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In re Chinese-Manufactured Drywall Products Liability Litigation

United States District Court, E.D. Louisiana

November 6, 2017


         SECTION L (2)


          ELDON E. FALLON United States District Judge.

         Before the Court is Claimants Daniel and Amy Carter's motion for reconsideration. Rec. Doc. 20951. Defendant Knauf opposes the motion. Rec. Doc. 20965. Having considered the parties' arguments, submissions, and applicable law, the Court now issues this Order and Reasons.

         I. BACKGROUND

         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), qff'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 dry wall.

         Because of the commonality of facts in the various cases, this litigation was designated as a 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 United States District Court for the Eastern District of Louisiana.

         The 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. The present motion relates to the proceedings against the Knauf Entities.

         A. Knauf Entities

         The 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 Rec. Doc. 18. On November 2, 2009, in Pretrial Order No. 17, KPT agreed to a limited waiver of service. See Rec. 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 Rec. 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 Rec. Doc. 3012.

         Thereafter, 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, 000 homes containing KPT Chinese dry wall using the same protocol.

         B. Claimants' Procedural History

         Claimants owned an affected property with Chinese drywall located at 261 W. Robert E. Lee Boulevard, New Orleans, LA 70124 (the "Property"). Rec. Doc. 20764 at 2. Claimants self-remediated the Property between February and April 2010. Claimants later filed claims against the Knauf Defendants and subsequently became class members to the Knauf Class Settlement Agreement. Claimants did not opt out of the Knauf Class Settlement Agreement and sought remedy and benefits under the Already Remediated Properties Protocol.

         Initially, this matter came to mediation on February 15, 2017 before Special Master Daniel J. Balhoff ("Special Master") regarding Mr. and Mrs. Carter's Already Remediated Property claim. On April 27, 2017, the Special Master rendered an Opinion and Decree, which found (1) in favor of Knauf and (2) that the failure of Claimants to preserve evidence was prejudicial. Rec. Doc. 20764-1. Claimants then filed an objection to the Special Master's Opinion and Decree pursuant to Section 4.2.9 of the Knauf Class Settlement Agreement. Rec. Doc. 20764. This Court reviewed the record and briefing before the Special Master, the objection of Claimants, and the Knauf Defendants' opposition before overruling the objection on August 28, 2017. Rec. Doc. 20933.

         II. ...

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