Chinese drywall maker must face U.S. lawsuits: judge

NEW YORK Tue Sep 4, 2012 10:27pm EDT

Related Topics

NEW YORK (Reuters) - A U.S. federal judge has ruled that a Chinese drywall maker must face claims over its allegedly tainted product, which has been blamed for causing foul odors, the failure of appliances and health problems.

The ruling means homeowners will be able to pursue claims against the Chinese firm in U.S. courts, increasing the pressure for a settlement similar to that reached between plaintiffs and a German drywall maker last year.

Judge Eldon Fallon of New Orleans on Monday denied motions by Taishan Gypsum Co Ltd to dismiss four lawsuits filed by homeowners whose properties were allegedly affected by faulty drywall.

Fallon also denied a request by Taishan to vacate a $2.6 million default judgment that he levied against the company in May 2010 after it had failed to make appearances in one of the cases.

The ruling is the latest victory for plaintiffs in hundreds of drywall lawsuits that have been consolidated in New Orleans federal court.

Last year, homeowners in the litigation settled with German company Knauf International over claims involving drywall manufactured by its Chinese subsidiary. As part of the settlement, funds were created to repair affected homes and compensate homeowners for economic losses and bodily harm.

Russ Herman, an attorney for the plaintiffs, said he hoped that Fallon's ruling would encourage Taishan to negotiate a similar settlement.

After Fallon entered the $2.6 million judgment against Taishan, the company's lawyers made appearances in the case and argued that the court lacked personal jurisdiction over the company because of its lack of contacts with the United States.

"We believe that the Court was in error for all the reasons reflected in our papers and discussed at the hearing," said Joe Cyr, an attorney for Taishan.

The consolidated cases are in Re: Chinese-Manufactured Drywall Products Liability Litigation, U.S. District Court for the Eastern District of Louisiana, No. 09-md-2047.

(Editing by Michael Urquhart)

FILED UNDER: