United States District Court, E.D. Louisiana
IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ALL CASES
WILKINSON MAG. JUDGE.
FINDINGS OF FACT & CONCLUSIONS OF LAW RELATED TO
THE JUNE 9, 2015 DAMAGES HEARING
following procedural history has been recited in several of
the Court's previous opinions, but in order to place the
current issues in context it is restated here. From 2004
through 2006, the housing boom in Florida and rebuilding
efforts necessitated by Hurricanes Rita and Katrina led to a
shortage of construction materials, including drywall. As a
result, drywall manufactured in China was brought into the
United States and used in the construction and refurbishing
of homes in coastal areas of the country, notably the Gulf
Coast and East Coast. Sometime after the installation of the
Chinese drywall, homeowners began to complain of emissions of
smelly gasses, the corrosion and blackening of metal wiring,
surfaces, and objects, and the breaking down of appliances
and electrical devices in their homes. In re
Chinese-Manufactured Drywall Prod. Liab. Litig., 894
F.Supp.2d 819, 829 (E.D. La. 2012), aff'd, 742
F.3d 576 (5th Cir. 2014). Many of these homeowners also began
to complain of various physical afflictions believed to be
caused by the Chinese drywall. Accordingly, these homeowners
began to file suit in various state and federal courts
against homebuilders, developers, installers, realtors,
brokers, suppliers, importers, exporters, distributors, and
manufacturers who were involved with the Chinese drywall.
Because of the commonality of facts in the various cases,
this litigation was designated as multidistrict litigation.
Pursuant to a Transfer Order from the United States Judicial
Panel on Multidistrict Litigation on June 15, 2009, all
federal cases involving Chinese drywall were consolidated for
pretrial proceedings in MDL 2047 in the U.S. District Court,
Eastern District of Louisiana.
Chinese drywall at issue was largely manufactured by two
groups of defendants: (1) the Knauf Entities, and (2) the
Taishan Entities. The litigation has focused upon these two
entities and their downstream associates, and has proceeded
on strikingly different tracks for the claims against each
group as described below:
Knauf Entities are German-based, international manufacturers
of building products, including drywall, whose Chinese
subsidiary, Knauf Plasterboard (Tianjin) Co., Ltd.
(“KPT”), advertised and sold its Chinese drywall
in the United States. The Knauf Entities are named defendants
in numerous cases consolidated with the MDL litigation and
litigation in state courts. The Knauf Entities first entered
their appearance in the MDL litigation on July 2, 2009.
See (R. Doc. 18). On November 2, 2009, in Pretrial
Order No. 17, KPT agreed to a limited waiver of service.
See (R. Doc. 401). On March 15-19, 2010, the Court
presided over a bellwether trial in Hernandez v. Knauf
Gips KG, Case No. 09-6050, involving a homeowner's
claims against KPT for defective drywall. See (R.
Doc. 2713). For purposes of the trial, KPT stipulated that
its Chinese drywall “emits certain reduced sulfur gases
and the drywall emits an odor.” Id. The Court
found in favor of the plaintiff family in Hernandez,
issued a detailed Findings of Fact and Conclusions of Law
(“Hernandez FOFCOL”), see id.,
and entered a Judgment in the amount of $164, 049.64,
including remediation damages in the amount of $136, 940.46,
which represented a cost of $81.13 per square foot based on
the footprint square footage of the house. See (R.
on October 14, 2010, the Knauf Entities entered into a pilot
remediation program with the Plaintiffs' Steering
Committee (“PSC”) in the MDL. This program was
largely based upon the remediation protocol formulated by the
Court in Hernandez. The Knauf pilot remediation
program is ongoing and has, at present, remediated over 2,
200 homes containing KPT Chinese drywall using the same
protocol. At the Court's urging, the parties began
working together to monetize this program and make it
available to a broader class of plaintiffs.
December 20, 2011, the Knauf Entities and the PSC entered
into a global, class Settlement Agreement (“Knauf
Settlement Agreement”), which is designed to resolve
all Knauf-related, Chinese drywall claims. See (R.
