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In re Chinese-Manufactured Drywall Prods. Liab. Litig.

United States District Court for the Eastern District of Louisiana

March 9, 2016, Decided; March 10, 2016, Filed

CIVIL ACTION NO. 09-02047 SECTION "L" (5)

Opinion

 [*921]  ORDER & REASONS

Before this Court is Defendant China New Building Materials Group's ("CNBM Group") Motion to Dismiss for lack of subject matter jurisdiction under [**2]  the Foreign Sovereign Immunities Act ("FSIA") (R. Doc. 19527). Having read the parties' briefs, reviewed the applicable law, and heard the parties on oral argument, the Court now issues this Order and Reasons.

I. INTRODUCTION

The present litigation arises from alleged property damage and personal injuries sustained as a result of the presence of Chinese-manufactured drywall in homes and other buildings in a number of states. During approximately 2005 to 2008, hundreds-of-millions of square feet of gypsum wallboard manufactured in China ("Chinese  [*922]  drywall") were exported to the United States, primarily along the East Coast and Gulf South, as a result of an exceptionally high demand for building supplies in the aftermaths of Hurricanes Rita and Katrina, as well as a general new-housing boom. The Chinese drywall was then installed in newly-constructed and reconstructed properties. After installation of this drywall, owners and occupants of the properties began noticing unusual odors, blackening of silver and copper items and components, and the failure of appliances, including microwaves, refrigerators, and air-conditioning units. Some also experienced health problems, such as skin and eye [**3]  irritation, respiratory issues, nose bleeds, and headaches. As a result, these property owners began filing suit in both state and federal courts against those involved with Chinese drywall, including the installers, homebuilders, suppliers, importers, exporters, and manufacturers, as well as their insurers and sureties. One of the defendants is CNBM Group.

In the instant motion, CNBM Groups contends that it is not properly a part of this litigation because it is in an "agency or instrumentality of a foreign state" within the meaning of FSIA. 28 U.S.C. § 1603(b). FSIA provides the "sole basis" for obtaining jurisdiction over a foreign state or its agency or instrumentality. Republic of Arg. v. Weltover, Inc., 504 U.S. 607, 611, 112 S. Ct. 2160, 119 L. Ed. 2d 394 (1992). A foreign state and its agencies and instrumentalities are "presumptively immune" from suit under the Act "unless a specified exception applies." Saudi Arabia v. Nelson, 507 U.S. 349, 355, 113 S. Ct. 1471, 123 L. Ed. 2d 47 (1993); see 28 U.S.C. § 1604. According to the Plaintiffs, both the commercial activity exception and the tortious activity exception apply.

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168 F. Supp. 3d 918 *; 2016 U.S. Dist. LEXIS 55140 **

IN RE: CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION. THIS DOCUMENT RELATES TO: ALL CASES

Prior History: In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2016 U.S. Dist. LEXIS 11648 (E.D. La., Feb. 1, 2016)

CORE TERMS

drywall, subsidiaries, Entities, shareholder, manufacture, shares, commercial activity, foreign state, immunity, ownership, stock, board of directors, day-to-day, instrumentality, indirect, export, sovereign, cases, controlling shareholder, annual report, coordinated, overcome a presumption, personal jurisdiction, alter ego, acquisition, discovery, lawsuit, email, equity interest, general meeting