In re Chinese Manufactured Drywall Products Liability Litigation Lawsuit

In re Chinese Manufactured Drywall Products Liability Litigation

The product

Between 2001 and 2009, large quantities of drywall — gypsum-based plasterboard — manufactured in China were imported into the United States and used in residential construction. Imports surged during the post-2004 construction boom, when a shortage of U.S.-made drywall followed the rebuilding demand created by the hurricanes that struck the Southeast. Trade analyses indicated that the volume of Chinese drywall brought in after 2006 was sufficient to build tens of thousands of average-sized homes.

Knauf Plasterboard Tianjin, part of Knauf Gips KG, was identified as a major producer of the imported product, because the company printed its name on its boards. Much of the other defective drywall carried no markings at all, which made it difficult to trace its origin.

The harm

Laboratory testing of affected boards detected off-gassing of sulfur compounds, including carbon disulfide, carbonyl sulfide, and hydrogen sulfide. The emissions worsened as temperature and humidity rose, produced a rotten-egg odor, and caused a distinctive black, powdery corrosion on copper surfaces — pipes, electrical wiring, and air-conditioning coils — as well as tarnishing of silver jewelry. The warm, humid climate of the Southeast appeared to encourage the emissions, and complaints were concentrated there: Florida, Louisiana, Mississippi, and Alabama accounted for the large majority of cases reported to the U.S. Consumer Product Safety Commission.

Residents of affected homes reported health complaints, including respiratory problems such as asthma attacks and chronic coughing, difficulty breathing, headaches, and sinus issues. Estimates suggested that as many as 100,000 homes in more than 20 states could have been affected.

Litigation

Class-action lawsuits were filed by homeowners, initially in Florida, against home builders, drywall suppliers, and a Chinese drywall manufacturer, claiming respiratory problems and property damage. The cases were centralized in June 2009 as MDL 2:09-md-2047, In re Chinese Manufactured Drywall Products Liability Litigation, in the United States District Court for the Eastern District of Louisiana before Judge Eldon E. Fallon, with the docket opened on June 15, 2009.

Parallel regulatory work informed the litigation. The Consumer Product Safety Commission, the Environmental Protection Agency, and state officials launched inquiries in 2009, and the CPSC opened a formal investigation. A CDC indoor-air study comparing complaint homes with control homes found a strong association between the imported drywall and elevated hydrogen sulfide levels and metal corrosion. Laboratory comparisons pointed to elevated pyrite content and bacterial activity in the Chinese material as potential sources of the sulfur compounds.

Outcome

The parties reached settlements in 2010 that were administered through a court-appointed claims process. Manufacturers agreed to replace the affected drywall, and the court endorsed a settlement under which the Knauf Group would pay for the repair of affected homes in Alabama, Florida, Louisiana, and Mississippi, with several insurers participating in the agreement. Home-improvement retailer Lowe's, which had denied selling the contaminated product, also reached a settlement with affected homeowners. The MDL is recorded in this entry as terminated, and the episode is recorded as a settlement resolved in 2010.