Doc. 12061-5). In addition to the Knauf Settlement Agreement,
numerous defendants in the chain-of-commerce with the Knauf
Entities have entered into class settlement agreements, the
effect of which settles almost all of the Knauf Entities'
chain-of-commerce litigation. These additional class action
settlement agreements involve the following defendants and in
most cases, their insurers: Interior Exterior Building
Supply, LP (“Interior Exterior”); the Banner
Entities; L&W Supply Corp. and USG Corp.; and a group of
numerous homebuilders, installers, suppliers. See
(R. Docs. 10033-3, 12258-3, 13375-2, 14404-2). The Court
first granted preliminary approval to all of the foregoing
settlement agreements, and after the fairness hearing,
certified and granted approval for the class settlements.
Although the Court occasionally must deal with common benefit
fees, settlement administration and enforcement issues, the
Knauf portion of this litigation is largely resolved.
contrast to the straightforwardness with which the MDL
litigation proceeded against the Knauf Defendants, the
litigation against the Chinese entities has taken a different
course. The Chinese Defendants in the litigation include the
principal Chinese-based Defendant Taishan, namely, Taishan
Gypsum Co. Ltd. (“TG”) and its wholly-owned
subsidiary, Taian Taishan Plasterboard Co., Ltd.
(“TTP”) (collectively “Taishan” or
“Taishan Entities”). Other Chinese-based
Defendants include the CNBM Defendants (“CNBM”),
comprised of the China National Building Materials Group
Corporation, China National Building Materials Company
Limited, China National Building Materials & Equipment
Import & Export Corporation, and CNBM Forest Products
(Canada) Ltd; and the BNBM Defendants (“BNMB”),
comprised of Beijing New Building Materials Public Limited
Company, and Beijing New Building Material (Group) Co. Ltd.
As discussed below, the course of the litigation involving
the Taishan Entities and other Chinese-based defendants has
not followed the same trajectory or enjoyed the same measure
of resolution as that involving the Knauf Entities.
alleged manufacturer of Chinese drywall which has been
installed in plaintiffs' properties, Taishan is a named
defendant in numerous cases in both the MDL litigation and
litigation filed in state courts. The Court's initial
inquiry regarding Taishan involved four cases in the MDL in
which Taishan was served, entered an appearance, and in two
of these cases, subjected to default judgment proceedings.
These four cases are: Germano v. Taishan Gypsum Co.,
Ltd., Case No. 09-6687; The Mitchell Co., Inc. v.
Knauf Gips KG, Case No. 09-4115; Gross v. Knauf Gips
KG, Case No. 09-6690; and Wiltz v. Beijing New
Building Materials Public Ltd., Co., Case No. 10-361.
The Court will briefly discuss each of these cases as they
pertain to Taishan before detailing the overall course of the
MDL litigation involving the claims against Taishan.
has served as the main vehicle for the MDL litigation
involving Taishan, particularly TG. Germano was
filed originally in the U.S. District Court for the Eastern
District of Virginia as a putative class action against TG by
the owners of homes located in Virginia which allegedly
contain TG-manufactured Chinese drywall. See (R.
Docs. 1-1, 1-2) (Case No. 09-6678). On August 3, 2009, TG was
validly served. See (R. Doc. 1-7) (Case No.
09-6687). Thereafter, on October 13, 2009, Germano
was transferred to the U.S. District Court for the Eastern
District of Louisiana and consolidated with the MDL
litigation on October 13, 2009. (R. Doc. 1) (Case No.
09-6678). Subsequent to transfer, Plaintiffs filed a Second
Amended Complaint (“SAC”), which was granted,
expanding the class to a nationwide class. See (R.
Doc. 470) (Case No. 09-md-2047). The Court then permitted the
intervention of 14 individual plaintiffs (the
“Intervening-Plaintiffs”). (R. Doc. 641).
was originally filed in the U.S. District Court for the
Northern District of Florida as a class action on behalf of
homebuilders in the states of Louisiana, Georgia, Texas and
Florida who used drywall manufactured by TG for the
construction, repair, or remodeling of properties, and who,
as a result, incurred expenses associated with repair or
replacement of this drywall and/or other property damaged by
the drywall, and/or incurred liability for property damages.
