Products Liability Law Daily $248M fund proposed to settle defective drywall claims against Chinese manufacturers
Wednesday, August 21, 2019

$248M fund proposed to settle defective drywall claims against Chinese manufacturers

By Pamela C. Maloney, J.D.

Unopposed settlement agreement calls for Taishan entities to pay $248,000,000 to settle claims that allegedly defective drywall caused property damage and personal injuries.

Counsel for a proposed settlement class in the Chinese-manufactured drywall multidistrict litigation action have sought approval by the U.S. District Court for the Eastern District of Louisiana of an unopposed settlement that calls for the creation of a $248,000,000 fund by Taishan entities to settle claims by property owners and residents that allegedly purchased defective drywall manufactured by those entities and installed the product after Hurricanes Katrina and Rita caused property damage to their homes (In re Chinese-Manufactured Drywall Products Liability Litigation, August 20, 2019, Fallon, E.).

The Chinese Drywall Litigation, which has been pending for more than 10 years, arose out of thousands of individual and class-action lawsuits filed in state and federal courts throughout the country on behalf of property owners and residents who sought compensation for property damage and personal injuries allegedly caused by Chinese-manufactured drywall that had been installed in tens of thousands of homes, commercial buildings, and other structures following the devastation caused by Hurricanes Katrina and Rita at the end of the summer of 2005. In the aftermath of these disasters and in conjunction with a housing boom, there was a critical shortage of drywall in the United States, which led to the importation of millions of square feet of drywall from China beginning in the fall of 2005 through 2008.

Once installed, many owners and residents began to notice unpleasant odors and corrosion to certain items made of metal. The affected homeowners filed claims for damages in various jurisdictions across the country, alleging that Chinese-manufactured drywall emitted sulfur gases that caused extensive damage to property and, in some cases, physical ailments. On June 15, 2009, the Judicial Panel for Multidistrict Litigation transferred all federal actions alleging damage from Chinese drywall to the Eastern District of Louisiana for coordinated discovery and consolidated pretrial proceedings. Although class-action complaints had been filed against more than 1,650 different manufacturers, importers, suppliers, distributors, builders, installers, and their insurers involved in the supply chain of Chinese-manufactured drywall, the Plaintiffs’ Steering Committee (PSC) primarily pursued two groups of drywall-manufacturers: the Knauf entities and the Taishan entities.

On December 20, 2011, the Knauf entities and the PSC entered into a class settlement agreement providing comprehensive remediation and cash benefits to homeowners with Knauf drywall, which the court certified as a class action and approved on February 7, 2013 (In re Chinese-Manufactured Drywall Prod. Liab. Litig., 2013 WL 499474 (E.D. La. Feb. 7, 2013). The latest proposed settlement, which is unopposed by the Taishan entities, sets forth the class definition, cash payment amount, and non-cash settlement terms. It is intended to resolve all the class actions pending against the Taishan entities and to release those entities from further liability.

Proposed settlement. According to the agreement, Taishan will establish a settlement fund in the aggregate amount of $248,000,000. The Taishan entities will contribute to the Settlement Fund pursuant to the following schedule: (1) an initial payment of $24,800,000 no later than 30 days following preliminary approval of the agreement; (2) a second payment of $74,000,000 no later than 120 days following preliminary approval; and (3) a final payment of the remaining $148,000,000, no later than 60 days after final approval of the settlement. Subject to the court’s approval, a portion of the initial payment may be used to pay the costs of the mailing of initial class notices and other administrative expenses associated with the retention of the Claims Administrator.

The funds will be used to settle class members’ claims based on or alleging any act, conduct, status, or obligation of any person or entity (including Taishan and/or any released party) and/or any source of liability whatsoever, and regardless of the legal theory or theories of damages involved. Valid claims include, but are not limited to, damage to real or immovable property and/or personal or movable property, remediation and/or clean-up of property, diminution of property value, stigma, contamination, alternative living expenses, loss of use, loss of enjoyment, economic loss, personal injury, bodily injury (including death), fear, fear of illness or disease, fear of developing illness or disease, fright, mental or emotional distress, pain and suffering, loss of earnings, impairment of earning capacity, loss of consortium, loss of support, loss of love and affection, equity and medical monitoring, bystander liability, wrongful death, survival actions, breach of contract, all statutory claims, punitive or exemplary damages, attorney fees, attorney costs or expenses, moving expenses, or additional rental or mortgage payments.

The legal basis for valid claims include: nuisance; trespass; inconvenience; loss of use or enjoyment; negligence; negligence per se; tort; public or private nuisance; custody of a thing containing a vice or defect; strict liability; liability for ultrahazardous activities or conduct; absolute liability; wanton and reckless misconduct; malicious misconduct; servitude or obligation of vicinage; abuse of right; or any other liability legally asserted or assertible under any federal, state, or local statute, directive or regulation, redhibition, violation of any state or federal home warranty act, products liability act, unfair trade practices or consumer protection law; negligent discharge of a pollutant or corrosive substance; unjust enrichment; breach of express or implied warranty; breach of implied warranty of fitness and merchantability; breach of implied warranty of habitability; negligent misrepresentation; and building code violations.

The settlement also recognizes claims for punitive damages, as well as claims for past, present, future, known, unknown, foreseen, unforeseen, contingent, nascent, or mature claim, or a claim arising at law, in equity, or otherwise, including but not limited to claims for survival and wrongful death.

Release of liability. The settlement also contains a release of any and all claims that class members may have against the Taishan entities. Similarly, the Taishan entities also agree to release any and all claims against all class members.

The case is MDL No. 2047.

MainStory: TopStory SettlementAgreementsNews BuildingConstructionNews DesignManufacturingNews ClassActLitigationNews DamagesNews LouisianaNews

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