Chinese Drywall Lawsuits Consolidated, Will Move to New Orleans

Chinese drywall lawsuits are moving to federal court in New Orleans. Yesterday, the Judicial Panel on Multidistrict Litigation (JPML) issued an order consolidating the lawsuits in a multidistrict litigation (MDL) and transferring all pending and future Chinese drywall cases to the U.S. District Court for the Eastern District of Louisiana.

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In their order, the panel cited the experience of Judge Eldon E. Fallon, who will preside over the Chinese drywall lawsuits. Judge Fallon is a veteran of such large scale litigation, and most recently oversaw a settlement in the consolidated class action against the manufacturers of the drug Vioxx. Fallon has been on the federal bench since 1995.

As we’ve reported previously, some attorneys for Florida-based plaintiffs and defendants had argued that the cases should be transferred to federal courts in that state, as Florida was the first state to report Chinese drywall problems. It also has more complaints than any other state, with the Florida Health Department having received more than 400 reports so far. But the seven-member JPML found that Judge Fallon’s experience trumped those factors.

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The order means that right now, a total of 10 suits pending in federal courts in Florida, Louisiana and Ohio will move to New Orleans. According to the New Orleans Times-Picayune, an additional lawsuit filed in Virginia could also be transferred . The Lakewood Ranch Herald is reporting that at least another 67 similar cases also could be folded into the consolidated case. Eventually, as many as 1000 such lawsuits from across the country could be headed to New Orleans, said.

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An MDL allows all cases to be coordinated under one judge for pretrial litigation to avoid duplicative discovery, inconsistent rulings and to conserve the resources of the parties, witnesses and the court. When lawsuits are consolidated as an MDL each retains its own identity. If the MDL process does not resolve the cases, they are transferred back to the court where they originated for trial.

Homeowners in at least 18 states have complained that fumes from Chinese-made drywall produce a “rotten eggs” odor and cause metals, such as air conditioning coils, to corrode. The fumes have also been associated with respiratory and sinus problems in some residents. According to a recent Wall Street Journal article, the U.S. imported roughly 309 million square feet of drywall from China during the housing boom from 2004 to 2007.

Last month, the Environmental Protection Agency (EPA) released results of tests it conducted that compared Chinese drywall to American-made material. The tests found sulfur and two organic compounds associated with acrylic paint in the Chinese drywall that were not present in the American wallboard. The agency said more testing is needed to determine if any of the compounds found in the Chinese drywall are responsible for problems reported by homeowners.

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