Sherwin-Williams Primed for Legal Disputes, Third Circuit Says "Wait a Minute"

A good offense may be the best defense, but you still need to have standing.

Paint manufacturer Sherwin-Williams was primed and ready for lead paint litigation rumored to be pending in several Pennsylvania counties. However, in this case, getting ahead of the problem was not the best move.

Sherwin-Williams Goes on the Offensive

Lehigh and Montgomery Counties sued Sherwin-Williams in 2018 over its sale of lead-based paint, with both hiring the same law firm to work on a contingency basis. After losing those cases and being slapped with an injunction barring "future illicit conduct," Sherwin-Williams decided to switch tactics.

The company filed suit against several Pennsylvania counties where it anticipated similar future litigation, in an attempt to enjoin them from suing or hiring outside contingent-fee counsel. Two counties agreed that they would not sue or hire outside counsel.

Delaware County did not.

Let's Not Get Ahead of Ourselves

On appeal in the Third Circuit, Sherwin-Williams alleged that the potential lawsuit violated its First Amendment right to membership in trade associations and imposed disproportionate and impermissibly retroactive liability. The company also claims that the County's contingent-fee arrangement with outside counsel violates the due process clause.

The Third Circuit affirmed the district court's assessment that the Declaratory Judgement Act requires a "substantial controversy" for Sherwin-Williams to obtain relief. Furthermore, speculation of a constitutional violation based on a hypothetical lawsuit was not enough to satisfy Article II standing requirements.

Maybe there is such a thing as being "too prepared."

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