Is My Drywall Chinese? - HB Litigation Conferences

HB Litigation Conferences Presents
Chinese Drywall Litigation
June 18, 2009 | The Ritz-Carlton, New Orleans
Conference Chairs:
Bruce Steckler, Esq., Baron & Budd, P.C., Dallas
Stephen Mysliwiec, Esq., DLA Piper, Washington, D.C.
Meeting Room: Lafayette Ballroom
7:30 Registration & Continental Breakfast
8:00 Introduction and Opening Remarks
8:15 Chinese Drywall Overview
•What is it, when did it become a problem and why?
•Who is manufacturing and distributing the tainted drywall, and
will we see toxic drywall from domestic manufacturers?
•The key builders who used the product
•Agency reactions and the larger impact Chinese drywall presents
for the housing and construction industry, nationally and regionally
•Likelihood and the impact of a CPSC recall
Michael Ryan, Esq., Krupnick Campbell Malone Buser Slama
Hancock Liberman and McKee, Fort Lauderdale, FL
Sheila Raftery Wiggins, Esq., Duane Morris LLP, Newark, NJ
Glenn Cambre, Esq., Deputy Assistant Secretary of the Office of
Public Health, Louisiana Department of Health and Hospitals, and
Executive Director of the Center for Environmental Health Services,
Baton Rouge, LA
9:15 State and Federal Legislative and Regulatory Developments
•Status of the foreign manufacturing bill
•Other state and federal initiatives regarding Chinese drywall
Melissa Hutts, Esq., Baron & Budd, P.C., Dallas
Jeremy Alters, Esq., Alters, Boldt, Brown, Rash & Culmo, P.A., Miami
10:00 Morning Break
10:15 The Property Damage Caused by Chinese Drywall
• Identifying the problem: confounding factors, product identification
issues and the required tests
• Building damage: what Chinese drywall is doing to the construction
it was used in
• Property damage: what Chinese drywall is doing to other home appliances
• The detailed analysis of remediation:
- Determining what to remove, project scope and avoiding
unnecessary costs
-The cost to remove Chinese drywall
• Assessing the potential costs nationwide: damages projections
for construction remediation and rebuilds in the 13 confirmed states
• What other dangerous substances may be hidden in Chinese
drywall that you should be aware of?
Russell Nassof, Esq., Principal, TRC, Phoenix
Paul Phillips, PE, Rimkus Consulting Group, Inc., Houston
Eric Winegar, PhD, QEP, Principal, Applied Measurement
Science, Fair Oaks, CA
11:30 Chinese Drywall-Insurance Coverage Nightmare
•The big coverage disputes, trigger issues, endorsements and exclusions to
come into play
• The kinds of policies providing coverage for both first and third party claims
•Additional insured issues
•Subrogation opportunities
Lorelie Masters, Esq., Jenner & Block LLP, Washington, D.C.
Stephen Mysliwiec, Esq., DLA Piper, Washington, D.C.
Veronica Bates, Esq., Hermes Sargent Bates, L.L.P., Dallas
Robert Stickley, Esq., Nelson Levine de Luca & Horst, Blue Bell, PA
12:45 Networking Luncheon - Salon 1
Arnold Levin, Esq., Levin, Fishbein, Sedran & Berman, Philadelphia
1:45 Liability Issues - Builder vs. Distributor vs. Manufacturer
•An examination of the builder’s role in the Chinese drywall litigations
•Liability closer to the source: the manufacturer and distributor liability -
who has already been sued and who stands to be brought into the fray
•What does a viable case look like and how do these parties defend
against it
•Possible indemnity claims for defendants and how to pursue them
•Real estate law: state law actions against builders update - Texas,
Florida, Louisiana, Virginia, and California
Hugh Turner, Esq., Akerman Senterfitt, Fort Lauderdale, FL
Robert Brown III, Esq., Alters, Boldt, Brown, Rash & Culmo, P.A., Miami
2:45 Bankruptcy and Other Financial Concerns for the Already Hard-Hit
Construction and Real Estate Market
• WCI has already filed bankruptcy, who is next?
• What does bankruptcy mean for homeowner claims and creditors?
• Chinese drywall’s impact on mortgage servicing companies and similar
financial institutions
- Will forebearance be an option for homeowners?
• What are the real estate market value implications of Chinese drywall
and how valuations impact home owners?
• How do we separate drywall stigma from overall recession meltdown?
• How can mass appraisal be applied in class action cases?
Sandy Esserman, Esq., Stutzman, Bromberg, Esserman & Plifka, Dallas
John Kilpatrick, PhD, Chief Executive Officer, Greenfield Advisors,
Seattle
3:45 Afternoon Break
Sponsors and Exhibitors Include:
4:00 Class Action and MDL Update
•MDL Issues - Commonality and the status of the cases
•Where have class actions been filed, against whom and what is the status
of the pending cases?
•Do you want to be part of or defending against a class action suit?
Ervin Gonzalez, Esq., Colson Hicks Eidson, Coral Gables, FL
Richard Lewis, Esq., Hausfeld LLP, Washington, D.C.
William Schuette, Esq., Jones Walker, Baton Rouge, LA
4:45 Health Damages Caused By Chinese Drywall
•What is toxicity: the dose that makes the poison, public risk vs. personal
risk; and the distinction between regulatory and human toxicology
•What needs to be proven, in order to establish toxicity and
distinguishing hazard perception from toxicity
•What is known today: the levels of hydrogen sulfide/strontium and other
toxic emissions from Chinese drywall that are known concerns today
-Does Chinese drywall pose health concerns for homeowners and to
what extent?
-Unique issues for certain class parties (elderly, children and those with
heightened sensitivities)
-The level of severity of the health risks
•What is unknown about tomorrow: possible longer terms effects of
these emissions, where does the medical research stand today and what is
planned tomorrow?
•How is Chinese drywall more dangerous than domestic drywall and
how do you know if your case involves dangerous drywall?
• The medical damages: the potential costs for medical care and analysis/
projection of medical damages defendants face
Patricia Williams, PhD, DABT, President, Environmental Toxicology
Experts, LLC, Metairie, LA
Barbara Manis, MD, Chief Medical Officer, Building Health Sciences,
a division of The NMAS Group, Rockville, MD
5:45 Networking Reception - Baronne

CO-CHAIRS
Stephen Mysliwiec is a partner at DLA Piper in Washington, D.C. Mr. Mysliwiec has more than 25
years of trial and appellate experience in the federal and state courts. He has extensive experience in
insurance coverage, suretyship, construction defect and product liability litigation. Mr. Mysliwiec has
litigated numerous insurance coverage disputes involving policyholders in the real estate,
construction, life insurance, hotel, assisted living, computer, transportation and food service
industries. He is currently advising clients with respect to liability arising out of the use of Chinese
drywall. He also advises clients in the real estate, construction, and financial services sectors
regarding insurance and indemnity issues in complex real estate and construction transactions. He is
a frequent lecturer on insurance issues in the construction industry. His article, "Insurance Coverage
for Claims of Latent Defects: What Protection Is a Builder Buying?" won the Burton Award for
excellence in legal writing. Mr. Mysliwiec holds a BA and MA from the University of Notre Dame,
and he is a graduate of Yale Law School, where he was an officer of the Yale Law Journal.
Bruce Steckler joined Baron & Budd in 2006 with a track record over a decade long of successfully
litigating toxic tort, medical malpractice, products liability, and personal injury cases. Previously a
partner at three Dallas-based firms and currently a Baron & Budd shareholder, Mr. Steckler is
known as an aggressive advocate who goes the extra mile for his clients. His legal acumen has won
him recognition by D Magazine’s “Best Lawyers under 40” feature in 2002, 2004, and 2006, and by D
Magazine’s “Best Lawyers” in 2009, and by Texas Monthly and Law & Politics Media as a “Texas Super
Lawyer” in 2004, 2005, 2007 and 2009. He also enjoys an “AV” rating by Martindale Hubbell Law
Directory, its highest rating. He was a member of the State Bar of Texas Grievance Committee and
served on the Board of Directors of the Dallas Trial Lawyers Association. He is a member of the
Millionaire Advocates Forum for the Top Trial Lawyers in America. He has also authored numerous
papers on civil litigation and trial practice and has spoken at several seminars on various civil
litigation topics before attorneys, health care professionals, and the insurance industry. Mr. Steckler
holds a BA magna cum laude from Tufts University and a JD from Southern Methodist University -
Dedman School of Law. He was Leading Articles Editor of the Journal of Air Law & Commerce, a
recipient of the journal’s scholarship, a member of the SMU Law Review Association, and a board
member of the law school’s Moot Court program.

FACULTY
Jeremy Alters is the founding and managing partner in the law firm of Alters, Boldt, Brown, Rash
& Culmo, P.A. (ABBRC) with three Florida offices in Miami-Dade, Broward and Palm Beach
counties. ABBRC handles medical malpractice, products liability, wrongful death, maritime and
tragic brain injury cases for individuals and families. For business owners, ABBRC represents
Plaintiffs in major business disputes where a trial lawyer is needed for the effective resolution of the
case whether by trial or settlement. In his career, he has resolved cases totaling well over 200 million
dollars. Mr. Alters has achieved dozens of multimillion dollar settlements and verdicts including
many noteworthy eight figure settlements. All of his significant settlements and verdicts have been
covered by the local and national media. One of his more notable settlements was for a 16-year-old
girl who was run over on the beach by an SUV, which resulted in a massive brain injury. The driver
only had 10,000 dollars in insurance coverage, however, Mr. Alters pursued the case tirelessly,
discovering that the insurance company had failed to act in good faith. As a result, he achieved a
17.5 million dollar settlement which was the largest pre-verdict settlement on a 10,000 dollar
insurance policy in United States history. It was also the single largest settlement in Florida history
for one plaintiff. As a trial lawyer, Mr. Alters has successfully tried to verdict more than 35 civil jury
trials in the areas of medical malpractice, products liability, wrongful death, tractor-trailer accidents
and tragic personal injury cases. Mr. Alters is known to be an effective and passionate advocate for
his clients, making their interests and pursuit of justice, the singular focus of each case. When a trial
lawyer is needed for the effective resolution of the case, whether by trial or settlement, in business
disputes, catastrophic loss or corporate malfeasance, Mr. Alters delivers representation that gets his
clients the results they deserve. Mr. Alters is currently expanding the firm's practice on a Global
scale. This initiative may be an unprecedented step for a law firm that handles exclusively Plaintiff's
cases. ABBRC Global represents individuals and families who have been catastrophically injured,
businesses embroiled in international disputes and foreign governments needing to pursue justice
against major corporations in the United States and around the world. Mr. Alters was a founding
shareholder in his prior firm, Ratzan & Alters, P.A. in 2001. He was born in Chicago, Illinois on
January 15, 1971. He received his BA from the University of Massachusetts at Amherst (1994) and
his JD from the University of Miami School of Law (1996).
Veronica Bates is a founding partner at Dallas-based law firm Hermes Sargent Bates, the largest
law firm in Texas with a female named partner. Previously voted one of the Top 50 Women
Lawyers in Texas by Texas Monthly, Ms. Bates devotes 100% of her practice to insurance-related
matters, including coverage and bad faith litigation, coverage opinions and related advice. She is a
frequent lecturer and author on insurance topics on a state and national level. Recently, Ms. Bates
served as a faculty member on a Texas Bar CLE Live Webcast and she was a speaker at the
Advanced Insurance Seminar and a Property Loss Research Bureau seminar. In addition, she was
featured in Claims Magazine for her opinion on construction defects coverage after the Texas
Supreme Court published its decision on the Lamar Homes, Inc. v. Mid-Continent Casualty Co. case. She
also recently co-authored the article, “Reservation of Rights Letters,” which was published in
ClaimsJournal.com. In 2008, Ms. Bates was selected by her peers for inclusion in The Best Lawyers in
America® in the field of Insurance Law and has claimed a spot on the Texas SuperLawyers list every
year since 2004. She was also named to Who's Who Legal for Insurance Law, a designation that
recognizes the foremost attorneys practicing Insurance Law in Texas. Ms. Bates graduated with a
BA from the University of Notre Dame and a JD from Southern Methodist University School of
Law. After graduation, Ms. Bates served as a briefing attorney at the Dallas Court of Appeals in
1987-1988.

Robert Brown III is a founding equity partner in the law firm of Alters, Boldt, Brown, Rash &
Culmo. Mr. Brown has handled mass torts, cases involving catastrophic loss, medical and legal
malpractice, product liability, wrongful death, intellectual property and commercial litigation. Over
the years, he has tried more than 50 cases to verdict and today continues to enjoy a stellar reputation
for being an excellent trial lawyer and providing zealous representation of both individuals and
wronged corporations. One of Mr. Brown’s more notable cases involved a loving, married couple
who had fostered more than 250 children with mental and/or physical disabilities. The husband was
in a fatal car accident. The case involved a suit against the insurer of the other driver involved in the
accident. The case was settled and although no amount will bring back the huge loss this family has
had, Mr. Brown certainly helped his surviving wife and children to live a normal life. Mr. Brown is a
member of the American Association for Justice, Leaders Forum and National Finance Committee,
and the Academy of Florida Trial Lawyers, Eagle level. He has been recognized by his peers in
several organizations and serves on the Board of Directors of the Miami-Dade Justice Association,
and is the President elect of the Miami Chapter of the American Board of Trial Advocates. He has
also received an “AV” rating by Martindale-Hubbell. Mr. Brown has been certified by the Florida
Bar since 1986. He is also admitted into the United States District Courts, Southern, Northern and
Middle Districts of Florida and the United States Circuit Court, 11th District.
Glenn Cambre is currently the Public Health Executive Director for the Center for Environmental
Health Services of the Office of Public Health of the Louisiana Department of Health and
Hospitals. Prior to this, Mr. Cambre served as Attorney Supervisor, Bureau of Legal Services,
DHH, advising and representing the CEHS Director and programs. Before beginning government
service in October 1999, Mr. Cambre was in the private practice of law in Gonzales, Louisiana,
dealing primarily with real estate and estates. He worked in law firms in Jena and Gonzales,
Louisiana, before starting his own firm in 1980. He has been involved in church international
mission work and community service in the Baton Rouge area for many years. Mr. Cambre received
his bachelor of science in Business from Louisiana State University (1972) and earned his JD from
Louisiana State University Law Center (1974).
Sander Esserman is a shareholder at Stutzman, Bromberg, Esserman & Plifka in Dallas. Mr.
Esserman’s experience in financial reorganizations and disputes covers the waterfront, including lead
counsel to debtors, secured creditors, trustees, indenture trustees and various creditors committees
and a legal representative in a major asbestos case covering nearly 10 years. His role has been
significant in major cases across the country, including various mass tort and asbestos cases. Mr.
Esserman holds a BA from DePauw University (1973) and a JD from Southern Methodist
University School of Law (1976).
Ervin Gonzalez is a partner at Colson Hicks Eidson, and has more than 20 years of experience
practicing products liability, class action, business litigation, medical malpractice and personal injury
litigation. Mr. Gonzalez has 21 jury trial verdicts that meet or exceed $1 million and numerous
settlements that meet or exceed $1 million. Mr. Gonzalez is board certified as a specialist in civil trial
law (both in personal injury and wrongful death cases) and business litigation law by The Florida Bar
and The National Board of Trial Advocacy. A member of the Florida Bar Board of Governors, Mr.
Gonzalez has served on the board’s Executive Committee. He is also a member of the National
Board of Trustees for the National Institute of Trial Advocacy. He is former President of the Dade
County Bar Association and Dade County Trial Lawyers Association, and past Director of the
Academy of Florida Trial Lawyers. In addition, Mr. Gonzalez is an adjunct professor at the
University of Miami School of Law for the trial skills litigation program. Some of his published

works include FasTrain: Florida Civil Trial Preparation, The Florida Bar, 5 Volume Book and
Practice Guide: Florida Civil Procedure, LexisNexis: 5 Volume Book. Mr. Gonzalez has also
authored numerous articles published in The Florida Bar Journal, the Dade County Trial Lawyers
Advanced Trial Handbook and the monthly column "Trial Tips," published in the Dade County Bar
Bulletin and the Daily Business Review. Furthermore, Mr. Gonzalez was recently named in the
prestigious Best Lawyers in America, a “who's who” of the legal profession's top practitioners as
evaluated and selected by their professional peers. He was also selected as one of the Best Lawyers
in Florida by Florida Trend Magazine and in the nation by Leading American Attorney. Mr.
Gonzalez graduated cum laude from the University of Miami School of Law with a juris
doctorate (1985).
John Kilpatrick, PhD, MRICS, is President of Greenfield Advisors, formerly Mundy Associates.
Dr. Kilpatrick is a Fellow of the American Real Estate Society, a member of the Faculty of
Valuation of the British Royal Institution of Chartered Surveyors, and a visiting Scholar in Real
Estate at the Zichlin School of Business, Baruch College. He is the author of four books, including
Understanding Home Construction, published by the National Association of Home Builders, and
Subdivision Development, published by the Realtors’ Land Institute of the National Association of
Realtors. Dr. Kilpatrick’s work has been featured in The Wall Street Journal, The Boston Globe,
The New York Times, and Canadian Living. In 2000, the S.C. Department of Archives and History,
with a grant from the National Park Service, compiled a monograph honoring his work in the
economic impacts of historic preservation. He is featured in the current edition of Who’s Who in
America. Dr. Kilpatrick has authored more than 100 recent publications, book chapters, working
papers, monographs, and invited presentations, including: “Valuing Brownfields,” from the
forthcoming 3rd edition of the ABA’s Brownfields; “Preservation Easements,” Journal of Wealth
Management (2008); “The Aftermath of Katrina – Recommendations for Real Estate Research,”
Journal of Real Estate Literature (2007); “Valuation of Impaired Property,” Chapter 6 in the text When
Bad Things Happen to Good Property (2006); “Impact of Transit Corridors on Property Values,” Journal
of Real Estate Research (2005); “Real Estate Issues in Class Certification,” Class Action Litigation Report
(2004); and “Appraisal Implications of EIFS,” The Appraisal Journal (1999). For a more
comprehensive list, go to www.greenfieldadvisors.com.
Burton LeBlanc is a shareholder in Baron & Budd, P.C. Mr. LeBlanc concentrates his practice in
the areas of environmental law, securities litigation and asbestos litigation. Mr. LeBlanc and his firm
have recovered millions of dollars for injured working men and women in Louisiana including
multiple jury verdicts more than one million dollars. Mr. LeBlanc was a founding member of the law
firm of LeBlanc & Waddell, an “AV” rated law firm by Martindale-Hubbell. LeBlanc & Waddell
was designated occupational disease counsel for the Louisiana AFL-CIO and the Louisiana NAACP,
and was one of the largest plaintiffs law firms in Louisiana. In June 2008, LeBlanc & Waddell
merged with the national law firm of Baron & Budd, P.C. based in Dallas, Texas. He is immediate
past President of the Louisiana Association for Justice ("LAJ") f/k/a Louisiana Trial Lawyers
Association ("LTLA") and serves on the Executive Committee of the LAJ. He has served on the
Council of Directors and the Board of Governors for the LAJ as well as the Committee for the
Environmental Law/Toxic Tort Section of the LAJ. He serves as Parliamentarian of the American
Association for Justice (“AAJ”) f/k/a the American Trial Lawyers Association (“ATLA”). He has
been a member of the Executive Committee and the Board of Governors of the AAJ, where he was
awarded the Wiedeman Wysocki Award. He has been a member of the AAJ National Finance
Council, a member of the Board of Trustees of the AAJ PAC Committee, a sustaining member of
the AAJ, and a member of the Leaders Forum for AAJ. He is a member of the AAJ's Section on

