STATE of Rhode Island v. LEAD INDUSTRIES ASSOCIATION, INC. Et Al. ( 2013 )

Supreme Court
No. 2010-278-Appeal.
No. 2010-296-Appeal.
(PC 99-5226)
State of Rhode Island :
v. :
Lead Industries Association, Inc. et al. :
NOTICE: This opinion is subject to formal revision before
publication in the Rhode Island Reporter. Readers are requested to
notify the Opinion Analyst, Supreme Court of Rhode Island, 250
Benefit Street, Providence, Rhode Island 02903, at Telephone 222-
3258 of any typographical or other formal errors in order that
corrections may be made before the opinion is published.
Supreme Court
No. 2010-278-Appeal.
No. 2010-296-Appeal.
(PC 99-5226)
State of Rhode Island :
v. :
Lead Industries Association, Inc. et al. :
Present: Suttell, C.J., Goldberg, Flaherty, and Indeglia, JJ.
OPINION
Chief Justice Suttell, for the Court. On July 1 2008, this Court issued an opinion in a
civil action brought by the State of Rhode Island (plaintiff or state) against various former lead
pigment manufacturers 1 and the Lead Industries Association, Inc., thus concluding what is
widely considered to be the longest civil jury trial in this state’s history. See State v. Lead
Industries Association, Inc., 951 A.2d 428, 434, 435 (R.I. 2008). Our decision may have
resolved the underlying legal issues, but it did little to end the contention between the parties. In
this opinion, we consider appeals from two Superior Court rulings concerning the apportionment
of co-examiners’ fees in particular and the payment of costs in general.
We first consider the state’s appeal from an order of the Superior Court granting the
motion of Sherwin-Williams Co., NL Industries, Inc., and Millennium Holdings, LLC
(collectively defendants), for the reimbursement of all previously paid fees, costs, and expenses
1
The manufacturer-defendants were Sherwin-Williams Co., NL Industries, Inc., Millennium
Holdings, LLC, Atlantic Richfield, Co., American Cyanamid Co. and Cytec Industries, Inc.,
ConAgra Grocery Products Co., and other “various defendants [that were] added or removed”
throughout the history of the underlying case. State v. Lead Industries Association, Inc., No. PC
99–5226, 2007 WL 711824, 2007 R.I.Super. LEXIS 32 (Feb. 26, 2007); see also State v. Lead
Industries Association, Inc., 951 A.2d 428, 434 (R.I. 2008).
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related to the engagement of the co-examiners. The state argues, inter alia, that as a sovereign
entity, it is not responsible for such expenses under the doctrine of sovereign immunity. The
defendants contend that the state is liable for all expenses associated with the co-examiners
because, as a plaintiff in a civil case, the state voluntarily invoked the jurisdiction of the court,
thereby implicitly waiving any claim of sovereign immunity.
We then turn to defendants’ appeal from an order denying the motion of Sherwin-
Williams Co., NL Industries, Inc., Millennium Holdings, LLC, ConAgra Grocery Products Co.,
American Cyanamid Co. and Cytec Industries, Inc., and Atlantic Richfield Co. 2 (collectively
defendants) 3 for an award of allowable costs under Rule 54(d) of the Superior Court Rules of
Civil Procedure and G.L. 1956 § 9-22-5. The defendants assert that the trial justice “bypassed
governing legal principles,” and, “[i]n effect, * * * treated the [s]tate as having a special status
that allows it to avoid costs.” Further, defendants argue that the trial justice used an
unprecedented “seven-factor test to support its departure from the strong presumption in favor of
awarding costs to the prevailing parties,” and also that, in using this unprecedented test, “the trial
justice manipulated it to reach an unjustifiable result * * *.” The state contends that, “through an
assessment of costs, [d]efendants seek to curtail the Attorney General’s constitutional and
common law obligation to protect the health and safety of citizens by initiating future ‘public
interest’ lawsuits,” which, the state asserts, would have serious and far-reaching consequences.
