Chinese Drywall Litigation Centralized in New Orleans

The United States Judicial Panel on Multidistrict Litigation has ordered that all federal Chinese drywall lawsuits be consolidated in New Orleans, before U.S. District Judge Edlon E. Fallon, the same judge who is presiding over the federal Vioxx litigation.

The order issued June 15, centralizes at least ten lawsuits over Chinese drywall that were originally filed in Florida, Louisiana and Ohio, and transfers the cases to the U.S. District Court for the Eastern District of Louisiana, where they will be handled in a coordinated manner during pretrial proceedings as part of an MDL, or Multidistrict Litigation. In addition, as other cases are filed by other homeowners or builders, they will also be transferred to Judge Fallon for pretrial litigation.

All of the cases involved in the Chinese drywall litigation include claims that defective wallboard imported from China between 2004 and 2007 were made with materials that contain high levels of sulfur compounds, which could emit a strong smell of rotten eggs and gases that corrode wiring, damage appliances and raise concerns about potential health problems for residents.

Thousands of homes throughout the United States were constructed with the defective Chinese drywall due to a shortage of domestic product caused by a construction boom and several hurricanes that struck the United States. The drywall problems have primarily impacted homeowners in the southeast United States, where more humid weather is found.

Some estimates have placed the number of U.S. homes containing the defective drywall as high as 100,000; most of those built within the last few years. Florida appears to be the state hardest hit, with an estimated 30,000 homes constructed with the toxic drywall.

The MDL formed by the Judicial Panel will allow all of the Chinese drywall litigation to be coordinated under Judge Fallon to avoid duplicate discovery and inconsistent rulings from different judges throughout the United States. The move is also designed to conserve the resources of the parties, witnesses and the court. As part of an MDL, if the cases do not settle or otherwise resolve during pretrial proceedings, they will be sent back to the district where they were originally filed for trial.

The Panel, noting that the manufacturer was a foreign entity and that defendants and plaintiffs covered a wide geographic area, placed the MDL under Judge Fallon due to his experience. The order indicated that Judge Fallon “has extensive experience in this multidistrict litigation as well as the ability and temperament to steer this complex litigation on a steady and expeditious course.”

Judge Fallon has handled large MDL’s in the past, including thousands of lawsuits against the makers of the painkiller Vioxx, most of which are in the process of settling for a combined total of about $5 billion.