News & Updates


First Chinese drywall trial is set for January

By Aaron Kessler

Published: Friday, November 20, 2009 at 1:00 a.m.
Last Modified: Thursday, November 19, 2009 at 7:22 p.m.

The first Chinese drywall trial is now scheduled, and it will involve a manufacturer controlled by the Chinese government itself.

U.S. District Court Judge Eldon E. Fallon, who is overseeing the combined Chinese drywall litigation in New Orleans, said Thursday the first “bellwether” trial will take place Jan. 25 — barely 60 days from now.

In a shift from previous plans, the trial will involve seven Virginia homeowners whose homes were allegedly damaged by tainted drywall produced by Taishan Gypsum Co. Ltd., also known as Shandong Taihe Dongxin Co. Ltd. and Taian Taishan Plasterboard.

Taishan shipped drywall to Florida through Port Everglades and Tampa, and its product also was sent to other states, including Virginia, New York and California. The seven Virginia plaintiffs all used drywall imported by the same distributor, Norfolk-based Venture Supply.

The issue of contaminated drywall was on the agenda during President Barack Obama’s first state visit to China.

“Drywall was raised during the President’s visit to Beijing and U.S. officials stressed with their Chinese counterparts the importance of continued cooperation and engagement in an effort to resolve concerns related to drywall,” White House spokeswoman Gannet Tseggai said. “The Obama Administration is committed to identifying and resolving the issues associated with tainted drywall.”

Fallon said Thursday that his goal was to use the seven cases — to be heard together as part of one trial — to flush out damages that could potentially apply across the board.

“I’m trying to get representative cases for the various aspects of the damages,” Fallon said. “Although my ruling will be on each of those cases, hopefully it will deal with issues that can be translated into other cases.”

The judge also is expected to rule on what kind of remediation is needed for the affected homes — a development that could reverberate widely.

“It will provide everyone very useful information going forward,” said Ervin Gonzalez, one of the lead plaintiffs’ attorneys.

The January trial will be a bench trial, meaning there will be no jury.

Taishan — controlled by the government-owned Beijing New Building Materials Public Limited Co. — has given no indication it intends to participate in the trial. The Virginia cases have been served in China, but the company has not responded.

However, because of the high stakes, Knauf Plasterboard Tianjin Co. Ltd., one of the other Chinese manufacturers, is expected to intervene on Taishan’s behalf to present the defense. Knauf Tianjin itself will be the subject of the next bellwether trial — the first with a jury — in late February.

Meanwhile, Fallon now intends to appoint a high-end attorney known for negotiating settlement deals to be a “special master” for the drywall cases.

While court-appointed special masters generally are brought in to help a judge deal with issues like discovery and other day-to-day matters, the choice of Michael K. Rozen, a partner in New York law firm Feinberg Rozen LLP, indicates a different approach.

Feinberg Rozen touts itself as “the nation’s foremost law firm for mediation, arbitration, other forms of alternative dispute resolution” and as being “preeminent in achieving an effective resolution and preventing years of protracted, expensive and uncertain litigation.”

Rozen, along with the firm’s founder, Kenneth R. Feinberg — known for running the September 11th Victim Compensation Fund — are widely viewed as mediators, tough deal makers. Rozen is not the type one hires to handle discovery motions, but rather to settle cases.

During Thursday’s hearing, Fallon said he was bringing in Rozen “to focus on the ultimate resolution of the case.”

In particular, Fallon said in a case involving so many different parties, having someone who can deal with each side individually would be helpful. Fallon said it was inappropriate for he himself as the presiding judge to do that, but that such negotiations would be one of Rozen’s central roles.

Attorneys involved in the case said the developments this week — the introduction of Rozen, combined with the movement toward trials — showed Fallon was taking a no-nonsense approach.

Michael Goetz, an Orlando plaintiffs’ attorney who attended the Thursday hearing, said “the judge appears to have a very strong focus on an end game for the case.”

“What it signals is that it’s not business as usual in a mass litigation. It’s proceeding very fast with a judge that’s looking to cut through all the normal wrangling and fast-track it to the finish line,” Goetz said.