Toxic Torts and Business Torts. He is a committee member of the American Bar Association's
Section on Toxic Torts. He is a supporting member of the Trial Lawyers for Public Justice
Foundation. He is a member of the National Association fo Public Pension Attorneys (NAAPA).
He is a member of the National Association of Shareholder & Consumer attorneys (NASCAT) He
is a frequent lecturer on the issue of environmental law, asbestos and chemical exposure cases. In
addition to being a member of the LAJ and AAJ, he is a member of the Texas Trial Lawyers
Association, Louisiana State Bar Association, Baton Rouge Bar Association, Texas State Bar
Association, American Bar Association, College of the State Bar of Texas and the Louisiana Bar
Foundation Since graduation from law school, Mr. LeBlanc has focused his practice to all areas of
environmental law, securities litigation, and complex litigation. Mr. LeBlanc has also represented
governmental entities, including the State of Louisiana in complex consumer fraud litigation. He
graduated with BA from Louisiana State University, Baton Rouge (political science), and a JD from
Loyola University School of Law, New Orleans. Mr. LeBlanc is admitted and licensed to practice in
the State of Louisiana; admitted and licensed to practice in the State of Texas; admitted to practice
before the Supreme Court of the United States; admitted to practice before the United States
District Courts (Middle District of Louisiana, Western District of Louisiana and Eastern District of
Louisiana); admitted and licensed to practice before the Louisiana State Supreme Court and Texas
Supreme Court.
Arnold Levin is the senior partner in the law firm of Levin, Fishbein, Sedran & Berman in
Philadelphia. In his 44 years of practicing law, Mr. Levin has either been lead counsel of and/or a
member of in excess of 100 steering committees in the fields of mass torts, antitrust, and securities
class actions and MDL proceedings. Mr. Levin is Co-Lead Counsel of Plaintiffs' Legal Committee
and Plaintiffs' Liaison Counsel, In re Orthopedic Bone Screw Products Liability Litigation, MDL No. 1014
(E.D. of Pa.) and Co-Lead Counsel of Plaintiffs' Management Committee and Plaintiffs' Liaison
Counsel, In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Products Liability Litigation, MDL
No. 1203 (E.D. of Pa.). He is a member of Plaintiffs' Executive Committee, In re Rezulin Products
Liability Litigation, MDL No. 1348 (S.D. of NY) and was a Member of Plaintiffs’ Executive
Committee and Lead Trial Counsel, In Re Asbestos School Litigation, U.S.D.C., Eastern District of
Pennsylvania, Master File No. 83-0268. He is a member of Plaintiffs’ Steering Committee in In re
Propulsid Products Liability Litigation, MDL No. 1355 (E.D. of Louisiana) and In re Vioxx Products
Liability Litigation, MDL No. 1657 (E.D. of LA) and was also a Member of Plaintiffs' Steering
Committee, Silicone Gel Breast Implants Products Liability Litigation, Master File No. CV-92-P-10000-S;
In re Telectronics Pacing Systems, Inc. Accufix Artrial "J" Leads Products Liability Litigation, Case No. MDL-
1057 (S.D. Ohio); In re Baxter Healthcare Corporation Gammagard Products Liability Litigation, MDL No.
1060-R (C.D. of Calif.); and In re Norplant Product Liability Litigation, MDL No. 1038 (E.D. of Texas).
He graduated from Temple University, B.S., in 1961, and Temple Law School, LLB, in 1964.
Richard Lewis is a member of Hausfeld LLP in Washington, D.C., and has been appointed to
serve as co-lead counsel in mass tort and product liability class action cases including In re StarLink
Corn Products (N.D. Ill) (asserting claims by farmers for genetic modification contamination of the
U.S. corn supply) and In re PPA (asserting claims by users of unsafe over-the-counter medicines). He
has also been appointed to the MDL Steering Committee in In re Prempro Products Liability Litigation.
In addition, Mr. Lewis served as lead counsel in numerous actions to obtain medical monitoring
relief for communities exposed to toxic chemicals from hazardous waste disposal practices or unsafe
drugs. These include In re Diet Drug Litigation (Fen-Phen), which resulted in a $4 billion settlement
providing medical monitoring in addition to individual personal injury awards, and Harman v. Lipari,

a Superfund case that resulted in a settlement providing medical monitoring for thousands of
residents who lived on or played near a landfill. He has litigated both individual and class childhood
lead poisoning cases and he is presently lead counsel in a case against the lead pigment industry, City
of Milwaukee v. NL Industries Inc. Mr. Lewis is also handling mass tort cases involving Vioxx, and
environmental cases in India, South Africa, and Barbados. Mr. Lewis graduated from Tufts
University with a BA in English (cum laude, 1976), and earned his Master’s in Public Health degree
from the University of Michigan (1981) and his law degree from the University of Pennsylvania (JD
cum laude 1986). He was Comments Editor for the University of Pennsylvania Law Review (1985-86) and
authored the Comment, O.C.A.W. v. American Cyanamid: The Shrinking of the Occupational
Safety and Health Act, U. Pa. L. Rev.(July, 1985). After law school, he was a law clerk for the Hon.
Stanley S. Brotman, U.S. District Court for the District of New Jersey. Mr. Lewis is admitted to
practice in the District of Columbia.
Barbara Ann Manis, MD, is the Chief Medical Officer at Building Health Sciences, Inc. Since
1980, Dr. Manis has overseen the review and analysis of hundreds of indoor environmental matters
to determine the relationship of the environment to health complaints or diagnoses. Board certified
in Quality Assurance and Utilization Review, she has written a book dealing with fetal pharmacology
and toxicology and articles in the legal literature and in the scientific literature, including indoor air
quality. She has overseen and directed projects in large scale workers’ compensation programs,
regulatory consulting, risk communication and product risk assessment. Dr. Manis was the Acting
Medical Director for the city of Philadelphia, involved with its workers’ compensation claims,
return-to-work, and medical pension fund. For the past 20 years, Dr. Manis has specialized in
environmental medicine dealing with commercial and residential IEAQ and exposure issues, in
building and health hazard evaluation for residents, occupants and workers. She has spoken at
national meetings and symposia on issues related to indoor air, toxic exposures and adverse health
effects. Dr. Manis received her BA and MA degrees from Temple University. Following several
years of teaching, she entered the University of Southern California School of Medicine where she
received her MD degree. She interned in internal medicine and completed a residency in
ophthalmology, both at the George Washington University Medical Center
Lorelie Masters is a partner in Jenner & Block’s Insurance Litigation and Counseling Practice
Group and has more than 25 years of experience representing policyholders in insurance coverage
counseling and litigation. She is co-author of two treatises on insurance coverage issues: (i) Insurance
Coverage Litigation, published in its second edition in January 2000, and updated yearly; and (ii)
Liability Insurance International Arbitration, published in Spring 2004. Ms. Masters is a past
Policyholder Chair of the Insurance Coverage Litigation Committee of the Section of Litigation of
the American Bar Association, and continues to serve in the Section of Litigation’s Leadership, and
served as President of the Women’s Bar Association of the District of Columbia from 2007-2008.
Ms. Masters served as trial counsel for policyholder Hoechst Celanese Corporation in its trial
enforcing general liability insurance coverage. The National Law Journal called the jury’s verdict for
Hoechst Celanese one of the “most significant jury verdicts of 1997.” She has lectured and written
extensively on products liability, directors’ and officers’, property and business interruption
insurance, and technology and e-commerce issues. She has also handled many other matters in
litigation, arbitration and settlement negotiations, recovering millions of dollars for her clients.

Russell Nassof is the Director of Strategic Initiatives at TRC, a publicly traded environmental and
engineering consulting firm with more than 100 offices worldwide. Mr. Nassof has been involved in
the field of environmental risk consulting for more than 20 years concentrating his work in the areas
of industrial hygiene, microbial contamination, toxic tort risk management, insurance defense, and
infection control. Many of his risk management programs have been adopted as underwriting
standards by the insurance industry and are utilized as risk barometers to evaluate emerging
environmental and health related issues. Mr. Nassof has been involved with the issue of Chinese
drywall in the State of Florida and has developed one of the first protocols for proceeding when the
presence of the suspected drywall in a structure has not been confirmed. He has been working on
projects involving Chinese drywall from Boynton Beach to Fort Myers on behalf of suppliers,
insurance carriers, and homebuilders. Mr. Nassof has presented hundreds of seminars to legal,
insurance, loss control, construction, and risk management groups in the US, Canada, and Europe,
has coauthored books and patents, has provided expert testimony, and has been an innovator in the
field of emerging environmental and health care issues. Mr. Nassof received his undergraduate and
JD degrees from Emory University in Atlanta.
Paul Phillips, PE, LEED® AP, is a senior consultant at Rimkus Consulting Group, Inc. Mr.
Phillips has 30 years of diversified engineering design and management experience. His expertise is
in identifying mechanical and plumbing system, building enclosure and other design and
construction defects that can result in problems with the occupied environment as well as the
building materials. He is experienced with failure investigations for mechanical and plumbing
equipment from direct examination of failed items to mathematical modeling. He has extensive
experience as a design engineer, project manager, and in-house trainer and has served as a lead
mechanical engineer for a team of design professionals. Mr. Phillips is knowledgeable about
environmental control systems from concept development, design, and construction for applications
including commercial office buildings, institutional healthcare, higher education, laboratories, and
manned spacecraft. As a senior engineer and lead engineer, Mr. Phillips has been called upon to
solve difficult design problems and to diagnose and resolve issues in the field during construction
and after completion. He is a graduate of Rice University with a BS and MS in Mechanical
Engineering.
Michael Ryan is a partner with the firm of Krupnick Campbell Malone Buser Slama Hancock
Liberman & McKee in Fort Lauderdale, FL. Mr. Ryan specializes in medical malpractice,
pharmaceutical litigation, and mass tort litigation. In addition to his trial practice in South Florida,
Mr. Ryan has participated in multiple MDL Plaintiffs’ Steering Committees in pharmaceutical and
product defect litigation. His work on behalf of clients has been the subject of local, national and
international news. Mr. Ryan speaks and teaches nationwide on issues of electronic discovery and
pharmaceutical litigation. In the area of defective drywall litigation, his work on behalf of
homeowners throughout Florida has also received local and national attention. He has submitted
testimony in the hearing on “Health and Product Safety Issues Associated with Imported Drywall”
before the Senate Sub-Committee on Consumer Protection, Product Safety and Insurance on May
21, 2009, is available as part of the United States Senate record. Mr. Ryan attended George
Washington University, where he received a degree in Business Administration in 1986. Following
graduation, he became a Federal Bank Examiner. Thereafter, he attended law school at Case
Western Reserve University School of Law in Cleveland, Ohio, graduating summa cum laude (1992).
At graduation, Mr. Ryan received numerous awards, including the Martin Luther King, Jr. Award,
The Student of the Year, the National Outstanding Law Student of the Year from Who’s Who of
American Law Students, and the Law Student Activist Award. After law school, he worked as a law

clerk in the United States District Court for the Southern District of Florida. In 1997, he joined the
firm. During just his first three years, Mr. Ryan was trial counsel and assisted in obtaining over $30
million in trial verdicts and settlements. In 1999, he was honored as one of ten national nominees
for Trial Lawyers of the Year by the Trial Lawyers for Public Justice. His nomination was based on
his role as trial counsel and the ultimate settlement in the landmark $17.9 million verdict against the
State of Florida for a man suffering from a traumatic brain injury who had been mistreated and
abused in state hospitals. In 2002, Mr. Ryan became a partner with the firm.
William Schuette is a partner in the Business & Commercial Litigation Practice Group at Jones
Walker. Since 1983, he has practiced in the areas of commercial, toxic tort, product liability, and
professional liability litigation. He has served as lead counsel and co-counsel in numerous trials in
Louisiana state and federal courts. He has been a seminar speaker on evidentiary issues, architects'
and engineers' liability, insurers' extra-contractual liability, and complex litigation. Mr. Schuette has
represented several Fortune 500® companies in asbestos litigation since 1995. He has personally
handled all phases of litigation from pretrial through appeal. The cases have included single plaintiff
cases, multi-plaintiff consolidations and class actions, and have involved many different products
containing asbestos, including sheetrock, joint compounds, and other building materials. He
represented a major manufacturing defendant in a seven-month trial of a 120-plaintiff consolidation,
resulting in a very favorable verdict. Mr. Schuette has extensive experience examining the medical
and scientific expert witnesses employed by plaintiffs. He has a thorough knowledge of the
epidemiology, medical, and scientific issues raised in asbestos litigation, and has handled many cases
before the United States District Courts' Panel for Multi District Litigation (MDL). Mr. Schuette
served as National Coordinating Counsel for Asbestos Litigation for a Fortune 500® building
materials and paper manufacturer/retailer. Mr. Schuette holds a BS from Louisiana State University
(1980) and a JD from the Paul M. Hebert Law Center at Louisiana State University (Order of the
Coif, 1983).
Robert Stickley is a partner in the Complex Litigation Group at Nelson Levine de Luca & Horst,
where his practice focuses upon defending insureds and carriers in Toxic Tort, Employment,
Construction, Computer Network Security, Professional Liability, Environmental, Steering and
Fraud claims. He is a frequent lecturer at seminars on the issue of additional insured endorsements
and UM/UIM coverage issues. He has tried numerous cases to verdict and has more than 15 years
of litigation experience. Mr. Stickley is licensed to practice law in Pennsylvania and New Jersey as
well as several Federal District Circuit and Circuit Courts. In addition, he has represented clients in
New York, Delaware, Rhode Island and Connecticut. Mr. Stickley was a member of the Law Review
in his class of 1997 at Widener University School of Law, and also obtained a degree in Litigation
Management from The Philadelphia Institute (1993). Since that time, he has been involved in the
litigation of defense, coverage and other matters, including class action cases.
Hugh Turner is the Chair of Akerman Senterfitt's Products Liability and Mass Torts Practice
Group. Mr. Turner's litigation practice encompasses the areas of products liability, commercial
disputes, class actions, construction, consumer protection class actions and toxic torts. He has
represented clients in complex litigation involving asbestos, silica, mold, lead, benzene,
pharmaceuticals and other toxic substances and serves as Florida regional counsel for a number of
asbestos and silica defendants. He has been a lecturer and published author on topics relating to the
defense of mass torts. Mr. Turner has recently represented retailers of pet food in the successful
defense of claims relating to products that were defectively manufactured in China. Mr. Turner is

also a former chairman of the International Law Section of the Florida Bar specializing in
international litigation issues.
Sheila Raftery Wiggins is a trial partner with Duane Morris LLP. Ms. Wiggins has extensive
experience handling litigation arising from both residential and commercial construction claims. She
has also represented contractors in litigation arising from major municipal construction projects.
Ms. Wiggins is also an experienced products liability litigator, and has defended companies which
manufacture, construct, and supply various construction and engineering related products. Her
experience includes both individual and class action matters. Ms. Wiggins' experience has been
recognized by her peers on numerous occasions. In 2008, Ms. Wiggins was selected by her peers as
one of the New Jersey's top “40 Under 40” attorneys, and she has been named by the New Jersey Law
Journal a “Rising Star” attorney for the years 2006-2009. Ms. Wiggins is active in several community
and civic organizations, including the Supreme Court of New Jersey District V-A Ethics Committee,
The Women Advocate Committee of the American Bar Association and the Women's Law Caucus
Mentoring Program of Temple University Beasley School of Law. She serves on the Board of
Directors of Musical Chairs Chamber Ensemble, a nonprofit corporation that supports classical
musicians in the New York metropolitan area. She is also a member of the Civil Bench Bar and Civil
Litigation sections of the Essex County Bar Association and a member of the Professional
Responsibility and Women In The Profession sections of the Philadelphia County Bar Association.
Ms. Wiggins is admitted to practice in New Jersey, New York and Pennsylvania. She is a 1998
graduate of Temple University School of Law, where she was business editor of the Temple
International and Comparative Law Journal, and where she competed in regional and national
competitions as a member of Temple's Negotiation Team.
Patricia Williams, PhD, DABT, is board-certified in Toxicology and a Diplomate of the American
Board of Toxicology. As President of Environmental Toxicology Experts, LLC, Dr. Williams has
served as expert witness in numerous State and Federal Courts to determine causation of
environmental and occupational diseases. She is currently a tenured Associate Professor and
Coordinator for Toxicology Research Laboratories of the Pontchartrain Institute for Environmental
Sciences, University of New Orleans, where she teaches Toxicology and Human Health,
Ecotoxicology, and Toxicology of Coastal Organisms. Dr. Williams formerly served for 10 years as
the Director of the Occupational Toxicology Outreach Program of the Department of Medicine at
the LSU Medical Center in Shreveport, where she was an Associate Professor of Medicine. Federal
Regulations and State licensure qualify Dr. Williams to serve as the Laboratory Director of an inhouse
CLIA-certified research laboratory for Medical Surveillance for adverse health effects of
chemical exposure, identifying the laboratory parameters that are clinical indicators of environmental
and occupational exposure. Dr. Williams has performed health profiles and epidemiologic studies in
workers and communities to identify the evolution of disease from toxic exposure. Dr. Williams
holds a Doctorate in Anatomy, a MS in Microbiology and bachelor’s degree in Medical Technology.
Eric Winegar, PhD, QEP, is Principal of Applied Measurement Science, based in Fair Oaks, CA.
Dr. Winegar specializes in ambient air monitoring, source/process emissions, measurement
technology evaluation, and on-site analysis.

The “Writing On The Wall”:
Imported Drywall Prompts
Health and Legal CConcerns
Sheila Wiggins, Esq. Glenn Cambre, Esq Michael Ryan, Esq.
Duane Morris LLP Dir., , Center for Environmental Krupnick p Campbell p
744 Broad Street Services ,Office of Public Health 700 S.E. Third Ave
Suite 1200 Louisiana Department of Health Suite 100
Newark, NJ 07101 & Hospitals Ft. Laud., FL 33316
(973) 424-2001 (225) 342-7269 (954) 763-8181
SRWiggins@duanemorris.com glenn.cambre@la.gov MRyan@krupnicklaw.com
USE OF IMPORTED DRYWALL
● 2000-early y 2001: Imported p drywall y first used
● 2004-2007: Increased use of imported drywall
Shortage of U.S. made drywall
New homes
Remodeling of existing homes
Some commercial property
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
1

ENTRY OF IMPORTED DRYWALL
● PORTS:
New York
Texas
New Orleans
California
Florida
[ w w w . d u a n e m o r r i s . c o m ]
STATES WHERE IMPORTED DRYWALL HAS
BEEN FOUND
● 460 reports p from 19 states and D.C.
● CPSC: 1 st report on Dec. 22, 2008
● Alabama, Arizona, California, Florida Georgia,
Kentucky, Louisiana, Mississippi, Missouri,
New Jersey, New York, North Carolina, Ohio,
Tennessee Tennessee, Texas, Texas Virginia, Virginia Washington
Washington,
Wisconsin, Wyoming, and the District of
Columbia.
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
2

STATES WHERE IMPORTED DRYWALL HAS
BEEN FOUND
HEALTH CONCERNS
[ w w w . d u a n e m o r r i s . c o m ]
● Rotten-egg gg vs. chemical soup p smell
● Respiratory
● Memory
● Fatigue
● Nose bleeds
● Headaches
● Sinus infections
● Pregnant women, asthmatics, sensitive people
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
3

Signs and Symptoms of Defective Drywall
Home
● Unusual Smell – rotten egg gg vs. chemical soup? p
● Early Failure of AC evaporator coils and repairs
of AC;
● Evidence of corrosion on copper piping/coils;
● Evidence of corrosion on electrical ground
wires;
● Evidence of corrosion on personal property;
● Drywall markings confirmed.
PROPERTY ISSUES
[ w w w . d u a n e m o r r i s . c o m ]
● Sulfur causes pinholes p into equipment q p
● Replace A/C or refrigerator components
Freon/refrigerant loss: leak because of holes
● Wiring turns black or is corroded
Fire concern for non-insulated/exposed wires
● Pi Piping i tturns bl black k or need d replacing l i
● Silver jewelry turns black
● Electrical problems
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
4

Florida Reports of Drywall “Cases” to DOH
County Health Departments
● Imported Drywall
and Health
– A Guide for
Healthcare
Providers
FLORIDA TIMELINE
[ w w w . d u a n e m o r r i s . c o m ]
● June 2008: FL DOH: first calls received
● Aug. 2008: EPA considers drywall as source
● Sept. 2008: Environ investigates for Lennar
● Oct. 2008: FL DOH hires Dr. David Krause
● Nov. 2008: FL DOH contacts CPSC
● Jan. 2009: FL DOH receives Environ report and
collects samples
● March 2009: Environ memo: 20x concentration
of sulfur
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
5

FLORIDA TIMELINE
● March 2009: FL Gov. contacts EPA and CDC
● April 2009: FL DOH coordinate with other
agencies
● April ‘09: Congressman Wexler requests State of
Emergency
● April ’09: 09: FL Gov. contacts EPA and CDC for help
in studying
● April ’09: FL DOH coordinate with other agencies
● May ’09: Senate hearing
[ w w w . d u a n e m o r r i s . c o m ]
EXAMPLES OF
BUSINESSES RESPONSES
● Lennar Corp. p of Miami: Investigation g
Investigate claims
Repairs to homes
Lawsuit against manufacturers and suppliers
● Prudential Realty: Seller disclosure form
● Mortgage Holders: Modifications/abatement
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
6

STATE RESPOND
● Florida
● Louisiana
● North Carolina
● Virginia
LITIGATION
● CLASS ACTION:
[ w w w . d u a n e m o r r i s . c o m ]
Persons –vs– Manufacturers, builders, suppliers,
installers
● INDIVIDUAL ACTION:
Persons –vs– Insurance companies
Persons –vs– vs Manufacturers Manufacturers, builders builders, suppliers suppliers,
installers
Builders, Installers –vs– Insurance companies
Builder –vs– Manufacturer, supplier, installers
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
7

LEGISLATION
● Amendment to Mortgage g g Reform Act
Insurance
Mortgage Foreclosures
● Drywall Safety Act of 2009
Product Study
Product Safety Standards
Temporary Ban
INVESTIGATION
[ w w w . d u a n e m o r r i s . c o m ]
● U.S. Environmental Protection Agency g y
● U.S. Consumer Product Safety Commission
● U.S. Center for Disease Control
● State Agencies (Health, Product, Fire)
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
8

Glenn Cambre, Esq.
Director Director, Center for Environmental Services
Office of Public Health
Louisiana Department of Health & Hospitals
IMPORTED DRYWALL IN LOUISIANA
IMPORTED DRYWALL ISSUE: INITIAL RESPONSE
• First call received 2/20/09
‐Indoor Air Quality hotline (888) 293‐7020
• LDHH partnered with CDC, USEPA & CPSC
‐Weekly conference calls focused on health
issues with states impacted (esp. Florida)
‐Technical Workgroup Formed focused on
sampling & protocol development
6/17/2009
9

IMPORTED DRYWALL RESPONSE ACTIVITIES:
• Factsheet development with CDC
‐residents id t
‐medical professionals
• Visual Assessment of homes for drywall
presence and it’s effects
‐copper pp wire/metal / corrosion & ppitting g
‐sulfur odors (rotten egg, match strike)
‐presence of stamp on drywall
CURRENT IMPORTED DRYWALL ISSUE ACTIVITIES:
Provision of accurate, scientifically based
iinformation f ti tto the th public bli
• News media reports
‐ La. State Health Officer
‐ Director of the Office of Public Health
• Factsheets
‐ Partnership with CDC
6/17/2009
10

PHONE SURVEY INFORMATION:
Identified homes that met 4 of Florida Department of Health’s
FDH Case Definition (only ( yrequire q 2 of the 5 if built after 2003): )
1.There is presence of sulfur‐like or other unusual odors
2. Confirmed presence of Chinese manufactured drywall in the home
3. Observed copper corrosion (air conditioning coils or uninsulated wires)
4. Documented failure of air conditioner evaporator coil
5. Confirmation of corrosion by an outside expert or professional
(air conditioning coils or uninsulated wires)
DRYWALL COMPLAINT SUMMARY:
• Surveys Completed ‐ 202 (2/20/09 to 4/9/09)
• Top 4 Parishes Parishes – Orleans
Jefferson
St. Bernard
St. Tammany
• Over 80% of households surveyed met 1 or more
of the case criteria (N=166)
• Most common criterion reported was sulfur‐like
odor presence (105, 52%)
6/17/2009
11

CASE CRITERIA & SELECTED HEALTH EFFECTS
Households reporting one or more selected health effects:
Selected health effects include headache, nosebleed, dry cough, irritated
throat, eye irritation/redness, and asthma exacerbation.
# of case criteria met N %
0 99 49.0
1+ 87 52.4
2+ 66 56.9
3+ 37 55.2
4+ 20 64.5
5 4 66 66.7 7
• The proportion of households reporting one or more selected
health effects increased with the number of case criteria that
household met.
VISUAL RESIDENTIAL EVALUATIONS FOR IMPORTED
DRYWALL PRESENCE:
• Visually inspected 11 homes:
‐5 North shore
‐6 South shore
• Returned for follow up scoping visit with
representatives from:
‐US Environmental Protection Agency
‐Center for Disease Control
6/17/2009
12

