Newspaper article International New York Times

China Firm Agrees to Pay U.S. Buyers for Damages ; in Rare Victory, Company Will Accept Liability for Contaminated Drywall

Newspaper article International New York Times

China Firm Agrees to Pay U.S. Buyers for Damages ; in Rare Victory, Company Will Accept Liability for Contaminated Drywall

Article excerpt

In a stunning about-face, Taishan Gypsum will pay $2.6 million in damages to seven families hurt by its drywall, after having fought any payout since 2010.

Elizabeth Heischober has been waiting nearly five years for a Chinese company to honor a court judgment for contaminated drywall that upended her life, made her sick and wrecked her finances. Until now, she wondered if it would ever happen.

"We'd pretty much given up hope," she said. "It's been a nightmare."

American consumers like Mrs. Heischober who have been hurt by defective products made by Chinese companies frequently have little recourse. But in a stunning turn of events, a Chinese drywall manufacturer has agreed to pay the damages owed her and six other Virginia families.

"It's amazing," said Carl Tobias, a law professor and product liability expert at the University of Richmond. "Americans trying to hold Chinese companies accountable in U.S. courts? They basically never succeed."

The judgment against the Taishan Gypsum Company, a state- controlled company, dates to 2010, when a New Orleans federal judge ruled that the company was liable for $2.6 million to fix the homes of the seven Virginia families. The seven were used as a so-called bellwether case -- a test trial of sorts for the issues surrounding complex litigation -- to represent the owners of about 4,000 houses nationwide built with Taishan's drywall. It emitted sulfur gases that corrode metal wiring and pipes, short-circuit electronics and can lead to numerous respiratory ailments.

But the company never paid. While another Chinese drywall manufacturer owned by a German company settled with victims, Taishan filed multiple appeals and challenged the jurisdiction of the federal court. Then, when the Fifth Circuit finally ruled in favor of the homeowners, the company pulled a Houdini act: It dismissed its lawyers and stopped showing up in court.

Federal District Judge Eldon E. Fallon, who oversaw the wide- ranging drywall litigation in New Orleans, responded with a scathing rebuke to the company and its affiliates -- all controlled by the Chinese government.

Last summer, he found Taishan in civil and criminal contempt of court, and barred the company, and its parent corporations, from doing business in the United States. …

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