Federal Judge Puts Chinese Drywall Cases on 'Rocket Docket'

Daily Business Review

August 11, 2009

Comments (1)

Related Items

With thousands of homeowners claiming their houses and health are deteriorating from sulfur-emitting Chinese drywall, a federal judge in New Orleans is intent on fast-tracking a handful of cases for trial, attorneys say.

The first of these bellwether lawsuits could be tried by the end of the year, a timetable that encourages homeowners to think settlement. In contrast, drywall maker and defendant Knauf Plasterboard Tianjin welcomes home inspections and is investigating "practical solutions" but denies any health effects from its drywall.

About 600 tainted Chinese drywall lawsuits have been consolidated in multidistrict litigation under U.S. District Judge Eldon E. Fallon for pretrial issues. With the help of plaintiff and defense steering committees, Fallon will select five cases to test the waters.

"He is moving extremely fast, which is the right thing because people are living in homes that are toxic to them," said Victor Diaz, a partner at Podhurst Orseck in Miami and a member of the MDL plaintiff steering committee.

Homeowner attorneys see the past as a guide. Fallon supervised the $4.85 billion Merck settlement in Vioxx cases, one of the largest pharmaceutical settlements on record. It was reached only after plaintiffs, who claimed the withdrawn painkiller caused heart attacks and strokes, lost a series of jury trials.

The estimated 600 Chinese drywall cases -- a number bound to grow -- are under the same judge's control.

"Fast-tracking is an understatement. It's a rocket docket. And he means business," said attorney Ervin Gonzalez, a class-action specialist with Colson Hicks Eidson in Coral Gables, Fla., who also is on the plaintiff steering committee. "He wants the first case tried by the end of the year, and he wants an inspection of every home. He wants to be able to get to the bottom of the problem."

A status conference is scheduled for today to work out an inspection plan, among other issues.

Fallon has ordered each side to select 10 cases to jump start the process of turning over documents and other information. He has said the initial trials most likely will involve claims limited to property damage as opposed to personal injury. The plaintiff bar has been in a feeding frenzy on Chinese drywall litigation, filing a litany of lawsuits in federal and state courts, naming Chinese drywall manufacturers as well as developers, builders, subcontractors and suppliers.

Knauf Plasterboard Tianjin, one of the leading manufacturers named in the federal litigation, responded to a series of questions with a statement.

"Even today there remains wild and unsubstantiated speculation as to the size and scope of the issues relating to the Chinese drywall that is claimed to be causing problems in the affected homes," the Knauf statement said.

Defendants including KPT are represented by several South Florida attorneys -- Donald J. Hayden of Baker & McKenzie in Miami, Hilarie Bass and Mark A. Salky of Greenberg Traurig in Miami, and Jan Douglas Atlas and Jeffrey Backman of Adorno & Yoss in Fort Lauderdale. Bass was defense liaison counsel as an attorney for Aetna in a racketeering class action against major managed care companies, which produced several settlements.

In the drywall cases, KPT said Fallon's inspection order and a requirement that all claimants fill out fact sheets "will substantially narrow the scope of the litigation and finally put to rest the speculation as to the number of homes that are impacted by Chinese drywall."

About 500 million pounds of Chinese drywall was imported during the U.S. housing boom from 2004 to 2007, meaning as many as 100,000 homes could contain the tainted material, plaintiffs claim.