LOUISIANA DRYWALL IMPACT MAPS
6/17/2009
13

MOST REQUESTED INFORMATION:
• Home inspection
• Evacuation
• Remediation
• Disposal
• Health info for Primary Care Physicians
• Financial Assistance to address problem
• Timeline for answers
DRYWALL ISSUES MOVING FORWARD:
• Sampling Protocol Development
• Continue to educate public
6/17/2009
14

FLORIDA VS LOUISIANA DRYWALL
• Florida: examples of domestic and imported
http://www.doh.state.fl.us/environment/communit
y/indoor‐air/casedefinition.html
• Louisiana: only imported seen in homes that met
FDH F HCase Case Definition efinition
FLORIDA’S IMPORTED DRYWALL:
Domestic
Wallboard stamp highlighted
Imported
6/17/2009
15

LOUISIANA’S IMPORTED DRYWALL:
Wallboard stamp highlighted
Examples of
‘Made in China’ stamp
MORE IMPORTED DRYWALL ……
6/17/2009
16

Remediation Standard?
● Presently no certified consensus on extent of
remediation
● Issues
Wiring
HVAC
Drywall
Insulation
Plumbing
Concrete
[ w w w . d u a n e m o r r i s . c o m ]
6/17/2009
17

Statement of
Michael J. Ryan, Esquire
Before the
Sub-Committee on Consumer Protection, Product Safety, and Insurance
The United States Senate Committee on Commerce, Science & Transportation
Hearing on “Health and Product Safety Issues Associated with Imported Drywall”
May 21, 2009
1

Chairman Pryor, Ranking Member Wicker and Members of the Sub-Committee,
Thank you for the opportunity to come before the Committee to discuss the
impending catastrophe for homeowners impacted by defective imported drywall. My
name is Michael Ryan and I am an advocate for homeowners. Presently, as an attorney, I
represent homeowners in South Florida whose aggregate home purchase prices prior to
the discovery of defective drywall exceeded one hundred million dollars
($100,000,000.00). Now, their homes are unsellable except at pennies on the dollar.
Many of my comments here today are shared by Mayor Michael Udine of Parkland,
Florida, one municipality particularly impacted by this catastrophe.
Communities and homeowners in the United States have been hit by a “silent
hurricane”. In South Florida, we have become accustomed to warnings of impending
hurricanes. We had no warning for this “silent hurricane”. Homeowners had no time to
prepare to move their families or protect their property. They never saw it coming. But,
the affects are disastrous for some and certainly to the community as a whole.
It has been estimated that tens of thousands of homes must be gutted right down
to the concrete block. While there are no water marks on the outside of the homes and no
trees damaged, the damage to each home is measured in hundreds of thousands of dollars.
In a way, this is worse than a hurricane. Homeowners’ insurance and Bonded Builder
Warranty are refusing to cover the damage. Those responsible for the “silent hurricane”
in many communities are refusing to accept responsibility and help rebuild because they
are bankrupt or lack the resources or are foreign companies.
The “silent hurricane” was caused by toxic and defective drywall. In one
community, Parkland, Florida, the builder who bought and used this toxic defective
2

drywall is bankrupt. The predicament for those homeowners in Parkland is mirrored by
other homeowners and communities around the United States where the builders are
refusing or unable to accept responsibility.
We, in South Florida, are not alone in this crisis. It is estimated that between
60,000 and 100,000 homes across the United States are impacted by this defective
drywall. This estimate is based upon the nearly 500,000,000 pounds of drywall
manufactured by the Chinese companies and imported to the United States between 2004
and 2007. Almost 200,000,000 pounds entered the ports in Southeast Florida. However,
we wonder if the estimate of the number of homes impacted is too low; there are homes
that only have a portion of the house where the defective drywall was installed. The
affects are pronounced in those homes, too. There is no dispute some gutting of the home
will be necessary for those homeowners as well. Throughout the country, some builders
are agreeing to some form of remediation, others are abandoning the homeowners.
Most distressing, the homeowners impacted by this defective drywall did nothing
wrong. The homeowners could have not have done anything more to protect their homes
and families. The builders never told the homeowners they were using defective drywall
in their homes.
The “silent hurricane” gases are corrosive to metals. Repeated failures of air
conditioning evaporator coils, visible evidence of corrosion of copper ground wires in the
house, evidence of corrosion of the copper plumbing, and a noxious smell of gases that
acutely and chronically affects the nose, throat and eyes are all signs of the “silent
hurricane”. There are reports of the circuitry in home appliances failing. Samples of
drywall board pulled from the homes displaying the names of the Chinese companies or
3

the German manufacturer, Knauf, only confirm what homeowners already know: they
have been hit by defective drywall.
Meaningful steps have been taken by Senator Bill Nelson, Congressman Robert
Wexler and others in Congress to prevent this from happening again. And, yet again,
there are calls for the changes in how we allow Chinese imports into our country.
Lawsuits and litigation are beginning. There will be time to hold accountable those
responsible for this disaster in courts of law.
However, pregnant women today are being told by their trusted physicians they
must leave the house to protect the health of their unborn child. There are elderly on
fixed incomes who feel the affects of the toxic gases but who have nowhere to go. There
are families with young children told by their pediatricians that the repeated sinus
infections and respiratory problems are potentially made worse or caused by the toxic
gases.
While the health departments, the EPA, and the science community debate the
long term health affects of this “silent hurricane”, people are at risk of losing their homes.
Most homeowners can not afford to continue paying mortgages for home in which they
can no longer live and yet also pay rent on a home to which they must relocate their
family. The homes with confirmed defective Chinese drywall can not be sold as the
market rightfully demands disclosure of the defective Chinese drywall. Banks can not
meaningfully assess the costs of remediation to lend to a homeowner because there is no
consensus as to what fix is truly a fix; no one is telling the community how to rebuild
safely and effectively to remove forever the toxic affects of the “silent hurricane”. All the
4

while, stellar credit of homeowners will be destroyed, foreclosures may begin, banks will
own truly “toxic assets”, and blight of abandonment threatens the entire community.
I have literally watched tight-knit subdivisions transformed under the stress of this
catastrophe. Streets where children pedaled their bikes until sunset under the watchful
eyes of friendly neighbors and adoring parents have been replaced with moving trucks
and abandoned homes.
Our communities need a comprehensive plan to save those hit by this silent
hurricane. We need help now.
First, we need to be able to give assistance to those who have nowhere to go when
builders are refusing to accept responsibility. These homeowners did nothing wrong.
They were current on their mortgages. They were in homes they could afford. They
were raising families responsibly, paying their taxes, and are productive members of our
community. They are not asking for a bailout like so many others, they are screaming for
a life raft. This is the highest calling of government – to help those in crisis. Most of the
banks are not responding to our requests for abatement. Two banks have agreed to
interim abatement and to not report the abatement to the credit reporting agencies. These
banks, HSBC and SunTrust, recognize that foreclosure is in nobody’s best interest, least
of all the banks, and that this is not a problem of credit worthiness – it is a disaster.
However, other banks are initiating foreclosure and are refusing to timely respond to the
cries of these homeowners. I have provided to Senator Nelson’s Office a list of mortgage
lenders who have not yet been adequately responsive to this crisis.
Second, we need to bring together the stakeholders in this process – the banks
who are partners in this disaster, the realtors, the contractors, the builders, the insurance
5

companies, the homeowners, and the cities – so we can devise and agree upon a true fix.
We need to be confident the market will accept these homes as fixed when the
remediation is complete so families can move back in and willing buyers in the future
will be confident in their purchases.
Third, we need to make sure the process of rebuilding from this “silent hurricane”
does not cause more problems. What are the health risks to construction workers? What
are the disposal requirements to make sure cities and local governments do not become
dumping grounds for toxic material that would be better shipped back to China? How are
the building departments to inspect the remediation process to ensure integrity and
transparency? When do we truly know a house is fixed?
If the Federal government and the stakeholders in this process do not respond
with a greater sense of urgency, entire city blocks, subdivisions, and municipalities will
be destroyed for years as homeowners abandon their property and the cities are left to
pick up the mess. Unfortunately, because most of the big lenders are not responding to
the cries of the homeowners, the shelf life on patience and hope is measured by the next
month when families sit down around their kitchen table to decide whether or not to pay
the next month’s mortgage on a destroyed home.
We know we will rebuild because we have always picked ourselves up. We have
the same hope that was tested by the victims of Katrina and other natural disasters.
Sadly, those same victims are tested again because some of their homes were even rebuilt
with this toxic drywall. We, as Americans, always come through times of challenge even
when it is a national disaster. We see neighbors offering available rooms in their homes
to those who have nowhere else to turn during this time of crisis. We see subdivisions
6

organizing themselves to call upon government for help. We see the heart-warming spirit
of community all too common after a disaster.
This does give some homeowners hope. It is not the life raft they deserve, but
hopefully they can tread water while we all work together to find a solution. I implore
you to send help with all the due haste and urgency this catastrophe demands.
Thank you again for permitting to share these thoughts with you and I am look
forward to answering any questions you may have.
7

Chinese drywall spins off 'silent hurricane'
effects
By Michael Udine and Michael J. Ryan
May 3, 2009
The city of Parkland, like many other communities, has been hit by a "silent hurricane." We had
no warning and never saw it coming. We had no time to move our families or protect our property.
Now, homes must be entirely gutted to the concrete block.
The "silent hurricane" was caused by toxic, defective drywall manufactured by Chinese
companies and imported through a German company. It has been estimated that between 60,000
and 100,000 homes across the United States are impacted by the toxic and corrosive gases
coming off the drywall.
In a way, this is worse than a hurricane. Homeowners' insurance is refusing to cover the damage.
Bankrupt builders and foreign companies are refusing to accept responsibility. In the meantime,
the gases are corrosive to metals, causing air conditioning failures, corrosion to ground wires,
plumbing and circuitry in home appliances, and a noxious smell that acutely and chronically
affects the nose, throat and eyes.
While the science community debates the long-term health effects of the noxious gases from the
"silent hurricane," homeowners cannot afford to pay mortgages on a destroyed home and yet
relocate. The homes cannot be sold. Foreclosures may begin and banks will own truly "toxic
assets." The blight of abandonment threatens communities.
Our communities need a comprehensive plan to save those hit by this "silent hurricane" now.
First, the government must provide assistance where builders and others are refusing to accept
responsibility. These homeowners did nothing wrong and are not asking for a bailout. They are
crying for a life raft.
Second, we need to immediately bring together all industries and those affected so we can devise
a consensus protocol for rebuilding.
Third, we need to make sure rebuilding does not cause more problems. Health risks to
construction workers, disposal and handling of toxic drywall and appropriate certifications
afterward are all issues.
Already, we are seeing mortgage companies beginning to abate mortgages for those who must
move out during the crisis. We see neighbors offering available rooms to those who have
nowhere else to turn. We see subdivisions organizing themselves to call upon government for
help. We see the heartwarming spirit of community after a disaster.
This does give some homeowners hope. It is not the life raft they deserve, but hopefully, they can
tread water until help arrives.
Michael Udine is the mayor of Parkland, and Michael J. Ryan is a Fort Lauderdale trial
attorney.

Chinese drywall hits health, wallets,
homeowners say
Tue May 19, 2009
By Rich Phillips
CNN Senior Producer
PARKLAND, Florida (CNN) -- Sherri and Ira Rojhani stopped paying the mortgage on their 2-year-old
South Florida home in April, victims not of a troubled economy, but, they say, of drywall from China that they
believe is making them sick.
An air conditioning unit in a Florida, is blackened and corroded from Chinese drywall, homeowners say.
They join a growing list of homeowners in 13 states who face foreclosure or the prospect of paying both their
mortgage and rent on alternate housing as they seek relief from what they describe as corrosive gasses
emitted from the Chinese drywall. The drywall is now the subject of several scientific studies.
"Families are being forced to make health decisions based on financial consideration, and that is
fundamentally flawed," said Sherri Rojhani, a homeowner in Parkland, Florida. "We shouldn't be in a position
to stay in a home, based on our health," she said.
Homeowners allege the gas is causing home appliances and copper wiring to fail and causes chronic, long-
term upper respiratory infections.
Federal authorities including the Centers for Disease Control and Prevention, the Environmental Protection
Agency and the U.S. Consumer Product Safety Commission are studying the possible health effects of the
drywall. Most of their results are still some time off.
On Tuesday the EPA announced that it found sulfur, a corrosive material, in the Chinese drywall samples it
tested and that sulfur was not found in the U.S. manufactured drywall samples it also tested. The EPA also
found strontium in the Chinese drywall at levels about 10 times higher than in the U.S. drywall. Strontium is
a metal often used in manufacturing the glass for television screens.
The EPA also detected two elements typically found in acrylic paints in the Chinese drywall but not in the
U.S. drywall.

The EPA said these results are not intended to establish a definitive link between the drywall and the
conditions being found by homeowners in their homes.
The CPSC says representatives from the Chinese government are in the U.S. working on the issue.
Pointing to the blackened copper on their home's corroded air conditioning unit as all the evidence they
need, the Rojhanis say they aren't going to wait for the government studies. They say the air in the home
they share with their son, Seth, 18, who is paraplegic with a history of cancer, is giving them headaches and
causing sinus infections. Sherri says she's been coughing since February.
"What we are doing is discontinuing our mortgage, and saving our money for moving expenses, and for a
rental property," Sherri Rojhani told CNN.
They stopped paying their mortgage in April. Their attorney contacted their mortgage company,
Countrywide, recently bought by Bank of America, almost a month ago with details of their plight.
A letter to the Rojhanis from Bank of America's counseling center said the bank intends to move forward
with the foreclosure process.
That doesn't make sense to Sherri Rojhani.
"It's worth zero. They cannot sell it. They face the same issue we do for a potential buyer," she said.
Countrywide / Bank of America did not respond to CNN's request for comment.
Indeed, banks and mortgage companies across the country may soon find themselves in the same position
if homeowners walk away and allow their homes to be foreclosed.
"They're having to make choices about their credit and whether they are going to lose their home, but they're
always going to pick their health first," said Michael Ryan, the Rojhanis' attorney.
According to the Gypsum Association, a trade group that represents drywall manufactures, enough drywall
was imported from China during the housing boom from 2005 to 2007 to build 30,000 complete homes. But
it's possible that some of the Chinese drywall was used in smaller remodeling projects across the country.
So, the number of homes affected is difficult to calculate.
Meanwhile, the U.S. government has made clear that not all Chinese drywall is bad.
Rather than foreclosing, the Rojhanis suggest the banks team with homeowners against those who supplied
the drywall.
"It's in their best interests to join us in going after ... the distributors and the manufactures to get
remediation," she said.
The Rojhanis are now suing their home builder.
Joseph Espinal lives in the same Parkland, Florida, area as the Rojhanis, but his lender, HSBC, has given
him and his family a three-month grace period in paying their mortgage.

In an e-mailed statement, an HSBC spokeswoman, Kate Durham, told CNN: "HSBC does not comment on
individual customer matters but we can tell you that our home preservation team members regularly work
with customers facing various hardships, to offer assistance."
But what happens after that three-month payment hiatus ends is anybody's guess.
"It's a great start," Joseph Espinal told CNN. "But I don't see anybody coming up to the plate and saying, Mr.
Espinal, I know we screwed you by building a house with toxic chemicals, here's a temporary home, while
we repair what went wrong."
He's moving his wife and two young daughters into a rental this month, after what he describes as almost
two years of sickness and visits to doctors.
"We have sinus headaches which lead to antibiotics, and then three weeks, four weeks later, I'm back
asking for more," he said.
Espinal made a 40 percent down payment on his home. He's concerned and angry about what's happened
to his investment.
"I don't want to lose my money," he said.
CPSC says Florida leads the nation in complaints about Chinese drywall. Other complaints from
homeowners are coming from Louisiana, Virginia, Wisconsin, Ohio, Alabama, Mississippi, Missouri,
California, Washington, Wyoming, Arizona, Tennessee and Washington D.C.
Many homeowner's have turned to their home insurance companies for help, only to find that any problems
would not be covered by homeowner's policies.
"If it's defective, where they have to be recompensated, that would have to come from the manufacturer,"
said Loretta Worters of the Insurance Information Institute, an insurance industry trade group.
Last week, Florida Reps. Robert Wexler, a Democrat, and Mario Diaz-Balart, a Republican, were successful
in passing legislation that required the secretary of housing to examine the effect of Chinese drywall on
mortgage foreclosures and to study the availability of property insurance coverage for these homes.
"It is critical that we address this problem swiftly to avoid devastating results in our communities and long-
term effects on the health and well being of our families," Diaz-Balart said in a written statement.
Meanwhile, Florida's attorney general has warned consumers to be aware of fraudulent companies selling
bogus test kits and quick fixes, costing thousands of dollars.
There are no quick fixes according to state and federal experts.
Sherri Rojhani says she won't be taking any chances.
"If the fumes are strong enough to corrode metal, and copper pipe is turning black, I don't need a degree
from the EPA to determine if my lung tissue is at risk."

Get out of house with Chinese drywall, doctor
tells family
PARKLAND, Florida (CNN) -- Yorelle Haroush fled a million-dollar South Florida home this week, chased
out, she said, by drywall made in China that's emitting vapors that smell like rotten eggs.
Amy Massachi hugs her pregnant niece, Yorelle Haroush, as she prepares to move this week.
"It's making me sick. Physically, mentally and emotionally, making me sick," said the 18-year-old, who is
pregnant with her first child.
Haroush lives with her aunt Amy Massachi and her four siblings and cousins in the house. They believe a
year's worth of upper respiratory infections, antibiotics, bloody noses and sickness have been caused by the
walls.
Their doctor said they need to get out of the $1.2 million estate in Parkland, Florida, northwest of Fort
Lauderdale.
"I said, 'you can't stay there anymore, because you're sick every minute,'" the family's longtime physician,
Dr. Ross Nochimson, told CNN. "They're sick on a weekly basis. Earaches, sore throat. I give them
something, and they're sick again."
Massachi and her family are among homeowners in more than a dozen states who allege Chinese drywall
has emitted corrosive gases they believe have given them health problems.
Homeowners also allege the gases corrode metal components including copper wiring, causing air
conditioners and other household systems to fail.
The U.S. Consumer Product Safety Commission says most of the complaints have come from Florida,
where the concerns emerged last year. But consumers also have filed complaints in Louisiana, Virginia,
Wisconsin, Ohio, Alabama, Mississippi, California, Washington, Wyoming, Arizona, Tennessee and
Washington, D.C.
The Florida Department of Health says complaints it received -- more than 330 as of Tuesday -- generally
involve homes built between 2004 and 2007.

A study done for the Florida health department by private laboratory Unified Engineering Inc. found that
samples of certain Chinese drywall gave off a sulfurous odor from "volatile sulfur compounds" when
exposed to extreme heat and moisture. It also found that vapors "in the residential atmosphere created a
corrosive environment in the presence of moisture."
The health effects of those vapors are still the subject of several scientific studies.
Odors and corrosion are clearly evident in the Massachi house.
The pungent, rotten-egg-like smell permeates the two-story home. Throughout the house, electrical outlets
are open to reveal black corrosion on the copper wiring. The air conditioning unit's air handler, inside the
house, is blackened.
"This is disgusting. It's so corroded. I can't even believe it," Amy Massachi said in a raspy voice. "I can't
breathe. Every morning, I wake up with sinus allergies, my voice is hoarse. "My mother, when I call her up
on the phone, she says, 'Amy, what's wrong with your voice?' and I say, 'allergies.'
"'What are you allergic to?' I don't know. Well, now I know. I'm allergic to my house. My house is making us
sick."
The doctor recommends they vacate their 18-month-old home.
"Before they bought this house, they weren't calling every week with allergies and sore throats and ear
aches and coughing," Nochimson said. "I don't know what more I can do for them."
Haroush, who after giving birth faces heart surgery for an unrelated condition, is moving in with her
grandmother.
"I'm graduating this year, and I'm having a baby, and I don't need to be thinking about anything else going
wrong, and any more stress that is on me," she told CNN.
Chinese drywall was imported into the U.S. during a different economic era, at the height of a housing boom.
Prices were sky high, and the country was hit by two active hurricane seasons in 2004 and 2005, increasing
the demand for home repairs.
Suppliers were forced to look elsewhere for their drywall supply. Drywall, made from gypsum, is regularly
imported from Mexico and Canada, according to the U.S. Department of Commerce, but during this time
frame, the U.S. looked to China to make up for the shortage.
The Gypsum Association told CNN that enough drywall was imported from China to build 30,000 complete
homes.
Most of the Chinese drywall, they say, ended up in southwest Florida during the housing boom, where it was
used in new housing developments.
Some was also used in remodeling projects all over the country, so the number of homes affected is difficult
to calculate.

The Consumer Product Safety Commission hopes to have more answers in the coming months. They
continue to test the Chinese drywall, including controlled tests in chambers and real-world air sampling tests
in homes, to determine how the drywall interacts with other elements in an average house.
"We don't deny there's a problem," spokesman Joe Martyak said. But there has been no positive link to
adverse health effects.
"We don't know what it is that's causing the sore throats or bleeding noses. We have to find out what's
causing the problem," he said.
The Environmental Protection Agency and the Centers for Disease Control and Prevention are doing studies
on the health effects, but those examinations are some time away from completion.
The Consumer Product Safety Commission is having ongoing conversations with Chinese officials, who will
be sending a representative to the United States to study the problem.
"They appreciate the seriousness of the issue here and trying to be cooperative," Martyak said.
A handful of Chinese companies have been sued by homeowners and home builders.
In the meantime, homeowners like Massachi face financial hardship.
"Now, because they have to move out for health reasons, they're taking on a whole second (rent) payment,"
said Massachi's attorney, Michael Ryan.
Ryan said he's had no luck trying to convince Massachi's home lenders to suspend mortgage payments until
the house can be made livable again.
He told CNN his clients are "having to make choices about their credit, and whether they are going to lose
their home. But they're always going to pick their health first."
Massachi agrees. A good look at her blackened air conditioning coil was all she needed. She's looking to
rent a new place.
"That's what I'm breathing in....I'm a little freaked out now, honestly," she said, her raspy voice cracking with
tears.
"It can't be good, if that's what that looks like and it's pumping throughout my entire house," she said.
Eighteen months ago, Massachi says, she moved into her dream house, surrounded by family and friends.
Now the dream is a nightmare.
"It's worth nothing," she said of the home. "It's exclusive. It's pricey, and now it's worth nothing."

