective of their actual liability,”

and merely “roughly estimating” an amount to be paid undermines those rights), partially

abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008).

Second, even assuming ARC could be ordered to pay some amount into Plaintiffs’

proposed fund to be used by an “independent” administrative entity -- or the jurisdictions

themselves -- to perform abatement activity, there would be no basis to determine for any

particular residence whether money paid by ARC should be used to perform abatement; nor is

there any proposed mechanism by which such a determination could be made or tested. For

example, if a home built in 1947 (i.e., one year after production of Anaconda white lead pigment

ceased) were presented to the fund as a home to be abated, such a home could not be abated using

funds provided by ARC, since there is no basis upon which ARC could be liable for the presence

of lead in that home. Even for a home with lead paint built when one of the alleged ARC

predecessors manufactured white lead carbonate (e.g., 1938), before ARC could be required to

fund the abatement of such a residence there would need to be an appropriate determination that

ARC caused the lead paint to be present. Moreover, since the fund could only be used to perform

abatement-related activities (and could not be viewed as damages or used for other compensation),

no fund could be established without a corresponding procedure for returning to ARC any money

it contributed that was not used to abate a residence for which it is responsible. Payment into a

fund to be controlled by a separate administrative entity (or the government) to perform

abatement, particularly where there is no apparent mechanism for a return of excess funds to ARC,

does not adequately protect ARC’s rights. See Allapattah Servs., Inc. v. Exxon Corp., 333 F.3d

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1248, 1258-59 (11th Cir. 2003) (where liability against defendant for any particular plaintiff’s

claim turned on individual circumstances, an “adversarial claims process is warranted” and “due

process requires that [the defendant] be allowed to participate in that process”); see also Frieman

v. San Rafael Rock Quarry, Inc., 116 Cal. App. 4th 29, 42 (2004) (determining whether any

particular property has been affected by an alleged public nuisance “is subject to separate and

differing matters of proof”); Klier v. Elf Atochem North Am., Inc., 658 F.3d 468, 482 (5th Cir.

2011) (“Our adversarial system should not effectuate transfers of funds from defendants beyond

what they owe to the parties in judgments or settlements.”) (Jones, J. concurring) (emphasis in

original).

C. The Doctrines Of Undivided Injury, And Joint And Several Liability Do NotApply To This Case

Plaintiffs also would not be entitled to a finding of joint and several liability. (See Pls.

Trial Br. (Dkt. # 3257), at 17:6 (asserting “liability is joint and several”).) Where “independent

acts of different defendants create a nuisance” the remedy “will be assessed against each tortfeasor

according to the tortfeasor’s contribution to them.” 5 Witkin, Summary of Cal. Law (10th ed.

2005) Torts, § 50, citing Conner v. Grosso, 41 Cal. 2d 229, 232 (1953) (“Since Grosso did not act

in concert with the other persons dumping dirt on the Connor land, he cannot be required to pay

for removal of the dirt dumped by them.”) (citation omitted); Jordan v. City of Santa Barbara, 46

Cal. App. 4th 1245, 1273 (1996) (in case alleging harm caused by defendants whose water usage

increased salination of aquifer, court noted that each defendant, as “only one of a number of

contributors to the acts alleged to have caused damages,” did not become a “joint tortfeasor simply

because afterwards its consequences united with the consequences of several other torts committed

by other persons or entities”).

The Restatement (Second) of Torts, § 433A, provides a general rule regarding the need to

apportion liability in a case such as this, and was cited with approval in Carlotto Ltd. v. County of

Ventura, 47 Cal. App. 3d 931, 936-38 (1975), a nuisance case. Section 433A applies when two or

more independent causes have combined to bring about harm to the plaintiff -- assuming each first

has been found to be a substantial factor in producing the harm. As comment d to that section

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illustrates: “Thus where two or more factories independently pollute a stream, the interference

with the plaintiff’s use of the water may be treated as divisible in terms of degree, and may be

apportioned among the owners of the factories, on the basis of evidence of the respective

quantities of pollution discharged into the stream.”