As such, the state argues that each party should be required to bear its own litigation expenses.
For the reasons set forth in this opinion, we affirm the orders of the Superior Court.
2
Although Atlantic Richfield Co. is included as a defendant in the order denying the motion for
costs, it did not join in the appeal to this Court.
3
For the sake of simplicity, we refer to all the manufacturers involved in these two appeals as
“defendants,” recognizing that not all the manufacturers who appeal from the order concerning
costs are also parties to the appeal concerning co-examiners’ expenses.
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I
Facts and Procedural History
The facts and procedural history of this case can be found in detail in Lead Industries
Association, Inc. In 1999, the Attorney General, on behalf of the state, filed the underlying
lawsuit against various former lead pigment manufacturers and Lead Industries Association, Inc.,
“a national trade association of lead producers formed in 1928.” Lead Industries Association,
Inc., 951 A.2d at 434.
The trial concluded in a mistrial, but a second trial “resulted in a verdict that imposed
liability on lead pigment manufacturers for creating a public nuisance.” Lead Industries
Association, Inc., 951 A.2d at 434. Following the entry of judgment, the state requested that the
abatement process begin immediately and that the trial justice appoint examiners “to aid in the
implementation of a complex remedial scheme.” Despite the fact that defendants had filed an
appeal on a number of issues, the state insisted on its request for immediate action. In response
to the state’s request, defendants moved for a stay of abatement proceedings, which included the
appointment of any examiners, while their appeal was pending before this Court.
During a subsequent hearing on defendants’ motion to stay, defendants stated that there
was “no question that this case and the issues involved [were] issues of first impression,
unsettled questions that clearly deserve[d] to be finally treated in the appellate process.” 4 The
defendants also argued that, because “the remedy [wa]s only premised on whether the liability
[wa]s correct,” the abatement proceedings should not move forward until the issues on appeal
were resolved by this Court. The state countered, however, that:
4
We note that the only official transcript submitted to this Court was of the August 15, 2008
hearing; however, copies of the additional relevant transcripts were attached to the parties’
appendices.
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“[T]here is a continuing threat of harm that exists; exists to
children who live in homes that have lead hazards and potential
lead hazards. It exists for their families, the property owners, and
* * * the citizens of the [S]tate of Rhode Island, the taxpayers of
the [S]tate of Rhode Island, the burden to government. That all
still exists. And it exists because of the continuing nuisance that is
in play.
“* * *
“We believe not wasting time is getting -- denying the stay and
getting to the appointment of the special master, dealing with his
powers and duties, talking about what’s going to be in a remedial
order, putting infrastructure in place, or thinking about it at least,
so that when a year from now comes and a decision is rendered by
the Supreme Court there hasn’t been that -- that delay or that that
would put it out another year for us to have to get to the same place
all over again. And it really isn’t that much of an inconvenience to
the parties.
“* * *
“To preserve the status quo is to preserve harm to children,
basically.”
The trial justice asked counsel for the state, “[H]ow would the [c]ourt compensate this special
master * * * in the event that the Supreme Court ruled against the [s]tate’s position?” The state’s
counsel replied that, “at this point in time, that should be a matter that the defendants have to
pay.” Another attorney for the state then added that:
“In the first instance, certainly that special master’s fees
should be paid by the defendants. In the event that, we think it’s
highly unlikely, that the Supreme Court would disagree with what
Your Honor has ruled over the last eight years, that seems to be
something that the defendants could at that point seek potentially
as a cost associated with their appeal * * * and could seek
reimbursement in that forum.”
The trial justice denied the stay and, on June 18, 2007, entered an order in which he
declared defendants to be initially jointly responsible for the cost of any appointed examiners but
added that the “[f]inal determination of the responsibility for such costs shall be determined by
the [c]ourt.” Numerous appeals were brought before this Court in 2008. Lead Industries
Association, Inc., 951 A.2d at 434. At that time, we held that the trial justice erred when he
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failed to grant defendants’ motion to dismiss, and we reversed the judgment of abatement. Id. at
458, 480.