Friday, May. 08, 2009
Comments (28) | Recommend (1)
Bennett’s drywall amendments fuel
dispute
Local state senator files 3 identical amendments to limit
contractors’ liability; calls it ploy to get ‘everybody’s attention’
By SARA KENNEDY and DUANE MARSTELLER - Herald Staff Writers
MANATEE — State Sen. Mike Bennett filed an amendment to three separate legislative bills that
would have limited liability for contractors, subcontractors, suppliers or other installers in
connection with defective drywall.
But the Bradenton Republican withdrew the proposed amendments each time after homeowners
protested to the bills’ sponsors, saying their residences are showing toxic effects of Chinese
drywall, according to Michael Ryan, a Fort Lauderdale attorney who opposed the amendments.
“Sen. Bennett proposed an amendment to an existing bill, he did it three times, and the
amendment would have protected builders, developers, suppliers and installers from liability,
while hurting homeowners that did nothing wrong,” Ryan said.
Sen. Mike Bennett
He said he represents 70 clients whose homes contain tainted Chinese drywall that emits a gas
that corrodes metal, such as wiring and air-conditioning components, and has raised health
concerns. The Florida Department of Health released a report Thursday listing 349 residential
drywall complaints from around the state.
Bennett, who lists his occupation on his Senate Web page as an electrical contractor, filed and
withdrew all the amendments April 27 and 28.
But Bennett disputed Ryan’s version Thursday, saying he had not withdrawn the amendments as
a result of pressure from homeowners. He said they had been a ploy designed solely “to get
everybody’s attention” that he did not expect would pass anyway.
“Now, we can find a way to protect all of the Florida consumers,” Bennett said. “This is a
statewide and national concern, we did exactly what we wanted to do, got everybody’s attention.

“We’re trying to get the federal government involved, help these people out,” he added. “We must
start with something drastic to get peoples’ attention, to get this problem recognized.”
In Manatee, neighborhoods where tainted drywall has been reported include Heritage Harbour
and Lakewood Ranch.
The text of each amendment was the same: “Property owners, contractors, subcontractors,
suppliers, or other installers of drywall will not be liable for defective drywall causing personal
injury or damage to property unless the property owners, contractors, subcontractors, suppliers or
other installers knew or should have known that the drywall was defective. The provisions of this
section shall apply to any complaint filed after January 1, 2009. This section does not apply to
manufacturers of defective drywall.”
Ryan argued that the amendments violated homeowners’ rights.
“The important point of this amendment is it would have turned upside down long-standing Florida
law, where such builders and contractors are responsible when they supply defective products to
a homeowner,” said Ryan, an attorney with Krupnick, Campbell, Malone, Buser, Slama, Hancock,
Liberman & McKee. “It would have eliminated the strict liability standards that have existed for
100 years in Florida.”
The amendments even attracted the attention of Broward County Mayor Stacy Ritter, who
interrupted an April 28 meeting of the Broward County Commission when she learned about one
of them. She called it “completely appalling.”
“First of all, these people have Chinese drywall in their homes, and the developers are the ones
who installed it, and they shouldn’t be absolved from liability . . .” she said, according to
transcripts of the meeting.
After hearing the amendment read aloud, one commissioner said it sounded “like that would
render literally nobody responsible for this.”
Sen. Cary Baker, R-Eustis, said he was not fully aware of the nature of the amendment Bennett
had filed in connection with one of his bills, Senate Bill 674.
“I guess I want to make it clear, it wasn’t my amendment, we never discussed it,” he said.
Bennett said he had mentioned it to Baker, but was not sure that Baker had remembered the
conversation.
And Baker did say that the amendment’s premise “makes absolute sense.”
“If you’re a small contractor and you buy a product, you have no way of doing chemical tests, it
really is the manufacturer that is responsible,” Baker said.
And Bennett’s view of Ryan? “I suggest Michael Ryan learn how to negotiate and to protect
people, versus worrying where his lawsuit’s going to be,” Bennett noted.

Chinese drywall problems hit already-battered market
May 27, 2009 04:19PM By Jennifer LeClaire
A growing number of South Florida families
must choose between health and housing.
For most families whose homes were built with
contaminated Chinese drywall, it's no decision
at all. Some choose foreclosure over still
unknown long-term health impacts of Chinese drywall. Foul odors and electric
problems have been widely reported in homes containing Chinese drywall, and
class action lawsuits are rising.
"This is a catastrophe," says Mike Ryan, a partner at the law firm of Krupnick
Campbell in Fort Lauderdale who is representing clients in Chinese drywall
cases. "We are going to live with this devastation for years. The Chinese drywall
issue is equivalent to a hurricane, but worse because insurance isn't covering it.
These homeowners couldn't sell their homes if they wanted to, and contractors
can't guarantee a fix because we don't fully understand the scope."
The data remains incomplete, though Florida is one of the most heavily affected
of the 13 states where problems have been reported. At least 400 statewide
complaints have prompted a federal inquiry by the Environmental Protection
Agency. What is known is enough drywall was imported from China during the
housing boom from 2005 to 2007 to build 30,000 complete homes, according to
the Gypsum Association, a trade group that represents drywall manufacturers.
"We don't expect the Chinese drywall suits to rise to the level of the asbestos

claims, but it's still a significant problem," said Joe Janssen, a partner at the law
firm of Katzman, Garfinkel, Rosenbaum in Fort Lauderdale, who represents
plaintiffs in a Chinese drywall class action suit. "The real tragedy is for people
who are upside down on their home, can't afford to have it fixed, and can't sell it
because it's contaminated. Those people are in purgatory."
Purgatory's prisoners can't afford to rent new homes while attorneys sort through
the issues, either. It could take years to settle the competing legal claims and for
federal authorities to arrive at definitive conclusions. The prospect has prompted
some families to move out of their homes and let the bank foreclose on the
property.
An amendment to the Mortgage Reform and Anti-Predatory Lending Act the
House passed earlier this month requires the Secretary of Housing and Urban
Development to study the effects of Chinese drywall on foreclosures and the
availability of property insurance for affected homes.
"It is critical that we address this problem swiftly to avoid devastating results in
our communities and long-term effects on the health and well-being of our
families," said Florida Rep. Mario Diaz-Balart.
Ryan says the banks don't want the Chinese drywall homes either. The material,
he said, gives the term "toxic asset" a new meaning. Ryan is working with
lenders to arrange abatements. So far, only HSBC has agreed to work with the
affected homeowners.
"HSBC has agreed to give our clients a three-month reprieve and not to report
the missed payments to the credit agency," Ryan says. "This is not a matter of
creditworthiness. It's a matter of health and safety. I think once other banks
understand that we need to work together to save communities, we can begin to
make some progress here for the victims."

Escambia
Santa Rosa
Ü
Disclaimer:
Reports of Drywall "Cases" to DOH
County Health Departments
Counties
Total Range
1 - 5
6 - 20
21 - 70
No cases to date
These data are self reported and likely
under-represent the true number of cases.
Data will be updated on a weekly basis.
This product is for reference purposes only and is not to be
construed as a legal document. Any reliance on the information
contained herein is at the user's own risk. The Florida Department
of Health and its agents assume no responsibility for any use of the
information contained herein or any loss resulting therefrom.
June 8, 2009
(N=398 in 28 counties)
Suwannee
Columbia
Pinellas
Citrus
Pasco
Hillsborough
Manatee
Sarasota
Marion
Lake
Duval
Putnam
Polk
Charlotte
http://www.doh.state.fl.us/environment/community/indoor-air/drywall.html
Lee
St. Johns
Orange
Highlands
Collier
Brevard
Indian River
St. Lucie
Martin
Palm Beach
Broward
Miami-Dade

Imported Drywall and Health - A Guide for Healthcare Providers
(Current as of June 3, 2009)
Background
As of May 21 st of this year, the U.S. Consumer Product Safety Commission (CPSC)
received more than 349 reports from residents in 16 states and the District of Columbia
who believe their health symptoms or the corrosion of certain metal components in their
homes are related to the presence of drywall produced in China. State and local health
authorities also received similar reports; some cases have been reported to regional
Poison Control Centers.
The CPSC, U.S. Environmental Protection Agency, U.S. Centers for Disease Control and
Prevention, /Agency for Toxic Substances and Disease Registry, and state health
departments, are jointly investigating this issue. The agencies are working to identify
whether the drywall is emitting chemicals of concern and whether homes containing the
drywall pose any health risk to people who live in them. This drywall was first imported
to the U.S. in 2003 and is still in use. The number and location of all homes containing
the imported drywall is not known.
At this time, not enough information exists to determine the nature and magnitude of a
potential health risk. Likewise, we do not know if every home that contains this product
is, or will be, affected. This fact sheet provides information for healthcare providers about
what we know. As new information becomes available, this fact sheet will be updated.
What are residents reporting?
Common reports submitted to the CPSC and state health departments from residents who
live in homes believed to contain problem drywall include one or more of the following:
Issues related to indoor air
• a “rotten egg” smell or smell of matches or fireworks in their homes.
Issues related to metal inside homes
• blackened and corroded metal components in their homes and frequent replacement
of metal components in air conditioning units.
Health symptoms
• irritated and itchy eyes and skin,
• difficulty breathing,
• persistent cough,
• bloody noses,
• runny noses,
• recurrent headaches,
• sinus infection, and
• asthma attacks.
1

What chemicals have been found?
Low levels of carbonyl sulfide and carbon disulfide gases were detected in some samples
obtained through limited testing conducted by product manufacturer consultants.
These sulfur-based compounds occur naturally in the environment, such as in swamps.
Paper mills, the textile industry, petroleum and natural gas extraction, and other
industries produce these gases as waste products. Cigarette smoke, septic tanks,
wastewater treatment, and automobiles also emit these compounds.
Sulfur gases are colorless and have an unpleasant odor, often described as smelling like a
rotten egg. Residents also report smells similar to fireworks or striking a match. Most
people can smell these chemicals at levels below those known to cause adverse health
effects. However, some people may react more strongly to noxious odors in the
environment. Exposure to high levels of sulfur-containing compounds can cause
olfactory fatigue. That is, the olfactory sensing cells in the nose become saturated and no
longer signal the brain that the substance is present. When this occurs, people can no
longer smell the substance even though it is present in the air.
What health problems can be caused by exposure to sulfur gas?
Very few studies exist of people exposed to low levels (1-100 ppb) of sulfur gases for
long periods of time.
Carbonyl sulfide and carbon disulfide exposure may result in eye, nose, and throat
irritation and exacerbation of respiratory problems. Less is known about chronic exposure
to lower levels (1-30 ppb), such as those found in the limited indoor testing conducted in
homes reported to contain imported drywall.
Short term exposure (hours) to low concentrations of sulfur gas can result in the
following symptoms:
• eye irritation
• sore throat
• stuffy nose/ rhinitis
• cough
• shortness of breath/ chest pain
• nausea
headaches
•
Chronic exposure (days to weeks) to low concentrations can result in the following
additional symptoms:
• fatigue
• loss of appetite
• irritability
• poor memory
• dizziness
2

Who is at risk?
• insomnia
• headaches
The most sensitive populations include:
• patients with asthma
• patients with chronic obstructive pulmonary disease (COPD)
• the elderly, and
• young children with compromised respiratory function.
What should I tell my patients?
Symptoms of exposure to carbonyl sulfide and carbon disulfide are non-specific. A
patient may have symptoms that include:
• watery eyes with redness and/or itching
• increased episodes of nasal congestion or coughing
• difficulty breathing or shortness of breath.
Patients may report subsiding of symptoms when they are away from their homes.
If the patient is experiencing symptoms of exposure the person attributes to drywall, you
can advise the patient to take the following actions:
• if the odor is strong inside the home, go outside to breathe fresh air for immediate
relief
• if possible, avoid areas where the odor is present
• avoid heavy exercise indoors
Because warm and humid conditions may cause more emissions from drywall, we do not
yet know whether opening windows to allow fresh air to come into the home is
beneficial.
For patients with chronic respiratory medical conditions (such as asthma or COPD)
• be sure the patient understands that breathing sulfur gas can aggravate a medical
condition, and
• advise the patient to keep inhalers and/or eye drops readily available for use, if
needed.
Encourage patients to contact the CPSC (number below) and their state or local health
departments to report the problem.
3

How do I treat patients?
Although we cannot determine if drywall is responsible for individual health concerns,
patients experiencing asthma attacks or aggravation of COPD and report worsening of
symptoms when in their homes may be advised to seek alternative shelter.
Treat symptoms as you normally would. Additional guidance for treatment is available
to health care providers 24 hours a day by contacting your regional Poison Control Center
at 800-222-1222. A medical toxicologist is available to answer questions you may have.
What other problems should patients watch for in their home that may be related to
this drywall?
Exposed metal wiring has been damaged in some homes with this drywall. The CPSC is
investigating the possibility that fires may occur related to this corrosion. CPSC is also
investigating to determine whether smoke and carbon monoxide detectors are being
damaged. People experiencing unusual electrical problems (such as malfunctioning
appliances or light switches) should contact a licensed electrician.
For more information
U.S. Consumer Product Safety Commission (for information and reporting a case):
• 800-638-2772 (general public)
• 800-638-8095 (physicians)
• info@cpsc.gov
U.S. Centers for Disease Control and Prevention (for medical provider information):
• 800-CDC-INFO (800-232-4636)
• cdcinfo@cdc.gov
American Association of Poison Control Centers (For guidance on treating patients):
• 800-222-1222
• http://www.AAPCC.org
4

"The Writing Is on the Wall": Defective Drywall Claims Prompt More Legal Action
By Sheila Raftery Wiggins
Spring 2009
Building & Bonding: The Construction Group Newsletter
Drywall is, literally, all around us. Yet, some drywall is allegedly causing property damage and
prompting health concerns. Thus, the next wave of construction litigation has hit our shores—
defective drywall claims. Drywall is a building material used to make interior walls and ceilings.
It is primarily gypsum wrapped in paper, but the core can also have added fiber, plasticizers,
foaming agents, potash and various other ingredients to inhibit the growth of mildew and
increase fire resistance. Impurities in this core material can cause problems, including adverse
environmental conditions in residences or other buildings where the drywall is installed.
After the hurricanes of 2004 and 2005, reconstruction led to a sharp increase in the demand for
drywall. Drywall shortages hit first and hardest on Florida's Gulf Coast, leading contractors and
distributors to start obtaining drywall from Chinese manufacturers. Reports state that at least 550
million pounds of Chinese-made drywall have been offloaded at multiple U.S. ports since
2006—enough to build 60,000 average-size homes. One of the largest concentrations to date of
Chinese drywall has been found in Southwest Florida. Reports state that enough Chinese-made
drywall shipments to build 36,000 homes landed in Florida ports.
Primarily two kinds of drywall board were imported: half-inch standard drywall and 5/8-inch
"fire-rated" or type "X" drywall. Building codes mandate the use of "fire-rated" drywall for
certain construction, such as interior and exterior walls near furnaces, because it delays the
spread of fire in walls and ceilings for up to one hour. There are several types of fire-rated
drywall. Some use fiber material in the core to combat heat and fire, while others contain mineral
cores for an even more fire-resistant product.
Imported drywall usually must have documentation attesting that it meets international fire
standards. American Society for Testing and Materials Standard ("ASTM") C36 was a domestic
standard for drywall that was replaced in 2005 by C1396/C1396M. This standard requires a
certain level of fire resistance for the gypsum core and establishes standards for the board's
ability to deflect humidity and how the board handles pulled nails. Tampa port officials reported
that much of the drywall arriving on container ships from China over the past few years did not
contain the required documentation or official stamps confirming that it met international
manufacturing and safety standards.
Some drywall that was imported from China is allegedly defective. It has been reported that
although the drywall may meet ASTM standards, the water used to mix the gypsum may have
been wastewater that contained chemicals, including sulfur. This drywall is claimed to emit
sulfuric gases that corrode electrical wires, copper wiring, pipes and air conditioning
components. The sulfuric gases also permeate wood studding, which effectively causes a rotten
[ www.duanemorris.com ]

egg smell in the homes even after the drywall has been removed. The sulfur compounds and the
resulting noxious sulfur-like odors are also linked to health problems, including respiratory
issues. As one might suspect, the cost to replace both the drywall and other allegedly defective
materials is high.
To date, the suspect drywall has been found in new homes built from 2004 through early 2007 in
at least 13 states. Specifically, investigations have found suspect drywall in Florida, Arizona,
Colorado, Georgia, Louisiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina,
South Carolina, Virginia and Texas. Florida homeowners have submitted almost 100 complaints
to the Florida Department of Health ("FLDOH") about problems relating to their drywall, and
the complaints have been logged from Manatee, Sarasota, Hillsborough, Lee, Dade, Palm Beach,
Highlands, Broward, Citrus, St. Lucie, Collier and Martin counties. The extent of the problem is
unknown, but at least 80 homes in Southwest Florida have been identified. The suspect drywall
has been located in residential properties of all types. Indeed, reports state that even Florida
Lieutenant Governor Jeff Kottkamp has moved his family out of their Fort Myers home while
the issue is being investigated. The problem is prevalent enough that some real estate agents are
beginning to add Chinese-made drywall information to their disclosure forms when buying and
selling Florida real estate.
Potential Liability
The "writing is on the wall." Lawsuits are beginning to be filed against the manufacturers and
distributors of the affected drywall. For example, a lawsuit filed in Florida state court by a
builder alleges that the manufacturer should have known that the drywall was defective. A class
action lawsuit pending in the U.S. District Court for the Middle District of Florida charges that
German drywall maker Knauf Gips KG ("Knauf"), its Chinese plasterboard units and other
defendants, including the manufacturers and distributors of the drywall, negligently
manufactured and sold the defective drywall, which was "unreasonably dangerous" in normal use
because it corroded plumbing, air conditioning and electrical components, and caused coughing
and irritation of sinuses, eyes and throats. The suit also seeks to recover from the defendant for
strict products liability and breach of warranty, among other causes of action. To date, residential
builders that have been identified as obtaining product from Knauf include: Lennar Corp., Taylor
Morrison, WCI Communities, Meritage Homes, Ryland Homes, Standard Pacific Homes and
Aubuchon Homes.
It is important to note that it is not just the manufacturers and distributors that should be
concerned about litigation arising from this allegedly defective drywall. Homebuilders and
contractors that installed the drywall should also be aware of their potential liability. For
example, some builders commented that the suspect drywall was heavier and broke differently
and in a more jagged manner than domestic drywall. Therefore, an issue might exist regarding
whether the builders had notice that the drywall was potentially defective. Moreover, architects
or engineers involved in construction projects should be mindful of potential professional
malpractice liability exposure. Any person in these roles named as a defendant may have
2
[ www.duanemorris.com ]

