Constructive Knowledge Standard Applies To Insurance-Related Drywall Bellwether

A “knew or should have known” standard will apply to determine a seller’s knowledge of defective Chinese drywall in an insurance-related bellwether trial on the seller’s liability under Louisiana law, the federal court overseeing the multidistrict drywall litigation held Nov. 21 (Chinese Manufactured Drywall Products Liability Litigation, In re, E.D. La., MDL No. 2047).

Although the defendant and its excess insurer argued that an actual knowledge standard should apply, the U.S. District Court for the Eastern District of Louisiana determined that Louisiana law requires the inclusion of a constructive knowledge standard as well when determining good faith ...