Chinese Drywall Manufacturers May Try to Evade LawsuitsSep 29, 2009 | Parker Waichman LLP
Lawyers for Chinese drywall victims are warning clients that some Chinese manufacturers may simply choose to ignore lawsuits filed in the U.S. According to an Associate Press report, attorneys for the thousands of homeowners who have filed lawsuits over Chinese drywall are already considering contingency plans should this occur.
Chinese drywall poured into the U.S. between 1999 and 2007 because of the high demand created by the housing boom. Imports accelerated when the rebuilding that followed Hurricane Charley in Florida in 2004, and Hurricane Katrina along the Gulf Coast in 2005, created a drywall shortage. According to The Wall Street Journal, some 500 million pounds of Chinese drywall was imported to the U.S. during the housing boom. That means as many as 100,000 homes throughout the country could have been built with the material.
Gases emitted from Chinese drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode. People living with Chinese drywall have also suffered eye, respiratory and sinus problems that may be linked to the gases. So far, the Consumer Products Safety Commission has received 1,501 Chinese drywall complaints from homeowners in 27 states, the District of Columbia and Puerto Rico.
Lawsuits involving Chinese drywall have been consolidated in Federal Court in New Orleans. We reported last week that Judge Eldon E. Fallon, who is presiding over the case, hit Chinese drywall manufacturer Taishan Gypsum Co. Ltd. with a default judgment in favor of plaintiffs after it failed to respond to a class action lawsuit filed against it. Taishan is also known as Taian Taishan Plasterboard and Shandong Taihe Dongxin Co. Ltd.. The firm is controlled by the Beijing New Building Materials Public Limited Co. (BNBM), a state-owned entity under control of the Chinese government.
According to the Associated Press, plaintiffs' attorneys are concerned other Chinese manufacturers will ignore lawsuits and judgments as well. They point out that Chinese firms have done so in other cases involving toxic toys, tainted heparin and contaminated foods. Suing firms in international courts is time consuming an expensive, and civil judgments rendered in U.S. courts are not enforced in China, the Associated Press said.
There are a number of options attorneys are considering should Chinese drywall manufacturers ignore lawsuits filed here, the Associated Press said. These include filing claims against U.S. investment bankers who financed the Chinese companies, and seizing ships that brought the drywall to U.S. ports. One attorney interviewed by the Associated Press said such moves could be a way of "getting the missing parties to the table." Another attorney told the Associated Press that considering the billions of dollars at stake, a way would be found to make Chinese manufacturers responsive.
The Chinese drywall debacle has prompted some lawmakers and consumer advocates to push for remedies that would make foreign companies more accountable in U.S. product liability cases. The Foreign Manufacturers Legal Accountability Act, which was introduced in the U.S. Senate earlier this year, would, among other things, require foreign manufacturers to agree to be held accountable by U.S. courts.