significant indemnification or contribution rights against others in the chain of distribution that
are more responsible. Manufacturers and distributors of plumbing, electrical or air conditioning
components that have failed or have been alleged by customers to be defective should also
consider whether it is possible that defective drywall is the true reason for the problem.
Liability may also fall on the design, construction and inspection teams, based on breach-ofwarranty
claims. The American Institute of Architects ("AIA") and the Associated General
Contractors of America ("AGC") provide standard form contracts widely used in construction
transactions. These contracts contain the typical express warranty clauses given by many
contractors, including that all work will be of good quality, free from faults and defects and
conform to the contract documents. Builders of new homes also implicitly warrant to the owner
that the homes will be completed in a workmanlike manner and will be suitable for habitation.
Some limits on the extension of the warranties exist. For example, the defect complained of must
have been latent—undiscoverable despite reasonable inspection—or the warranty does not
survive. When a home or building is not suitable for its intended purpose because of substandard
or defective materials, builders may be also liable of misrepresentation, unfair business practices
or negligence, depending on the governing law.
Issues regarding insurance coverage are also likely to be important. Insurance policies, which
often are written with broad pollution exclusions, may offer no legal defense for building
industry companies faced with lawsuits because drywall is allegedly emitting toxic gas inside
homes and walls that may be deemed "pollution." Companies may want to seek counsel
regarding whether to put their insurance companies on notice of potential issues. Companies
should also review their contracts, subcontracts, warranties and insurance policies to analyze
their liability and their ability to satisfy potential compensatory damages. Government
Regulatory Responses Federal and state agencies are also investigating drywall products
imported from China. U.S. Sen. Bill Nelson (D-Fla.) has asked the U.S. Environmental
Protection Agency ("EPA") and the U.S. Consumer Product Safety Commission ("CPSC") to
investigate whether Chinese-manufactured drywall is toxic. U.S. Rep. Vern Buchanan (R-Fla.)
has also written the Federal Trade Commission and the Office of the U.S. Trade Representative,
asking them to take corrective steps.
The CPSC has responded by focusing on whether the sulfur-based gases emitted from the
drywall are corroding household wiring and whether these gases pose a potential safety hazard.
If the commission determines there is a safety hazard, it could order a halt in further sales of
certain drywall products. The CPSC has been asked to prepare drywall safety standards. To the
extent that potential CPSC regulatory action could impact business operations, concerned parties
may want to seek counsel about providing input during this phase of the regulatory process.
Carbon disulfide, carbonyl sulfide and dimethyl sulfide have been found in air samples of some
of the affected homes. If inhaled in large quantities, carbon disulfide can affect a person's
nervous system and can be life threatening in high levels, according to the U.S. Department of
Health and Human Services. As for carbonyl sulfide (another potential byproduct), some states
have established health criteria regarding the permissible levels. Accordingly, a manufacturer's
3
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liability for selling defective drywall may vary considerably depending upon the state of
installation. In response to many complaints, FLDOH is currently investigating potential health
hazards that may arise when metals inside a home are rapidly corroding.
Therefore, the regulatory response by individual states may impose substantial new costs on
manufacturers, distributors and consumers of drywall products. To the extent that one has
concerns that state regulators may not have been provided with adequate information about this
issue, interested parties should seek counsel to formulate an effective submission to the pertinent
regulators.
Sheila Raftery Wiggins is a partner in the Newark office of Duane Morris who has handled
construction and products liability-related litigations.
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The Walls Are Closing In: Chinese Drywall Issues Prompt Legislation and Litigation
May 21, 2009
Certain drywall manufactured in China is allegedly defective. It has been alleged that this
defective drywall corrodes electrical wires and copper coils, and emits "rotten egg" fumes that
cause respiratory health problems. It is estimated that 60,000 residential houses in the
southeastern United States have been built using this purportedly defective drywall. As a result,
the U.S. Congress has responded with new legislation, and litigation has been increasing.
Legislation
Recent legislation directs the U.S. Department of Housing and Urban Development ("HUD"),
the U.S. Consumer Product Safety Commission ("CPSC"), the National Institute of Standards
and Technology ("NIST") and the U.S. Environmental Protection Agency ("EPA") to address the
wide-ranging impact of the Chinese drywall situation.
Amendment to Mortgage Reform Act: The U.S. House of Representatives recently passed a
measure, H. Amdt. 118, that calls for HUD to study:
• The availability of property insurance for residential structures with Chinese drywall and
• The effects of the presence of Chinese drywall on residential mortgage foreclosures.
This measure is an amendment to the Mortgage Reform and Anti-Predatory Lending Act, H.R.
1728.
Drywall Safety Act of 2009: Both the U.S. Senate and the House of Representatives recently
introduced identical bills to address the allegedly defective drywall imported from China
between 2004 and 2007. The bill, H.R. 1977, has been referred to the House of Representatives'
Energy and Commerce Committee. The bill, if enacted, would require the following actions:
• Product Study: The CPSC (with the NIST and the EPA) has 120 days to study "the
material and chemical composition" of drywall that was imported from China between
2004 and 2007 and used in U.S. houses. The study will analyze: (a) the chemical and
organic composition of drywall samples, (b) the effect of such compounds or emissions
emanating on metal fixtures commonly found in residences, and (c) any health or
environmental impact from exposure. The results of such a study are likely to play an
important role in any litigation regarding Chinese drywall.
• Product Safety Standards: The CPSC has 180 days to determine whether to enact a
consumer-product safety standard regulating the composition of materials used in drywall
"to protect the health and safety of residential homeowners." The standard focuses on
residential use; however, the standards are also likely to impact commercial use.
• Temporary Ban: Within 30 days of the enactment of the bill, the CPSC will impose a
temporary ban on drywall exceeding 5-percent organic compounds, by weight, as being
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Litigation
defective. An order would then be issued to manufacturers, distributors and retailers of
this drywall. The ban would be effective until the CPSC publishes a determination that a
consumer-product safety standard regulating the composition of materials used in drywall
is no longer necessary.
As previously reported in "'The Writing Is on the Wall': Defective Drywall Claims Prompt More
Legal Action," which appeared in the Spring 2009 Building & Bonding: The Construction Group
Newsletter, litigation has commenced against the product manufacturers and the distribution
chain. However, additional areas of litigation are emerging, including the following:
Foreclosure: Some homeowners have stopped paying their mortgages, claiming that they should
not have to pay for allegedly defective homes that cannot currently be sold or inhabited. These
claims are especially common in Florida, as a result of recent and substantial decreases in real
estate values. Such defaults by homeowners will likely result in foreclosure proceedings. Lenders
who have foreclosed on these homes may have to explore their remedies against other potentially
responsible parties, as simply selling the foreclosed houses will be difficult or impossible.
Insurance Coverage: Issues exist regarding whether the drywall-related claims are covered by
certain insurance policies. For example, areas of contention may arise as to whether the claim is
subject to an exclusion, such as: (a) the pollution exclusion, because there are allegations that the
damage is caused by gases emitted from the drywall; (b) "your work, your product" exclusion; or
(c) mold exclusions that are usually included in coastal areas. Regarding third-party property
damage or construction-defect claims, a key issue concerns whether a claim for faulty
workmanship leads to an occurrence under a general liability policy. Also, disputes regarding the
"trigger of coverage" are likely to arise between first-party policies. Finally, this exposure may
create not only areas of contention but also new opportunities for insurers. Underwriting
opportunities for specialty insurers may develop from recently formed businesses that are
inspecting homes for the presence of Chinese drywall and to remediate damage.
The legal issues regarding "Chinese drywall" are impacting many business sectors—
manufacturers, construction, insurance, real estate, home associations, mortgages, foreclosures
and healthcare. We will continue to monitor the development of legislation and litigation.
For Further Information
If you have any questions regarding this topic or would like more information, please contact
Sheila Raftery Wiggins, any member of the Construction Group or the attorney in the firm with
whom you are regularly in contact.
2
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An Introduction to Our Firm
Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers
innovative solutions to the legal and business challenges presented by today’s evolving global markets. Throughout its more than 100year
history, Duane Morris has fostered a collegial culture, where lawyers work with each other to better serve their clients. Lawyers
who are leaders in a range of legal disciplines and have diverse backgrounds join Duane Morris in order to use the latest technology,
professional support staff and other resources in pursuit of clients’ goals.
Growth and Culture
Evolving from a partnership of prominent lawyers in Philadelphia more than a century ago, Duane Morris now has offices in many
major markets and continues to expand across the country and overseas. Throughout this expansion, Duane Morris remains committed
to preserving the collegial culture that has attracted so many talented attorneys. The firm’s leadership believes this culture is truly
unique among large law firms, and that outstanding legal work is best accomplished by skilled professionals who respect each other
and work well together.
Leadership and Experience
Duane Morris lawyers hold leadership positions in bar associations, as well as in educational, cultural and charitable organizations
and with community groups across the country. Many of the firm’s attorneys come to Duane Morris after having held senior positions
in government agencies and large corporations. This range of experience is further enriched by the diverse backgrounds of the firm’s
attorneys. Duane Morris has long been committed to recruiting, retaining and promoting talented female and minority lawyers, many
of whom hold leadership roles at the firm.
Technology and Infrastructure
Trade publications have placed Duane Morris in the upper echelon of firms in terms of utilizing technology. Hundreds of lawyers
working around the globe quickly communicate and collaborate using the firm’s integrated computer network, accessing sophisticated
research software, information-rich databases, and other knowledge-sharing tools. Duane Morris’ clients also benefit from the
contributions of professional-level support staff who maintain the firm’s technological and administrative infrastructure and enable
lawyers to focus on providing valuable counsel and service to their clients.
Office Locations
Atlanta
Atlantic Center Plaza
1180 West Peachtree Street
Suite 700
Atlanta, GA 30309-3448
404.253.6900
Baltimore
111 South Calvert Street
Suite 2000
Baltimore, MD 21202-6114
410.949.2900
Boca Raton
2700 North Military Trail
Suite 300
Boca Raton, FL 33431-1808
561.962.2100
Boston
470 Atlantic Avenue
Suite 500
Boston, MA 02210-2600
857.488.4200
Cherry Hill
1940 Route 70 East, Suite 200
Cherry Hill, NJ 08003
856.424.8200
Chicago
190 South LaSalle Street
Suite 3700
Chicago, IL 60603-3433
312.499.6700
Hanoi
Pacific Place
Unit V1308, 13th Floor
83B Ly Thuong Kiet Street
Hoan Kiem District
Hanoi, Vietnam
84.4.3946.2200
Ho Chi Minh City
Suite 809, Saigon Tower
29 Le Duan Street, District 1
Ho Chi Minh City, Vietnam
84.8.3827.9460
Houston
3200 Southwest Freeway
Suite 3150
Houston, TX 77027-7534
713.402.3900
Lake Tahoe
11149 Brockway Road
Suite 100
Truckee, CA 96161-2213
530.550.2050
Las Vegas
100 North City Parkway, Suite 1560
Las Vegas, NV 89106-4617
702.868.2600
London
10 Chiswell Street, 2nd Floor
London, UK EC1Y 4UQ
011.44.20.7786.2100
Los Angeles
633 West Fifth Street, Suite
4600
Los Angeles, CA 90071-2065
213.689.7400
Miami
200 South Biscayne Boulevard
Suite 3400
Miami, FL 33131-2318
305.960.2200
New York
1540 Broadway
New York, NY 10036-4086
212.692.1000
Newark
744 Broad Street, Suite 1200
Newark, NJ 07102-3889
973.424.2000
Philadelphia
30 South 17th Street
Philadelphia, PA 19103-4196
215.979.1000
Pittsburgh
600 Grant Street, Suite 5010
Pittsburgh, PA 15219-2811
412.497.1000
Princeton
100 American Metro Boulevard
Suite 150
Hamilton, NJ 08619
609.631.2400
Mailing Address:
P.O. Box 5203
Princeton, NJ 08543-5203
San Diego
101 West Broadway
Suite 900
San Diego, CA 92101-8285
619.744.2200
San Francisco
One Market, Spear Tower
Suite 2000
San Francisco, CA 94105-1104
415.957.3000
Singapore
5 Shenton Way
#10-01 UIC Building
Singapore 068808
65.6592.5077
Washington, D.C.
505 9th Street, Suite 1000
Washington, D.C. 20004-2166
202.776.7800
Wilmington
1100 North Market Street
Suite 1200
Wilmington, DE 19801-1246
302.657.4900
Duane Morris LLP – A Delaware limited liability partnership 04.29.09
[ www.duanemorris.com ]

Construction Group
Duane Morris’ Construction Group has a strong local, national and international presence, with
practice group attorneys located in many of our offices in the U.S. and around the world. The
group’s lawyers provide a full range of legal services to clients engaged in all aspects of construction
and government contracting, including:
• Contracting with public and private entities
• Bid protests and award disputes
• Owner/developer project management representation
• Construction administration services
• Complex contract claims and surety litigation
• Claims preparation and negotiation
• Contract defaults and terminations
• Federal procurement issues
• Alternative dispute resolution
• Advising regarding BIM, LEED and green building issues
• Environmental risk management
• Bid, Payment and Performance Surety bond and insurance issues
• Risk management
• Mechanic’s liens
• Contractor licensing matters
• Property damage claims
• Labor and employment counseling
• OSHA compliance and workplace safety issues
Duane Morris lawyers handle the legal challenges common to entities engaged in the design,
development, financing, performance and management of major construction and government
procurement contracts. Our national practice includes attorneys who regularly represent prime
contractors, public and private owners and developers, construction managers, subcontractors,
equipment suppliers, architects/engineers and other design professionals, and sureties. This
experience enables us to handle the complete spectrum of issues arising before, during and after
project completion.
Construction Group lawyers frequently work with lawyers from the firm’s other practice areas to
address the many issues associated with any particular project, whether tax, finance, real estate,
environmental, energy and, when necessary, white-collar criminal defense, corporate investigations
and regulatory compliance, or any other relevant issue. In addition, the firm’s full panoply of
practices enables Duane Morris to offer clients sophisticated legal services that are coordinated and
streamlined from coast to coast and internationally.
Range of Services
Contract Formation and Performance
• Developing contract documents that expressly allocate the risk, responsibility and rewards for
proper performance essential to a successful project.
[ www.duanemorris.com ]

• Utilizing the Construction Group’s considerable experience with numerous forms of contracts,
from standard industry and government sources (including those of the American Institute of
Architects (AIA), the Associated General Contractors of America (AGC), the Engineers Joint
Contracts Documents Committee (EJCDC) and the Construction Management Association of
America (CMA)) to customized, manuscripted documents to develop the most appropriate form
of contract for the project or task involved.
• Advising owners, developers, prime contractors, subcontractors, engineers, architects, other
design professionals, sureties or other project team members, in forming and managing
contractual relationships.
Claims Prevention
• Providing clients with construction project legal management, monitoring projects during
construction to ensure client awareness of issues and potential pitfalls and addressing issues as
they arise to prevent claims.
• Presenting seminars and written materials to our clients to educate their project managers,
superintendents, engineers and others to the common pitfalls encountered on a construction
project.
• Reviewing contract forms and procedures so our clients are better able to avoid many situations
that may otherwise generate claims or delays.
Construction Claims
• Handling the panoply of construction claims including changed or unforeseen conditions, delays,
disruptions, loss of productivity, acceleration, payment disputes, insurance coverage and
allegations of defective design or construction.
• Attempting, where possible, to achieve an early and fair resolution of construction disputes
without the expense and disruption of litigation.
• Calculating extended project costs and unallocated home-office overhead using all industryrecognized
formulas, recommending qualified consultants to do so, and, where appropriate,
working closely with claims consultants in a cooperative effort to maximize the benefits and
minimize the risks for our clients.
• Engaging in all forms of alternative dispute resolution, including mini-trials, mediations, and
arbitrations and attempt to present strategies to resolve disputes promptly and amicably short of
full-blown litigation.
• When early resolution is not possible, litigating complex, highly technical construction claims in
trial and appellate courts at both the state and federal levels, before contract appeals boards or
other administrative tribunals and in arbitration of matters before domestic and internationally
sanctioned panels. Our attorneys have considerable experience before all of these tribunals.
Government Contracts and Bid Protests
• Providing a full range of services in connection with government contracting at the local, state
and federal level, and with international agencies.
• Advising clients regarding the procurement process, including bidding, contractor selection and
awards processes used by public agencies.
• Representing contractors, subcontractors, engineers, architects, suppliers and sureties in
connection with government contracts and public bidding disputes.
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• Duane Morris attorneys have litigated precedent-setting cases involving procurement laws and
the awards process, and have written extensively on competitive bidding and related subjects.
• Regularly counseling clients regarding claims arising under government contracts, including
analysis of entitlement and claims pricing issues, and claims notification and certification
requirements.
• Representing clients in resolving claims arising under government contracts through alternative
dispute resolution procedures, arbitration and litigation.
Default/Termination Claims and Surety Practice
• Handling the complex issues and claims arising as a result of contractor and/or subcontractor
default terminations and failed construction projects that can result in numerous payment and
performance bond claims and/or default or termination of a bonded contractor.
• Duane Morris Construction Group’s attorneys have had the benefit of having represented all
sides of such disputes, including public and private owners, bonded contractors, subcontractors,
suppliers and sureties. This breadth of experience provides our clients with unique insights into
handling default terminations, negotiating no-cost terminations in many cases or obtaining
terminations for convenience on behalf of improperly terminated contractors as well as working
and negotiating with, and/or litigating for and against sureties relating to payment and
performance bond claims and indemnity obligations.
Architects, Engineers and Other Design Professionals
• Representing architects, engineers and other design professionals in matters relating to
contractual issues via project delivery systems such as design-build, design-bid-build, fast-track
or any combination thereof and advising on their relationships with owners, consultants,
contractors or subcontractors, during the pre-design, design, construction and post-construction
phases.
• Defending or prosecuting claims by or against design professionals, and by or against
professional liability insurance carriers. Our practice in this area is enhanced by our attorneys’
direct experience in the formation and management of design professional practices.
Labor and Employment
Our Employment Law practice represents management on such far-ranging issues as:
• Equal Employment Opportunity Commission concerns, wage and hour (Davis-Bacon) matters.
• Personnel administration, Americans with Disabilities Act and Family Medical Leave Act
compliance and related matters.
• Assisting clients’ compliance with affirmative action requirements and First Source requirements
(when applicable) at the bidding stage and with respect to any audits or investigations that may
occur.
• Providing clients with representation in matters arising from union employment and labor-related
problems.
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Occupational Safety and Health Act (OSHA) Compliance Issues
• Keeping clients abreast of the ever-changing health and safety regulations promulgated by
federal, state and municipal agencies continuously to protect individuals and property in the
workplace.
• Providing guidance to clients concerning the scope and application of these regulations, the
liabilities attendant to their activities in ongoing projects and appropriate responses to issues
arising during inspections or upon the issuance of subpoenas and/or citations.
Managing Environmental Risks
• Working with firm’s environmental attorneys to keep abreast of environmental risks on
construction projects such as federal RCRA and CERCLA liabilities and compliance with state
statutes and regulations.
• Representing environmental engineers, contractors, owners, sureties and insurance carriers in
addressing, assessing risk and resolving environmental issues on construction projects.
Property Damage Claims
• Representing owners, contractors and other project participants in claims which often become
very complex, arising out of property damage to projects during construction or to completed
projects.
• Drawing on extensive experience in litigating numerous property damage cases, and our long
history of dealing with insurance companies and claims adjusters, adding value on questions of
coverage and in settlement negotiations.
Participation in Construction Industry Groups
Our attorneys participate in, and hold leadership positions in, many construction industry
organizations, including:
• Associated General Contractors of America
• American Institute of Architects
• Public Contract Section of the American Bar Association
• American Bar Association Construction Litigation Committee
• American Bar Association Forum on the Construction Industry
• Construction Financial Management Association
• Design-Build Institute of America
• International Bar Association
• London Court of International Arbitration
• Washington Building Congress
• Construction Law and Litigation Committee of the International Association of Defense Counsel
Representative Matters
• Assisted a major construction firm in its restructuring, including negotiation with lenders,
sureties and other third parties.
• Assisted a major architectural firm in negotiating the architectural contract for the design of a
$500 million hospital and teaching facility.
4
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• Concluded a major construction dispute before the International Chamber of Commerce (ICC) in
London. The arbitration arose from the design and construction of a $1 billion project. A parallel
action was instituted in a federal district court against third parties whose participation was key
to resolution of the dispute. Ultimately employed advanced ADR procedures in one of the firstever
successful combined mediations of a federal court case and an ICC arbitration.
• Assisted a major engineering firm in obtaining the award of a contract to design San Francisco’s
new central subway. We were able to demonstrate that applicable federal law, including the
Brooks Act, required award to our client.
• Successfully protested the use of restrictive specifications in the request for proposals issued for
the procurement of the U.S. military’s Meals Ready to Eat. After obtaining a temporary
restraining order, the restrictive specification was removed, allowing our client to compete for
the contract.
• Successfully protested the U.S. Army’s proposed award of a sole-source contract for helicopter
equipment using funds congressionally earmarked for a competitor of a Duane Morris client.
Our bid protest, filed first with the Army and then the Government Accountability Office
(GAO), argued that it was unlawful to make any award on a sole source basis because the
earmark had not properly authorized a sole-source procurement, and that the Army had failed to
follow procurement regulations applicable to proposed sole-source contracts. Within two days of
the filing of the GAO protest, the Army withdrew the procurement, and committed to notify our
client and other competitors of any subsequent action to procure the helicopter equipment in
question.
For Additional Information
For more information, please contact Robert A. Prentice at 215.979.1130 or any of the lawyers listed
on www.duanemorris.com.
The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained
in any other matter. Each legal matter should be considered to be unique and subject to varying results.
6.08
5
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The Walls Are Closing In: Chinese Drywall Issues Prompt Legislation and Litigation
May 21, 2009
Certain drywall manufactured in China is allegedly defective. It has been alleged that this
defective drywall corrodes electrical wires and copper coils, and emits "rotten egg" fumes that
cause respiratory health problems. It is estimated that 60,000 residential houses in the
southeastern United States have been built using this purportedly defective drywall. As a result,
the U.S. Congress has responded with new legislation, and litigation has been increasing.
Legislation
Recent legislation directs the U.S. Department of Housing and Urban Development ("HUD"),
the U.S. Consumer Product Safety Commission ("CPSC"), the National Institute of Standards
and Technology ("NIST") and the U.S. Environmental Protection Agency ("EPA") to address the
wide-ranging impact of the Chinese drywall situation.
Amendment to Mortgage Reform Act: The U.S. House of Representatives recently passed a
measure, H. Amdt. 118, that calls for HUD to study:
• The availability of property insurance for residential structures with Chinese drywall and
• The effects of the presence of Chinese drywall on residential mortgage foreclosures.
This measure is an amendment to the Mortgage Reform and Anti-Predatory Lending Act, H.R.
1728.
Drywall Safety Act of 2009: Both the U.S. Senate and the House of Representatives recently
introduced identical bills to address the allegedly defective drywall imported from China
between 2004 and 2007. The bill, H.R. 1977, has been referred to the House of Representatives'
Energy and Commerce Committee. The bill, if enacted, would require the following actions:
• Product Study: The CPSC (with the NIST and the EPA) has 120 days to study "the
material and chemical composition" of drywall that was imported from China between
2004 and 2007 and used in U.S. houses. The study will analyze: (a) the chemical and
organic composition of drywall samples, (b) the effect of such compounds or emissions
emanating on metal fixtures commonly found in residences, and (c) any health or
environmental impact from exposure. The results of such a study are likely to play an
important role in any litigation regarding Chinese drywall.
• Product Safety Standards: The CPSC has 180 days to determine whether to enact a
consumer-product safety standard regulating the composition of materials used in drywall
"to protect the health and safety of residential homeowners." The standard focuses on
residential use; however, the standards are also likely to impact commercial use.
• Temporary Ban: Within 30 days of the enactment of the bill, the CPSC will impose a
temporary ban on drywall exceeding 5-percent organic compounds, by weight, as being
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Litigation
defective. An order would then be issued to manufacturers, distributors and retailers of
this drywall. The ban would be effective until the CPSC publishes a determination that a
consumer-product safety standard regulating the composition of materials used in drywall
is no longer necessary.
As previously reported in "'The Writing Is on the Wall': Defective Drywall Claims Prompt More
Legal Action," which appeared in the Spring 2009 Building & Bonding: The Construction Group
Newsletter, litigation has commenced against the product manufacturers and the distribution
chain. However, additional areas of litigation are emerging, including the following:
Foreclosure: Some homeowners have stopped paying their mortgages, claiming that they should
not have to pay for allegedly defective homes that cannot currently be sold or inhabited. These
claims are especially common in Florida, as a result of recent and substantial decreases in real
estate values. Such defaults by homeowners will likely result in foreclosure proceedings. Lenders
who have foreclosed on these homes may have to explore their remedies against other potentially
responsible parties, as simply selling the foreclosed houses will be difficult or impossible.
Insurance Coverage: Issues exist regarding whether the drywall-related claims are covered by
certain insurance policies. For example, areas of contention may arise as to whether the claim is
subject to an exclusion, such as: (a) the pollution exclusion, because there are allegations that the
damage is caused by gases emitted from the drywall; (b) "your work, your product" exclusion; or
(c) mold exclusions that are usually included in coastal areas. Regarding third-party property
damage or construction-defect claims, a key issue concerns whether a claim for faulty
workmanship leads to an occurrence under a general liability policy. Also, disputes regarding the
"trigger of coverage" are likely to arise between first-party policies. Finally, this exposure may
create not only areas of contention but also new opportunities for insurers. Underwriting
opportunities for specialty insurers may develop from recently formed businesses that are
inspecting homes for the presence of Chinese drywall and to remediate damage.
The legal issues regarding "Chinese drywall" are impacting many business sectors—
manufacturers, construction, insurance, real estate, home associations, mortgages, foreclosures
and healthcare. We will continue to monitor the development of legislation and litigation.
For Further Information
If you have any questions regarding this topic or would like more information, please contact
Sheila Raftery Wiggins, any member of the Construction Group or the attorney in the firm with
whom you are regularly in contact.
2
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"The Writing Is on the Wall": Defective Drywall Claims Prompt More Legal Action
By Sheila Raftery Wiggins
Spring 2009
Building & Bonding: The Construction Group Newsletter
Drywall is, literally, all around us. Yet, some drywall is allegedly causing property damage and
prompting health concerns. Thus, the next wave of construction litigation has hit our shores—
defective drywall claims. Drywall is a building material used to make interior walls and ceilings.
It is primarily gypsum wrapped in paper, but the core can also have added fiber, plasticizers,
foaming agents, potash and various other ingredients to inhibit the growth of mildew and
increase fire resistance. Impurities in this core material can cause problems, including adverse
environmental conditions in residences or other buildings where the drywall is installed.
After the hurricanes of 2004 and 2005, reconstruction led to a sharp increase in the demand for
drywall. Drywall shortages hit first and hardest on Florida's Gulf Coast, leading contractors and
distributors to start obtaining drywall from Chinese manufacturers. Reports state that at least 550
million pounds of Chinese-made drywall have been offloaded at multiple U.S. ports since
2006—enough to build 60,000 average-size homes. One of the largest concentrations to date of
Chinese drywall has been found in Southwest Florida. Reports state that enough Chinese-made
drywall shipments to build 36,000 homes landed in Florida ports.
Primarily two kinds of drywall board were imported: half-inch standard drywall and 5/8-inch
"fire-rated" or type "X" drywall. Building codes mandate the use of "fire-rated" drywall for
certain construction, such as interior and exterior walls near furnaces, because it delays the
spread of fire in walls and ceilings for up to one hour. There are several types of fire-rated
drywall. Some use fiber material in the core to combat heat and fire, while others contain mineral
cores for an even more fire-resistant product.
Imported drywall usually must have documentation attesting that it meets international fire
standards. American Society for Testing and Materials Standard ("ASTM") C36 was a domestic
standard for drywall that was replaced in 2005 by C1396/C1396M. This standard requires a
certain level of fire resistance for the gypsum core and establishes standards for the board's
ability to deflect humidity and how the board handles pulled nails. Tampa port officials reported
that much of the drywall arriving on container ships from China over the past few years did not
contain the required documentation or official stamps confirming that it met international
manufacturing and safety standards.
Some drywall that was imported from China is allegedly defective. It has been reported that
although the drywall may meet ASTM standards, the water used to mix the gypsum may have
been wastewater that contained chemicals, including sulfur. This drywall is claimed to emit
sulfuric gases that corrode electrical wires, copper wiring, pipes and air conditioning
components. The sulfuric gases also permeate wood studding, which effectively causes a rotten
[ www.duanemorris.com ]