Here, each defendant’s activities were distinct, and they acted independently from one

another. Some defendants sold paint; some sold other lead pigments in addition to white lead

carbonate; the alleged ARC predecessors sold only white lead carbonate pigment. Each defendant

sold its products during different time periods, using its own advertising. Indeed, in the case of

the alleged ARC predecessors, as noted above, there is no evidence of any advertising of

Anaconda products in California at all. There is no evidence of conspiracy among defendants, or

other joint conduct. Accordingly, even if Plaintiffs had been able to establish liability against

ARC, the doctrines of undivided injury or joint and several liability do not apply.

VI. PLAINTIFFS’ CLAIM AGAINST ATLANTIC RICHFIELD FAILS FORMULTIPLE OTHER REASONS

A. The First Amendment Issue Recognized By The Supreme Court In This CasePrecludes Imposition Of Liability

1. The Supreme Court Acknowledged That Plaintiffs’ Claims InvolveCommercial Speech Subject To First Amendment Protection

A prior appeal in this case addressed the ruling by Judge Komar that People ex rel. Clancy

v. Superior Court, 39 Cal. 3d 740 (1985), precluded the use of contingent fee counsel to prosecute

a public nuisance abatement action. The Court of Appeal reversed, and the Supreme Court

granted review on the merits.

Plaintiffs’ brief to the Supreme Court tried to distinguish Clancy based on its subject matter.

The plaintiff municipality in Clancy sought to close down an adult bookstore. Plaintiffs argued that

the present case, unlike Clancy, “do[es] not raise First Amendment concerns.” Cty. of Santa Clara

v. Superior Ct., 2009 WL 630503, at *17 (filed Jan. 23, 2009). This was so, they said, because “the

Public Entities are not seeking any restraint on Defendants’ free speech.” Id. at *18.

The Supreme Court did not accept Plaintiffs’ argument. It instead expressly acknowledged

that this case presented First Amendment concerns to be resolved in future proceedings:

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The adjudication of this action will involve at least some balancing ofinterests, such as the social utility of defendants’ product against theharm it has caused, and may implicate the free-speech rights exercisedby defendants when they marketed their products and petitioned thegovernment to oppose regulations. Nevertheless, that balancingprocess and those constitutional rights involve only past acts—notongoing marketing, petitioning, or property/business interests.

Cty. of Santa Clara v. Superior Ct., 50 Cal. 4th 35, 55 (2010) (emphasis added).

2. The Advertisements Offered Against ARC Were Protected CommercialSpeech And Cannot Be The Basis Of Liability

Sellers have a constitutional right to truthfully advertise legal products. U.S. Const.

Amend. 1; Cal. Const., art. I, sect. 2, subd. (a); Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 553-

54 (2001). The United States Supreme Court has developed, and this State has accordingly

followed, a body of jurisprudence on the First Amendment protection accorded to “commercial

speech,” defined as “expression related solely to the economic interests of the speaker and its

audience.” Central Hudson Gas & Elec. Co. v. Public Serv. Comm’n, 447 U.S. 557, 561 (1980);

Gerawan Farming, Inc. v. Lyons, 24 Cal. 4th 468, 493-494 (2000); Bronco Wine Co. v. Jolly, 129

Cal. App. 4th 988, 1003-05 (2005). The constitutional protections afforded commercial speech

are not limited to cases in which plaintiffs seek prior restraints on speech or injunctions against its

continuance. The imposition of economic sanctions based on protected speech violates the First

Amendment just as an injunction barring its utterance would. McCollum v. CBS, Inc., 202 Cal.

App. 3d 989, 1003 (1988); In re Tobacco Cases II, No. SDSC 719446, 2002 WL 31628649, at *2

(Cal. Sup. Ct. Nov. 22, 2002); cf. NAACP v. Claiborne Hardware, 458 U.S. 886, 916-17 (1982)

(First Amendment “imposes restraints on the grounds that may give rise to damages liability and

on the persons who may be held accountable for those damages.”).

The burden of proving that commercial speech promoting the sale of a product is not

protected rests on the party seeking to justify the regulation of commercial speech. See Bolger v.

