Federal court won't allow appeal of attorneys' fees dispute order stemming from Chinese-made drywall litigation

By Carrie Salls | May 21, 2018

NEW ORLEANS – The U.S. District Court for the Eastern District of Louisiana denied a motion to appeal an attorneys’ fees allocation dispute order that arose as part of a Chinese-manufactured drywall products liability litigation, according to an order filed May 7.

NEW ORLEANS – The U.S. District Court for the Eastern District of Louisiana denied a motion to appeal an attorneys’ fees allocation dispute order that arose as part of liability litigation involving Chinese-manufactured drywall products in an order filed May 7.

The May 7 order also denies a request for a final judgment in the litigation and for interim distribution of attorneys’ fees.

The litigation involving Chinese-manufactured drywall stems from rebuilding efforts after Hurricanes Rita and Katrina led to a shortage of construction materials. Drywall made in China was brought into the U.S. to meet the demand.

In the May 7 ruling, the court said the fee dispute is between “common benefit counsel” that handled the product liability litigation and lawyers hired by individual plaintiffs in connection with the drywall litigation.

In its ruling on the fee dispute, the court “determined a 52-48 division of available funds for attorneys’ fees between common benefit counsel and individually retained contract attorneys, respectively.”

Some of the individual plaintiffs’ attorneys subsequently filed motions “for certification of order for interlocutory appeal” of the fee division order, “or in the alternative, entry of final judgment,” the order said, as well as requests for interim distribution of the fees awarded.

According to the order, the product liability claims filed against the Knauf Gips KG group of plaintiffs, which are the ones covered by the fee allocation order, were settled, with claimants being given three settlement options, including an option to have the drywall work fixed, reimbursement of the amount they paid to have the drywall issues addressed by a third party and a cash settlement payment.

“As part of the Knauf remediation settlement, Knauf also agreed to pay reasonable costs, including the cost of administering the program, and an additional amount for attorneys’ fees, which includes both the fees for contract counsel and those for common benefit counsel,” the May 7 order said. “The total for both attorneys’ fees and costs is $233,078,270.33, in which $197,803,738.17 is used for attorneys’ fees and $35,274,532.16 has been used for costs.”

The court said the plaintiffs have received their share of the settlement funds.

In the order regarding the request to appeal, U.S. District Judge Eldon E. Fallon said “movants’ parade of reasons for an interlocutory appeal chiefly arises from pecuniary motives and dissatisfaction with facts – not error in law.”

Fallon also ruled that the fee judgment is not final, so an interim distribution is not appropriate.

“The court sees little prejudice to deferring disbursement of attorneys’ fees funds until a final judgment is entered," the order said. “The court expects completion of the attorneys’ fees disbursement process … by the end of this year. The focus now should be arriving at a final resolution – not taking pointless detours.”

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