egg smell in the homes even after the drywall has been removed. The sulfur compounds and the
resulting noxious sulfur-like odors are also linked to health problems, including respiratory
issues. As one might suspect, the cost to replace both the drywall and other allegedly defective
materials is high.
To date, the suspect drywall has been found in new homes built from 2004 through early 2007 in
at least 13 states. Specifically, investigations have found suspect drywall in Florida, Arizona,
Colorado, Georgia, Louisiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina,
South Carolina, Virginia and Texas. Florida homeowners have submitted almost 100 complaints
to the Florida Department of Health ("FLDOH") about problems relating to their drywall, and
the complaints have been logged from Manatee, Sarasota, Hillsborough, Lee, Dade, Palm Beach,
Highlands, Broward, Citrus, St. Lucie, Collier and Martin counties. The extent of the problem is
unknown, but at least 80 homes in Southwest Florida have been identified. The suspect drywall
has been located in residential properties of all types. Indeed, reports state that even Florida
Lieutenant Governor Jeff Kottkamp has moved his family out of their Fort Myers home while
the issue is being investigated. The problem is prevalent enough that some real estate agents are
beginning to add Chinese-made drywall information to their disclosure forms when buying and
selling Florida real estate.
Potential Liability
The "writing is on the wall." Lawsuits are beginning to be filed against the manufacturers and
distributors of the affected drywall. For example, a lawsuit filed in Florida state court by a
builder alleges that the manufacturer should have known that the drywall was defective. A class
action lawsuit pending in the U.S. District Court for the Middle District of Florida charges that
German drywall maker Knauf Gips KG ("Knauf"), its Chinese plasterboard units and other
defendants, including the manufacturers and distributors of the drywall, negligently
manufactured and sold the defective drywall, which was "unreasonably dangerous" in normal use
because it corroded plumbing, air conditioning and electrical components, and caused coughing
and irritation of sinuses, eyes and throats. The suit also seeks to recover from the defendant for
strict products liability and breach of warranty, among other causes of action. To date, residential
builders that have been identified as obtaining product from Knauf include: Lennar Corp., Taylor
Morrison, WCI Communities, Meritage Homes, Ryland Homes, Standard Pacific Homes and
Aubuchon Homes.
It is important to note that it is not just the manufacturers and distributors that should be
concerned about litigation arising from this allegedly defective drywall. Homebuilders and
contractors that installed the drywall should also be aware of their potential liability. For
example, some builders commented that the suspect drywall was heavier and broke differently
and in a more jagged manner than domestic drywall. Therefore, an issue might exist regarding
whether the builders had notice that the drywall was potentially defective. Moreover, architects
or engineers involved in construction projects should be mindful of potential professional
malpractice liability exposure. Any person in these roles named as a defendant may have
2
[ www.duanemorris.com ]

significant indemnification or contribution rights against others in the chain of distribution that
are more responsible. Manufacturers and distributors of plumbing, electrical or air conditioning
components that have failed or have been alleged by customers to be defective should also
consider whether it is possible that defective drywall is the true reason for the problem.
Liability may also fall on the design, construction and inspection teams, based on breach-ofwarranty
claims. The American Institute of Architects ("AIA") and the Associated General
Contractors of America ("AGC") provide standard form contracts widely used in construction
transactions. These contracts contain the typical express warranty clauses given by many
contractors, including that all work will be of good quality, free from faults and defects and
conform to the contract documents. Builders of new homes also implicitly warrant to the owner
that the homes will be completed in a workmanlike manner and will be suitable for habitation.
Some limits on the extension of the warranties exist. For example, the defect complained of must
have been latent—undiscoverable despite reasonable inspection—or the warranty does not
survive. When a home or building is not suitable for its intended purpose because of substandard
or defective materials, builders may be also liable of misrepresentation, unfair business practices
or negligence, depending on the governing law.
Issues regarding insurance coverage are also likely to be important. Insurance policies, which
often are written with broad pollution exclusions, may offer no legal defense for building
industry companies faced with lawsuits because drywall is allegedly emitting toxic gas inside
homes and walls that may be deemed "pollution." Companies may want to seek counsel
regarding whether to put their insurance companies on notice of potential issues. Companies
should also review their contracts, subcontracts, warranties and insurance policies to analyze
their liability and their ability to satisfy potential compensatory damages. Government
Regulatory Responses Federal and state agencies are also investigating drywall products
imported from China. U.S. Sen. Bill Nelson (D-Fla.) has asked the U.S. Environmental
Protection Agency ("EPA") and the U.S. Consumer Product Safety Commission ("CPSC") to
investigate whether Chinese-manufactured drywall is toxic. U.S. Rep. Vern Buchanan (R-Fla.)
has also written the Federal Trade Commission and the Office of the U.S. Trade Representative,
asking them to take corrective steps.
The CPSC has responded by focusing on whether the sulfur-based gases emitted from the
drywall are corroding household wiring and whether these gases pose a potential safety hazard.
If the commission determines there is a safety hazard, it could order a halt in further sales of
certain drywall products. The CPSC has been asked to prepare drywall safety standards. To the
extent that potential CPSC regulatory action could impact business operations, concerned parties
may want to seek counsel about providing input during this phase of the regulatory process.
Carbon disulfide, carbonyl sulfide and dimethyl sulfide have been found in air samples of some
of the affected homes. If inhaled in large quantities, carbon disulfide can affect a person's
nervous system and can be life threatening in high levels, according to the U.S. Department of
Health and Human Services. As for carbonyl sulfide (another potential byproduct), some states
have established health criteria regarding the permissible levels. Accordingly, a manufacturer's
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[ www.duanemorris.com ]

liability for selling defective drywall may vary considerably depending upon the state of
installation. In response to many complaints, FLDOH is currently investigating potential health
hazards that may arise when metals inside a home are rapidly corroding.
Therefore, the regulatory response by individual states may impose substantial new costs on
manufacturers, distributors and consumers of drywall products. To the extent that one has
concerns that state regulators may not have been provided with adequate information about this
issue, interested parties should seek counsel to formulate an effective submission to the pertinent
regulators.
Sheila Raftery Wiggins is a partner in the Newark office of Duane Morris who has handled
construction and products liability-related litigations.
4
[ www.duanemorris.com ]

Sheila Raftery Wiggins, Partner
Duane Morris LLP
Suite 1200
744 Broad Street
Newark, NJ 07102-3889
USA
Phone: 973.424.2055
Fax: 973.556.1486
Email: SRWiggins@duanemorris.com
New York Address
Duane Morris LLP
1540 Broadway
New York, NY 10036-4086
Phone: 212.692.1000
Fax: 212.692.1020
Sheila Raftery Wiggins practices in the area of litigation and was recently selected as one of the
state's "40 Under 40" by the New Jersey Law Journal. Ms. Wiggins handles matters involving
complex commercial disputes, mortgage and banking fraud, employment law defense, attorney
ethics investigations, bankruptcy litigation, and insurance coverage disputes. She has extensive
experience representing clients before state and federal trial courts, on appeal, and at arbitration
hearings and mediations.
Ms. Wiggins is active in several community and civic organizations, including the Supreme
Court of New Jersey District V-A Ethics Committee, The Women Advocate Committee of the
American Bar Association and the Women's Law Caucus Mentoring Program of Temple
University Beasley School of Law. She serves on the Board of Directors of Musical Chairs
Chamber Ensemble, a nonprofit corporation that supports classical musicians in the New York
metropolitan area. She is also a member of the Civil Bench Bar, Civil Litigation, and Law and
Employment sections of the Essex County Bar Association and a member of the Professional
Responsibility, Women In The Profession and Labor and Employment sections of the
Philadelphia County Bar Association.
Ms. Wiggins is admitted to practice in New Jersey, New York and Pennsylvania. She is a 1998
graduate of Temple University School of Law, where she was business editor of the Temple
International and Comparative Law Journal, and where she competed in regional and national
competitions as a member of Temple's Negotiation Team.
Areas Of Practice
• Commercial Litigation
• Employment Law Defense and Internal Investigations
• Bankruptcy Litigation
• Trade Secret And Restrictive Covenant Litigation
[ www.duanemorris.com ]

• Attorney Ethics
Representative Matters
Banking Litigation
• Represented a national bank in a "property flipping" case alleging state and federal
consumer fraud and civil rights violations arising from the marketing, sale and mortgage
procurement of several groups of properties.
• Represented a national bank in fraud cases arising from agreements and letters of credit
which the bank had with its customers.
• Defended major fashion house in banking fraud case arising from the theft of funds by
employee.
Bankruptcy Litigation
• Defended corporate clients against fraudulent conveyance claims arising from
bankruptcies, corporate change of control, or other challenged transactions.
• Investigated claims on behalf of the committee of unsecured creditors in the bankruptcy
of a real estate developer and related companies.
• Defended leading financial institution in a lawsuit arising from its role as indenture
trustee for holders of publicly-issued notes and credit agreements.
Employment Litigation
• Defended a major brokerage firm in an action alleging gender and racial harassment and
wage discrimination by obtaining summary judgment on all counts. Ruling was affirmed
on appeal by the New Jersey Appellate Division.
• Counsel to national companies in trade secret and restrictive covenant injunction matters
in federal and state court. Obtained favorable rulings against former employees of
national companies to prevent employees from working for competitors and from
soliciting clients.
• Obtained dismissal for healthcare employer of same-sex sexual harassment and wage
discrimination lawsuit.
• Obtained summary judgment for a large interstate cargo carrier in a litigation arising
under the Worker Adjustment Retraining Notification ("WARN") Act.
Commercial Litigation
• Represented a major gaming industry company in a license agreement dispute with a
casino.
• Obtained a favorable ruling on behalf of a health care provider in a partnership dispute.
Obtained a favorable ruling for a company based on a partnership agreement to remove
the other partner from the business.
• Represented companies in litigation arising from commercial distribution agreements.
[ www.duanemorris.com ]

Real Estate Litigation
• Represented entities regarding alleged breach of lease lawsuits in New York and New
Jersey.
Ethics Litigation
• Appointed to investigate and to litigate ethics grievances against attorneys for the
Supreme Court of New Jersey District V-A Ethics Committee.
Insurance Coverage Litigation
• Represented numerous insurance companies in disputes regarding insurance coverage
issues, including at arbitration.
• Obtained summary judgment, which was subsequently affirmed by the United States
Court of Appeals for the Seventh Circuit, regarding whether a company can shift
coverage for its Longshore and Harbor Workers Compensation benefit obligation to an
injured employee from its workers compensation insurer to another insurer under a
Bumbershoot Policy. The St. Paul Travelers Companies, Inc. v. Corn Island Shipyard,
Inc., No. 06-2137 (7th Cir. 2007).
Pro Bono Litigation and Matters
• Represented Holocaust survivors to apply to the German government for benefits relating
to work they performed in ghettos in German-occupied areas.
• Represented veteran before U.S. Court of Appeals for Veterans Claims in appealing the
decision of the Board of Veterans' Appeals. Represented tenants regarding breach of
lease lawsuit in New Jersey. Assisted victims affected by attacks on World Trade Center
with obtaining benefits.
Professional Activities
• Supreme Court of New Jersey District V-A Ethics Committee
• American Bar Association
• New Jersey Liaison for The Woman Advocate Committee of the American Bar
Association
• Philadelphia Bar Association
- Member of Professional Responsibility Section, Women In The Profession Section, and
Labor and Employment Section
• Essex County Bar Association
- Member of Civil Bench Bar Section, Civil Litigation Section, and Law and
Employment Section
• Essex County Delegates' Council
• New York County Bar Association
• New Jersey Superior Court Mediator, Mortgage Mediation Program
[ www.duanemorris.com ]

Admissions
• New Jersey
• New York
• Pennsylvania
• U.S. Court of Appeals for the Second Circuit
• U.S. Court of Appeals for the Third Circuit
• U.S. District Court for the District of New Jersey
• U.S. District Courts for the Southern and Eastern Districts of New York
• U.S. District Court for the Eastern District of Pennsylvania
Education
• Temple University School of Law, J.D., 1998 Internships: Volunteers for the Indigent
Program of Philadelphia; The Honorable Diane Welsh, U.S.M.J.; New York County
District Attorney's Office; Richmond County District Attorney's Office; City of
Philadelphia Law Department
• Binghamton University, B.A., 1995
Experience
• Duane Morris LLP
- Partner, 2008-present
- Associate, 2003-2007
• Gibbons, Del Deo, Dolan, Griffinger & Vecchione, Newark, New Jersey
- Associate, 2000-2003
• Lavin, Coleman, O'Neil, Ricci, Finarelli & Gray, Philadelphia, Pennsylvania
- Associate, 1998-2000
Board Memberships
• Founding Director, Musical Chairs Chamber Ensemble, New York
Civic and Charitable Activities
• Essex-Newark Legal Services, a nonprofit pro bono organization
• Women's Law Caucus Mentoring Program of Temple University Beasley School of Law
• National Association of Women Lawyers Mentor
Honors and Awards
• Named one of the New Jersey Law Journal's 2008 "40 Under 40"
• Named a Rising Star in the area of Business Litigation by New Jersey Super Lawyers,
2006-2008
[ www.duanemorris.com ]

Selected Publications
• "The Walls Are Closing In: Chinese Drywall Issues Prompt Legislation and Litigation,"
Duane Morris Alert, May 21, 2009
• "'The Writing Is on the Wall': Defective Drywall Claims Prompt More Legal Action,"
Building & Bonding: The Construction Group Newsletter, Spring 2009
• "New Law Changes the Calculation of the Statute of Limitations in Pay Discrimination
Cases," Duane Morris Alert, January 30, 2009
• "The Loss of Privileged Information by Intentional or Inadvertent Production to a Third
Party," New Jersey Law Journal, June 17, 2008
• "The Loss of Privileged Information by Intentional or Inadvertent Production to a Third
Party," New Jersey Law Journal, June 16, 2008
• "Invalid Subpoenas Sent Via E-Mail: New and Dangerous Internet Scam," Duane Morris
Alert, April 23, 2008
• "What Did They Say? Deciphering When Remarks Are Evidence Of Discriminatory
Intent Is A Difficult Task," New York Law Journal, August 27, 2007
• "Minimizing the Impact of Stray Remarks," New Jersey Law Journal, April 9, 2007
• "The Expanding Scope of Lender Liability; Courts Permit Claims to Proceed Against
Lenders on Various Theories, From Aiding and Abetting to Fraudulent Conveyance,"
New Jersey Law Journal, March 12, 2004
• "Safety Net and Measuring Rod: The NAFTA TAA Program, Temple International and
Comparative Law Journal, Vol. 12.1, Spring 1998
Selected Speaking Engagements
• "Coffee with Experience" round-table discussion, American Bar Association conference
[ www.duanemorris.com ]

By: Veronica M. Bates
TRIGGER OF COVERAGE
1. “Pure” or “strict” manifestation rule -
• triggers coverage upon actual discovery of
injury

TRIGGER OF COVERAGE cont.
2. “Relaxed” manifestation rule -
• triggers coverage in first policy period during
which discovery of injury is possible
TRIGGER OF COVERAGE cont.
3. “Exposure” rule -
• triggers coverage in any policy period in
which exposure to cause of injury occurred

TRIGGER OF COVERAGE cont.
4. “Injury-in-fact” rule -
• triggers coverage at the time of the underlying
injury, even if not yet manifested
TRIGGER OF COVERAGE cont.
5. “Injury-causing event” rule -
• triggers coverage at the time of the underlying
injury-causing event

TRIGGER OF COVERAGE cont.
6. Triple Trigger
• All policies triggered during period of
continuing exposure and manifestation
NUMBER OF OCCURRENCES
1. Cause Test
• determined by the number of causes for a
loss(es)
• Not the number of claims or different types of
damages
2. Effects Test
• determined by how many “effects”
(injuries/damages) result from an event(s)

ALLOCATION
1. Pro Rata
• Time on Risk
• allocate amongst multiple insurers based upon
each insurer’s length of policy period(s)
• Proportionate Policy Limits
• Proportion of Injuries During Each Policy
Period
• Total Number of Policies
• Combination of Above
ALLOCATION cont.
2. Joint and Several
• insured selects single policy limit
• all insurers reallocate based upon that
limit
3. Stacking
• each triggered policy can be called upon
to respond up to full limits
• all limits added together

OTHER CONSIDERATIONS
• Deductibles
• Self Insured Retentions
• Gaps in Coverage
• Policy Language
• specific to limits, allocation, sharing,
number of occurrences
901 Main Street
Suite 5200
Dallas, Texas 75202
214.749.6000
www.hsblaw.com

Navigating the “Perfect Storm”*
of Chinese Drywall—
Chemistry and Analysis
Eric Winegar, PhD, QEP
Applied Measurement Science
Fair Oaks, California
New Orleans, June 18, 2009
Up‐to‐date presentation available at
AirMeasurement.com/drywall,
and sulfuranalysis.com
Chemistry—EEK!
There will be NO quiz on this!
Physics—ACK!
6/23/2009
1

*Overused and Overwrought Metaphor?
• Odors
• Health complaints
• Corrosion
• Decreased home value
• High publicity
• Possible fraud
• Highly complex transport
• Thousands affected
• Unknown technical issues
• Poorly documented ‘scientific
reports’ reports
• Complicated chemistry
• Role of humidity
What is needed
• Data*
• Information
• Knowledge
• Action
*Where things stand
now
Objectives
• Legal issues
• Gov’t agency involvement
• Foreign supplier
• Reactive chemicals
• Lack of standard analysis
methods
• Low concentrations
• Multi‐media (gas, solid, metal)
• Misinformation
• Mitigation cost
• Mitigation risk
• Competition for clients
How to get it
• Characterization of
media (air, solids)
• Examine reactions
• Conduct analysis
• Provide diagnosis g
6/23/2009
2

Nomenclature and Terminology
• Sulfide = Reduced oxidation number (

Reduced Sulfur Compounds
are Difficult to Sample and Analyze
• Reactivity‐‐Decomposes easily…reactions with
other analytes (e (e.g, g water) or with surfaces
• Adsorptivity‐‐H2S binds to metal surfaces
(except gold)
• Diffusivity—Losses through container (e.g.,
Tedlar bag)
• Analysis—to get high sensitivity and
specificity, need dedicated and specialized
equipment
Air Methods—Whole Air
• No ‘official’ method for low‐level ambient RSC
• NIOSH/OSHA Methods—occupational, ppmv levels
• Methods are adopted and/or modified—e.g., ASTM‐
5504: Standard Test Method for Determination of
Sulfur Compounds in Natural Gas and Gaseous Fuels by
Gas Chromatography and Chemiluminescence
• EPA Compendium Method TO‐15—for VOCs, but some
labs do use it. Problems with metal surfaces
• General bag methods—Tedlar, Teflon, Mylar, Saran,
Flexfoil, etc. All suffer rapid losses.
6/23/2009
4

Air Methods—Sorbents
• No all‐around good sorbent
• Some can be used with cryogenic assistance
• Gold surfaces have been used
• In‐site reactions—several types, but not specific
enough
• Sorbents rarely used, except in oceanographic and
climate research
• PPassive i samplers—not l t used d a lot, l t but b th have potential. t ti l
Need long periods of sampling for adequate sensitivity
(weeks). Currently in testing trial at several homes.
Analysis Methods—
Gas Chromatography
• Sulfur specific detectors
– Flame photometric photometric—old, old not as sensitive, sensitive non‐linear non linear
response
– Chemiluminescence—sensitive and specific, but
difficult to operate
– Pulsed Flame Photometric—new, sensitive, easy to
use, non‐linear response
– Atomic i emission i i ddetector—specific, ifi not widely id l used d
• Mass spectrometer—only certain systems can do
it well
6/23/2009
5

Analysis Methods—
Electrochemical and Optical
• Jerome sensor—gold foil, sensitive
• Electrochemical—diffusive Electrochemical diffusive, reaction‐based
reaction‐based,
mainly used for emergency notification—high
detection limits (high ppbv to ppmv)
• FTIR—open path/closed path (cell). H2S is poor
IR absorber, so relatively insensitive
• Cavity ring‐down spectroscopy—sensitive,
specific, ifi bbut texpensive i
• UV‐fluorescence—used for continuous ambient
monitoring, not suitable for portable or
laboratory application
On‐site Analysis—
Mobile Laboratory
• Rapid analysis
• No losses
• Strengths of gas chromatography with element‐
specific detector
• More sensitive than laboratory analysis (uses
cryo—0.1 ppbv)
• EExpensive i overall, ll bbut ton per‐sample l bbasis i iis
competitive
• Best data quality
6/23/2009
6

