Major Chinese Drywall Hearing Set for Friday

The litigation involving the Chinese drywall debacle will kick into high gear on Friday. A hearing in federal court in New Orleans is to focus on seven Virginia homes built with Chinese drywall, and could set the bar for the remediation of homes with the tainted wallboard nationwide.

At least 3,000 people from across the country have filed suit over defective Chinese drywall. All of the Chinese drywall lawsuits filed in federal courts have been consolidated in the US District Court in New Orleans under Judge Eldon E. Fallon as part of a multidistrict litigation (MDL). One single class action lawsuit alone filed against Knauf Gips KG, its Chinese affiliate, Knauf Plasterboard Tianjin Co. Ltd., and 600 other defendants, involves nearly 2,100 plaintiffs from Florida, Mississippi and Alabama.

The Consumer Products Safety Commission (CPSC) has received more than 2,800 complaints from dozens of states regarding defective Chinese drywall. The wallboard poured into the U.S. between 1999 and 2007 because of the high demand created by the housing boom. Imports accelerated when the rebuilding that followed Hurricane Charley in Florida in 2004, and Hurricane Katrina along the Gulf Coast in 2005, created a drywall shortage. According to an earlier Wall Street Journal report, some 500 million pounds of Chinese drywall was imported to the U.S. during the housing boom. That means as many as 100,000 homes throughout the country could have been built with the material.

According to a report on, a hearing in New Orleans on Friday will result in the first judicial decision on remediation and help set the standard for federal trials set to begin in March. In anticipation of the hearing, attorneys for plaintiffs and defendants have been conducting tests on the seven Virginia homes to come up with estimates for how much it will cost to fix the problem. Plaintiffs attorneys will ask the judge to rule that the homes be gutted of all of the drywall and electrical wiring and appliances, including removing all copper pipes, said. The cost of the work will range from $190,000 to $235,000 per home.

The seven homes in Virginia – one in Virginia Beach, two in Newport News and four in Williamsburg – are intended to serve as a cross section of homes affected by the drywall across the country, said. The homes contain drywall made by Taishan Gypsum Co. Ltd., a company controlled by the Chinese government. As we reported last year, Judge Fallon issued a default judgment against Taishan for failing to respond to lawsuits. Because of the default judgment, there willl be no jury trials in these seven cases.

Because Taishan won’t be participating in Friday’s hearing, Knauf volunteered to study the seven homes and produce its own estimate for remediation. There are likely to be huge differences between the remediation plans proposed by defendants and plaintiffs, and it will be up to Judge Fallon to decide between them. Once Judge Fallon decides on a remediation plan, it will be binding only two the seven Virginia homes. However, the judge has indicated that the outcome will “provide some guidance for similarly situated or affected properties.”

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