Knauf Chinese Drywall MDL: Up to $1 Billion Settlement for 4,500 Contaminated Homes

Starting around 2001 and accelerating through the mid-2000s construction boom, millions of square feet of drywall manufactured in China, primarily by Knauf Plasterboard Tianjin (a Chinese subsidiary of the German building-materials giant Knauf), were shipped to the United States and installed in new and renovated homes. Homeowners, concentrated heavily in Florida and Louisiana, began noticing a distinctive rotten-egg odor and a wave of failing appliances, corroded copper wiring, and blackened metal fixtures shortly after move-in.

Scientific testing eventually identified the source: elevated sulfur compounds off-gassing from the Chinese drywall reacted with copper and other metals throughout affected homes, destroying electrical systems, HVAC coils, and plumbing components. In some cases residents reported health complaints they attributed to the fumes. Many families were forced to gut and rebuild their homes or relocate entirely, often while still carrying mortgages on properties they could not safely occupy.

The litigation was consolidated in New Orleans before U.S. District Judge Eldon Fallon as MDL 2047, 'In re Chinese-Manufactured Drywall Products Liability Litigation.' The plaintiffs' side was organized through a Plaintiffs Steering Committee whose members took responsibility for discovery, expert work, and coordinating claims across tens of thousands of affected homeowners in 42 states. Hugh Lambert of Lambert Zainey in New Orleans was appointed to that committee and played an active role in the litigation over the three years it took to bring the Knauf claims to resolution.

In December 2011, Judge Fallon announced a global settlement with Knauf valued at up to $1 billion. The agreement covered approximately 4,500 homes identified as containing Knauf drywall. Under the terms, affected homeowners could choose from three remediation paths: repairs performed by a court-approved contractor, the option to hire their own contractor at a set reimbursement rate, or a cash payment. The settlement also provided a mechanism for health-related claims supported by evidence of sulfur-related exposure.

The Knauf settlement was described at the time as the first major resolution in a litigation that still had separate proceedings underway against Taishan Gypsum and other Chinese manufacturers. Negotiations had stretched nearly three years from the MDL's formation to the announcement of the agreement in December 2011.