United States District Court, E.D. Louisiana
IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ALL CASES
ORDER & REASONS
E. FALLON U.S. DISTRICT COURT JUDGE.
the Court is a Motion for an Award of Attorney Fees on
Interest Earned filed by the Yance Law Firm, LLC
(“Yance”), R. Doc. 22108. The Motion is opposed.
R. Doc. 22148. Yance has filed a reply. R. Doc. 22189. The
Court rules as follows.
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, to March 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 Hernendez
(“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 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
drywall claims. After a bellwether trial involving the
downstream Knauf distributor, North River, numerous other
settlement agreements were also 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
August 12, 2013, Plaintiffs' and Defendants' Liaison
counsel entered into a second settlement agreement addressing
claims filed after December 9, 2011 (the “New Claims
Settlement Agreement”). R. Doc.16978-1. Under the New
Claims Settlement Agreement, Claimants who gave notice prior
to October 25, 2013 and qualified under the terms of the New
Claims Agreement were eligible to seek benefits under the
Knauf Class Settlement Agreement, subject to the requirements
set forth in both agreements. R. Doc. 16978-1.
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, Defendants 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. This payment relieves 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.
claimants having received their appropriate portion of the
settlement funds, the Court endeavored to allocate
attorneys' fees to contract counsel and common benefit
counsel pursuant to Pre-Trial Order 28 (“PTO
28”). R. Docs. 17379, 20282. PTO 28 lays out the
multi-step process by which the Court disbursed
attorneys' fees: (1) a review of time and expenses, (2)
the submission of an initial affidavit for compensation for
common benefit work and reimbursement of expenses, (3) the
filing of a joint fee petition, (4) the filing of a request
for common benefit assessment for any Chinese Drywall case or
claim not participating as a Class Member or claimant in any
of the various Class Action Settlement Agreements, (5)
establishing common benefit and individual fees, and finally