By Tricia Gorman
The Germany-based drywall manufacturer Knauf Plasterboard Tianjin, facing hundreds of suits over allegedly defective drywall, has agreed to pay for repairs to 300 homes in four states as part of the massive federal multidistrict litigation.
Knauf, which has plants in China, is the only defendant named in the suits consolidated in the U.S. District Court for the Eastern District of Louisiana to be involved in the litigation. Other named manufacturers have ignored the proceedings.
Knauf admits no liability in the settlement but has agreed, along with several domestic drywall distributors and suppliers, to pay for repairs in 300 homes in Florida, Louisiana, Alabama and Mississippi that contain Knauf wallboard.
Homeowners who have drywall from other manufacturers are not covered by the agreement.
The lawsuits in the multidistrict litigation allege that drywall manufacturers in China negligently made wallboard now suspected of corroding wiring and piping in U.S. homes and causing health hazards.
The defendants allegedly made the drywall from waste material from coal-fired power plants that can emit sulfur dioxide and hydrogen sulfide, the suits say. The acids also emit a rotten-egg smell and affect some residents' eyes, sinuses and breathing.
The agreement, announced by Knauf and attorneys on the plaintiffs’ steering committee, creates a “demonstration remediation program” that includes removal and replacement of all drywall and replacement of the homes’ electrical wiring and home security and fire systems.
The program is based on guidance issued by the Consumer Product Safety Commission and is meant to be a model for resolution of the entire drywall issue.
Homeowners will also receive compensation for the cost of alternative living arrangements during the remediation.
Finally, environmental engineers will perform inspections to certify that the homes are free of contamination.
The settlement follows verdicts totaling more than $2.7 million for plaintiffs in two bellwether suits in April.
In those cases, U.S. District Judge Eldon Fallon, who is presiding over the consolidated litigation, awarded a Louisiana couple $164,000 and seven Virginia homeowners $2.6 million for repairs to their homes. In re Chinese Manufactured Drywall Prods. Liab. Litig., MDL No. 2047; Hernandez v. Knauf Gips KG et al., No. 09-6050, 2010 WL 1710434 (E.D. La. Apr. 27, 2010); In re Chinese Manufactured Drywall Prods. Liab. Litig., No. 09-2047; Germano et al. v. Taishan Gypsum Co., No. 09-6687, 2010 WL 1445684 (E.D. La. Apr. 8, 2010).
In each suit he rejected Knauf’s contention that it was not necessary to remove all the homes’ drywall and wiring. The company suggested that only the drywall that was contaminated needed to be replaced and that the wiring could be cleaned.
Louisiana’s Democratic U.S. senator, Mary Landrieu, praised the agreement but said it is only a first step to helping homeowners.
“This is the first piece of good news that many of these families have received since this problem first arose two years ago,” she said in a statement. “I’m encouraged by the outline of the settlement, but recognize there is still much work to be done.”
In re Chinese Manufactured Drywall Products Liability Litigation, No. 09-2047, settlement reached (E.D. La. Oct. 14, 2010).