From the AM Law Litigation Daily, “Judge Dismisses Cleveland’s Suit Against Subprime Lenders“:

Perhaps Cleveland mayor Frank Jackson scored points with his base when he announced back in January 2008 that the city was suing 21 financial institutions. Likening the banks’ activity to that of organized crime, the city claimed the banks had created a public nuisance by fueling subprime mortgages that left certain neighborhoods devastated by foreclosures. But the city’s legal reasoning has not impressed Cleveland federal district court judge Sara Lioi, who dismissed the case with prejudice on Friday.

The city sought to recover damages related to the costs of “monitoring, maintaining, and demolishing foreclosed properties” and “the diminution in the city’s property tax revenues caused by the depreciating effect foreclosures have had on the affected homes and surrounding properties,” according to Judge Lioi’s opinion. But Judge Lioi found, among other things, that Ohio state law preempts the city’s public nuisance claim and that the allegations did not sufficiently show that the defendants were the proximate cause of the alleged damages.

The city’s suit, like so many others, was always political grandstanding more than cogent law. A block of Cleveland is blighted because Credit Suisse First Boston securitized mortgages? You might as well sue the Mayor of Cleveland for promoting policies that undermine the city’s tax base that pay for police and city services. You might as well sue the people who trashed the buildings and actually, you know, created the blight.

Twisting public nuisance law to serve political purposes or to tap a new source of revenue has proved a dismal failure, as Rhode Island and Ohio’s lead paint lawsuits demonstrate. Time for candidates and voters to hold the elected officials who brought the suits accountable.

(Hat tip, Walter Olson, Point of Law, with much background at this post.)

To avoid making a public nuisance of ourselves, here’s a list of today’s posts on the Rhode Island Supreme Court’s opinion on the state’s lead paint lawsuit.

• Twisting Public Nuisance Laws
• Finally, for More on the R.I. Ruling, Go Here
• More on Lead Paint, Almost 800 Years Worth
• Our Thoughts Turn to Cleveland, Leadenly
• The NAM’s Statement on the R.I. Lead Paint Ruling
• Statement from the Defendants in R.I. Lead Case
• The NAM’s Involvement in Rhode Island Decision
• R.I. Court Reins In Abuse of Public Nuisance Laws

And again…

• Case summary from the Rhode Island Supreme Court
• Opinion (.pdf)
• Dow-Jones Newswires: “RI High Court Reverses Ruling Against Paint Cos“
• Reuters: “Rhode Island top court overturns lead paint ruling“
• Providence Journal: “Update: Landmark lead-paint judgment overturned

This AP story notes state courts in New Jersey and Missouri rejected public nuisance lawsuits against paint manufacturers last year, while a jury in Milwaukee ruled in favor of NL Industries, one of the defendants in the Rhode Island lead paint lawsuit.

Ohio is the only other state that has sued. Jim Gravelle, a spokesman for that state’s attorney general’s office, said lawyers in the office were interested in what the Supreme Court said because the arguments in both cases are very similar. But he said it does not affect Ohio’s lawsuit because that suit is based on Ohio law.

“This in no way restricts Ohio’s right to hold lead paint companies liable for the extreme harm they have caused Ohio citizens under public nuisance or other causes of action,” he said.

In no way? Really? Ohio has a new attorney general these days, not the same one (Marc Dann) who filed the original lawsuit in 2007. Dann’s judgment proved less than stellar, generally. Perhaps the new AG , Nancy Rogers, can re-evaluate the state’s case in light of the Rhode Island ruling and save the Ohio a lot of money in fruitless litigation.

As AG Rogers considers that option, we commend this article in the Washburn Law Journal, vol. 45, no. 3 (Spring 2006), “The Law of Public Nuisance: Maintaining Rational Boundaries on a Rational Tort,” by Victor Schwartz and Phil Goldberg of Shook, Hardy & Bacon:

In the movie “Zelig,” Woody Allen’s character was chameleonlike. His personality changed to fit his surroundings or needs at the moment. Throughout history, there have been various attempts to turn the tort of public nuisance into a Zelig-like legal theory as amorphous as the word “nuisance” itself.1 Recently, some state attorneys general and personal injury lawyers have been trying to convert the tort of public nuisance into a cutting edge legal theory and are using it in the most important mass litigations of our time. They are attempting to move public nuisance theory far outside its traditional boundaries by using it to sue product manufacturers in an effort to circumvent the well-defined structure of products liability law. If history and sound public policies guide courts, these lawsuits will fail.  Unlike the character Zelig, public nuisance theory has a rich history and distinct personality.  

We note that Phil was the lead drafter of the amicus brief the NAM joined in the Rhode Island case. So congratulations, and good arguing!

UPDATE (6 p.m.): LegalNewsline has a good review of the paltry few remaining public nuisance suits against paint manufacturers, including the state of Ohio’s: “A state judge has already dismissed the City of Toledo’s. Moellenberg said the public nuisance theory can’t survive an examination in Ohio. ‘(T)he plaintiffs (in Toledo) are represented by many of the same attorneys that brought the Columbus lawsuit, and they didn’t even appeal,’ Moellenberg said.” Charles Moellenberg is the Pittsburgh attorney with Jones Day who represented Sherwin-Williams.