Taryn Phaneuf Jun. 11, 2016, 11:46am


NEW ORLEANS — Louisiana consumers and others whose homes were ruined by toxic drywall made in China suffered another setback in their quest to recover damages.

China’s Ministry of Justice refused to serve the lawsuit to a Cabinet agency that oversees the country’s biggest state-owned companies, claiming the State-Owned Assets Supervision and Administration Commission is immune to the suit.

The response came almost two years after attorneys representing homeowners in the class action sued the commission responsible for overseeing more than 100 state-owned companies, including Taishan Gypsum Co. Ltd.

U.S. District Judge Eldon Fallon determined that Taishan must pay for damages from the drywall it made. The class could include up to 4,000 homeowners in six states, including Louisiana.

In an earlier suit brought by seven homeowners in Virginia, Fallon determined that the drywall emitted sulfur gas that made people sick, and required them to replace the drywall as well as corroded wiring and copper pipes, damaged heating, ventilation and air-conditioning units, appliances, electronics, and flooring.

Carl Tobias, a law professor and product liability expert at the University of Richmond who has followed the case from a distance, told the Louisiana Record that it’s unclear whether the plaintiffs in the suit will find a remedy to China’s answer without the country’s cooperation.

“I thought after Fallon ruled that some plaintiffs might be able to recover," Tobias said. "I think China’s response is unfortunate, especially given the serious damages that many suffered from the defective drywall,” Tobias said. “One possibility might be some type of diplomatic outreach from the federal government to China’s government requesting some relief, but that would be unusual, difficult to assemble and might not work.”

Taishan resisted the court’s authority for the same reason eventually voiced by the justice ministry. It didn’t show up to a 2014 hearing in New Orleans after a judgment against the company was finalized in the suit by the Virginia homeowners. Fallon held the company in contempt of court, banned them from doing work in the country and ordered it to put a quarter of its profits into escrow. After about eight months, the company agreed to pay the Virginia plaintiffs.

While waiting for the company to respond to claims in the class action, plaintiffs filed a lawsuit against its owners, including the Chinese government.

China’s answer could have implications for other lawsuits brought by plaintiffs in the U.S. — “especially Chinese companies that might assert a similar defense,” Tobias said. “I am uncertain about whether businesses in other nations would be able to assert this type of defense.”

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