In the ongoing tainted drywall class action case, a recent settlement offer has the legal and consumer affairs communities up in arms. Lowe’s Companies Inc. has agreed to a $6.5 million settlement that would result in small payouts to plaintiffs. While this is not the infamous Chinese Drywall litigation, the Lowe’s drywall allegedly suffers the same problems as the tainted product coming out of China.
Compensation is planned in the form of Lowe’s gift cards in amounts of $50, $250 or $2,000. The actual amount will depend on consumer’s ability to document their losses. Those who show more than $2,000 in damages can win an additional $2,500 cash.
Compared to the purchase cost of the drywall in most of the affected homes, the settlement is small. According to federal guidelines from the U.S. Consumer Product Safety Commission, drywall-tainted homes require full remediation that can cost more than $100,000 depending on the size of the home and scope of damage.
The fumes emitted by tainted drywall do more than just emit a foul smell. The fumes corrode metals, including electrical systems, plumbing and HVAC components. One South Florida homeowner alone secured $2.5 million in compensation for their damages.
The agreement cannot be finalized until Superior Court Judge Bobby Peters hears arguments for and against the settlement on November 19, 2010, but he has already offered a preliminary approval. Consumers who wish to protect their rights to sue for the full amount of damages must notify the Superior Court of Muscogee County, GA of their intention to opt out of the class action by November 9, 2010. Contact our office if you need assistance in opting out of the class action suit.
Attorneys representing Chinese Drywall plaintiffs believe such a settlement would interfere in their case, which is the nation’s largest drywall lawsuit. U.S. District Judge Eldon Fallon is overseeing that multi-district federal case in New Orleans. A motion is now before him, asking to block the Georgia settlement, which “interferes with and erodes” the federal litigation. To complicate matters, some of the GA plaintiffs are also plaintiffs in the federal suit.
But it’s not really the amount of compensation at issue here. If Lowe’s successfully completes this settlement, the company will be shielded from liability in the federal case. Meanwhile, tort reform advocates are seizing the opportunity to bend public opinion to their cause.
But the usual proposed tort reform remedy of a cap on damages would do nothing to help a case like this. Such measures merely hurt meritorious claims and do nothing to stop frivolous claims. Laws are already in place to stop frivolous claims, such as Rule 11 Sanctions and Litigation Accountability Acts. And of course judges are there to dismiss frivolous cases anyway.
This settlement only protects a large corporation. It does nothing for Lowe’s consumers and may actually harm plaintiffs in the federal case.