MISSISSIPPI COUNTIES REBUFFED IN SUITS AGAINST PAINT MAKERS.

Mississippi school districts and counties have lost a round in their legal effort to recover damages from companies that formerly made lead-based paint, with the Fifth U.S. Circuit Court of Appeals ruling a federal judge was wrong to reject a manufacturer's attempt to win a single declaratory judgment.

"Federalism and comity concerns weigh in favor of the federal court exercising its discretion to decide this case," U.S. District Judge Lee Rosenthal wrote for the three-judge panel in Sherwin-Williams Co. v. Holmes County et al. (02-60578).

"Sherwin-Williams properly invoked diversity jurisdiction to litigate in a single forum issues that would arise in a number of suits it anticipated facing in different state courts, a reason consistent with the Declaratory Judgment Act," he said.

The company sought the declaratory judgment after media reports that the school districts and counties, and their lawyers, intended to file a number of lead-paint abatement suits in different counties in Mississippi.

It asked a federal judge to declare that:

* The First Amendment prevents imposing liability on Sherwin-Williams based on its membership in the Lead Industries Association or any other trade association, its petitioning government agencies or its public expressions of opinion.

* The Federal Hazardous Substances Act, with which Sherwin-Williams complied, preempts any claims the company subsequently failed to warn about the dangers of its products.

* Sherwin-Williams is not the proximate cause of injuries unless one of its products is identified as creating a lead-paint hazard in a particular school.

* The company has no duty to reimburse the counties and school districts for costs of maintenance, operations, renovations, repair, testing, inspection or abatement associated with lead paint.

Sherwin-Williams also sought an injunction prohibiting the school districts and counties from filing any suit violating the declaration.

The federal judge decided against issuing the declaratory judgment after considering seven factors set forth by the Fifth Circuit in St. Paul Insurance Co. v. Trejo. Among other things, the judge said handling all the cases in a single federal court would inconvenience some of the plaintiffs, and Sherwin-Williams was forum shopping, .

Sherwin-Williams appealed, and the Fifth Circuit rejected the reasoning. "Any marginal inconvenience is outweighed by the other factors that weigh with proceeding with the federal declaratory judgment," it said, and the company wasn't forum shopping.