United States District Court, E.D. Louisiana
IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ALL LOUISIANA AMORIN CASES
ORDER & REASONS
E. Fallon, U.S. District Court Judge
the Court is a Motion for the Immediate Disbursement of
Attorneys' Fees (the “Motion”) filed by
Krupnick Campbell (“Movant”), R. Doc. 22130, in
which several parties have joined, R. Docs. 22131, 22134,
22141, 22147, 22159, 22164, 22168, 22169. The Motion is
opposed, R. Doc. 22172, to which Movant has filed a reply, R.
Doc. 22175. Relatedly, on March 20, 2019, Parker Waichman,
LLP (“Parker”) filed a “Motion for Partial
Disbursement of Fees Awarded by the Court.” R. Doc.
22170. Thereafter, on March 22, 2019, Parker filed a motion
seeking to strike Movant's Motion, R. Doc. 22181, to
which Movant filed an opposition, R. Doc. 22183. On March 14,
2019, McCallum, Hoaglund, Cook & Irby, LLP
(“McCallum”) and Gentle, Turner, Sexton &
Harbison (“Gentle Turner”) filed a Motion for
Disbursement of Individually Retained Counsels' Fees. R.
Doc. 22151, 22168. The Court heard oral argument on the
motions on April 23, 2019. R. Doc. 22227. The motions being
related, the Court now rules on them simultaneously.
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
(6) allocating the common benefit fees. R. Doc. 17379.
Throughout this process, the Court was aided by Special
Master Daniel Balhoff, Court-Appointed CPA Philip Garrett,
and Court-Appointed Settlement Administrator BrownGreer.
completing steps one through four, the Court proceeded to
step five to “determine the total amount of the common
benefit fund and the amount of funds for individual counsel
for claimants.” Id. at ¶ 10. In its
January 31, 2018 order, the Court found the appropriate split
between contract counsel and common benefit counsel was
fifty-two percent for common benefit counsel and forty-eight
for contract counsel. R. Doc. 21168. Thereafter, on February
4, 2019, the Court proceeded to step six, allotting the
common benefit fund to various firms in differing amounts. R.
Doc. 22089. The next day, the Court issued its final judgment
regarding common benefit attorneys' fees (the
“Final Judgment”). R. Doc. 22092. On March 5,
2019, Parker filed a notice of appeal with respect to the
Court's April 5, 2019 judgment, R. Doc. 22123; on March
6, 2019, Anderson Kill, PC also filed a notice of appeal, R.
Doc. 22123; and on March 7, 2019, the Alters Law Firm filed a
notice of appeal, R. Doc. 22129 (collectively the
Movant's Motion Seeking Immediate Disbursement of
Attorneys' Fees [R. Doc. 22130]
March 8, 2019, Movant filed a motion seeking the immediate
disbursement of attorneys' fees pursuant to the
Court's Final Judgment, R. Doc. 22130, in which several
parties have joined, R. Docs. 22131, 22134, 22141, 22147,
22159, 22164, 22169. In its Motion, Movant argues the Knauf
Settlement Agreements “made clear this Court would
consider and rule upon the allocation of all attorneys'
fees and that any right of appeal as to the Court's
determination of attorneys' fee allocation was
waived.” R. Doc. 22130 at 1. In support of its
argument, Movant points to language in both Agreements.
Id. at 5-6. The Knauf Settlement Agreement states in
The PSC shall be entitled to petition the Court for an award
of attorneys' fees and costs, and provided that the PSC
does not seek an award of attorneys' fees and costs
exceeding $160 million from the Knauf Defendants, the Knauf
Defendants agree not to oppose any such request. All
attorneys' fees and costs as well as the allocation of
attorneys' fees and costs among the PSC, common benefit
counsel authorized and working at the direction of the PSC,
other common benefit counsel, Settlement Class Counsel and
individual retained counsel are subject to the approval of
the Court and to a ...