See (R. Doc. 1-1) (Case No. 09-4115). On May 8,
2009, service was executed on TG. See (R. Doc. 52)
(Case No. 09-md-2047). Shortly thereafter, Mitchell
was transferred to the Eastern District of Louisiana and
consolidated with the MDL litigation. See (R. Doc.
1) (Case No. 09-4115).
and Wiltz were both filed in the Eastern District of
Louisiana and consolidated with the MDL litigation as
nationwide class actions by property owners whose homes
contain Taishan-manufactured Chinese drywall. See
(R. Doc. 1) (Case No. 09-6690); (R. Docs. 1, 1-1) (Case No.
10-361). Taishan was served or entered an appearance in both
cases. See (R. Docs. 2140, 2141, 2553); (R. Docs.
7408, 7409). Gross involves claims against
“indeterminate defendants” who have allegedly
concealed their identity and are allegedly responsible for
the Chinese drywall in plaintiff class members'
properties. See (R. Doc. 1) (Case No. 09-6690).
Wiltz, on the other hand, is a more typical class
action filed on behalf of property owners against Taishan as
a result of the damage caused by the presence of
Taishan's drywall in their properties. See (R.
Docs. 1, 1-1) (Case No. 10-361).
first issues in the MDL litigation involving Taishan arose
when TG failed to timely answer or otherwise enter an
appearance in Mitchell and Germano, despite
the fact that TG had been properly served in each case.
See (R. Doc. 52); (R. Doc. 1-7) (Case No. 09-6687).
After affording TG more than a reasonable amount of time to
answer or enter an appearance, the Court entered a
preliminary default against TG in both cases (R. Docs. 277,
487) and moved forward with an evidentiary hearing in
furtherance of the Preliminary Default in Germano on
the Intervening-Plaintiffs' claimed damages. See
(R. Doc. 502, 1223, 1258, 2380). At this hearing, the
Intervening-Plaintiffs presented evidence specific to seven
individual properties, which served as bellwether cases.
Following this hearing, which occurred on February 19 and 20,
2010, the Court issued detailed Findings of Fact &
Conclusions of Law. See (R. Doc. 2380, hereinafter
“Germano FOFCOL”). The Germano
FOFCOL noted that the average cost per square foot to repair
the Germano properties was $86 and that the average
cost was based on “the average of independent quotes
from two local reputable Virginia contractors.”
Id. at 57. Further, the Germano FOFCOL
found that the “homes of the seven
Plaintiff-intervenors are representative of a cross-section
of contaminated homes.” Id. at 62. On May 11,
2010, the Court issued a Final Default Judgment against TG in
Germano, in favor of the Intervening-Plaintiffs, in
the amount of $2, 609, 129.99. (R. Doc. 3031). On the last
day to timely do so, June 10, 2010, TG filed a Notice of
Appeal of the Default Judgment in Germano. (R. Doc.
3670). On this same day, TG also entered its appearance in
Germano and Mitchell. See (R. Doc.
TG entered its appearance in the MDL, it quickly sought to
have the Final Default Judgment in Germano and the
Preliminary Default in Mitchell vacated for lack of
personal jurisdiction, as well as on procedural grounds.
See (R. Docs. 5436, 5583). However, because of the
pending appeal, this Court was without jurisdiction to
address any motions filed by TG. See (R. Doc. 5504).
Accordingly, TG sought and was granted by the Fifth Circuit,
a stay of its appeal to allow this Court to provide an
indicative ruling on TG's motions to vacate the
preliminary default and default judgments. See (R.