In the aftermath of our opinion, several hearings were held before the trial justice on
issues relating to the payment of various expenses. On August 15, 2008, the trial justice heard
defendants’ motion for co-examiners’ expenses, as well as defendants’ motion for an award of
allowable costs. At that hearing, defendants argued that as the prevailing parties, they were
entitled to recover their costs from the state. With respect to the payment of co-examiners’ fees,
they contended that they had been opposed to the engagement of examiners and that “it would be
grossly unfair to require the defendants who argued vociferously against the incurring of these
costs to now * * * have to bear those costs * * *.” The state argued, on the other hand, that the
doctrine of sovereign immunity barred the court from requiring the state to pay either costs or co-
examiners’ fees and also that the state had not waived immunity by filing the lawsuit.
In a written decision issued on January 22, 2009, the trial justice considered the co-
examiners’ fees issue under Rule 53(a) of the Superior Court Rules of Civil Procedure, which
provides, in pertinent part, that “[t]he compensation to be allowed to a master shall be fixed by
the court, and shall be charged upon such of the parties * * * as the court may direct.” As an
additional, independent ground for his ruling, the trial justice stated that, “as a matter of judicial
estoppel, this [c]ourt will not allow the [s]tate to renege on its word and argue that it cannot be
held responsible for the Co-Examiner expenses for which it had previously lobbied.” The trial
justice explained that:
“[D]uring the May 1, 2007 hearing before this [c]ourt, the [s]tate
was asked directly who would be responsible for the Co-Examiner
expenses should the Supreme Court reverse the decision and
vacate the judgment of abatement. * * * In response, the [s]tate
presented to this [c]ourt the possibility of reimbursement for those
cost[s]. * * * However, now, when faced with the prospect of
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responsibility for these costs, the [s]tate has changed its position
and is arguing that the Co-Examiner expenses cannot and should
not be imposed on the [s]tate. If the [s]tate believed it could not be
held responsible for these expenses, it should have expressed this
opinion at the May 1, 2007 hearing instead of leading the [c]ourt to
believe that, in the event of a reversal, the [d]efendants could seek
reimbursement from the [s]tate. The [s]tate’s current position
concerning its potential responsibility for payment of the Co-
Examiner expenses is wholly inconsistent with its previous
position, as articulated to the [c]ourt at the May 1, 2007 hearing.”
The trial justice determined that, “as a matter of law and fundamental fairness, sovereign
immunity will not insulate the [s]tate from responsibility for the [c]o-[e]xaminer expenses.” In
support of his determination, the trial justice observed that “[t]he [s]tate made a calculated
decision to pursue a claim against the [d]efendants and voluntarily participate in the judicial
system, and thus may not invoke sovereign immunity to shield it from the imposition of costs.”
In conclusion, the trial justice stated:
“After due consideration of the arguments advanced by
counsel at oral argument and in their memoranda, the [c]ourt has
determined that the [s]tate shall be responsible for reimbursement
of all costs and expenses associated with the Co-Examiners. * * *
Pursuant to [paragraph] 13(a) of the June 18, 2007 Order, the
[c]ourt reserved the right to modify it[s] original allocation of Co-
Examiner expenses. Here, where the Rhode Island Supreme Court
has overturned the jury verdict against the [d]efendants and
vacated the judgment of abatement, it would be inappropriate to
continue holding the [d]efendants liable for any portion of the Co-
Examiner expenses.”
An order entered on June 28, 2010, requiring the state to reimburse defendants $242,121.21. The
state timely appealed. Also on June 28, 2010, an order entered denying defendants’ motion for
costs. Final judgment entered on the same date from which defendants timely appealed. We
consolidate both appeals for purposes of this opinion.
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II
Standard of Review
We review a trial justice’s determination relative to the allocation of costs pursuant to
§ 9-22-5 and Rule 54(d), as well as a ruling on the apportionment of co-examiners’ expenses
under Rule 53(a) of the Superior Court Rules of Civil Procedure, employing an abuse-of-
discretion standard. Under § 9-22-5, the prevailing party is entitled to recover costs in a civil
action, “except where otherwise specially provided, or as justice may require, in the discretion of
the court.” Rule 54(d) also specifies that “[c]osts * * * shall be allowed as of course to the
prevailing party as provided by statute and by these rules unless the court otherwise specifically
directs.” As expressly stated, both § 9-22-5 and Rule 54(d) endow the trial justice with
discretion in conducting a cost-distribution analysis. “[D]iscretion is not exercised by merely
granting or denying a party’s request.” DiRaimo v. City of Providence, 714 A.2d 554, 557 (R.I.
1998) (quoting Hartman v. Carter, 121 R.I. 1, 4-5, 393 A.2d 1102, 1105 (1978)). The term
“discretion,” rather, denotes action taken “in the light of reason as applied to all the facts and
with a view to the rights of all the parties to the action while having regard for what is right and
equitable under the circumstances and the law.” Id. (quoting Hartman, 121 R.I. at 5, 393 A.2d at
1105). Likewise, Rule 53(a) provides that “[t]he compensation to be allowed to a master shall be
fixed by the court, and shall be charged upon such of the parties * * * as the court may direct.”
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III
Discussion
A
Co-Examiners’ Fees
On appeal, the state argues that the trial justice erred in reaching his conclusion that the
state waived its sovereign immunity because it filed the underlying lawsuit. Additionally, the
state contends that the trial justice erred when he ordered it to reimburse defendants for the costs
associated with the co-examiners.
According to defendants, the state’s argument is flawed because, “irrespective of liability
costs at the conclusion of a case, [Rule] 53(a) authorizes the Superior Court to allocate the costs
of a special master among the parties at any point during the proceeding.” Moreover, defendants
contend that “sovereign immunity has no role to play when the state voluntarily invokes the
jurisdiction of the court, utilizes its rules and procedures to advance its tactical interest, and is
then required by these same rules to pay fees when the issue goes against it.”
The state counters that the trial justice’s assertion of judicial estoppel was inappropriate
because he “placed undue emphasis on the [s]tate’s statement to the [c]ourt that [d]efendants
could seek reimbursement upon reversal.” The state argues that its suggestion to the trial justice
that, if he were reversed, defendants “‘could at that point seek potentially as a cost associated
with their appeal * * * and could seek reimbursement in that forum’ * * * is hardly an
unequivocal waiver or statement that [d]efendants would be entitled to co-examiner costs if they
succeeded on appeal.” This, the state further contends, “was merely a factual statement that
defendants could file a [m]otion at a time when there was a case or controversy to address, not
when there was a hypothetical situation that the trial court itself found unlikely.”
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The invocation of judicial estoppel is “driven by the important motive of promoting
truthfulness and fair dealing in court proceedings.” D & H Therapy Associates v. Murray, 821
A.2d 691, 693 (R.I. 2003). “Unlike equitable estoppel, which focuses on the relationship
between the parties, judicial estoppel focuses on the relationship between the litigant and the
judicial system as a whole.” Id. (citing 28 Am. Jur. 2d Estoppel and Waiver § 34 (2000)). “The
United States Supreme Court has noted that ‘[b]ecause the rule is intended to prevent improper
use of judicial machinery, * * * judicial estoppel is an equitable doctrine invoked by a court at its
discretion.’” Id. (quoting New Hampshire v. Maine, 532 U.S. 742, 750 (2001)). “One of the
primary factors courts typically look to in determining whether to invoke the doctrine in a
particular case is whether the ‘party seeking to assert an inconsistent position would derive an
unfair advantage * * * if not estopped.’” Id. at 694 (quoting New Hampshire, 532 U.S. at 751).
