Deadline Looms for Chinese Drywall Homeowners

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For Immediate Release: December 1, 2009

Contact: Jennifer Fuson
202.965-3500, ext. 8609

Deadline Looms for Chinese Drywall Homeowners

Chinese Drywall Shows Need to Address Holding Foreign Manufacturers Accountable in U.S. Civil Justice System

Washington, DC – After tomorrow, those who find hazardous Chinese drywall manufactured by Knauf Plasterboard (Tianjin) in their homes will have little legal recourse, underscoring why Congress must pass legislation that more easily allows Americans to hold foreign corporations accountable.

Tomorrow is the deadline for homeowners to join the omnibus complaint against Knauf for drywall the company manufactured and imported to the U.S.  The drywall is believed to emit sulfuric gases that corrode copper wires in the homes, causing appliances to stop working.  The drywall also is alleged to cause serious respiratory difficulties, including severe headaches, nosebleeds, and burning in the lining of the lungs.

The complaint will be filed December 9th, after which Knauf has said they will not accept service of process, meaning new claims would need to go through the Hague Convention, costing an estimated $15,000 to serve the company abroad.

“Foreign companies profited from drywall they sold here in the U.S. that has now shown to be defective, costing millions of dollars in damage, decreased property values, and health problems,” said American Association for Justice President Anthony Tarricone.  “The Chinese drywall debacle is a wake-up call to why Congress must pass legislation that allows Americans to hold foreign manufacturers accountable.”

The Foreign Manufacturers Legal Accountability Act of 2009 (S. 1606), introduced this summer, will making it easier to hold foreign manufacturers accountable in the U.S. court system by doing several things:

  • Requires manufacturers to have an “agent” located in at least one state where the company does business that would accept service of process for any civil and regulatory claims.
  • Companies would consent to state and federal jurisdiction, holding foreign manufacturers accountable to those judicial standards.

Currently, bringing a case against a foreign manufacturer requires servicing the company in their country, according to their rules of service.  This often requires translating the papers into the language of the native country and tracking down the company’s foreign address, adding time and expense to the legal process. 

At least 30 states have filed complaints about drywall with the Consumer Product Safety Commission (CPSC).  The December 2nd deadline could be problematic in states where the effects of the drywall may not be as noticeable, and in states like Florida, where a large amount of “snowbirds” - people who live in the state during the winter months - may not have discovered the Chinese drywall or had enough time to gather evidence Knauf is the manufacturer of their drywall. 

Earlier this fall, Judge Eldon Fallon held Taishan Gypsum, a Chinese manufacturer of drywall, in default for failing to respond to a putative class action brought by builders that used the Chinese company’s drywall in homes.   The hearing on the default will be held in January.

Upcoming dates to remember:

  • December 4, 2009 – Hearing on motions filed in Germano v. Taishan Gypsum Co., Ltd., and Defendants Venture Supply, Inc. and The Porter-Blaine Corp.’s Motion to Disqualify Counsel for Plaintiffs, and (2) the Plaintiffs’ Steering Committee’s Motion to Compel Discovery From Defendants, Venture Supply, Inc. and Porter-Blaine Corp.  More information available at http://www.laed.uscourts.gov/Drywall/Calendar.htm
  • December 10, 2009 - Next pre-trial status hearing in New Orleans on the ongoing multidistrict litigation.
  • January 25, 2010 - Hearing on damages related to another foreign manufacturer, Taishan Gypsum, that was held in preliminary default in September for failing to respond to the hearing.
  • February - beginning of hearing.

For more information on Chinese drywall, view AAJ’s timeline at http://www.justice.org/resources/Drywall_TimeLine_10_05_09.pdf .

To see the CPSC’s latest report on the drywall investigation, visit http://www.cpsc.gov/info/drywall/index.html .

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