Doc. 5649). In response, this Court issued an order pursuant
to Federal Rule of Civil Procedure 62.1 to allow it to
consider TG's motions. See (R. Doc. 6101). In
the fall of 2010, the Court directed the parties to commence
the personal jurisdiction discovery necessary to resolve
TG's motions to vacate. Sometime after the initial
discovery, the parties agreed to expand the discovery beyond
the Germano and Mitchell cases to other
cases in which Taishan been served, including Gross
personal jurisdiction discovery of Taishan began in October
2010, see, e.g., (R. Docs. 5839, 5840), and
continued over the year-and-a-half leading up to the filing
of Taishan's motions. Discovery has included the
production of both written and electronic documents, as well
as depositions of Taishan's corporate representatives,
with each type of discovery proceeding in a parallel fashion.
This discovery has often been contentious, requiring close
supervision by the Court. The Court has presided over
regularly-scheduled status conferences to keep the parties on
track, and conducted hearings and issued rulings to resolve
numerous discovery-related disputes. See, e.g., (R.
Docs. 7136, 7511).
April 2012, TG and TTP re-filed various motions: a motion to
dismiss for lack of personal jurisdiction, a motion to vacate
the entry of default and to dismiss the action in
Mitchell, a motion to dismiss the complaint in
Gross, and a motion to dismiss the complaint in
Wiltz. Responses in opposition were filed by the
PSC, Interior Exterior, the Banner Entities, and Certain
Florida Homebuilders, (R. Docs. 14202, 14204, 14209, 14216,
14356, 14372, 14390, 14392, 14391-4), with other parties
joining in these motions, including the State of Louisiana
(collectively the “Respondents”). Prior to the
hearing, evidentiary objections were raised by Taishan, which
the Respondents addressed. On June 29, 2012, over three years
since the creation of MDL 2047, and after a year-and-a-half
of personal jurisdiction discovery on Taishan, the Court
presided over a hearing on Taishan's motions. The Court
coordinated its hearing with Judge Joseph Farina of the 11th
Judicial Circuit Court of Florida, who had a similar motion
involving Taishan's challenge to personal jurisdiction.
September 4, 2012, this Court issued a 142-page order
regarding Taishan's motions in Germano,
Mitchell, Gross, and Wiltz, in
which the Court denied the motions to vacate, denied the
motions to dismiss, and held that it maintained personal
jurisdiction over Taishan. In re: Chinese-Manufactured
Drywall Products Liability Litigation, 894 F.Supp.2d 819
(E.D. La. 2012). The Court also ruled that TTP was operating
as the alter ego of TG. The Court certified an interlocutory
appeal and the Fifth Circuit granted permission to appeal. In
January and May of 2014, two different panels of the Fifth
Circuit affirmed this Court's ruling and held that this
Court maintained personal jurisdiction over Taishan and TTP.
In re: Chinese-Manufactured Drywall Products Liability
Litigation, 753 F.3d 521 (5th Cir. 2014); In re:
Chinese-Manufactured Drywall Products Liability
Litigation, 742 F.3d 576 (5th Cir. 2014). The time for
writs of certiorari passed and the issue of personal
jurisdiction over Taishan became firmly settled.
Court set a judgment debtor examination for July 17, 2014 and
ordered Taishan to appear. Instead of appearing, however,
Taishan fired its Hogan Lovells attorneys and indicated that
it was again “withdrawing” from the litigation.
The Court held Taishan in contempt of court. (R. Doc. 17869).
Pursuant to this contempt order, Taishan was ordered to pay
$15, 000 in attorneys' fees to Plaintiffs' counsel
and $40, 000 as a penalty for contempt. The contempt order
also enjoined Taishan and its affiliates and subsidiaries
from conducting business in the United States until or unless
it participated in the judicial process. In addition, the
contempt order provided that if Taishan or its affiliates or
alter egos did business in violation of the contempt order,
they would forfeit 25% of the earnings. The Court did not
immediately permit Taishan's terminated attorneys to
withdraw from the litigation, in order to ensure that Taishan
was on notice of the progress of the proceedings,
Taishan's contempt and “withdrawal”
23, 2014, Plaintiffs filed their Omnibus Motion for Class
Certification pursuant to Rule 23(b)(3). (R. Doc. 17883).