Youngs Drug Prods. Corp., 463 U.S. 60, 71, n.20 (1983) (“The party seeking to uphold a

restriction on commercial speech carries the burden of justifying it.”); Baba v. Bd. of Supervisors

of City of San Francisco, 124 Cal. App. 4th 504, 517 (2004).

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Where a plaintiff seeks to hold a defendant liable for the content of its commercial speech,

the plaintiff must prove that the speech satisfies one of two alternative threshold tests. Failing

such proof, the defendant’s commercial speech is entitled to the same First Amendment protection

as political or other non-commercial speech and cannot be the basis for civil or criminal liability.

Plaintiffs’ claim addressed to promotion by the alleged ARC predecessors cannot meet either test.

The first test is whether the defendant’s speech proposed an unlawful transaction, in which

case the speech is unprotected. This test addresses purely whether the product is lawful to sell, not

whether it may be socially undesirable or harmful in use, as can be true of such products as

alcohol and tobacco that nevertheless may be sold lawfully. See Lorillard, 533 U.S. at 553-54;

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 500 (1996); In re Tobacco Cases II, 41 Cal.

4th 1257, 1274 (2007). Plaintiffs have not attempted to satisfy this test, and cannot do so. At all

times through 1946 when the alleged ARC predecessor left the lead pigment business, white lead

carbonate pigment was a lawful product for use in paint, and also was lawful for use in non-paint

products such as ceramics. (TR. 669:6-9 [Rosner].)

The second alternative test is whether the commercial speech was false or misleading.

Central Hudson, 447 U.S. at 566. In the present case, Plaintiffs have offered no evidence showing

that any promotion by an alleged ARC predecessor was false or misleading. The only basis on

which Plaintiffs have claimed that any advertisement in evidence was misleading is the argument

offered by Dr. Markowitz that it was misleading to advertise paints containing lead without

disclosing that they contained lead. (TR. 1965:8-17.) Dr. Markowitz is not an expert in what

makes an advertisement misleading, and his testimony on this point is incompetent. But even if

that testimony were credited, it would not support Plaintiffs’ claim against ARC, because all of the

advertisements for which Plaintiffs seek to hold ARC responsible disclosed that the advertised

products contained lead. This is true not only of the alleged ARC predecessors’ own

advertisements but also those run by the LIA as part of its White Lead Promotion Campaign. See

Sections III.B.1. through 3., above.

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B. Imposition Of Liability On ARC Based On The Alleged Predecessors’ ConductSeven Or More Decades Ago Would Violate The Due Process And TakingsClauses Of The Fifth Amendment

Plaintiffs’ use of the common law of public nuisance in this case represents a change in

California law from what it had been in 1946 and earlier when the alleged ARC predecessors

manufactured lead pigment. As of that time no California court had held, and no one could

reasonably have anticipated that any would hold, that the manufacture or promotion of a lawful

product could result in liability under the law of public nuisance based on harm that all units of

that product, whether sold by the advertiser or by its competitors, might cause in certain

applications.

Acceptance of the theory of liability Plaintiffs assert would constitute retroactive

lawmaking, in that it would “attach[ ] new legal consequences to events completed before its

enactment.” Landgraf v. USI Film Prods., Inc., 511 U.S. 244, 270 (1994). Specifically, it would

“increase a party’s liability for past conduct. . . .” Id. at 280; see McClung v. Empl. Dev. Dep’t, 34

Cal. 4th 467, 472 (2004); Myers v. Philip Morris Cos., 28 Cal. 4th 828, 839 (2002).

Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), addressed the constitutional limits on

retroactive lawmaking. All nine Justices found that the law there at issue, the Coal Industry

Retiree Health Benefit Act of 1992 that required coal mine operators to provide lifetime health

benefits to miners and their families, was retroactive in effect and that such laws may violate the

Fifth Amendment. Id. at 533-34, 538, 556. The Justices disagreed over precisely which clause of

the Fifth Amendment applied. Four Justices joined an opinion by Justice O’Connor stating that

the Act violated the Takings Clause. Id. at 537. Her opinion stated that a retroactive law might be

unconstitutional if it imposed “severe retroactive liability on a limited class of parties that could

not have anticipated the liability, and the extent of that liability is substantially disproportionate to

the parties’ experience.” Id. at 528-29. The other five Justices agreed that severe retroactive laws

may violate the Fifth Amendment, but believed that the Due Process Clause provided the correct

analytical framework. Id. at 539, 556. Of those five, Justice Kennedy found that the Coal Act

exceeded constitutional limits (id. at 539); Justices Breyer, Stevens, Ginsburg, and Souter agreed

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that the Due Process Clause imposes such limits but found on the facts that the Act did not exceed

them. Id. at 567-68.

The retroactivity principles addressed in Eastern Enterprises were applied to claims

against former lead pigment manufacturers in Gibson v. American Cyanamid Co., 719 F. Supp. 2d

1031 (E.D. Wis. 2010), appeal pending. The state of Wisconsin, in Thomas ex rel. Gramling v.

Mallett, 285 Wis. 2d 236, 256 (2005), adopted a new “risk contribution” rule that permitted a

plaintiff claiming personal injury due to ingestion of residential lead paint to sue any former lead

pigment manufacturer without proving that the defendant made the pigment the plaintiff ingested.

This retroactively changed Wisconsin law and exposed ARC to a newly established risk of

damage awards based on acts of its alleged ARC predecessors occurring during the pre-1946

period when Wisconsin law imposed no such risk. The retroactive effect of Thomas on ARC was

particularly severe, because ARC had never been in the lead pigment business. It was sued as

alleged successor to other companies that had been in that business prior to 1946 based on mergers

that occurred many years later in 1973 (when International Smelting & Refining Company was

merged into its parent The Anaconda Company) and 1981 (when The Anaconda Company was

merged into ARC). The parties could have chosen not to consummate those mergers if they had

known of the potential retroactive liability. Gibson held that this retroactive change in the law was

unconstitutional under both the Due Process clause and the Takings Clause of the Fifth

Amendment. 719 F. Supp. 2d at 1041.

By the same analysis that led to a finding of unconstitutional retroactivity in Gibson,

changing California’s law of public nuisance retroactively to impose abatement liability on former

pigment manufacturers also is unconstitutional. Indeed, one distinction between the two cases

only makes the violation of the Takings Clause in the present case more acute. While Thomas and

Gibson were personal injury actions seeking compensation for private parties through money

damages, Plaintiffs’ present case openly seeks to compel ARC to fund the continuing operations

of government agencies. Plaintiffs’ witnesses have testified that the abatement remedy they seek

will consist of the local CLPPP programs doing more of what they do already; the incremental

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activity, which the Legislature to date has chosen not to finance, would be paid for by money

exacted from defendants. (TR. 1525:5-1526:12.)

Apart from its retroactivity, the change in California’s law of public nuisance that Plaintiffs

seek to effect in this case violates additional constitutional principles recognized in Gibson. The Due

Process Clause limits a state’s authority to decree through judicial proceedings that the property of one

person shall be seized and given to another. A state may do this only based upon a determination that

the person whose property is to be seized did something that harmed the person to whom that property

will be given. There must be a causal nexus between the conduct of the defendant that the state strips

of its property and the plaintiff to whom the state gives it. This constitutional principle has been

recognized expressly in State Farm Mutual Auto Ins. Co. v. Campbell, 538 U.S. 408 (2003), and Philip

Morris USA v. Williams, 549 U.S. 346 (2007). These decisions establish that a state violates due

process by awarding punitive damages to a plaintiff based on conduct that has not been proven to have

harmed the plaintiff but instead may have harmed other persons. State Farm, 538 U.S. at 422-23;

Williams, 549 U.S. at 355. Permitting such recovery deprives the defendant of an opportunity to

present every available defense, invites speculation by the trier of fact about the effects of the

defendant’s conduct on nonparties, and is unsupported by authority. Williams, 549 U.S. at 353-54.

