FEATURE - Arsenic lawsuits get under US wood treaters' skin
Author: Nichola Groom
Nearly seven years later, Walker is one of a growing number of consumers who blame U.S. wood products makers for injuries they received from wood treated with a compound containing arsenic, a known carcinogen.
As a result, companies that have made or sold wood treated with the arsenic compound - including forest products heavyweights Georgia Pacific Corp. and Universal Forest Products Inc. - are becoming targets of a growing wave of litigation that is worrying investors.
"The issue does make me nervous," said Mark Wilde, who follows forest products firms for Deutsche Bank Securities. "The best case scenario is that it doesn't become any bigger, but it seems to have the momentum making it bigger."
Chromated copper arsenate, or CCA, has been used to protect wood from leaching and erosion for more than 70 years and is most often used outdoors in decks and playgrounds.
For the last 20 years or so, any litigation against the makers of CCA-treated wood has mostly involved individual claims against small, privately held companies.
Walker, for example, sued the chemical maker, the wood treater, and the wood retailer, settling for $150,000 - an amount that did not even cover her medical costs.
"My medical bills are more than that," she said in a phone interview from her home in Clearfield, Utah.
Walker's ailments were traced to splinters that got stuck under her fingernails and could not be completely removed until they were successively amputated within a few years.
WHERE THE MONEY IS AT
Recently, however, several class-action lawsuits have surfaced naming big players in the CCA-treated lumber market, recalling recent legal nightmares including scores of asbestos claims that drove some U.S. firms into bankruptcy. Big Tobacco companies have also been hit by billions of dollars worth of legal claims.
"This could be a substantial litigation in terms of dollars," said Lester Brickman, a professor at Cardozo Law School in New York and an expert on asbestos litigation. "Class actions are where the money is at."
A spokeswoman for Georgia-Pacific, which has made the product since the 1988, said the company has two lawsuits involving CCA-treated wood pending in Alabama, one of which is a class action.
The spokeswoman would not comment on the claims other than to say the company believed they had no merit.
Universal Forest Products also declined to comment on pending litigation, but argued that studies have shown the product is safe when handled correctly.
"Every bit of information that has come out has reaffirmed the safety of CCA-treated wood," said Scott Conklin, vice president of wood preservation at Universal Forest Products.
In February, the Environmental Protection Agency banned the use of CCA-treated wood in residential construction beginning in 2004, but said it "has not concluded that CCA-treated wood poses unreasonable risks to the public" and that it was not necessary to remove or replace existing structures.
Parker Brugge, president of the American Wood Preservers Institute, a trade group named as a defendant in a Florida complaint seeking class-action status, said "no class action has been sustained on allegations of injury due to treated wood." He added that he is "confident that the courts will not sustain any class action on these facts."
Still, even the prospect of litigation is enough to make Wall Street analysts wary.
"The fear that there might be a health issue here makes this quite an explosive issue," said Wilde. "The issue doesn't smell good."
Though Georgia Pacific and Universal Forest Products are now the largest publicly traded players in the treated wood market, other companies including Louisiana-Pacific Corp. and Canada's Domtar Inc. have made the product in the past and could also face legal headaches.
"Products out in the marketplace that are sold for long-term use can generate liability many years after the sale," Brickman said. "You