United States District Court, E.D. Louisiana
IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO
Knauf Gips KG, 2:09-cv-6690 Amorin
Taishan Gypsum, 2:11-cv-1395 Amorin
Taishan Gypsum, 2:11-cv-1673 Wiltz
Beijing New Building Materials Public Limited Co., 10-cv-361
ORDER AND REASONS
E. FALLON, UNITED STATES DISTRICT JUDGE
China National Building Materials Co., Ltd. (“CNBM
Company”), Beijing New Building Material (Group)
Company, Limited (“BNBM Group”), and Beijing New
Building Materials Public Limited Company (“BNBM
PLC”) (collectively, the “Movants” or
“Defendants”) have filed a motion to vacate the
Court's default judgments against them. Rec. Doc. 21050.
Plaintiffs oppose the motion. The Court held oral argument on
this matter on December 14, 2017. Having considered the
parties' submissions, the extensive record, and the
applicable laws, the Court now issues this Order and Reasons.
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 to construct and refurbish 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. See In re
Chinese-Manufactured Drywall Prods. Liab. Litig., 894
F.Supp.2d 819, 829-30 (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.
homeowners then 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 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 09-2047
before this Court.
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
The Knauf Defendants
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.
Knauf Entities first entered their appearance in the MDL
litigation on July 2, 2009. Rec. Doc. 18. Thereafter, 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. The Court found in favor of the
plaintiff family in Hernandez, issued a detailed
Findings of Fact and Conclusions of Law, 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.
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
from the evidence in Hernandez. The Knauf pilot
remediation program is ongoing and has, at present,
remediated more than 2, 200 homes containing KPT Chinese
drywall using the same general protocol. At the Court's
urging, the parties began working together to monetize this
program and make it available to a broader class of
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 Rec.
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. Although the Court occasionally
must deal with settlement administration and enforcement
issues, the Knauf portion of this litigation is largely
The Chinese Defendants
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 and BNBM Entities.
Court's initial inquiry regarding Taishan involved four
cases in this MDL: (1) Germano v. Taishan Gypsum Co.
(Case No. 09-6687); (2) The Mitchell Co. v. Knauf Gips
KG (Case No. 09-4115); (3) Gross v. Knauf Gips
KG (Case No. 09-6690); and (4) Wiltz v. Beijing New
Building Materials Public Ltd. (Case No. 10-361).
first issues involving Taishan arose when Taishan failed to
timely answer or otherwise enter an appearance in
Mitchell and Germano, despite the fact that
it had been properly served in each case. See Rec.
Docs. 52 & 1-7 (Case No. 09-6687). Thus, after an
extended period of time, the Court entered preliminary
defaults against Taishan in both of these cases. See
Rec. Docs. 277 & 487.
the Court moved forward with an evidentiary hearing in
furtherance of the Preliminary Default in Germano on
the Plaintiffs' claimed damages. See Rec. Docs.
502, 1223, 1258 & 2380. At this hearing, the Plaintiffs
presented evidence specific to seven individual properties,
which served as bellwether cases. Following this hearing on
February 19 and 20, 2010, the Court issued detailed Findings
of Fact and Conclusions of Law. See Rec. Doc. 2380.
On May 11, 2010, the Court issued a Default Judgment against
Taishan in Germano and in favor of the Plaintiffs.
Rec. Doc. 3013. On June 10, 2010, the last day to timely
appeal, Taishan filed a Notice of Appeal of the Default
Judgment in Germano and entered its appearance in
Germano and Mitchell. Rec. Docs. 3668 &
Taishan entered its appearance in the MDL, it quickly sought
to have the Default Judgment in Germano and the
Preliminary Default in Mitchell vacated for lack of
personal jurisdiction. See Rec. Docs. 5436 &
5583. In the fall of 2010, the Court directed the parties to
commence the personal jurisdiction discovery necessary to
resolve Taishan'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 had been served, including
Gross and Wiltz.
personal jurisdiction discovery of Taishan began in October
2010. See Rec. Docs. 5839 & 5840. 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 Rec. Docs. 7136 & 7511.
April 2012, Taishan filed various motions, including its
motions to dismiss for lack of personal jurisdiction. On June
29, 2012, over three years since the creation of this MDL,
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
the Honorable 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 dismiss, and held that
it maintained personal jurisdiction over Taishan. In re
Chinese-Manufactured Drywall Prods. Liab. Litig., 894
F.Supp.2d 819 (E.D. La. 2012). The Court also ruled that
Taishan was operating as the alter ego of TG. The Court
certified an interlocutory appeal, and the Fifth Circuit
granted permission to appeal.
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 Prods. Liab.
Litig., 753 F.3d 521 (5th Cir. 2014); In re
Chinese-Manufactured Drywall Prods. Liab. Litig., 742
F.3d 576 (5th Cir. 2014). The time for writ of certiorari
passed, and the issue of personal jurisdiction over Taishan
became firmly and finally settled. Nevertheless, Taishan
refused to voluntarily participate in this suit.
20, 2014, the Court ordered Taishan to appear in open court
on July 17, 2014 to be examined as a judgment debtor. Rec.
Doc. 17774. Taishan failed to appear for the July 17, 2014
Judgment Debtor Examination, and the Court held Taishan in
contempt and ordered that Taishan pay $15, 000.00 in
attorney's fees to Plaintiffs' counsel; that Taishan
pay $40, 000.00 as a penalty for contempt; that Taishan and
any of its affiliates or subsidiaries be enjoined from
conducting any business in the United States until or unless
it participates in this judicial process; and that if Taishan
violates the injunction, it must pay a further penalty of
25-percent of the profits earned by the Company or its
affiliate who violate the Order for the year of the
violation. See Rec. Doc. 17869.
23, 2014, Plaintiffs filed their Omnibus Motion for Class
Certification pursuant to Rule 23(b)(3). Rec. 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 on the complaints in Amorin,
Germano, Gross, and/or Wiltz
(i.e., not an absent class member), asserting claims for
remediated damages arising from, or otherwise related to
Chinese Drywall manufactured, sold, distributed, supplied,
marketed, inspected, imported or delivered by the Taishan
In re Chinese-Manufactured Drywall Prods. Liab.
Litig., 2014 WL 4809520, at *16 (E.D. La. Sept. 26,
finally entered an appearance with the Court in February
2015, and, to satisfy the contempt, Taishan paid both the sum
of $15, 000.00 in attorney's fees to Plaintiffs'
counsel and the contempt penalty of $40, 000.00 in March
2015. Rec. Doc. 18764. On March 17, 2015, the Court ordered
Taishan and the BNBM and CNBM Entities to participate in
expedited discovery related to “the relationship