Global drywall settlement given final approval

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March 5, 2013

Global drywall settlement given final approval 

Thousands of homeowners alleged that hundreds of drywall manufacturers and others were liable for defective Chinese drywall. The court has granted final approval of combined settlements of about $1.33 billion. In re: Chinese-Manufactured Drywall Prods. Liab. Litig.

Following several years of litigation, a U.S. district court has given final approval to five settlements in the Chinese drywall litigation.

After Hurricanes Katrina and Rita destroyed thousands of Gulf Coast houses in 2005, builders started running out of drywall, and drywall manufacturers and suppliers began importing drywall from China. Almost immediately, homeowners complained of odd odors, metal corrosion, appliance failures, and physical ailments like nosebleeds, skin irritation, and respiratory problems. State and federal agencies investigated and learned that the drywall contained corrosive gases.

Thousands of homeowners joined class actions against hundreds of drywall manufacturers, distributors, builders, suppliers, and installers. The largest defendants were manufacturer and supplier Knauf Plasterboard Tianjin Co., supplier Interior/Exterior Building Supply Ltd. (InEx), supplier Banner Supply Co., and supplier L&W Supply Corp., as well as each company’s subsidiaries. The plaintiffs also sued Chinese company Taishan Gypsum Co. and its subsidiaries. The suits were consolidated into an MDL in the Eastern District of Louisiana.

In 2010, the trial court found that the Chinese drywall was defective, requiring property remediation. Knauf agreed to remove and replace drywall in 300 homes as part of a remediation pilot program. In 2011, InEx agreed to pay $8 million, and Banner agreed to pay about $54.48 million. In December 2011, Knauf agreed to extend the remediation to all homeowners who made a claim and establish monetary funds for homeowners who opted to self-remediate or cash out. The settlement was worth about $600 million. L&W, which supplied the Knauf drywall to builders, contributed to that settlement. Finally, in 2012, a group of builders, suppliers, and installers agreed to a $70.57 million global settlement.

The final value of the combined settlements is about $1.33 billion, which could increase based on the number of remediations. The court has granted final approval.

The Chinese company did not participate in the settlement because it is appealing the court’s finding that it has jurisdiction.

Citation: In re: Chinese-Manufactured Drywall Prods. Liab. Litig., No. 2:09-cv-02047 (E.D. La. Feb. 7, 2013).

Plaintiff lead and liaison counsel: AAJ members Russ M. Herman, Leonard A. Davis, and Stephen J. Herman, all of New Orleans; and AAJ members Arnold Levin, Fred S. Longer, and Matthew C. Gaughan, and Sandra L. Duggan, all of Philadelphia.

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