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Chinese drywall under fire for health issues

February 23, 2010 Products Liability

Drywall manufactured in China started appearing as a major player in the home building and renovation business, predominately in the Southeastern U.S., following the hurricane season of 2001.

By 2006, and continuing today, thousands of consumer complaints had been lodged against the builders, retailers, and one primary manufacturer of Chinese drywall because of alleged negative health effects of that drywall, as well as alleged corrosive effects of emissions on copper and other household materials. The situation created enough of a crisis that selling drywall manufactured in China was banned in 2009, and product liability lawsuits are pending.

The Consumer Product Safety Council currently estimates the number of formal filed complaints with them and state agencies to be around 5,000, concentrated primarily in Florida (almost 60%), Louisiana (21%) and a few other southern states. Other sources estimate the number of homes affected in the six figures, although true counts are difficult. The CPSC’s investigation is the most expensive in the agency’s history.

Although the drywall is still being tested, most preliminary reports pin the problem on emissions of either strontium sulfide or hydrogen sulfide, both of which are corrosive agents and have serious adverse health effects on human beings. The manufacturer primarily blamed for the toxic drywall throughout the south is a German company called the Knauf Group, which reportedly has at least three subsidiaries who manufacture drywall in China.

Chinese drywall has been the subject of at least two large lawsuits – one class action suit in Florida, and a big one in Louisiana that has been brought by the Louisiana Attorney General. A consortium of 14 insurance companies are also under suit for allegedly failing to pay claims for this product.

It is too soon into the litigation and testing process to talk about collectability, but some ideas are being advanced – if, of course, the liability issues are settled. Nevertheless, hearings are underway to try to settle at least one large claim. Last year, a Chinese-controlled gypsum company (the base product of drywall) failed to respond to a Florida-based lawsuit and had a default judgment taken against it. Hearings are now on to determine where to go from there, as there exists no established legal recourse for collecting a judgment from a foreign company not beholden to US law. There has also been discussion of a U.S. government-based fund to handle the claims, though no official course of action has been decided.

And the kicker? Some of the testing involved U.S.-manufactured drywall as well, and some of the U.S. product also gave off sulfurous emissions. A study designed to measure the longer-term effects of decades of corrosion is not expected to be completed until June of this year, so full resolution to these claims may be a long time coming.

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