“Courts often inquire whether the party who has taken an inconsistent position had ‘succeeded in
persuading a court to accept that party’s earlier position, so that judicial acceptance of an
inconsistent position in a later proceeding would create the perception that either the first or the
second court was misled.’” Id. (quoting New Hampshire, 532 U.S. at 750). Here, a review of the
record clearly shows that the trial justice predicated his decision—granting the state’s request to
appoint examiners and ordering defendants jointly responsible for all related expenses—upon the
state’s representation that defendants could seek reimbursement if the judgment were to be
reversed on appeal.
During the hearing on defendants’ motion to stay the abatement proceedings, the trial
justice specifically questioned the state about which party would be responsible for the expense
of the co-examiners. The state responded that “[i]n the first instance,” defendants should be
responsible for the expenses, but then added that, if the judgment were to be reversed on appeal,
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it “seem[ed] to be something that the defendants could at that point seek potentially as a cost
associated with their appeal * * * and could seek reimbursement in that forum.” As a result, the
trial justice denied the stay and reserved final judgment regarding the responsibility for the costs
related to the examiners.
Moreover, in the trial justice’s decision regarding the allocation of co-examiners’
expenses, he explicitly stated that had the state believed that sovereign immunity would shield it
from financial responsibility “it should have expressed this opinion at the May 1, 2007 hearing
instead of leading the [c]ourt to believe that, in the event of a reversal, the [d]efendants could
seek reimbursement from the [s]tate.” This statement unmistakably indicates to this Court that,
when the trial justice ordered that defendants assume responsibility for these expenses, he
substantially relied upon the state’s declaration that defendants would be able to seek
reimbursement if they succeeded in their appeal.
Because a trial justice has discretion in applying judicial estoppel when he or she finds
that a party’s inconsistent positions would create an unfair advantage, our review is deferential
and considers whether judicial acceptance of that party’s subsequent position would be perceived
as misleading as to either the first or second court. See Murray, 821 A.2d at 694. We are fully
confident that the trial justice in this case was justified in his use of judicial estoppel. We deem
the state’s initial declaration that defendants could seek reimbursement upon appellate success to
be misleading when compared with the state’s subsequent sovereign-immunity argument, which
would bar any reimbursement to defendants. Therefore, we perceive no error in the trial justice’s
application of judicial estoppel. 5
5
Because we hold that the state was judicially estopped from asserting a sovereign-immunity
defense against the allocation of costs related to the co-examiners, we need not consider whether
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B
Costs
With respect to the denial of defendants’ motion for costs, defendants argue that the trial
justice correctly recognized the presumption of awarding costs to the prevailing party, but erred
by disregarding that presumption and instead applying “a purely discretionary standard.” The
defendants specifically contend that the trial justice not only used an unprecedented “seven-
factor test to support [his] departure from the strong presumption in favor of awarding costs to
the prevailing parties,” but also “manipulated it to reach an unjustifiable result [in this case].”6
Specifically, defendants assert five errors committed by the trial justice: (1) “failing to apply the
proper presumption and burden of proof”; (2) “applying inappropriate cost factors and ignoring
relevant ones”; (3) “creating a different standard for the [s]tate than other non-prevailing
parties”; (4) “failing to consider facts of record”; and (5) “speculating with respect to facts not of
record.”
The state counters that the trial justice did not err because he looked at the totality of the
circumstances to support his determination that each party should bear its own costs. The state
suggests that, although “the narrow issue on appeal may be viewed as which party(s) must bear
the cost of litigation, the answer to this question in the context of this case has far-reaching
implications.” Additionally, the state asserts that, “through an assessment of costs, [d]efendants
the trial justice erred in his determination that the state waived its sovereign immunity by
initiating litigation.
6
The defendants suggest that the trial justice considered the following seven factors: (1) “The
financial need of the prevailing party for reimbursement”; (2) “The burden that the imposition of
costs would have on a non-affluent, non-prevailing party”; (3) “Any bad faith or misconduct by
the prevailing party”; (4) “Good faith of the plaintiff in bringing the action”; (5) “Whether the
action provided any direct or indirect benefit to the public or the victorious party”; (6) “The
complexity of the matter”; and (7) “Whether imposition of costs would unduly inhibit future
litigation.” We, however, decipher only four factors that the trial justice weighed, which are
discussed infra.