Taishan did not appear and, on September 26, 2014, this Court
certified a class of “[a]ll owners of real properties
in the United States, who are named Plaintiffs [in the
various MDL complaints] asserting claims for remediated
damages arising from, or otherwise related to [Taishan]
drywall. See (R. Doc. 18028 at 34-35, hereinafter
“Class Certification FOFCOL”). The Court so ruled
following a motion from the PSC. (R. Doc. 18086). The motion
was unopposed by any party.
Court set a class damages hearing for February 12, 2015. At
that hearing, BNBM entered an appearance for the first time
in this litigation and asked for a continuance to prepare for
a class damages hearing. (R. Doc. 18331). The Court granted
the request for a continuance. Taishan subsequently entered
an appearance with its new counsel, Alston & Bird, LLP.
(R. Doc. 18352). CNBM also entered an appearance for the
first time in this litigation. On March 17, 2015, the Court
ordered Taishan to purge itself of contempt and again
continued the damages hearing to April 28, 2015. (R. Doc.
18831). Thereafter, the Court granted yet another request for
a continuance and set the class damages hearing for June 9,
hearing on damages proceeded on June 9, 2015. The PSC
presented two witnesses. First, the PSC called Jacob Woody to
testify. Mr. Woody is an attorney employed by BrownGreer.
BrownGreer serves as Settlement Administrator for the Knauf
Settlement and Claims Administrator for the Global, Banner,
and InEx Settlements (collectively referred to as the
“GBI settlements”). The PSC then called George J.
Inglis, a Professional Engineer and Senior Project Consultant
with Berman & Wright Architecture, Engineering and
Planning, as its designated expert to testify about
remediation damage estimates. Defendants called David
Pogorolich as their first damages rebuttal expert. Pogorolich
is a Director at Navigant Consulting and a licensed Certified
General Contractor in the State of Florida. Defendants called
Dr. M. Laurentis Marais as their second expert. Dr. Marais is
Vice President and Principal Consultant at William E. Wecker
Associates, Inc. The Court earlier held that Dr. Marais was
an expert in statistical science and sampling but was not
qualified to testify about building damage or remediation
Court has carefully considered the testimony of all of the
witnesses and the exhibits entered into evidence during the
hearing, as well as the record. Pursuant to Rule 52(a) of the
Federal Rules of Civil Procedure, the Court issues the
following Findings of Fact and Conclusions of Law. To the
extent that any finding of fact may be construed as a
conclusion of law, the Court hereby adopts it as such and to
the extent that any conclusion of law constitutes a finding
of fact, the Court adopts it as such. Notwithstanding the
foregoing, the Court would like to make clear at the outset
that the instant Findings of Fact and Conclusions of Laws
relate to the property damages caused by Chinese Drywall. The
June 9, 2015, Hearing was held for the sole purpose of
hearing testimony regarding the property damages aspect of
this MDL litigation. Accordingly, the findings and
conclusions herein do not address issues of alter ego,
jurisdiction or contempt.
BACKGROUND - GYPSUM & DRYWALL
is a widely used construction material that is also known as
gypsum board, wallboard, plasterboard, and sheetrock.
P2.0006-0003 (Cozen O'Connor, Chinese
Drywall Litigation: Subrogation Whitepaper (2009)). A
drywall panel is composed of a layer of hardened gypsum
plaster sandwiched between two layers of paper liner.
Id. Gypsum is a hydrated calcium sulfate, composed
of two molecules of water (H2O) and one of calcium sulfate
(CaSO4). Id. The gypsum used to make drywall can be
created both naturally and synthetically. Id.
