Defective Products

Chinese-Manufactured Drywall Litigation

Issue: Defective drywall products

Lieff Cabraser, with co-counsel, represents a proposed class of builders who suffered economic losses as a result of the presence of Chinese-manufactured drywall in homes and other buildings they constructed. From 2005 to 2008, hundreds-of-millions of square feet of gypsum wallboard manufactured in China were exported to the U.S., primarily to the Gulf Coast states, and 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 residents of the affected homes also experienced health problems, such as skin and eye irritation, respiratory issues, and headaches.

Lieff Cabraser’s client, Mitchell Company, Inc., was the first to perfect service on Chinese defendant Taishan Gypsum Co. Ltd. (“TG”), and thereafter secured a default judgment against TG. Lieff Cabraser participated in briefing that led to the district court’s denial of TG’s motion to dismiss the class action complaint for lack of personal jurisdiction. That order is currently on appeal to the Fifth Circuit, but plaintiffs are hopeful that the district court’s ruling will be affirmed.

On January 14, 2014, in a parallel proceeding, the U.S. Court of Appeals for the Fifth Court affirmed the district court’s finding of personal jurisdiction over TG, holding that the “assertion of personal jurisdiction here comports with traditional notions of fair play and substantial justice.” The appellate court noted that although “China may not favor personal jurisdiction over its manufacturers,” given the nature of the global economy, “it is in everyone’s interest to discourage the manufacturer and distribution of defective products.” [internal quotation omitted.]