Lowe's Offering Gift Cards in Chinese Drywall SettlementAug 12, 2010 | Parker Waichman LLP
A proposed settlement in a Chinese drywall lawsuit involving Lowe’s stores looks like it will benefit lawyers and the retailer far more than plaintiffs. Astonishingly, plaintiffs in the lawsuit would receive Lowe’s gift cards in amounts ranging from $50 to $2,000 if it is adopted. Those who can prove they’ve suffered more than $2,000 in damages may also receive up to $2,500 in cash.
According to the Web site ProPublica, the class-action suit is being decided in a Georgia state court. It is not included in the multi-district litigation currently underway in federal court in New Orleans, which involves the Chinese drywall manufacturers Knauf Plasterboard Tianjin Co. Lt and Taishan Gypsum Co. Ltd., as well as thousands of homeowners, builders and suppliers.
According to ProPublica, the proposed settlement in Georgia totals $6.5 million. Attorneys who quietly negotiated the deal will receive a separate payment of $2.1 million, the report said.
Under the settlement, many plaintiffs won’t even receive full refunds for their drywall purchases, ProPublic said. For example, someone who spent $10,000 on drywall would still only qualify for a maximum of $4,500 in cash and gift cards. People who sign on to the deal would waive all legal rights to sue Lowe’s for property damage or medical claims related to the drywall.
That $4,500 won’t go far if plaintiff’s want to correctly and safely mediate their Chinese drywall-tainted homes. As we’ve reported previously, the remediation protocol handed down by US District Judge Eldon E. Fallon, who is overseeing the litigation in New Orleans, calls for plaintiffs’ homes be gutted down to the studs. The Judge also ruled that plaintiffs were entitled to damages for the cost of personal property damaged by the drywall gases, relocation costs, and loss of use and enjoyment of the home.
Under either Judge Fallon’s or the CPSC protocol, correctly remediating a Chinese drywall home will likely cost in excess of $100,000.
According to ProPublica, attorneys involved in the New Orleans litigation have attacked the proposed Georgia settlement. They say the payments to victims are too small, the attorney fees too large and that the agreement “interferes with and erodes” the federal litigation and Judge Fallon’s own authority to deal with the wide scope of the drywall problem. They said the Lowe’s settlement could set back efforts to determine the scope of US cases and shield Lowe’s from having to disclose critical information they are seeking, according to ProPublica.
So far, about 40 plaintiffs are involved in the Lowe’s class action lawsuit. Some are also involved in the New Orleans multidistrict litigation. However, according to ProPublica, the class-action settlement would automatically apply to Lowe’s customers throughout the nation, unless they notify the Superior Court of Muscogee County, Ga. by Nov. 9 that they want to opt out. Lowe’s customers won’t be notified of the settlement or their option to opt out via mail, but rather, the retailer will use a web site, media ads and notices on store receipts to get the word out.
One attorney interviewed by ProPublica said he believes the settlement was designed to protect Lowe’s from any liability over all the drywall it has ever sold, before more homeowners can come forward.