Field Sampling and Analysis Methods
Jerome H2S Sensor
Sensitivity: 3 ppbv
Interferences: Organosulfurs
No response: OCS, CS2
Tedlar Bag Chamber
Imperfect and Incorrect
Sampling Methods
Tedlar bag—RSC stable,
but for short period.
About the only way for
remote laboratory
analysis
DO NOT USE STAINLESS STEEL
CANISTERS FOR H2S—IT IS LOST
WITHIN MINUTES. Silco canisters—
glass‐lined—can work if new. Old
canisters have inconsistent
performance. COS, CS2—possibly, but
inadequate data.
6/23/2009
7

Conc. (ppmv)
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
Implications of Tedlar Bag Use
Loss of H2S in Saturated Humidityy
Excess Water Dry
0.0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Time (minutes)
Laboratory Data (ppmv)
Field vs. Laboratory Analysis
0.001 0.01 0.1 1 10
Jerome Data (ppmv)
Rapid losses of analyte over time Low bias
Static Headspace Analysis
• Concentrations measured cannot be easily related to indoor air concentrations
Concentrations measured cannot be easily related to indoor air concentrations
• Useful for ranking source material only; cannot be used for source strength
assessment, e.g., total emissions into home.
• Accuracy of H2S is questionable
• H2O diffuses through bag
10
1
0.1
0.01
0.001
6/23/2009
8

Complex Organic Mix‐‐Headspace
Complex mixture of organosulfur
and other species
Analysis of Solid Material
• Elemental Analysis—X‐ray Fluorescence,
bbroad dspectrum t (50 elements, l t iinc. S)
• Sulfur analysis—Extraction/HPLC, GC/MS
Usefulness of data uncertain
• FTIR—Spectral feature used for ID. One‐
dimensional data subject to interferences
• Head‐space off‐gassing
6/23/2009
9

Key Reactions*
• H2S + H2O + M = Metal sulfides
• COS + H2O = H2S + CO2
• CS2 + H2O = H2S + CO2 (very slow)
• SSr + H2O = H2S + SrO
• FeS/FeS2 + acid = H2S
• Ag + H2S = Ag2S (tarnish)
• Cu + S = CuS
• Cu + S = Cu2S
• S + H2O = H2S
• S + O2 = SO4 ‐2
*Not balanced equations
Gas Phase
(Adsorption
on surface) )
Liquid Phase
(condensed
humidity)
Net Reaction
Corrosion Chemistry
Combination of electrochemical and chemical actions
6/23/2009
10

Corrosion Growth
• Rate dependent on concentration of sulfur
• Highly dependent on humidity
• Three steps:
– Initial linear (first hours)
– Slower period
– Final, faster period
• Both Cu2S 2 and Cu2O 2 add to corrosion layer,
• COS acts similarly to H2S
• H2S and COS are 10,000 times more corrosive
than SO2 or CS2.
Corrosion
• Copper coils—sulfides and oxides
• Sufficient rate to cause failure
• Tarnish silver (Ag2S)
• Threshold conc: low ppbv
Electronic Component Failures
International Electrotechnical Commission:
Specification of

Chemistry of Emissions
from Drywall
‐‐Hypothesis…not all has been confirmed…yet‐‐
• Presence of metallic contaminants, and metal
sulfide (Sr, Fe, others?)
• Addition of ambient humidity
• In‐situ hydrolysis, forming H2S, COS, CS2
• Many other organics present—contribute to
odor?
• TTransport t(diff (diffusion/advection) i / d ti ) of f gases ffrom
walls into indoor air
• Corrosion by H2S, COS (via H2S). CS2—no.
• SO2—different reports, weak evidence.
Thank you.
Contact Info
Eric Winegar, PhD
Applied Measurement Science
4764 Concord Drive
Fair Oaks, CA 95628
916.965‐7050 office
916.837.4251 mobile
EricWinegar@earthlink.net
www.AirMeasurement.com
6/23/2009
12

Paul G. Phillips, PE, LEED ® AP
Senior Consultant
Date: June 18, 2009
Location: New Orleans
HB Litigation Conference
“Chinese Chinese Drywall” Drywall
Effects on
Construction and Appliances
Chinese Drywall Effects
--Three Topics
1. What’s being damaged?
2. How and why?
3. What questions are open?
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
2

What is Damaged?
Problems we’re sure of
• Air conditioner coils turn black and leak
Shiny
Copper
HVAC Coils
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
BEFORE
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
www.rimkus.com
3
4

AFTER
Blackened
Copper
HVAC Coils
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
What is Damaged?
Problems we’re sure of
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
• Air conditioner coils turn black and leak
• Copper wires blacken
www.rimkus.com
5
6

Copper Wires Blacken
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Copper Wires Affected
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
www.rimkus.com
7
8

What is Damaged?
Problems we’re sure of
• Air conditioner coils turn black and leak
• Copper wires blacken
• Fixtures get pits
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
Pitted Bathroom Drawer Handles
Paul G. Phillips, P.E., LEED ® AP
www.rimkus.com
9
10

Pitted Bath Tub Stoppers
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
What is Damaged?
Problems we’re sure of
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
• Air conditioner coils turn black and leak
• Copper electrical wires blacken
• Fixtures get pits
• Silver and jewelry blacken
www.rimkus.com
11
12

Silver Service
TARNISHED SILVER
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Jewelry
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
STAINED
JEWELRY
www.rimkus.com
www.rimkus.com
13
14

What MAY BE Damaged
Problems we’re pretty sure of
• Alarm systems fail
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Alarm Systems
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
BLACKENED
SECURITY SYSTEM
WIRING
www.rimkus.com
www.rimkus.com
15
16

What MAY BE Damaged
Problems we’re pretty sure of
• Alarm systems fail
• Mirrors lose backing
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Mirrors
MIRROR LOSING
REFLECTIVE BACKING
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
www.rimkus.com
17
18

What’s Reportedly Damaged
Other problems claimed
• Other appliances fail
– Refrigerators
– Dishwashers
– Washing machines
– Ceiling fans
• Arcing in electrical devices
• Smoke detectors fail
• Nails and fasteners degrade
• Wood products absorb hydrogen sulfide
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Why is this Happening?
One possible process
• Copper + Air => Copper Oxide protective layer
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
www.rimkus.com
19
20

Copper Oxide Protective Layer
BARE COPPER
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
COPPER OXIDE
PROTECTIVE LAYER
Why is this Happening?
One possible process
• Copper + Air => Copper Oxide protective layer
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
• Hydrogen Sulfide + Copper Oxide => Copper Sulfide + Water
www.rimkus.com
21
22

Black Copper Sulfide
TYPICAL
BLACKENED
COPPER
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Why is this Happening?
One possible process
• Copper + Air => Copper Oxide protective layer
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
• Hydrogen Sulfide + Copper Oxide => Copper Sulfide + Water
• Copper Sulfide: Wipes off easily - Not protective
www.rimkus.com
23
24

Copper Sulfide Wipes Off
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
COPPER SULFIDE
WIPES OFF EASILY
Why is this Happening?
One possible process
• Copper + Air => Copper Oxide protective layer
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
• Hydrogen Sulfide + Copper Oxide => Copper Sulfide + Water
• Copper Sulfide: Wipes off easily - Not protective
• Hydrogen Sulfide: Water soluble
• Reaction may continue and progress
– Especially wet environments
Like cooling coils!
Paul G. Phillips, P.E., LEED ® AP
www.rimkus.com
25
26

Reaction Progresses
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Open Questions
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
• How and where are cooling coils failing?
Paul G. Phillips, P.E., LEED ® AP
www.rimkus.com
27
28

AND COPPER
TUBES ARE
TURNING
BLACK?
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Open Questions
“Chinese Drywall” Effects on
Construction and Appliances
WHY ARE
FINS STILL
BRIGHT?
www.rimkus.com
• How and where are cooling coils failing?
• Does coating the coil help?
Paul G. Phillips, P.E., LEED ® AP
www.rimkus.com
29
30

COATED COIL
IS ALL BLACK
Open Questions
FRAME
TUBES
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
FINS
www.rimkus.com
• How and where are cooling coils failing?
• Does coating the coil help?
• Why do only some fixtures pit?
www.rimkus.com
31
32

PITS ON
BATHROOM
DRAWER
HANDLE
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
NO PITS ON
BATHROOM
FAUCET
(SAME ROOM)
www.rimkus.com
• How and where are cooling coils failing?
• Does coating the coil help?
• Why do only some fixtures pit?
• How are outlets and switches affected?
www.rimkus.com
33
34

PUSH-IN WIRING
CONNECTION
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
SCREW-IN WIRING
CONNECTION
www.rimkus.com
• How and where are cooling coils failing?
• Does coating the coil help?
• Why do only some fixtures pit?
• How are outlets and switches affected?
• How are electronics affected?
www.rimkus.com
35
36

Low Voltage
Light Gauge
Wire
e.g.
Telephone,
Security, A/C
Controls
Open Questions
BLACKENED
CABLE
CONNECTION
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
Some Some Wire Wire is NOT is Affected
Under Insulation
High Voltage
12 Gauge Wire
e.g.
Receptacles
and Lights
www.rimkus.com
37
38

Open Questions
• How and where are cooling coils failing?
• Does coating the coil help?
• Why do only some fixtures pit?
• How are outlets and switches affected?
• How are electronics affected?
• How are motors affected?
COMMUTATOR
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
Open Questions
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
TYPICAL NEW
ELECTRIC MOTOR
www.rimkus.com
COULD
COMMUTATORS
WEAR OUT
PREMATURELY?
www.rimkus.com
39
40

Thanks for your time!
When you need to go beyond the obvious…
Paul G. Phillips, P.E., LEED ® AP
“Chinese Drywall” Effects on
Construction and Appliances
www.rimkus.com
41

Outline
Chinese Drywall
A Practical Protocol
HB Litigation Conferences
Ritz Carlton, New Orleans, LA
June 18, 2009
• Is My Drywall of Chinese Origin?
Factors to Examine
Just because it IS does NOT mean it will be a problem and
just because it is NOT does not mean it will NOT be a
problem.
Testing-lessons learned from the old days of mold
• Impact to Homes/Scope of Repair
• Costs
• Geographical Distribution
• Can this get any worse?
2

Is My Drywall Chinese?
Factors to Examine
a) Smell
1. Variable odors (most common- rotten egg or burnt match)
and not all homes have it
2. Low odor threshold for sulfur compounds (.0047 ppm)
3. Odor differences may have to do with manufacturing origins
4. Odor will not dissipate as sulfur continues to leach but MAY
lessen as time goes on
5. Time of day- earlier may be worse
6. Location- confined spaces, upper levels, cutouts will have
greatest odors-back side of drywall smells worse
Is My Drywall Chinese?
• Smell-Red Herrings
In Florida- the presence of a shallow water well
on the property along with a high sulfur content in
the water may lead to similar odors and
problems.
3
4

Is My Drywall Chinese?
b) Visual Appearance
1. Most is 1/2” not 5/8” thick-look for visual seam lines
2. Most is 4’ x 12’ as opposed to 4’ x 8’ therefore most used in
walls not ceiling areas
3. May have non-uniform surfaces/waves-may be defective.
Some sheets show ASTM-C36 label instead of ASTM C
1396 and may sag due to organic contaminants
4. May say “Made in China” or Knauf, C & K, or Taishan
Gypsum Ltd. Many other manufacturers as well but most
not identified.
5. US Drywall will have markings on the edge tape usually
saying “Made in USA”. Chinese drywall will not.
Is My Drywall Chinese?
• Chinese Takeout?
5
6

Is My Drywall Chinese?
c) Property Damage
1. Testing has found iron disulfide, hydrogen sulfide,
sulfur dioxide, strontium sulfide (trace), carbonyl
sulfide, and carbon disulfide in the drywall. Testing
has shown the latter 2 to be emitted as gases from
the drywall. Gaseous hydrogen sulfide has been
found only in a lab setting to date.
2. Moisture combining with sulfides creates an acidic
combination which results in corrosion of copper,
silver, aluminum, chrome and even stainless. Does
not appear to impact galvanized metals.
Is My Drywall Chinese?
7
8

Is My Drywall Chinese?
Is My Drywall Chinese?
d) Health Complaints
1. Alleged as a result of exposure to the emitted gases and
potential “mystery” drywall components
2. Health complaints include: respiratory issues, sinus,
headaches, sleep apnea, nose bleeds, fatigue, skin rashes,
eye irritation, dizziness, coronary heart damage, breathing
difficulty, body aches, sore throat, mental anguish and the
death of the family pet….
3. Exposure to high levels of sulfur compounds can result in a
variety of respiratory and other bodily injury issues.
4. Just because sulfur exposure is present does not mean the
sulfur caused the injury. Need to examine preexisting
conditions and balance cost to produce evidence vs.
potential recovery
5. MORE RESEARCH IS NEEDED AND IS BEING DONE BY
VARIOUS AGENCIES INCLUDING FLA DOH.
9
10

Is My Drywall Chinese?
• To Test or Not To Test?
Lessons learned from mold
Types of testing
Qualifications of tester
Understanding the ramifications
Determine when/what to test
Is My Drywall Chinese?
• To Test or Not To Test?
1. Air sampling plan for field investigations is being
developed by EPA/CPSC and will be ready in July.
2. Do you need to test? Carefully evaluate pros/cons
3. Determine what information you want to obtain when
considering type of testing to perform
4. Due to low detection limits, some types of sampling will
likely NEVER pick up any sulfur compounds
5. Factor in costs- most testing is expensive
6. Beware of lab qualifications as much of the accuracy of
this testing is dependent upon lab technician
qualifications
11
12

Is My Drywall Chinese?
• To Test or Not To Test?
1. Is there property damage only or are there bodily
injury allegations as well?
2. No air testing in a residence to date has shown
levels exceeding the MRL (minimum risk level)
as determined by the Agency for Toxic
Substances and Disease Registry (ATSDR)
3. Exposure to a level above the MRL does NOT
mean adverse health effects will occur.
Is My Drywall Chinese?
• Qualifications of Tester
1. No certification required
2. Everyone is an expert
3. Engineer, GC, Chemist, CIH
4. Look for the toxicologist, physician, if BI will be a
component
5. No lab/consultant connection
6. Lab qualifications- many do not have proper
equipment for testing or skilled analysts
13
14

Is My Drywall Chinese?
• When to Test?
1. Testing the air prior to any demolition will establish baseline
ambient conditions.
2. Testing the air during demolition will generate results
skewed due to construction disturbance.
3. Testing the air after demolition/build back completion will
establish post rehab conditions.
4. Testing materials prior to demolition will confirm presence
of Chinese drywall but may not be necessary if odors,
corrosion, and/or visual confirmation are present.
5. Testing replacement materials will confirm drywall is not
Chinese if documentation will not suffice.
Impact to Homes
• Suggested Scope of Repair-The Jury is
Still Out
1. Remove all impacted drywall (both Chinese and non Chinese) as
odors may be absorbed into porous building materials. Cement
board in baths and/or that is tile faced is generally not removed
unless it is necessary to access impacted piping.
2. Remove all impacted corroded metals- including all wiring, HVAC,
plumbing, piping, heating/cooling systems, impacted appliances,
sprinkler heads, door knobs and fixtures. Any corroded metals not
removed will continue to deteriorate even after drywall is removed.
3. Impacted metals include copper, chrome, silver, aluminum, and
possibly stainless. No impact to galvanized seen.
4. Remove all carpet
5. Cabinets/doors-temporary removal for access.
6. Furniture/Mattresses ? (use of oxidizers??)
7. PPE, containment, jobsite controls????
15
16

Costs
Risk Management 101
• Lessons from the Trenches
Share knowledge with other homebuilders
Videotape homes prior to put back
Develop post repair clearance criteria
Develop protocol/policies and be CONSISTENT
Relocate occupants during repairs
Be aware of local regulations re disposal
requirements
• Investigation/Testing
• Remediation
Depends on home size
$100,000 or 1/3 home value
17
18

Geographic Distribution
• Where it is?
Florida, Alabama, Mississippi, Virginia, New
Mexico, California, Washington, Nevada,
Arizona, Louisiana, Wyoming, Ohio,
Wisconsin, Minnesota, Tennessee, DC,
Maryland, Georgia, Colorado, New Jersey,
North Carolina, South Carolina, Texas,
Canada
Geographic Distribution
19
20

Can This Get Any Worse?
• Emerging Issues
1. Asbestos found in the drywall-20% Amosite/Consider
performing asbestos sampling prior to demolition
2. “TOXIC” Drywall
3. Scammers abound-engineering (test kits, ozone, experts,
encapsulation), legal (may be worse than the mold frenzy-
“Send us your photos and we’ll send you a lawyer”)
4. New FLA lawsuits allege Georgia Pacific and 84 Lumber
use of synthetic (recycled) US gypsum also problematic
5. “Perception is the problem”/diminution in value
6. Deep (ANY) pockets are difficult to find
7. California, Arizona, Nevada, other states- potential sleeping
giant because of low humidity
8. Commercial buildings???
21

HB Litigation Conferences
Chinese Drywall Litigation
Chinese Drywall-Insurance Coverage Nightmare
June 18, 2009
New Orleans
Lorelie S. Masters
Jenner & Block LLP
202-639-6076
Lmasters@jenner.com
Potentially Applicable Coverages
First-party First party property insurance:
– Homeowners’ Homeowners and Condominium Owners’ Owners insurance
claims.
– Property damage to drywall, HVAC coils, copper
wiring, appliances, and personal property.
Third-party Third party liability insurance:
– Claims for bodily injury and property damage by
homeowners.
– Disputes between builders and subcontractors.
– Defense against class actions and individual lawsuits.
2

The Expected Primary Defense:
“Pollution Pollution” Exclusions
Policyholder arguments:
– Traditional “pollution pollution” exclusions were designed to
preclude coverage for true industrial environmental
pollution. Insurers represented to regulators that the
exclusions were limited in scope.
Insurer arguments:
– Drywall emits noxious fumes or odors and damage or
liability that results, including defense costs, is
excluded.
Insurers likely to press for broad interpretations
of these exclusions.
Different varieties:
Overview
– “Absolute Absolute” pollution exclusion (APE)
– “Total Total” pollution exclusion (TPE)
Usually standard-form
standard form
Past is prologue
Effect of Massachusetts v. EPA, EPA,
549 U.S.
___, 127 S. Ct. 1438 (2007) (5-4; (5 4; op. by
Stevens, J.).
3
4

Absolute Pollution Exclusion
(1984 I.S.O.)
Bodily injury or property damage arising
out of the actual, alleged, or threatened
discharge, dispersal, release or escape of
pollutants.
– At premises you own, rent or occupy
– Site or location used for waste
– Transportation, handling, or storage of waste
– Sites on which you work if the pollutants are
brought on or if the operations are to test for,
contain, treat or neutralize pollutants.
Absolute Pollution Exclusion
(1984 I.S.O.)
Any loss, cost or expenses arising out of
government cleanup.
Pollutants means any solid, liquid,
gaseous or thermal irritant or
contaminant including smoke, vapor,
soot, fumes, acid, alkalis, chemicals and
waste
(Emphases added).
5
6

Revisions to the “APE APE”
Demonstrate Industry Intent
Four important revisions:
– 1988 – Coverage for damage from “hostile hostile
fire” fire confirmed.
– 1996 – Coverage for certain mobile
equipment confirmed.
– 1998 – Coverage for fumes released from a
faulty furnace confirmed.
– 2004 – Coverage for loss from utilities to cool
or dehumidify a building confirmed.
Creation of the TPE
Insurers sought a pollution exclusion with
fewer exceptions.
ISO then drafted the so-called so called Total
Pollution Exclusion.
Continues to focus on clean-up clean up and
CERCLA damages.
7
8

Total Pollution Exclusion (cont’d) (cont d)
This insurance does not apply to:
Pollution
(1) “Bodily Bodily injury” injury or “property property damage” damage which would not have
occurred in whole or part but for the actual, alleged or threatened threatened
discharge, dispersal, seepage, migration, release or escape of
“pollutants pollutants” at any time.
(2) Any loss, cost or expense arising out of any:
(a) Request, demand, order or statutory or regulatory
requirement that any insured or others test for, monitor, clean
up, remove, contain, treat, detoxify or neutralize, or in any
way respond to, or assess the effects of “pollutants pollutants” or
(b) Claim or suit by or on behalf of a governmental authority for for
damages because of testing for, monitoring, cleaning up,
removing, containing, treating, detoxifying or neutralizing, or
in any way responding to, or assessing the effects of,
“pollutants. pollutants.”
Cases Interpreting the Pollution
Exclusions
Pipefitters Welfare Educ. Fund v. Westchester
Fire Ins. Co., Co. , 976 F.2d 1037, 1043 (7th Cir.
1992):
“The The terms ‘irritant irritant’ and ‘contaminant,
contaminant,’ when
viewed in isolation are virtually boundless, for
there is virtually no substance or chemical in
existence that would not irritate or damage some
person or property. . . . Without some limiting
principle, the pollution exclusion clause would
extend far beyond its intended scope, and lead
to some absurd results.”
results.
9
10

Cases Interpreting the Pollution
Exclusions (cont’d) (cont d)
Sullins v. Allstate Ins. Co., Co. , 667 A.2d 617, 624
(Md. 1995) – pollution exclusion did not limit
coverage for exposure to lead paint, exclusion
intended to apply to environmental pollution.
Donaldson v. Urban Land Interests, Inc., Inc. , 564
N.W. 2d 728, 732 (Wis. 1997) – pollution
exclusion did not bar coverage when applied to
the buildup of carbon dioxide.
See The Risk Report, Report,
Vol. XXXI, No. 7 (March
2009) Richard J. Scislowski, “A A New Method for
Interpreting Post-1986 Post 1986 Pollution Exclusions.”
Exclusions.
Recent Texas Pollution Exclusion
Decision
Nautilus Ins. Co. v. Country Oaks Apartments
Ltd., Ltd.,
2009 WL 1067587 (5th Cir. Apr. 22, 2009)
held that the total pollution exclusion applied to
buildup of carbon monoxide in apartment.
– The court held that carbon monoxide monoxide was was a pollutant pollutant
as defined by the policy which did not contain an
exception to the exclusion for bodily injury resulting
from fumes or vapor from equipment used to heat or
cool the building.
– The court also held that the carbon monoxide also
was discharged, dispersed, or released into the
apartment.
– Release into the environment was not required.
11
12