Naturally occurring gypsum is a deposit largely the result of
the evaporation of water in ancient inland seas which
contains large amounts of dissolved gypsum. P2.0051-001
(Treatment and Disposal of Gypsum Board Waste,
Construction Dimension, February 1992 at 5). Synthetic gypsum
is chemically identical to mineral gypsum, but the amount and
types of trace materials and unreacted sorbents found in the
source material can vary among power plants and among mines
from which it originates. P2.0006-0003 (Cozen
O'Connor, Chinese Drywall Litigation: Subrogation
Whitepaper (2009)). Synthetic gypsum is generally
obtained in the final stage of industrial processes, where
sulfuric acid is neutralized by a calcium salt; for example
it is produced as a byproduct of coal combustion power
plants. Id.; P2.0240.0014 (ASTM International
report). To make drywall from gypsum, first gypsum is crushed
or ground up and heated to about 350 degrees Fahrenheit to
remove approximately seventy-five percent (75%) of its water
content in a process called calcining, thereafter becoming a
fine white powder. P2.0006-0003 (Cozen O'Connor,
Chinese Drywall Litigation: Subrogation Whitepaper
(2009)); P2.0051-0001 (Treatment and Disposal of Gypsum
Board Waste, Construction Dimensions, February 1992 at
5). Second, the calcined gypsum is mixed with water, foam,
and other additives to form a slurry which is fed between
continuous sheets of paper on a continuous belt line.
Id. Third, as the board moves down the belt line,
the calcined gypsum recrystalizes or rehydrates, reverting to
its original gypsum state, and the paper sheets become firmly
bonded to the rehydrated core. Id. Finally, the
board is cut to length and conveyed through dryers to remove
free moisture. Id.
gypsum was used as far back as 3700 B.C. by the Egyptians as
a base to preserve the wall murals in the pyramids.
P2.0051-0001 (Treatment and Disposal of Gypsum Board
Waste, Construction Dimension, February 1992 at 6);
P2.0240-0022 to -0023 (ASTM International, Oct. 2009 at
9-10). The Roman Empire used gypsum for interior purposes,
such as the interior walls of Pompeii. Id. There is
little information of the use of gypsum plaster during the
Middle Ages. Id. The modern science of gypsum began
with the discoveries by Antoine Lavoisier outlined in his two
papers on gypsum presented to the French Academy of Sciences
in 1765 and 1766. P2.0240-0022 to -0023 (ASTM International,
Oct. 2009 at 11). In the United States, the use of gypsum
board started in the early 1950s and was driven by the
following issues, (1) avoiding the drying time of plaster
which allowed earlier occupancy of buildings, and (2) the
lack of skilled plasterers in many locations. P2.0240-0026
(ASTM International, Oct. 2009, pg. 13). Gypsum is fire
resistant, thus making it a preferable material for drywall.
P2.0051-0001 (Treatment and Disposal of Gypsum Board
Waste, Construction Dimensions, February 1992 at 6).
Since the 1950's, drywall has become a primary source
material for buildings in the United States. As mentioned
above, due to a shortage of U.S.-manufactured drywall,
Chinese-manufactured drywall was brought into the United
GENERAL FINDINGS ON CHINESE DRYWALL
Chinese Drywall is Defective
As established by the U.S. Consumer Product Safety Commission
(“CPSC”), the Florida Dept. of Health, other
scientific entities, and this Court in the Germano
FOFCOL, the defective nature of this Chinese drywall is
The Chinese drywall in question has a significantly higher
average concentration of strontium and significantly more
detectable levels of elemental sulfur. It releases three main
gases: (i) hydrogen sulfide (H2S), (ii) carbonyl sulfide
(COS), and (iii) carbon disulfide (CS2). Germano
FOFCOL at 12. The Plaintiffs' experts detected sulfur gas
emissions by conducting laboratory tests on samples of this
Chinese drywall. The CPSC, Florida Dept. of Health and other
investigatory agencies and firms also reported that Chinese
drywall emits sulfur gases. Id. at 12-13.
The sulfur gases released by Chinese drywall are irritating
to the human body during exposure. Exposed individuals
reported irritation of the eyes, respiratory system, and
skin, among other things. Id. at 13.
