United States District Court, E.D. Louisiana
IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ALL CASES
ORDER AND REASONS
E. FALLON, UNITED STATES DISTRICT JUDGE.
January 31, 2018, the Court issued its opinion setting common
benefit fees involving the Knauf portion of the
Chinese-Manufactured Drywall Products Liability
multidistrict litigation. Rec. Doc. 21168. After conducting
an independent review of the hours logged by common benefit
counsel and squaring it with the lodestar method and
Johnson factors, see Johnson v. Georgia Highway
Express, 488 F.2d 714 (5th Cir. 1974), the Court
determined a 52-48 division of available funds for
attorneys' fees between common benefit counsel and
individually retained contract attorneys, respectively.
the common benefit fees order, certain plaintiffs'
attorneys (“Movants, ” “contract counsel,
” or “objectors”) have filed the following
motions: (1) motion for certification of order for
interlocutory appeal under 28 U.S.C. § 1292(b), or in
the alternative, entry of final judgment under Federal Rule
of Civil Procedure 54(b); and (2) motion for interim
disbursement of attorneys' fees. Because the Court is
well versed on this case and the common benefit doctrine,
these motions were taken under submission without oral
considered the parties' briefs and applicable law, 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 in the United States,
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 foul-smelling 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
(E.D. La. 2012), aff'd, 742 F.3d 576 (5th Cir.
2014). Many of these homeowners also began to report various
physical afflictions allegedly caused by the Chinese drywall.
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 June 15, 2009
transfer order from the United States Judicial Panel on
Multidistrict Litigation, all federal cases involving
Chinese-manufactured drywall were consolidated for pretrial
proceedings in MDL 2047 in the United States District Court
for the 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. Because the Taishan entities contested
jurisdiction at the outset and refused to accept service of
process, it was necessary to conduct this litigation along
two tracks. The first track involved the Knauf entities.
Knauf entities (“Knauf”) 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 as well as litigation in state courts. The
Knauf entities did not contest jurisdiction and 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. After a period of intense
discovery, the court set various bellwether trials. From
March 15-19, 2010, 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. For purposes of the
trial, Knauf stipulated that KPT Chinese drywall “emits
certain reduced sulfur gases and the drywall emits an
odor.” Id. The Court, based on the evidence
presented, found the KPT Drywall was a defective product and
issued a detailed Findings of Fact and Conclusions of Law in
favor of Plaintiff Hernandez (“Hernandez FOF
/COL”), 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.
October 14, 2010, Knauf agreed to participate in a pilot
program to remediate a number of homes using the remediation
protocol formulated by the Court in the Hernandez
case. The Knauf pilot remediation program has, at present,
remediated over 2, 800 homes containing KPT Chinese drywall
using essentially the same protocol. At the Court's
urging, after a number of homes had been remediated, the
parties began working together to monetize this program and
make it available to a broader class of plaintiffs.
the PSC and Knauf entered into settlement discussions, and on
December 20, 2011, some two years after the formation of this
MDL. The PSC reached a global remediation settlement with
Knauf, which is designed to resolve all Knauf-related Chinese
bellwether trial involving the downstream Knauf distributor,
North River, numerous other settlement agreements were
reached with other downstream entities in the chain of
commerce with the Knauf. These entities included various
distributers, builders, and installers (and their insurers)
of the Knauf-manufactured Chinese drywall.
the terms of the settlements, the claimants with KPT Chinese
drywall (drywall manufactured by Knauf's Chinese
subsidiary) were offered several options. Under Option 1, the
claimants were offered the opportunity to receive a complete,
environmentally certified remediation of their properties.
Under Option 2, the claimants were offered cash reimbursement
in the event the home was already remediated. Finally, under
Option 3, claimants were offered a cash payment instead of
remediation as well as the opportunity to receive monetary
benefits from the Knauf downstream chain of commerce entities
to compensate them for other specifically designated losses.
of the Knauf remediation settlement, Knauf also agreed to pay
reasonable costs, including the cost of administering the
program, and an additional amount for attorneys' fees,
which includes both the fees for contract counsel and those
for common benefit counsel. The total for both attorneys'
fees and costs is $233, 078, 270.33, in which $197, 803,
738.17 is used for attorneys' fees and $35, 274, 532.16
has been used for costs. This payment of fees and costs
relieves each and every claimant of all contingency fee and
cost reimbursement obligations to both retained contract
counsel and common benefit counsel (with exception of the
Virginia litigants), and thus represents an amount which
otherwise would have been payable by the claimants out of
their settlement recovery. The claimants have now all