$248 Million Taishan Settlement Closes Decade-Long Chinese Drywall MDL

Between 2005 and 2008, homebuilders across the Gulf Coast and beyond turned to Chinese-manufactured drywall to fill a severe material shortage that followed Hurricanes Katrina and Rita. Much of that product was made by Taishan Gypsum Co. Ltd. -- a Chinese state-linked manufacturer -- and its subsidiaries, including Shandong Taihe Dongxin Co. Ltd. and Taian Taishan Plasterboard Co. Ltd. Estimates put the number of affected homes at somewhere between 12,000 and 20,000, concentrated in Louisiana, Florida, Alabama, Mississippi, Texas, and Virginia.

Homeowners knew something was wrong quickly. A persistent sulfur smell filled living spaces and metallic components throughout the houses -- copper wiring, HVAC coils, appliance contacts, plumbing fixtures -- turned black and failed at an accelerated rate. The chemical mechanism was the off-gassing of sulfur compounds from the drywall reacting with metal surfaces, a process sometimes called sulfidation. Residents also reported respiratory irritation and other health complaints they attributed to the fumes. Many families were left in homes that were technically standing but functionally uninhabitable without a full gut renovation.

The litigation was centralized in New Orleans before U.S. District Judge Eldon E. Fallon as MDL 2047, 'In re Chinese-Manufactured Drywall Products Liability Litigation,' filed in 2009. Judge Fallon appointed a Plaintiffs Steering Committee to coordinate discovery, expert retention, bellwether trials, and settlement negotiations across a plaintiff class that spanned dozens of states and tens of thousands of affected properties. Hugh Lambert of Lambert Zainey was one of the 15 attorneys Judge Fallon named to that committee. Lambert's engineering background informed the PSC's position that proper remediation required a full 'down to the studs' rebuild -- not a patch -- to ensure that corroded wiring and other hidden damage did not leave lasting hazards in repaired homes.

The MDL had already produced a major resolution with the Knauf defendants by 2011. The Taishan defendants took considerably longer. Taishan initially refused to participate in the proceedings and was held in contempt before eventually returning to court. Settlement negotiations with the PSC culminated in an agreement announced in August 2019. On January 10, 2020, Judge Fallon granted final approval. The $248 million settlement obligated the Taishan entities to pay that sum in full, covering property damage and remediation costs, alternative housing expenses, personal injury claims tied to sulfur exposure, and related losses.

At the fairness hearing, 97.4 percent of the roughly 3,689 class members supported the settlement. A small number of objectors argued that certain allocation categories produced payouts that fell short of full remediation costs, but the court found the overall resolution fair and approved it. The Taishan settlement, combined with prior agreements against Knauf and other defendants, effectively concluded the core of a litigation that had run for more than a decade.