U.S. Settlement Reached in Chinese Drywall Case

Homeowners will share from $800K to $1M. Attorneys will be paid by the defendant.

NEW ORLEANS, Dec. 15, 2011 /PRNewswire/ — After 18 months of more than 50 worldwide negotiations in New Orleans, New York, Philadelphia and Miami, as well as Frankfurt, Germany, the Honorable Judge Eldon E. Fallon of the U.S. Eastern District Court, New Orleans, Louisiana, announced that the Plaintiffs’ Steering Committee and Knauf Plasterboard Tianjin (KPT) Defendants proposed a class action settlement that would resolve potentially thousands of Chinese Drywall claims.  

Russ Herman, liaison counsel for the Plaintiffs, said, "The proposed settlement is subject to court approval and the settlement value is estimated to be between $800 million to $1 billion."

The settlement will be paid by German manufacturer Knauf and will enable approximately 4,500 properties that contain tainted Chinese Drywall supplied by KPT, a Knauf subsidiary, to have relief. The relief includes remediation of the property that will be paid out of an unlimited remediation fund and also creates a capped fund to pay claims of personal injury and equity loss due to foreclosures and short sales. Properties that have KPT drywall and other manufactured Chinese Drywall will receive partial payments.  The settlement also provides for the payment of attorney’s fees and costs. 

Russ Herman and Leonard Davis of New Orleans – based Herman, Herman, Katz & Cotlar negotiated this settlement as liaison counsel for the plaintiffs, along with attorneys Arnold Levin and Fred Longer of the Philadelphia – based Levin Fishbein Sedran & Berman, lead counsel for the plaintiffs. Attorney Kerry Miller of the New Orleans – based Frilot, L.L.C. and attorneys from Kaye Scholer and Knauf executives negotiated the settlement on behalf of the Defendants. 

"Knauf really stepped up to the plate by participating in this settlement," says Herman. "Though they are not admitting fault, by being accountable, KPT has agreed to provide thousands of families and resident / owners the opportunity to recover losses caused by KPT drywall. The Peoples’ Republic of China, the corporate interests it controls and the mine from which the toxic gypsum came have not taken responsibility for the damage they have caused another 4,000 to 8,000 innocent American families and many in Louisiana, who have been thrice victimized – by Katrina, toxic FEMA trailers and tainted Chinese drywall. We hope that Knauf’s efforts to provide a remedy for these people will provide a platform for the Peoples’ Republic of China and corporations such as Taishan and BMBN, to begin worthwhile discussions."

Judge Eldon E. Fallon is overseeing between 10,000 – 12,000 Chinese Drywall cases nationwide in the Multi-district Litigation and will travel to China in early 2012 to be present at the depositions of the representatives of Chinese manufacturer Taishan Gypsum.

Herman, Herman, Katz & Cotlar first represented the plaintiffs during the only contested Chinese Drywall case against KPT in 2009, when attorney Stephen J. Herman, along with Chris Seeger of Seeger Weiss, represented the Hernandez Family of St. Tammany Parish in Louisiana.

Toby’s Commentary:  Only two confirmed cases of Chinese Drywall have been identified in Flagler County. It was most heavily used in South Florida and in hurricane damanged Gulf states.