The litigation concerns associated with the use of Chinese drywall during the recent boom in new housing construction may be impacted further by the increasing role of the U.S. Consumer Product Safety Commission (CPSC).

The prevalence of drywall claims has prompted the CPSC to host a Drywall Information Center on the Web to gather consumer complaints. The CPSC recently reported that it has received more than 1,500 complaints allegedly related to the use of roughly 309 million square feet of Chinese drywall in U.S. home construction. The drywall purportedly contains excessive amounts of sulfur, whose emissions have allegedly caused surrounding construction materials to fail, respiratory health effects, and noxious, "rotten egg" odors that affect habitability.

The CPSC has received complaints from 27 states, the District of Columbia, and Puerto Rico. It is believed that the bulk of the drywall was installed in 2007 and 2008, although reports have suggested installation as early as 2004.

A large number of lawsuits continue to be filed by homebuyers against homebuilders, drywall suppliers, and manufacturers. In June, a special panel on multidistrict litigation consolidated hundreds of related lawsuits in the Eastern District of Louisiana. In August, a class action was filed in Nevada state court against a homebuilder and drywall manufacturer.

Notably, in the Nevada case, the defendants claim that they did not even use Chinese drywall in any of the homes noted in the lawsuit. Regardless of the merits of the plaintiffs' contentions, this signals that the plaintiffs may attempt to use Chinese drywall allegations as a means of exploring whether domestically supplied drywall has caused construction damage and health effects.

Lawsuits of this nature have proven to be complex and require the coordination of legal experience in a number of different areas, including class action, product liability, real estate, environmental, and construction experience. Litigants will also likely need to address the bankruptcy of failed construction companies and product suppliers. In addition, indemnity and coverage issues may arise.

Ballard Spahr is well positioned to effectively represent companies in this type of litigation. The firm is also prepared to counsel companies about how to take steps to avoid litigation before it happens. For more information, please contact John B. Kearney (856.761.3482 or ) or Charles S. Hirsch (410.528.5503 or ).

Copyright © 2009 by Ballard Spahr LLP.
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