United States District Court, E.D. Louisiana
IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO WINSTON BURNS, JR. AND WENDY BURNS
ORDER AND REASONS
E. FALLON UNITED STATES DISTRICT JUDGE
Writs Act, 28 U.S.C. § 1651, empowers federal courts to
enjoin state proceedings that interfere, derogate, or
conflict with federal judgments, orders, or settlements. This
authority, though great and broad, is limited by the
Anti-Injunction Act, 28 U.S.C. § 2283, which demands
respect for state courts. Arguing that exceptions to the
Anti-Injunction Act warrant exercise of such extraordinary
authority, Defendant Interior Exterior Building Supply
(“InEx”) invites this Court to halt an ongoing
Louisiana judicial proceeding against it based on a
settlement agreement reached in the Chinese-Manufactured
Drywall multidistrict litigation. See Rec.
state court action in question is filed by Winston Burns, Jr.
and Wendy Burns against Livers Construction, Inc., and
relates to the installation of allegedly defective Chinese
drywall in their residence. Subsequently, Livers filed a
third-party demand against InEx, claiming that InEx sold
Livers the allegedly defective drywall. The Burns oppose
InEx's instant motion for injunctive relief. Rec. Doc.
21032. The Court heard oral argument in this matter on
January 23, 2018. Having considered the parties'
submissions, arguments, and applicable law, the Court now
issues this Order and Reasons.
Chinese-Manufactured Drywall Multidistrict
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
foul-smelling gas, 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
group. The instant motion and opinion relate to matters in
the Knauf track.
The Knauf Defendant
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, 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'
Interior Exterior Building Supply
result of its role in purchasing and supplying allegedly
defective Chinese drywall, InEx is among the defendants in
the Knauf Entities' chain-of-commerce litigation.
Following Hurricane Katrina, InEx, a major supplier of
construction materials in the Gulf Coast area, distributed
Chinese drywall manufactured both by various Knauf entities
and by certain Taishan entities. InEx sold drywall to
suppliers, developers, homebuilders, and installers in a
number of states, predominantly Alabama, Louisiana,
Mississippi, and Texas. The InEx-related Chinese drywall
eventually ended up in the homes of numerous individuals who
filed claims against InEx, seeking relief for the property
damage and personal injuries they have sustained as a result
of the presence of drywall in their homes. Additionally,
homebuilders who repaired these homes at their own cost have
filed claims against InEx.
of its role with Chinese drywall, InEx became the subject of
a class certification hearing and a jury trial, both of which
were initially scheduled for the summer of 2011. In
preparation for these proceedings, extensive discovery was
conducted. As a result, various mediations between the
Plaintiffs' Steering Committee, InEx, and the Insurers
were held in an effort to resolve the claims against InEx,
which resulted in the InEx Settlement Agreement.
Knauf and InEx Settlement Agreements
February 2013, the Court issued an Order and Judgment
concerning the Knauf entities. Rec. Doc. 16570. The Order and
Judgment certified five settlement classes-InEx, Banner,
Knauf, L&W Supply Corporation, and Global Settlement-and
granted final approval to five individual class settlements
between the plaintiffs suffering property damages and
personal injuries from Chinese drywall and the various Knauf
entities responsible for the use of Chinese drywall in
affected properties (“Settling Defendants”). The
five class settlements included in the Order and Judgment are