Chinese drywall manufacturer fined, banned from doing business in U.S.

gavel_rgbNEW ORLEANS — A federal judge has ordered a China-based maker of drywall to pay $55,000 in penalties and attorney fees — and to stop doing business in the United States — as punishment for refusing to take part in court proceedings over harm allegedly done by the product.

U.S. District Judge Eldon Fallon found Taishan Gypsum Co. Ltd. in contempt of court.

Taishan had contested U.S. Courts’ jurisdiction over claims that gases released by the drywall corroded metals and caused major appliances to fail.

Fallon’s ruling noted that Taishan lost that argument at the 5th U.S. Circuit Court of Appeals. He noted instances where Taishan refused to appear at later court proceedings.

An attorney for Taishan declined to comment today.

Fallon said Taishan and its affiliates are blocked from doing business in the U.S. until they take part in the litigation. If they violate the contempt order, the penalty will be 25 percent of profits earned in the year of the violation.

“This refusal to appear is a direct contemptuous act occurring in open court after actual notice of the proceedings,” the judge wrote. “Such disobedience of the Court’s order harms both the many other parties in this case and the decorum of the Court.”

Defective drywall from China was installed in an estimated 12,000 to 20,000 homes and businesses, mostly in the South, during a building boom following hurricanes Katrina and Rita, in late 2005. Federal cases resulting from the damages were consolidated in New Orleans.

In a news release, Arnold Levin, an attorney for plaintiffs in the drywall court cases, said all legal avenues would be pursued to collect any judgments against Taishan.

In October, Plaintiffs’ attorneys argued that Taishan can be held accountable in the United States for selling more than $8.5 million worth of its drywall in the U.S. between 2005 and 2008.

 

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