Federal Judge To Assess Damages In Chinese Drywall Lawsuit

Transcript

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Imagine if the walls in your home were making you sick. That's what happened to some Americans at the center of a massive international lawsuit. It's a class action suit against Chinese companies that manufactured defective drywall. The case will reach its climax tomorrow when a federal judge in New Orleans assesses damages for thousands of homes across the South that were made uninhabitable. It's rare for Chinese manufacturers to be held liable in the U.S. for faulty products. In this case, it took a platoon of lawyers and one tough judge. NPR's John Burnett has the story.

JOHN BURNETT, BYLINE: C.J. and Joan Cheramie say their health maladies began soon after they moved into their new home in a tranquil subdivision of Covington, La., eight years ago.

C.J. CHERAMIE: From the day we lived here, my wife and I both started having dry eye. She started having numerous headaches. She also had a lot of skin rashes and things that she noticed.

BURNETT: When the weather was warm, which it is a lot of the time in South Louisiana, the faulty drywall emitted a disagreeable odor.

JOAN CHERAMIE: It smells like a match - sulfur from the match.

C. CHERAMIE: And that burning sulfur smell would stay around.

BURNETT: On his wife's urging, C.J. finally climbed up in the attic to investigate. Stamped on the plasterboard, he read the words that would change their lives.

C. CHERAMIE: Made in China.

BURNETT: Eventually, the copper coils on their air conditioning unit and their refrigerator corroded, a telltale sign of problem drywall, according to the U.S. Consumer Product Safety Commission. The Cheramies moved out of their house and their symptoms went away. They also stopped paying their mortgage and their home was foreclosed on. As the sheriff was planning to put the contaminated house up for public auction, they sold it last month at a steep loss.

C. CHERAMIE: Chinese drywall has set me back because of health issues and financial issues. It robbed me of the approximately $90,000 that I have in this house, which was my biggest form of savings.

BURNETT: The Cheramies, both 70 years old, are among some 4,000 families across the South, from Louisiana to Virginia, involved in a leviathan lawsuit that seeks to hold drywall manufacturers responsible for their defective products. Laboratory tests on Chinese drywall found that in warm, humid conditions, it gives off sulfur gases. One defendant has already paid up. A German company named Knauf that sourced plasterboard from China agreed to an $800 million settlement. The holdout has been Taishan Gypsum in Shandong Province. Eleven months ago, the company simply disappeared from a federal court room in New Orleans after losing an appeal over whether U.S. courts had jurisdiction over a Chinese entity. Lead counsel Arnold Levin of New Orleans has been pursuing Taishan for six years.

ARNOLD LEVIN: They just ignore the litigation. They ignore everything about us. They fire their own lawyers and go back behind the Great Wall of China.

BURNETT: Federal judge Eldon Fallon was not happy. He held in Taishan in contempt. He enjoined the company and its affiliates from doing any more business in the U.S., and he ordered them to forfeit 25 percent of their profits to an escrow account. Rather than risk their other business in the U.S., such as selling solar panels and buying Oregon lumber, the Chinese companies came back to federal court in March. In a surprising turnabout, lawyers for Taishan and its two parent companies agreed to pay seven Virginia families $2.7 million to fix their houses. In tomorrow's hearing, plaintiff's attorneys will ask Judge Fallon to assess up to a billion dollars in damages and order Taishan to rebuild homes for or compensate all of the affected families.

LEVIN: They finally paid the first seven plaintiffs. And when we're done with them, they'll pay all 4,000 class members whose homes have been destroyed. They have a lot to answer to in the United States.

BURNETT: Asked for a comment, Taishan's law firm, Alston & Bird in Atlanta, emailed NPR saying we are not at liberty to discuss the case.

CARL TOBIAS: I think it is important to stress that - just how unusual everything about this case is.

BURNETT: Carl Tobias is a professor of law at the University of Richmond and a specialist in federal product liability lawsuits.

TOBIAS: It's extraordinary that an American plaintiff is able to trace back to China and recover from a Chinese company some kind of reimbursement for product liability.

BURNETT: Over the years, there have been many scandals involving defective Chinese products sold in the United States - toys, vehicle tires, electric appliances and infant formula, to name a few. Lawyers know how difficult it is to haul a Chinese company into the U.S. court system. With the Chinese drywall case, they're hoping to show how that can be done. John Burnett, NPR News, New Orleans. Transcript provided by NPR, Copyright NPR.