Legal Briefing: $2.6 Million in Toxic Chinese Drywall Case


A daily look at legal news and the business of law:

Toxins in Chinese Products: They're Not Just For Toys Anymore

In recent years, much attention has been given to toxic imports from China, although the headlines have largely focused on lead and other heavy metals in toys and kids' jewelry, and pharmaceuticals. Those scandals led to recalls and changed standards, but the stakes in the toxic drywall lawsuits may make the previous situations look like small potatoes.

In the wake of several hurricanes, and during the peak of the housing boom, thousands of homes in Florida, Virginia, Louisiana, Mississippi and Alabama were built or repaired with Chinese-made drywall so toxic its emissions corroded wiring, air conditioners, appliances, carpet, cabinetry, trim work and flooring. A federal judge has just awarded seven plaintiffs $2.6 million to cover repairs, housing costs while the repairs are being done, damage to personal property, decreased property values, and compensation for loss of enjoyment of their homes. Plaintiffs also allege the drywall made them sick, but the court won't rule on those claims until late this year or next.

One big challenge for plaintiffs will be getting paid by the truly responsible parties: U.S. civil judgments are not enforceable in China. American drywall suppliers, distributors and home builders may get stuck will the whole bill. And the full bill will be enormous: Thousands more homeowners have cases pending, and as noted, health claims haven't even been considered yet.

More States Join Suit Against Health Care Reform

The total number of states suing the federal government over health care reform has now reached 19, notes the The Wall Street Journal Law Blog, 18 in one suit and Virginia on its own. The new states are Indiana, North Dakota, Mississippi, Arizona and Nevada. Reflecting the bitter partisanship underlying the suit, Nevada was only able to join after GOP Gov. Jim Gibbons bypassed Democratic Attorney General Catherine Cortez Masto by issuing an executive order that allowed him to appoint a special counsel. That special counsel, Mark Hutchinson, must be a true believer in the cause: He's doing it pro bono.

Department of Justice Prosecutes Tax-Cheating Accountants

The Department of Justice just announced wins against two tax preparers who helped taxpayers cheat the government (and thus the rest of us) out of millions of dollars in taxes. From now on, the only tax returns those two can help with will their own and their families'.

And in the Business of Law...

Attorney layoffs resume, with Mayer, Brown letting 28 associates and counsels go (and 47 other staff members, too).

• Elderly equity partners at Kelley Drye got good news: In the face of an Equal Employment Opportunity Commission lawsuit, the firm is ending its policy of requiring retirement at age 70.