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seek to curtail the Attorney General’s constitutional and common law obligation to protect the
health and safety of citizens by initiating future ‘public interest’ lawsuits.”
The trial justice acknowledged the presumption in favor of awarding costs to the
prevailing party under Rule 54(d), noting, however, that such an award is discretionary. The trial
justice, quoting DLC Management Corp. v. Town of Hyde Park, 45 F. Supp. 2d 314, 315
(S.D.N.Y. 1999), explained that costs may be denied “upon a showing that such an award would
be inequitable.” Further, he looked to the following factors: (1) whether the state’s claim was
frivolous; (2) whether the state proceeded in good faith; (3) whether the award of costs “could
have a chilling effect on future suits by the public raising public health or environmental
concerns”; and (4) whether “substantial benefits” were conferred on “the public and the
prevailing parties.” 7 As this Court has stated, a trial justice exercises proper discretion when the
final determination is “in the light of reason as applied to all the facts and with a view to the
rights of all the parties to the action while having a regard for what is right and equitable under
the circumstances and the law.” Hartman, 121 R.I. at 5, 393 A.2d at 1105.
In his written decision, the trial justice analyzed the totality of the circumstances and
found the following: (1) that the state’s claim was not frivolous or made in bad faith; (2) that the
public had a heightened interest because of the physical and environmental problems lead paint
presented; (3) that assigning all costs to the state could act as a penalty and deter future
environmental suits; and (4) that both the public and defendants substantially benefited from the
commencement of the litigation. As a result, the trial justice held that both the state and
defendants were responsible for bearing their own costs.
7
The trial justice also noted “the severe financial position of the [s]tate”; however, he expressly
clarified that this was not a basis for his decision in this case.
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After a careful review of the record, we are satisfied that the trial justice did not overlook
or misconceive the facts of this case, nor did he apply those facts inappropriately to the factors he
used in reaching his conclusion. Although we need not endorse each specific factor he utilized,
we conclude that he carefully considered the totality of the circumstances as well as the equities,
given the significant history and multitude of issues involved in this important case. As such, we
are satisfied that the trial justice’s denial of the defendant’s motion for costs was not clearly
erroneous. Accordingly, we will not disturb the ruling of the trial justice, who conscientiously
and meticulously presided over this very lengthy and complex litigation.
IV
Conclusion
For the reasons set forth in this opinion, we affirm the orders of the Superior Court. The
record of this case shall be remanded to the Superior Court.
Justice Robinson did not participate.
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RHODE ISLAND SUPREME COURT CLERK’S OFFICE
Clerk’s Office Order/Opinion Cover Sheet
TITLE OF CASE: State of Rhode Island v. Lead Industries Association, Inc. et al.
CASE NO: No. 2010-278-Appeal.
No. 2010-296-Appeal.
(PC 99-5226)
COURT: Supreme Court
DATE OPINION FILED: May 10, 2013
JUSTICES: Suttell, C.J., Goldberg, Flaherty, and Indeglia, JJ.
WRITTEN BY: Chief Justice Paul A. Suttell
SOURCE OF APPEAL: Providence County Superior Court
JUDGE FROM LOWER COURT:
Associate Justice Michael A. Silverstein
ATTORNEYS ON APPEAL:
For Plaintiff: Michael W. Field
Department of Attorney General
For Defendants The Sherwin-Williams Co., NL Industries, Inc.,
and Millennium Holdings, LLC:
John A. MacFadyen, Esq.
For Defendants The Sherwin-Williams Co., NL Industries, Inc.,
Millennium Holdings, LLC., ConAgra Grocery Products Co.,
American Cyanamid Company and Cytec Industries, Inc.:
Laura B. Ellsworth, Esq., Pro Hac Vice