Gibson held that under the reasoning of State Farm and Williams the same due process

limits those two decisions applied to punitive damages also apply to claims for compensatory

damages, and that it therefore is unconstitutional for Wisconsin, via its “risk contribution” rule, to

permit imposition of compensatory damages without proof of causation. 719 F. Supp. 2d at 1052.

On this issue there is no principled distinction between the judgment for compensatory damages

that the plaintiff sought in Gibson and the equitable decree requiring ARC to fund an abatement

program that Plaintiffs seek here. Both violate the constitutional standards recognized in State

Farm and Williams if imposed without proof of causation. Plaintiffs have not offered such proof

against ARC here.

C. Plaintiffs Failed To Prove That ARC Is The Legal Successor To ALPC

Plaintiffs sue ARC as alleged successor to The Anaconda Company and certain of its

former subsidiaries. (See 4th Am. Compl. ¶ 9.) The evidence shows promotion only by two of the

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subsidiaries: Anaconda Lead Products Company (“ALPC”), and International Smelting &

Refining Company (“IS&R”).

ALPC operated a lead pigment manufacturing plant in East Chicago, Indiana from 1920

until October 31, 1936, when ALPC was dissolved. (Ex. 291_004.)

IS&R was the sole shareholder of ALPC at the time of its dissolution. ALPC’s assets and

properties were distributed to IS&R upon ALPC’s dissolution. IS&R became the owner of the

East Chicago plant at that time, and operated the plant from November 1936 until September

1946, when it sold the plant to an unrelated entity and exited the lead pigment business. (Exs.

285, 291_004.)

When ALPC, and later IS&R, operated the East Chicago plant, the plant produced dry

white lead carbonate pigment for sale under the “Anaconda” brand name to manufacturers of paint

and to manufacturers of non-paint products such as ceramics. (Ex. 285.) Beginning in 1931, the

plant also produced white lead-in-oil, which also was sold under the “Anaconda” brand name.

(Id.)

Plaintiffs’ evidence of promotions published by any alleged ARC predecessor before

October 1, 1936 (which as demonstrated above includes 49 of the 59 promotions included in

Exhibit 1) consists of promotions published by ALPC.

ARC has not succeeded to the liability, if any, that ALPC would have for those promotions

if it still existed. The shareholders of a dissolved corporation do not succeed to its liabilities as a

result of the dissolution. In re RegO Co., 623 A.2d 92, 104 (Del. Ch. 1992); Potlatch Corp. v.

Superior Court, 154 Cal. App. 3d 1144, 1151 (1984). Thus, IS&R did not succeed to the

liabilities, if any, of ALPC. Although IS&R later merged with The Anaconda Company, which in

turn merged with ARC, those mergers do not provide any basis for holding ARC to be the

successor to the liabilities of ALPC.

Ray v. Alad Corp., 19 Cal. 3d 22, 25 (1977), adopts a “product line” exception to the normal

rule that a buyer who acquires assets for cash does not succeed to the seller’s liabilities. That

“product line” exception has been limited to product liability cases in which plaintiffs seek damages

for personal injury. See Franklin v. USX Corp., 87 Cal. App. 4th 615, 628 (2001) (“we decline to

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expand the product line exception [articulated in Ray v. Alad] beyond the arena of product liability”).

It has no application to the present case, which is not such a product liability case and has been

expressly distinguished by the Court of Appeal from such a case.

Dated: September 13, 2013 Respectfully submitted,

By: /s/ Jonathan Stern .Sean MorrisEric MayGwendolyn M. OstroskyARNOLD & PORTER LLP777 South Figueroa Street, 44th FloorLos Angeles, California 90017-5844(213) 243-4000

Philip H. Curtis (admitted pro hac vice)William H. Voth (admitted pro hac vice)Bruce R. Kelly (admitted pro hac vice)ARNOLD & PORTER LLP399 Park AvenueNew York, New York 10022(212) 715-1000

Jonathan Stern (admitted pro hac vice)ARNOLD & PORTER LLP555 Twelfth Street, NWWashington, DC 20004-1206(202) 942-5000

Attorneys for Defendant Atlantic Richfield Company

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