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Lowe's Ups Defective Drywall Settlement Offer

Oct 29, 2010 | Parker Waichman LLP

Facing withering criticism, Lowe’s Companies Inc. has increased its offer to settle toxic drywall lawsuits. According to ProPublica, the home improvement store chain is offering as much as $100,000 to customers who claim their homes and health sustained damages because of toxic drywall they allegedly purchased at Lowe’s.

Despite the settlement, Lowe’s continues to maintain it did not sell any Chinese-made drywall, which has been linked to corrosion and other problems seen in homes around the country. When it announced an earlier version of the settlement, the company said it “entered into this agreement as part of our commitment to serving our customers.”

Under the original settlement proposal, Lowe’s drywall claimants would have received gift cards in amounts ranging from $50 to $2,000. Those who could prove they suffered more than $2,000 in damages would have received up to $2,500 in cash. As we reported previously, the $4,500 maximum reward offered under that settlement would not even begin to cover the cost of properly remediating a home with tainted drywall. Such an effort is estimated to cost at least $100,000 per home.

Almost immediately after the original Lowe’s drywall settlement was proposed, it was attacked by consumer advocates. The original settlement totaled around $6.5 million. Attorneys who quietly negotiated the deal would have received a separate payment of $2.1 million. The big lawyer payout compared to the negligible compensation claimants would have received was a major point of contention.

According to ProPublica, the newly-amended settlement was negotiated by a separate team of attorneys. The new attorneys will receive a separate fee based on how many $100,000-claims Lowe’s eventually pays. The original attorneys will still get their $2.1 million.

The new settlement still provides $50 dollar gift cards for customers who had no proof of purchase but said they bought drywall from Lowe’s, and a $250 dollar gift card for Lowe’s customers who had proof of purchase but no documentation that they suffered any damages, ProPublica said.

Not everyone is convinced that Lowes didn’t sell Chinese drywall. One of the plaintiffs’ attorneys involved in the Chinese drywall multidistrict litigation in New Orleans told ProPublica that his clients will continue to oppose the Lowe’s agreement as long as it appears to include Chinese drywall. He asserted that if Lowe’s did not sell Chinese drywall, it would not need to require that participants in its settlement agree to release Chinese drywall claims against the company.

The attorney added that a team of lawyers is investigating whether Lowe’s bought drywall from Interior-Exterior Building Supply, one of the Louisiana-based suppliers at the center of the Chinese drywall litigation.

Plaintiffs’ attorneys involved in the Chinese drywall multidistrict litigation have asked US District Court Judge Eldon E. Fallon to block the original Lowe’s settlement, arguing that it “interferes with and erodes” the federal litigation and Fallon’s authority to deal with the wide scope of the drywall problem. Fallon has scheduled a hearing on the matter for next week, ProPublica said.


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