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Final OK Given to $248 Million Chinese Drywall Settlement (2)

Jan. 13, 2020, 10:09 PMUpdated: Jan. 14, 2020, 4:47 PM

A $248 million settlement between U.S. homeowners and Chinese government-linked companies that made allegedly sulphurous drywall received final approval, but the federal court in Louisiana overseeing the deal awarded a smaller percentage in attorneys’ fees, freeing up more money for the class.

Objections that the settlement failed to make many homeowners whole shouldn’t scuttle the deal, which represents a compromise, Judge Eldon E. Fallon of the U.S. District Court for the Eastern District of Louisiana said. The settlement “aims to resolve claims on an aggregate basis to provide the greatest total recovery for the greatest number of people and was negotiated in light of the complexities” in litigating against Taishan Gypsum Co. and related companies, he said.

The disparate treatment of two classes of homeowners and those with and without clear product identification tying their claims to Taishan reflects the relative strength of claims and is appropriate, the court said.

Class counsel requested 30% of the common fund, or $74.4 million, in attorneys’ fees, and 3% for costs, or $7.1 million, according to the court.

The court settled on attorneys’ fees representing 19% of the total. “Ultimately, the Court finds it reasonable to award $47,120,000 to compensate both common benefit counsel and individually retained attorneys in light of the circumstances in this case, namely that the case involves property damage claims and that the attorney fees come out of the overall recovery available to claimants,” Fallon said Jan. 10.

The fee award “strikes a fair balance between the diligent and commendable effort exerted by the attorneys and the limited funds available to compensate Class Members for their property damage,” he said.

Fallon awarded the exact amount of costs, about $2.8 million, rather than the requested amount. He also cut some plaintiffs’ incentive awards from the requested $10,000 to $5,000 each.

The settlement covers nearly 3,700 claims. Plaintiffs’ counsel received 90 properly completed opt-out requests and 22 objections from class members, according to the court.

The cases arose from a shortage of building supplies during reconstructions following Hurricanes Rita and Katrina, which also coincided with a housing boom. Builders turned to Chinese sources for drywall.

But thousands of homeowners, especially in southern states, began to complain of foul smells, property damage, and health problems. Many homes have required significant rebuilding.

Herman, Herman & Katz LLC and others represent the plaintiffs. Alston & Bird LLP and Orrick Herrington & Sutcliffe LLP represented the defendants participating in the settlement, and Phelps Dunbar LLP served as defendants’ liaison counsel in the Eastern District of Louisiana.

The case is In re Chinese-Manufactured Drywall Prods. Liability Litig., E.D. La., MDL No. 2047, 1/10/20.

(Additional information added in eighth paragraph of Jan. 13 story about number of covered claims, opt-outs, objectors. Prior version corrected attorney names in last paragraph.)

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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