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The ties that bind

BY Brae Canlen

Alarge group of California lumberyard owners have banded together to fight against a possible product liability lawsuit because they may have sold used railroad ties treated with creosote and other toxic chemicals. At least 40 LBM dealers have contacted the Lumber Association of California and Nevada (LACN) about “violation” letters they received from a law firm in Eureka, Calif., and the calls keep coming in. “We don’t care if they’re members or not,” said LACN executive director Ken Dunham. “This is an industry-wide problem, and we need to address it.”

At the heart of the issue is Proposition 65, passed by California voters in 1986 to limit the public’s exposure to carcinogens or other harmful chemicals. The law mandates that businesses post adequate warnings to consumers of hazardous substances, and the list has grown to more than 800 chemical compounds. The state’s attorney general and local prosecutors are charged with enforcing the law, but private attorneys—acting in the public’s interest—can also file civil lawsuits and then recoup their fees and costs.

The Mateel Environmental Justice Foundation, a law firm in Eureka, Calif., has handled numerous Prop 65 cases involving everything from crystal vases to brass hose nozzles and PVC-coated wire. In mid-November, Mateel sent Prop 65 violation letters to 55 lumberyards, home centers and hardware stores in California, according to documents obtained by Home Channel News. The list included such large companies as ProBuild, Stock Building Supply, Home Depot and HD Supply. But many of the recipients were small independents like Augie Venezia of Fairfax Lumber & Hardware.

“I call this legalized extortion,” Venezia said. “I believe that if [Mateel] were truly working on behalf of the citizens of California, [the law firm] would simply notify non-compliant businesses about their deficiencies, [and] those businesses would promptly remedy the situation. We did, [but] to prove this in court would cost more money than to just settle.”

The letter received by Fairfax Lumber & Hardware and other California businesses listed the various chemicals used to treat railroad ties, all of which are included on the Prop 65 list of hazardous compounds. Consumers and employees who touched these products were exposed to the toxic substances, the letter stated.

“Mateel is willing to settle this matter to the extent legally possible prior to the commencement of any enforcement action,” the letter read. Businesses found to be in violation of Prop 65 are subject to civil penalties of up to $2,500 per day for each violation. “To determine what that penalty amount should actually be, Mateel will need to receive your sales data for the past year, relevant demographic data about the people who use the product, and data about how the product was used,” the letter stated.

Brenda Radmacher, an attorney with Wood, Smith, Henning & Berman in Glendale, Calif., has defended a number of California businesses against Prop 65 claims, and is now working on behalf of several LACN members. Radmacher noted that many of the lumberyards that received violation notices thought they were in compliance with Prop 65: They posted warning notices in their stores or above the railroad ties. One client even had warning tags affixed to the product.

“The legislation and the statutes are not specific enough about providing [adequate] warnings,” Radmacher said. “Some of the lumberyards even contacted the [California] attorney general, and they couldn’t get an answer.”

Under Prop 65, private attorneys like the Mateel Environmental Justice Foundation cannot file a lawsuit until the state attorney general’s office, as well as the appropriate district attorney or city attorney, is given 60 days to file its own enforcement action. When the Prop 65 violation letters were mailed out by Mateel on Nov. 12, local prosecutors throughout California were also notified.

The 60-day period is now over. Bill Verick, an attorney with the Mateel Environmental Justice Foundation said he has only been contacted by one district attorney’s office in California. “They asked us to hold off while they do their own investigation,” Verick said. As for the other 54 businesses, Mateel will proceed on a case-by-case basis.

“Just because we sent them a notice doesn’t mean we’ll file an enforcement action,” Verick said. The size of the business is one determinant, he said, adding, “We tend not to sue mom-and-pop companies.”

Although Verick is aware of his firm’s “bounty hunter” reputation, he pointed out that railroad ties were treated with known carcinogens. “Most people don’t realize how toxic these things are,” he said. “People just assume the government is protecting them, and they put these things in as retaining walls or in their kids’ sandboxes.”

Verick takes issue with anyone who criticizes his firm for making money on the Prop 65 cases. “Warning people that their kids might get cancer isn’t worth being compensated for? People should applaud the privatization of [Prop 65] enforcement. And I have to make a living just like the [lumberyard owners] do.”

LACN members who received the Mateel letters held a meeting in Folsom on Dec. 11 to discuss the notices and what dealers can do to protect themselves against liability. Approximately 75 people attended either in person or via conference call. “This is flat-out extortion, and we’re going to fight it,” Dunham said.

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Armstrong names Thomas Mangas CFO

BY HBSDEALER Staff

Lancaster, Pa.-based Armstrong World Industries announced it has named Thomas Mangas senior VP and CFO, effective Feb. 1.

Mangas most recently served as VP and CFO of the beauty and grooming business of Proctor & Gamble, a $28-billion business.

“We are pleased to have an executive of Tom’s caliber from a world-class company like Procter & Gamble join Armstrong at this exciting time in Armstrong’s history,” said Michael Lockhart, chairman and CEO. “His background and expertise will be important aids to realizing our significant sales growth and margin expansion objectives over the next several years.”

Armstrong World Industries is a leader in design and manufacturing of floors, ceilings and cabinets. The company’s net sales for 2008 were $3.4 billion.

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Around the Web: True Value dealer closes in northern Ohio

BY HBSDEALER Staff

A 20-year-old hardware store in Avon Lake, Ohio succumbed to the economic slowdown, according to news reports.

Avon Lake True Value Hardware, a Northern Ohio dealer that has been in operation since 1988, closed its doors for good a week ago, according to the Morning Journal. The 8,000-sq.-ft. store, located in a small shopping center, originally opened as an Ace Hardware store before converting over to True Value, the newspaper reported.

Avon Lake, a community of 20,000 people on the shores of Lake Erie, is located 15 miles west of Cleveland. The article cited the slow housing market and competitive pressures from Home Depot and Lowe’s as contributing factors in the store’s demise.

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