Action on Chinese Drywall Class Actions

NEW ORLEANS (CN) - New Orleans Saints manager Sean Payton has joined the thousands of homeowners who say bad Chinese drywall ruined their homes. Payton and his wife, of Mandaville, La., are lead plaintiffs in a 591-page class action, with 2,072 plaintiffs from Florida, Alabama and Louisiana, who say their homes or businesses were destroyed by drywall with "unreasonably" high levels of sulfur and other toxic and corrosive components.

Lead defendant is Germany-based drywall manufacturer Knauf Gips, whose affiliates in China are accused of producing the highly sulfuric gypsum board. Knauf Gips, along with all companies that "manufactured, exported, imported, distributed, delivered, supplied, inspected, installed, marketed and sold defective drywall products." are blamed for noxious fumes, corroded air conditioning systems, electrical appliances, internal wiring and other electrical systems, and a variety of respiratory ailments.

Payton is the lead plaintiff in this claim because he was among the first people in Louisiana to link news reports of bad drywall to his family becoming ill and televisions, computers and electrical equipment failing in his home, attorney Daniel Becnel Jr. told the Times-Picayune this week. Becnel filed the first drywall class action in Louisiana.

Because the three states with high incidents of defective Chinese drywall seek comparable damages against the same defendants, all federal suits filed in Florida, Alabama and Louisiana were elected for consolidation under one federal judge as multidistrict litigation.

Becnel was a strong proponent for a transfer of the defective drywall litigation to New Orleans because New Orleans residents have suffered several times over, first from losing their homes to Hurricane Katrina, the again when the renovated homes were found to contain the defective drywall.

Becnel said some New Orleans residents whose houses are filled with the tainted drywall cannot afford to move, even though the walls of their houses emit sulfur-like odors, corrode appliances and cause nosebleeds and other health issues.

The multidistrict litigation was assigned to U.S. District Judge Eldon E. Fallon I New Orleans.

Fallon engineered a global settlement in the consolidated class action against manufacturers of the drug Vioxx.

Knauf Gips argued this year that claims against it should be dismissed because the company is based in Germany, and U.S. courts lack jurisdiction.

The Sarasota (Fla.) Herald Tribune reported in October that Knauf Gips attorney Richard Franklin denied that the company was "the parent company of the Knauf Chinese entities," which he said were part of "a different chain of ownership."

Attorneys for the plaintiffs and the homebuilders reportedly disagreed, and said Fallon's court should retain control.

Victor Diaz, an attorney for the plaintiffs, told the court that Knauf Gips in Germany in fact "exercises control over the operations" of the Chinese affiliates, provides technical support for them and "established the production criteria to produce the very Chinese drywall at issue in this litigation."

Because overseas product liability litigation could take years to organize and execute, Fallon denied Knauf Gips' arguments, saying this is "not a case that can wait. ... It can't linger."

Fallon is overseeing hundreds of drywall-related cases, several of them against Knauf Gips.

In January, default proceedings will begin against another Chinese drywall manufacturer, this one controlled by the Chinese government, Taishan Gypsum. Fallon found the company in default after it failed to show for proceedings in September from a series of cases from Virginia.

The Herald Tribune reported in October that the warning Fallon issued to Taishan Gypsum when it failed to appear was "his strongest warning yet" to a Chinese drywall manufacturer.

"The judge said at a hearing ... that as soon as attorneys are ready to submit evidence of monetary damages against Taishan Gypsum Co. Ltd., he is prepared to move forward, and will consider seizing any U.S. assets of the company to help pay the judgment. 'I can issue orders seizing either vessels or bank accounts or transfers, or anything of that sort that is brought to my attention,' Fallon said."

Payton's class action demands that the Knauf Gips defendants "buy back or rescind the contracts" for homes, or "remediate, repair and/or replace the drywall" and cease and desist from misrepresenting to the class and the general public that there is no defect in, or danger associated with the drywall.

And because the drywall puts plaintiffs at risk of "contracting a serious latent disease," the class demands the defendants institute a public awareness campaign to alert the public of the dangers associated with the drywall, and pay for medical monitoring.

The first jury trial against Knauf Gips from the Payton class action is set to begin in March and. The plaintiffs are Lakeview residents John and Diane Hernandez, who rebuilt their Katrina-flooded home only to find it was redone with bad drywall. The trial is slated to last two weeks.

The class is represented by Russ Herman with Herman, Herman, Katz & Cotlar of New Orleans.

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