The first test case in the national litigation over Chinese manufactured drywall is getting underway in U.S. District Court in New Orleans as seven families from Virginia seek to be compensated for the cost of repairing corrosion in their homes from an overseas manufacturer that has ignored the court proceedings.

The test case, Germano et al v. Taishan Gypsum Co. Ltd., will offer the first real estimates of what it may cost to repair a home built with bad drywall while federal agencies in Washington are still deliberating proper "repair protocols" that may guide the use of any government remediation funds. The case is also likely to highlight the challenges of collecting a judgement from a foreign company that has failed to acknowledge the proceedings.

To handle massive consolidated litigation, judges conduct more manageable "test trials" to serve as a proxy for many of the issues in the case. In the process, they set benchmarks for appropriate compensation for different types of damage in different types of houses, making it easier for the parties to settle all of the cases that have been filed if they wish.

Approximately 2,100 homeowners from around the country are participating in the national drywall litigation in New Orleans. About 2,800 people in 38 states have reported to the Consumer Product Safety Commission that their homes contain bad drywall. Florida and Louisiana are believed to be the two states with the most drywall cases. The Consumer Product Safety Commission has been coordinating a massive federal investigation into bad drywall, but has been criticized for moving too slowly while people are ill and without recourse in their homes.

Chinese Drywall Hearing Gets Underway (New Orleans Times-Picayune 2/18/10)

February 24, 2010