Paint makers found liable for poisoning kids
Paint stocks plummet after Rhode Island jury finds former lead paint manufacturers liable for poisoning children and creating a public nuisance.
NEW YORK (CNNMoney.com) - Shares of Sherwin-Williams Co., NL Industries Inc. and Millennium Holdings LLC continued to sink on Thursday after the paint makers were found liable by a Rhode Island jury for creating a public nuisance and poisoning children.
Craig Berke, a spokesman for the Rhode Island Supreme Court, said a six-member jury deliberated for eight days before finding three of the four companies named in the suit liable. The jury decided that the fourth company, Atlantic Richfield, was not accountable.
Superior Court Judge Michael Silverstein will hear oral arguments on Monday on the issue of punitive damages. If the case proceeds, then a jury will decide how much the companies must pay.
"If other attorney generals or tort lawyers follow the example of Rhode Island, it could ruin a whole industry," said Lawrence Horan, an analyst with Janney Montgomery Scott, a Philadelphia-based investment firm.
Suits have already been filed against the former lead paint makers in other jurisdictions in the U.S. as well.
The National Paint and Coatings Association, Inc. (NPCA) disagreed with the decision reached by the jury in Rhode Island and said in a statement that it was "confident that, upon appeal, the issue will be resolved in favor of the defendants."
In a statement issued Thursday, Sherwin-Williams said: "We continue to believe that the facts and the law are on our side. The court still has to rule on various remaining issues before the next steps in the legal process can be determined...Sherwin-Williams will continue to vigorously defend itself."
But FTN Midwest Securities downgraded the Cleveland-based company to "neutral" from "buy" and said the overhang from the Rhode Island verdict was certain to serve as a serious limiting factor for the shares of the paint maker, until an appeal was launched and concluded.
Lead-based paint was banned by the government in 1978 after studies showed it caused health problems. There are still about 38 million homes that contain some lead paint, according to the National Safety Council.
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