It remained unclear which agency has ultimate jurisdiction over any possible inquiry, underscoring the murkiness of laws governing safety in consumers’ homes.
Shares of the flooring retailer fell more than 20 percent after that report Sunday night, March 3, on the CBS News program. In a statement on its website, Lumber Liquidators disputed the “60 Minutes” findings, saying that the program had used “an improper test method” and that its products were safe. (Deny. deny. deny until the day you die.)
Further, the company argued that the “attacks” on its products were driven by short-sellers — investors who bet that a company is overvalued. “That’s nonsense,” said Whitney Tilson, a hedge fund manager who said he first became suspicious of Lumber Liquidators after shares of the company more than doubled in a year. Mr. Tilson shorted the stock, and paid $5,000 to test three pieces of wood for himself. He said that formaldehyde levels in the wood he tested were
two to six times the California limits. (Can you argue with science?
Maybe the Lumber Liquidators and creationist theorists can.) But “That is not a matter of opinion,” Mr. Tilson said.
While formaldehyde has long been associated with an increased risk for leukemia and other cancers, the United States has yet to enforce any federal safety standard restricting its use in certain wood products.
California pioneered strict standards on its own, which the Environmental Protection Agency adopted in 2010.
But after multiple extensions at the urging of industry groups, those standards have not yet gone into effect. In a statement, the E.P.A. said that it was still completing its rules, which it expected to publish by the end of this year. What can you do if you bought this flooring? You may have a way to recover in the courts, but it will be a battle of David vs Goliath! A buddy of mine who has handled class actions is taking a long hard look. If you are interested or scared,
give me a call and I will put you in touch with him.
The “60 Minutes” episode accused Lumber Liquidators’ Chinese suppliers of deliberately mislabeling products as being compliant with California’s rules, a finding that the company also disputed. The accusations of tainted Lumber Liquidators floorboards echo the problem of contaminated Chinese-made drywall used in thousands of homes during the American housing boom, particularly after the 2005 hurricane season devastated areas along the Gulf Coast, leading to shortages of
domestic drywall. If you use Chinese products in your home, it may be scarier than a haunted house. Do you see a pattern?
The federal government’s response to the Chinese drywall crisis was the formation of an inter-agency task force led by the Consumer Product Safety Commission that included the E.P.A., the Center for Disease Control and Prevention and others. However, the agencies frequently fought with one another over whose responsibility it was to solve the problem. Ultimately, the E.P.A. and C.D.C. largely deferred to the safety commission, taking little action of their own.
The safety agency did send inspectors to China to visit factories — where lax practices were discovered — but was ineffective at bringing relief to thousands of homeowners. (OF COURSE! But what can we do in China? They won’t listen to us ”round-eyed barbarians.”)
Unlike Chinese drywall manufacturers, Lumber Liquidators is an American company with many assets in the United States. That could make the consumer safety agency’s job easier this time, should it
choose to pursue the matter.
But decisions in state and federal courts in recent weeks involving the company, Taishan Gypsum, a major Chinese manufacturer of drywall, could signal a turning point for thousands of American homeowners, according to lawyers representing homeowners and home builders.
The Chinese manufacturer argues that its drywall was not defective and that courts in the United States have no jurisdiction over the company since its drywall was sold in this country by other companies. But a federal judge in Louisiana ruled last month in a drywall case that Taishan Gypsum was responsible for its drywall sold in Florida,
Virginia and Louisiana. The ruling by United States District CourtJudge Eldon E. Fallon followed a similar decision on Aug. 31 by a state judge in Florida.
Miami-Dade Circuit Court Judge Joseph P. Farina ruled that the plasterboard company that exported the drywall to Florida was wholly owned and controlled by Taishan Gypsum, and therefore it was subject to the court’s jurisdiction.
The judge also noted that Taishan Gypsum “actively targeted the Florida market by courting Florida companies, mailing drywall samplesto Florida, selling large amounts of drywall to Florida-based companies.”
Taishan Gypsum is appealing both rulings, and the company’s lawyer, Joe Cyr of Hogan Lovells, said he was confident his client would prevail. Mr. Cyr said American distributors came to China looking for drywall in 2005 and 2006. “Taishan Gypsum did not ship any drywall to the U.S.,” he said, adding that Taishan “strongly disputes any claim that the drywall is defective.”
But lawyers representing homeowners and home builders suing over the suspect drywall suggested the rulings could have broad implications.
In all, the lawyers said about 7,000 to 10,000 homes suffered damage because of defective Chinese drywall installed in the aftermath of hurricanes Rita and Katrina and during a building boom in the South.
(Who me? Don’t you know about the Latin phrase that is prevalent in the Real estate industry: Caveat Emptor — let the buyer beware?)
Made in America is much safer! Don’t be floored by your new flooring and don’t buy liquidated lumber!
Mace J. Yampolsky is a Board Certified Criminal Law Specialist, 625 South Sixth St., Las Vegas, NV 89101; He can be reached at: Phone 702-385-9777 or fax 702-385-300. His website is located at: www.macelaw.com.