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Knauf Avoids Second Class of Homeowners Who Allege Bad Drywall

Jan. 30, 2020, 4:41 PM

Homeowners who discovered allegedly sulfurous drywall made by Knauf Gips KG and its Chinese subsidiaries after the German company settled thousands of claims won’t be able to proceed as a class, a federal court in Louisiana ruled.

Common issues don’t predominate among the newer group because the plaintiffs are scattered over five states and bring a wide variety of claims, Judge Eldon E. Fallon of the U.S. District Court for the Eastern District of Louisiana said.

The proposed class also doesn’t meet other requirements under Federal Rule of Civil Procedure 23(b), the court said. The case doesn’t involve a limited fund, and injunctive relief is only a minor aspect of the case, it said.

The contaminated drywall cases stem from a shortage of building supplies during reconstruction following Hurricanes Rita and Katrina in 2005, which also coincided with a housing boom. Builders turned to Chinese sources for drywall.

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

The Knauf defendants entered into a settlement agreement with the first set of plaintiffs in December 2011, and also settled with other companies in the chain of commerce. The settlements ultimately totaled $1.1 billion, according to the court.

The plaintiffs here filed suit in November 2014.

A separate group of people who purchased property after the Knauf settlement missed out on getting reimbursement in 2018 because they failed to inquire about presence of contaminated drywall before buying, failed to preserve evidence, or both.

Another supplier, Taishan Gypsum Co., and related companies at first avoided the litigation and then fought default judgments. Taishan recently settled claims with U.S. homeowners for $248 million.

The case is In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2020 BL 31103, E.D. La., No. 2:09-md-02047, docketed 1/28/20.

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; Nicholas Datlowe at ndatlowe@bloomberglaw.com