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Judge Gives Preliminary OK To Settlement In Chinese Drywall Litigation

NEW ORLEANS - (Mealey's) The federal judge in Louisiana presiding over the Chinese drywall multidistrict litigation on Jan. 10 preliminarily approved a settlement that would resolve thousands of claims involving defective drywall manufactured by Knauf Plasterboard Tianjin (KPT) (In re:  Chinese-Manufactured Drywall Products Liability Litigation, No. 2:09md02047, E.D. La.). 

(Order.  Document #77-120117-013R.)

The settlement, announced Dec. 15, is estimated to be worth between $800 million and $1 billion. 

The litigation arises from the manufacture, distribution, sale and installation of Chinese drywall in homes where it allegedly emits foul odors, damages metal and electronic elements and devices and causes various personal injuries. 

On June 15, 2009, the Judicial Panel on Multidistrict Litigation transferred all federal actions alleging damages from Chinese-manufactured drywall to the U.S. District Court for the Eastern District of Louisiana.  Judge Eldon E. Fallon is presiding over MDL 2047 and gave preliminary approval to the Knauf settlement. 

The settlement would be paid by German manufacturer Knauf and would enable approximately 4,500 properties that contain tainted Chinese drywall supplied by KPT, a Knauf subsidiary, to be remediated.  

Remediation costs would be paid out of an unlimited remediation fund.  The settlement also would create a capped fund to pay claims of personal injury and equity loss because of foreclosures and short sales.  

Properties that have KPT drywall and other manufactured Chinese drywall would receive partial payments.  The settlement also provides $160 million for the payment of attorney fees and costs.  

"It is ordered that the Knauf Settlement Agreement, including all exhibits attached thereto, is preliminarily approved by the court as fair, reasonable and adequate, as negotiated and entered into at arm's length, in good faith, and free of collusion to the detriment of the Knauf Settlement Class, and as being within the range of possible judicial approval at a prospective Fairness Hearing," Judge Fallon held. 

A formal fairness hearing has been scheduled for June 20. 

The plaintiffs are represented by Arnold Levin and Fred Longer of Levin Fishbein Sedran & Berman in Philadelphia and Leonard Davis and Russ M. Herman of Herman Herman Katz & Cotlar in New Orleans.  KPT is represented by Gregory J. Wallance of Kaye Scholer in New York and Kerry J. Miller of Frilot in New Orleans. 

[Editor's Note:  Lexis subscribers may download the document using the link above. The document(s) are also available at or by calling the Customer Support Department at 1-800-833-9844.] subscribers can find Chinese drywall-related filings here.  If you do not have a ID, you can get information on how to subscribe here.

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