The sulfur gases released by this Chinese drywall cause
offending odors in homes, making them hard if not impossible
to live in, and are corrosive to metals, particularly copper
and silver, which are uniquely vulnerable to corrosion from
sulfur gases. Id. The sulfur gases emitted from
Chinese drywall create an environment classified among the
most severe industrial corrosive environments in the Battelle
Classification scheme and the standards established by the
International Standards Association. Id. at 19-20.
Forensic examination by scientific and technical experts,
including testing of building materials in the damaged homes
of the Germano Plaintiffs, further confirmed the
wide-spread impact of the corrosive environment, which
included corrosion of copper wiring, copper pipes and
silver-based components in electronics, including HVAC
circuitry and brazing on pipes, causing premature failure of
electrical and mechanical devices. Id. at 14, 23.
Property Damage Arising From Chinese Drywall Requires Total
The Court adopts and incorporates herein the Germano
FOFCOL, which accurately explains the scope of remediation
required for class plaintiffs' properties.
Germano FOFCOL at 29-31; In re Chinese
Manufactured Drywall Prod. Liab. Litig., 706 F.Supp.2d
655 (E.D. La. 2010).
After considered analysis of the impracticality and risks of
the selective remediation approach, the Court found in
Germano and re-affirms herein that remediating a
Chinese drywall property requires complete remediation and
cleaning; thus, the Court again rejects any remediation
approach that favors selective remediation such as the one
originally proposed by the Knauf experts in Germano.
Id. The remediation protocol fashioned in
Germano is evidence based and has been confirmed via
its application in the actual remediation of several thousand
The scientific and practical constructability evidence
presented before this Court, which relies on long-term
observation, sampling and testing of properties with Chinese
drywall, scientific investigation of Chinese drywall and the
science of corrosion, practical construction experience
(particularly the experience of the national builders), and
electric and building codes, demonstrates that proper
remediation of the danger posed by Chinese drywall must
include the removal of all drywall, all electrical
wiring, the entire HVAC system, and many other items such as
appliances, carpet, cabinetry, trim work and flooring.
Germano FOFCOL at 27-55; Hernandez FOFCOL
at 20-34; Transcript at pp. 106:8-110:3.
This scope of remediation is necessary even in homes with
“mixed” drywall, where Chinese and non-reactive
drywall may be found, because the sulfur gases disburse and
circulate creating a generally corrosive environment and,
moreover, there is no reliable or practicable method for
selective identification and removal of Chinese drywall in
mixed homes. Germano FOFCOL at 27-40. Large Florida
homebuilders with extensive experience in Chinese drywall
remediation have determined that removal of all drywall in
affected homes is efficient and cost-effective, and that
attempted selective identification and removal of CDW is
neither efficient nor cost-effective. Id. at 31.
It is both economical and practical to remove all the wiring
while the drywall is removed, rather than removing only some
of the wiring at the time of remediation and then risk later
having to tear down the drywall again in the event that
additional wiring exposed to the sulfur gases is harmed or
fails. Additionally, the low-voltage wiring supporting life
and safety devices such as fire alarms and smoke detectors
should be removed and replaced because of the low cost of
replacement when compared with the high risk of injury or
death if these devices are not functioning properly.
Id. at 39.
Copper pipes and HVAC units must be replaced. It is more
cost-effective and less time consuming to remove and replace
all copper pipes and the HVAC units in Chinese drywall
properties as opposed to attempting to “clean”
the corrosion off copper components and HVAC ductwork.
Id. at 39-46.
The evidence shows that carpeting must be replaced because
attempting to remove and store the carpet during the
remediation is not cost-effective. Similarly, hardwood or
vinyl flooring must be replaced because dust generated during
the remediation process will intrude into the cracks and
crevices of the flooring. However, tile flooring may be
properly protected during the remediation process, and if
this can be done, the Court finds that it does not need to be
removed and replaced. Id. at 49-50.
Similarly, it is more cost-effective to replace cabinets,
countertops, trim, crown molding, baseboards, bathroom
fixtures, and insulation than attempt exacting removal,
storage and subsequent re-installation. Id. at
In order to eliminate the tremendous amount of dust produced
from removal of the drywall, and to eliminate the offensive
odor of the Chinese drywall, properties need to be cleaned
and aired-out after remediation is complete. A HEPA vacuum
should be used to remove the fine drywall dust and other
particles. Additionally, properties should be wet-wiped or
power washed to eradicate any remaining particles.
Id. at 53.
Following the deconstructing phase of the remediation
process, the properties will need to be inspected by an
independent and qualified engineering company. This is
important for insurance, resale potential, and peace of mind
for the present occupants. The independent and qualified
engineering company should provide a letter or report
indicating that the remediation has been correctly performed.
Id. at 53-54.
The necessary remediation proposed by the PSC is essentially
the same in all material respects as the scope of remediation
being utilized by national builders Beazer Homes and Lennar
Homes. National builders Beazer and Lennar have also
independently assessed the need for complete remediation
through scientific evidence, practical cost considerations,
and hands-on experience with the problem. Although in theory,
a thorough cleaning or selective replacement of contaminated
drywall may be an option, in practice, the evidence does not
support the feasibility of such an option. The alternative
remedies to a complete remediation that have been tried or
suggested, such as selective identification and removal of
Chinese drywall, “cleaning” corroded wires,
switches, and contact points, leaving corroded wires and
switches in place, clipping the exposed ends of the corroded
wires and splicing wires, or making new junction boxes, will
not make the plaintiff whole, will not be adequate from a
scientific or practical standpoint, and will not provide
safety and marketability to the property owner. Id.
Thus, in sum, the appropriate scope of remediation includes:
removal and disposal of all damaged and affected building
components in the properties, replacement of all drywall,
replacement of entire HVAC assembly, replacement of entire
electrical system (including receptacles and switches),
replacement of all copper and silver plumbing and electrical
switches, replacement of all items that are likely to be
damaged during demolition (i.e., cabinets, trim and
baseboards), replacement of items that are ultimately more
efficient to replace than restore, such as carpet and
flooring, a complete cleaning of the premises, and
confirmation from an independent and qualified engineering
company to confirm the quality and completeness of the
cleanup and provide the necessary assurances for insurance,
resale potential and peace of mind for the affected property
owners. As mentioned, the scope of remediation is supported
by the testimony of the experts and confirmed by the
remediation of over 2, 200 homes carried out in the Knauf
LIABILITY FOR EXPOSURE IN CLASS PLAINTIFFS'
The Germano FOFCOL resolved a multitude of factual
and legal issues including the scope of remediation and the
right to recover remediation damages. The Class Certification
FOFCOL essentially adopted the Germano ruling
regarding liability and causation. The Court adopts and
incorporates herein the Germano and Class
Certification Tools and emphasizes its prior holding that
Taishan and its affiliates are liable to the Class
The Court already has found the Taishan Defendants in
default. The Germano Plaintiffs obtained a default
judgment against Taishan on November 20, 2009. See In re
Chinese-Manufactured Drywall Prod. Liab. Litig., 742
F.3d 576 (5th Cir. 2014). Additionally, the Taishan
affiliates have also been held in default with respect to the
proceedings in Wiltz, Gross, and
Amorin. On February 1, 2011, BNBM, BNBM Group, CNBM,
and CNBM Group were held in default in the Gross
proceedings. (R. Doc. 7302). These same entities were again
held in default in Gross on August 7, 2012
(i.e., as to the omnibus interventions complaint
that was filed in Gross). (R. Doc. 15687). On
February 24, 2011, BNBM was held in default in the
Wiltz proceedings. (R. Doc. 7735). On July 1, 2014,
Taishan, TTP, and CNBM were held in default with respect to
the Amorin case originally filed in this Court (Case
No. 2:11-cv-1395) (R. Doc. 17814). Pursuant to this same
Order, Taishan and TTP were held in default with respect to
the Amorin complaint originally filed in the
Southern District of Florida prior to its transfer to this
Court (Case No. 2:11-cv-1672). Id. Also on July 1,
2014, Taishan, TTP, BNBM, CNBM, and CNBM Group were held in
default with ...