Other Exclusions
“Business Business risk” risk exclusions:
– General rule
– Own Product/Own Work Exclusion – Subcontractor
exception
Exception: Does not apply if the damaged work or the work
out of which the damage arises was performed on your
behalf by a subcontractor.
Stonewall v. Asbestos Claims Mgmt. Corp., Corp. , 73 F.3d 178 (2d
Cir. 1995) (own product exclusion rejected because of
damage to other property).
– “Impaired Impaired property” property exclusion:
Not applicable if property is not injured, restored to use.
Hopelessly ambiguous.
Occurrence
Other Issues
– “An An accident, including continuous or repeated exposure to
substantially the same general harmful conditions.”
conditions.
Number of occurrences
– Cause test: E.g., E.g. , Owens-Illinois Owens Illinois v. Aetna Cas. & Sur. Co., Co. , 597 F. Supp.
1515 (D.D.C. 1984).
– Unfortunate events test
– Recent case of Stanley Martin Cos. v. Ohio Cas. Group, Group,
2009
WL 367589 (4 th Cir. Feb. 12, 2009): The Court reaffirmed that an
insured general contractor cannot seek recovery for damage
caused by its own faulty workmanship; however, court also said
that, that,
where a subcontractor also causes damage to other non- non
defective components of a project, the resulting losses may be
covered.
13
14

Other Issues
Additional coverage part:
– Personal injury coverage:
To the extent a claim is based on “wrongful wrongful
entry,” entry, “invasion invasion of private occupancy” occupancy or
other “personal personal injury,” injury, the exclusion may
have no application; the exclusion may be
strictly limited to “bodily bodily injury” injury and
“personal personal injury” injury claims.
Different exclusions.
HB Litigation Conferences
Chinese Drywall Litigation
Chinese Drywall-Insurance Coverage Nightmare
June 18, 2009
New Orleans
Lorelie S. Masters
Jenner & Block LLP
202-639-6076
Lmasters@jenner.com
15

Absolutely Not Total:
Rejecting Insurance Company Arguments to Disclaim Coverage for
Chinese Drywall Claims Based on Absolute” and “Total” Pollution Exclusions
by Lorelie S. Masters 1
INTRODUCTION
As shown by decisions by the high courts in California, New York and the District of
Columbia, state appellate courts – the arbiters of state law – often limit “absolute” and “total”
pollution exclusions to true “environmental pollution.” This trend accords with the historical
representations that the insurance industry made in seeking the required regulatory approval of
the exclusions from the state insurance commissions in the 50 states.
At the time of first approval in the 1980s, the insurance industry represented that the
“absolute pollution exclusion” (“APE”), though “overdrafted,” precluded coverage only for
industrial or environmental pollution. Notwithstanding these representations to insurance
regulators in the 1980s, insurance companies have used APEs and “total pollution exclusions”
(“TPEs”) to reject coverage for products liability and other claims unrelated to environmental
pollution. Although courts in the late 1980s and early 1990s often accepted the insurance
industry’s rhetorical excess in naming these exclusions (“absolute” must mean “absolute”!), the
insurance industry’s chronic abuse of these exclusions has increasingly led courts, particularly
state courts which determine the law applicable to this issue, to limit the scope of these
exclusions to true “environmental pollution.”
As shown below, use of the APE, first promulgated in 1986 (the “1986 exclusion”), to
preclude coverage for ordinary claims like products liability and premises-operations claims,
1 Ms. Masters is a partner at Jenner & Block LLP, in Washington, D.C., where she advises and
represents policyholders in insurance coverage matters. She is co-author of a treatise entitled
Insurance Coverage Litigation and served for three years, from 2000-2003, as the Policyholder
Chair of the Insurance Coverage Litigation Committee of the ABA’s Section of Litigation.

contradicts the plain language and purpose of the exclusion. Many courts and at least one state
insurance department have rejected the insurance industry’s overly broad use of these exclusions
to swallow up intended coverage.
INSURANCE INDUSTRY ANALYSIS
AND REPRESENTATIONS REGARDING THE 1986 EXCLUSION
As shown by the history of the pollution exclusion since its first incarnation in 1970, the
testimony of insurance industry representatives, and publicly available documents created by the
insurance industry at the time of approval of the APE in the mid-1980s, neither the “absolute”
nor the “total” exclusion is either “total” or “absolute.” Rather, each exclusion contains
exceptions. For example, the APE preserves coverage for liability arising out of “products,”
“completed operations,” and “certain off-premises discharges of pollutants.” An understanding
of the history of pollution exclusions, since their advent in the early 1970s, is important to an
understanding of this issue.
The “Sudden and Accidental” Exclusion
The insurance industry first began using the “sudden and accidental” pollution exclusion
in 1973. Since that time, some courts have found that insurance companies misrepresented the
scope of the exclusion at the time they sought approval of the “qualified” exclusion from state
insurance regulators. 2 Relying upon the “studied” representations by representatives of the
insurance industry, those courts estopped the defendant insurance companies from taking a
position in litigation that contradicted earlier representations to state insurance regulators. 3
2
E.g., Morton Int’l, Inc. v. General Accident Ins. Co. of Am., 629 A.2d 831 (N.J. 1993); Joy
Techs., Inc. v. Liberty Mut. Ins. Co., 421 S.E.2d 493 (W. Va. 1992).
3
Textron v. Aetna Cas. & Sur. Co., 754 A.2d 742 (R.I. 2000); Morton, 629 A.2d at 873; Joy,
421 S.E.2d at 499.
- 2 -

Other courts have found that policyholders need not rely on estoppel principles to secure
coverage for environmental liability, finding that the regulatory history of the pollution
ents for coverage. 4
exclusions supports the policyholders’ reasonable argum
The “Absolute” Exclusion in the 1980s
As with the “sudden and accidental” pollution exclusion, the insurance industry made
representations to state insurance regulators in seeking to secure regulatory approval of the APE.
In seeking approval for the APE, insurance companies promised regulators that ordinary
products and premises claims would remain covered notwithstanding addition of the proposed
“absolute” exclusion. In 1985 hearings, the New Jersey State Insurance Department heard
testimony from various members of the insurance industry confirming that the insurance industry
would not use the then-proposed exclusion to sweep too many potential non-environmental
liabilities within its reach. The insurance industry sought to allay regulators’ fears about
overbreadth and, thus, secure the needed approval of this exclusion. Michael A. Averill, a
manager of the Insurance Service Office’s (“ISO”) 5 Commercial Casualty Division, testified that
the insurance industry did not intend to use the revised pollution exclusion as a bar to coverage:
“[The purpose of the change in policy language] is to introduce a complete on-site emission and
4 E.g., American States Ins. Co. v. Kiger, 662 N.E.2d 945 (Ind. 1996); Alabama Plating Co. v.
United States Fire & Guar. Co., 690 So. 2d 331 (Ala. 1996). Other courts have found the
“sudden and accidental” pollution exclusion is ambiguous and thus have rejected insurance
company arguments against coverage for gradual pollution. See, e.g., Eugene R. Anderson,
Jordan S. Stanzler, & Lorelie S. Masters, Insurance Coverage Litigation ch. 15 (2d ed. 2000).
5 ISO is an insurance industry organization that, among other things, creates standard insurance
policy forms for the insurance industry. E.g., In re Ins. Antitrust Litig., 723 F. Supp. 464 (N.D.
Cal. 1989), rev’d, 938 F.2d 919 (9th Cir. 1991), aff’d in part, rev=d in part, & modified sub
nom., Hartford Fire Ins. Co. v. Cal., 509 U.S. 764 (1993).
- 3 -

partial off-site exclusion for some operations. For some operations. It is not an absolute
exclusion.” 6
Robert J. Sullivan, Vice President of Government Affairs for Crum & Forster in
Morristown, New Jersey, confirmed that the exclusion was not intended to preclude coverage for
liability for a policyholder’s products and completed operations. Thus, the exclusion would not
preclude coverage even for some kinds of environmental claims:
[T]hese are not total, absolute pollution exclusions. It does have
significant coverage for completed operations and product liability
in certain off-site discharges.
While that may seem narrow, when you talk to a manufacturer of
an underground storage tank, it provides, even with the exclusion,
significant pollution coverages provided to that manufacturer for
pollution liability coverages arising out of product liability claim
for his underground storage tank. So, there is still a considerable
amount, admittedly for certain classes of risk, of pollution liability
coverage, even under the almost total pollution exclusion that the
current forms provide. 7
Mr. Sullivan also acknowledged that an insurance company bears the burden to prove that it had
explicitly disclosed to its policyholder that a new exclusion had eliminated coverage:
[T]o the extent the insured expected coverage and had every right
to expect the coverage, [ ] when the coverage issue is litigated, the
insurer is going to have the burden of showing that there was some
explanation to the insured that the coverage simply did not exist. 8
Insurance industry representatives affirmed these points to regulators at a 1985 hearing of
the Texas State Board of Insurance. When a Texas regulator David Thornberry termed the 1986
6
Transcript of Proceedings, Hearing on the Proposed Exclusion of Sudden and Accidental
Pollution Coverage from General Liability Policies, New Jersey Dep’t of Ins., at 15 (Dec. 18,
1995) (emphasis added).
7
Id. at 31 (emphasis added).
8 Id. at 74 (emphasis added).
- 4 -

exclusion ambiguous, no industry representative present at the hearing denied it. Indeed, Liberty
Mutual=s representative, Wade Harrel, testified that the exclusion was ambiguous: “We have
overdrafted the exclusion. We’ll tell you, we’ll tell anybody else, we overdrafted it.” 9
Regulator Thornberry was also concerned about the definition of “pollutants” in the
proposed exclusion. He used a hypothetical of a bottle of Clorox chlorine bleach, a household
cleaning product, falling off a shelf in a grocery store. In the hypothetical, a child slipped and
fell, through negligent failure to clean up the spill of bleach, and was disfigured. The Texas
regulator commented: “My reading of that exclusion is that’s pollution excluded from the policy
and there is no coverage. And that I guess is the correct reading.” 10 Mr. Harrel disagreed,
assuring the Texas regulators that no one would “read it that way”:
Mr. Harrel: That is a reading, yeah. It can be read that way, . . . I
don’t know anybody that’s reading the policy that way, and I think
you can read the new policy just the way you read it. But our
insured would be at the state board – someone said yesterday –
quicker than a New York minute if, in fact, every time a bottle of
Clorox fell off a shelf at a grocery store and we denied the claim
because it’s a pollution loss.
Mr. Thornberry: I have also heard the justification that if an
insurance company denied the claim and you went to the
courthouse, the courts wouldn’t read the policy that way.
Mr. Harrel: Nobody would read it that way. 11
When the absolute pollution exclusion was first approved, some states required that an
explanatory notice be provided to policyholders. 12 ISO drafted such a standard-form notice.
9
Transcript of Proceedings, Hearing to Consider, Discuss, and Act on Commercial General
Liability Forms Filed by the Insurance Services Office, Inc., Texas State Board of Insurance, No.
1472, Vol. III, at 8 (Oct. 31, 1985).
10
Id. at 7.
11 Id. at 7-8 (emphasis added).
- 5 -

With respect to the new, absolute pollution exclusion, the ISO notice informed policyholders
that:
Pollution Liability – The new policies do not cover this liability if
the pollutants escape from your premises or a waste disposal or
treatment facility . . . . Certain pollution exposures away from
your premises – including many that arise out of your products or
work – are covered regardless of whether the emission was
“sudden” or not. See exclusion f. under Coverage A for details. 13
ISO included a table explaining the “Highlights of Current and Revised Contracts.” 14 ISO noted
that under the absolute pollution exclusion, “pollution liability” was “excluded if emission
originates on named insured’s premises or a waste disposal or treatment facility. Off-site
emissions covered unless pollutants are waste or unless the pollutants are brought to jobsite in
connection with insured’s or subcontractor’s operations.” 15 Reiterating what was promised in its
regulatory representations, ISO noted that “[r]esulting coverage embraces products-completed
operations exposure for both sudden and gradual emissions.” 16
Notably, in 1985, prior to the 1986 exclusion’s ultimate approval, the New Jersey Deputy
Commissioner of Insurance, Jasper J. Jackson, summarily rejected an “absolute” pollution
exclusion submitted to the Department of Insurance by Aetna. In doing so, New Jersey’s Deputy
Commissioner noted, “Your submission indicates no reduction of rates to reflect the proposed
(. . . cont’d)
12
See, e.g., ISO, Commercial General Liability Program Instructions at 1 (1986) (“the use of
policyholder notices . . . has been suggested, and in fact required in some states”).
13
Id. at 3 (emphasis added).
14 Id. at 7.
15
Id.
16
Id.
- 6 -

decrease in coverage.” 17 When New Jersey finally approved the 1986 exclusion for use in the
state, it was approved without any reduction of rates, based on insurance industry representations
that the exclusion would not be applied as “overdrafted.”
Insurance Industry Custom and Practice
Both insurance industry documents and later regulatory analysis of the exclusion confirm
the limitations of these exclusions. For example, a 1985 workbook written by ISO confirms that
the APE does not apply to preclude coverage for alleged pollution arising from use of the
policyholder’s products and from completed operations:
There is some coverage for off-site emissions, including the
product/completed operations exposure.
Illustrations
The insured would be covered for bodily injury and property
damage liability arising out of the following situations, whether the
emission of a pollutant is sudden or gradual:
$ The insured’s chemical products are sold to a manufacturer
and escaped while being used in the manufacturer’s
operations.
$ The insured installs a tank on some else’s premises (other
than a waste disposal or treatment site) and the tank leaks,
resulting in the release of pollutants. 18
ISO created this workbook as a manual for training insurance company claims handlers and other
personnel in the correct application of the 1986 ISO CGL policy form, including the 1986
exclusion.
17 Letter from Deputy Commissioner Jasper Jackson to Robert C. Chilone, Superintendent of
Insurance Department Affairs – Aetna Commercial Insurance Division, dated Nov. 20, 1985, at
2.
18 ISO Workbook: Policy Forms and Endorsements (1985).
- 7 -

Even when courts find that an APE should be interpreted to preclude coverage, they
may – as courts did with the “sudden and accidental” pollution exclusions 19 – order discovery of
the regulatory history of the exclusion. Thus, a federal court in Pennsylvania held that, without
more, the text of an APE would preclude coverage for contamination from deterioration of
copper roofing materials which discharged lead and copper into the environment. 20 However,
the court allowed the policyholder to pursue discovery about representations made to
Pennsylvania insurance regulators with regard to whether an APE was intended, as a matter of
insurance industry custom and practice, to preclude coverage for products and completed
operations claims. 21
Environmental Terms of Art
Insurance companies also resist the argument that the APE and TPE should be limited to
environmental pollution because they use environmental terms of art. However, proceedings of
the National Association of Insurance Commissioners (“NAIC”) in 1986 demonstrate that the
insurance industry developed the exclusion specifically to address the retroactive, joint-and-
several, and strict liability imposed for the first time in the Comprehensive Environmental
Response, Compensation & Liability Act (“CERCLA” or “Superfund”) in 1980. 22 It is telling
that, when the insurance industry chose its limiting language for use in its insurance policies, it
19
See supra footnote 2 and accompanying text.
20
Hussey Copper Ltd. v. Royal Ins. Co., No. 07-758, 2008 WL 2906899 (W.D. Pa. July 28,
2008).
21 Id.
22 Such terms did, as insurance companies sometimes point out, predate CERCLA and, in fact,
appear in the “sudden & accidental” pollution exclusion in 1970. However, it was the spectre of
CERCLA’s vast expansion of liability that the insurance industry most feared and spurred the
industry to promulgate the APE.
- 8 -

sought to ensure that its chosen language was consistent with references to “hazardous
substances” 23 and federal environmental statutes. Furthermore, the language of the APE focuses
on the “actual . . . or threatened discharge, dispersal, release, or escape of pollutants . . .,” both of
which echo themes from the Superfund statute. 24
Consideration of this evidence shows that the interpretation of the APE put forth by
insurance companies is not – as it must be for an insurer to meet its burden of proof 25 – the only
reasonable one. Policy language is considered ambiguous if “it is susceptible of more than one
reasonable interpretation.” 26 Policyholders reasonably have expected that coverage for ordinary
liabilities like products liability and premises risks would not be precluded by a “pollution
exclusion.” Accordingly, because the insurance contract was drafted exclusively by the insurers,
the ambiguous provisions should be construed to accord with the objectively reasonable
expectations of the policyholder. 27
23 1982 NAIC Proc. 596, at *685.
24 See, e.g., 42 U.S.C. § 9607(a)(4)(A) (emphasis added); see also Porterfield v. Audubon
Indem. Co., 856 So. 2d 789 (Ala. 2002).
25 E.g., State Farm Lloyd’s v. Goss, 109 F. Supp. 2d 574 (E.D. Tex. 2000); York Ins. Co. v.
Williams Seafood of Albany, Inc., 544 S.E.2d 156 (Ga. 2001). See also 19 Couch on Insurance
2d §§ 79.417, 79.484 (rev. ed. 1983 & Supp. 2009).
26 Chase v. State Farm Fire & Cas. Co., 780 A.2d 1123, 1127-28 (D.C. 2001) (internal
quotation marks and citation omitted). An ambiguity in an insurance contract can be either
patent – one apparent from the face of the provision – or latent –where, although the contract
may be clear on its face, “anyone knowing the background would know that it didn’t mean what
it seems to mean.” Stone Container Corp. v. Hartford Steam Boiler Inspection & Ins. Co., 165
F.3d 1157, 1162 (7th Cir. 1999). The APE and TPE arguably contain both patent and latent
ambiguities.
27
Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034, 1041-42 (D.C. Cir. 1981); Travelers
Indem. Co. of Ill. v. United Food & Commercial Workers Int’l Union, 770 A.2d 978, 986 (D.C.
2001). Insurance companies typically attempt to reverse the burden of proof by suggesting that
the policyholder must prove the provision ambiguous. To the contrary, it is the insurance
(Cont’d . . .)
- 9 -

Setting aside expectations of coverage, policyholders, the public, and the courts have the
right to rely upon the representations made by insurers (and others) during the state regulatory
process. ISO never even hinted that its “pollution exclusion” would be interpreted to exclude
coverage for ordinary premises risks or liability for products or completed operations.
Moreover, there is no danger of a “significant destabilizing effect” as policyholders typically
advocate a method of insurance policy interpretation that will lead to results that are consistent
with insurance industry representations.
THE APE IN THE 1990s
Louisiana Department of Insurance Advisory Letter
Despite these representations to state insurance departments in the 1980s, insurance
companies have used the exclusion to disclaim coverage for policyholder liability for products,
completed operations, and off-premises discharges of pollutants. Such disclaimers led the
Louisiana Supreme Court to conclude in South Central Bell Telephone Co. v. Ka-Jon Food
Stores, 28 that the exclusion was ambiguous as a matter of law and so broad as to “eviscerate” the
coverage promised under the commercial general liability insurance policy as a whole:
The all inclusiveness of the words used in the exclusion are
adverse to both the policy’s nature and its primary purpose which
is to insure [the policyholder] against fortuitous accidents and
incidental business risks of running its [business]. The literal
application of the exclusion’s words leads to absurd consequences
and is at odds with the policy’s nature. CGL policies protect
against the premises, operations, products, completed operations
and independent contractor hazards of the insured. No reasonable
(. . . cont’d)
company’s burden to prove that an exception to coverage applies and that its interpretation is the
only reasonable one.
28
644 So. 2d 357, vacated on reh’g, remanded, 644 So. 2d 368 (La. 1994).
- 10 -

insured would intend for a pollution exclusion to basically
eviscerate this coverage. Since the language of the exclusion fails
to clearly express the common intent of the parties, it is ambiguous
as a matter of law. 29
As the Illinois Supreme Court observed in another case, the events leading up to the insurance
industry’s adoption of the pollution exclusion are “‘well documented and relatively
uncontroverted.’” 30
In part in reaction to Ka-Jon, the Louisiana Department of Insurance (“LDI”) studied the
exclusion and its application by insurance companies for three years. At its hearings on the
proper scope of the exclusion, an ISO representative reiterated the insurance industry’s
regulatory position that the 1986 pollution exclusion does not apply to certain categories of
liability:
Some courts interpreted the sudden and accidental exception to the
1973 exclusion as ambiguous, and this caused some insurers to pay
for gradual pollution losses. In order to create a more insurable
coverage grant, ISO developed a completely new pollution
exclusion which applied to all pollution claims other than products
and completed operations and certain incidents under contract at
the job site.
In the new exclusion, the issue of “sudden and accidental” is
removed. Later, the exclusion was revised to add an exception for
heat smoke or fumes from a hostile fire. In the aftermath of the
elimination of the sudden and accidental qualification, the new
exclusion has been at times mislabeled as absolute. This is an
unfortunate misnomer. Given the coverage exceptions I mentioned
earlier, this is not an absolute pollution exclusion. 31
29
Id. at 364 (emphasis added).
30
American States Ins. Co. v. Koloms, 687 N.E.2d 72 (Ill. 1997) (citation omitted).
31 Transcript of Proceedings, In the Matter of: The Revision of the Absolute Pollution Exclusion,
La. Dep’t of Ins., Testimony of Robert Miller, ISO Regional Vice President for the Southern
Region, at 57 (Sept. 6, 1995).
- 11 -

The LDI’s Advisory Letter warned that insurance companies should rely on exclusions to
disclaim coverage only for claims made by “intentional active industrial polluters.” 32 The
Louisiana Commissioner found that the insurance industry had been ignoring its regulatory
promises to apply the exclusion in a principled manner, in cases involving industrial pollution.
The Advisory Letter stressed that the Department would take future action if it was needed to
protect “the integrity of the regulatory process”:
The appropriate use of standard pollution exclusions in claims
handling is an issue of grave concern. The [Louisiana Department
of Insurance] will take such action as is necessary to assure that the
integrity of the regulatory process is not undermined. 33
Clarifications (but not Reductions) of Coverage
Contrary to arguments sometimes advanced by insurers, insurance companies do not
charge premiums for an endorsement called the “Amendment of Pollution Exclusion – Exception
for Building Heating Equipment.” This mandatory endorsement makes clear that liability for so-
called “puff-backs” from heating equipment remained covered by CGL policies notwithstanding
the APE. For example, the LDI complained to ISO when it learned that insurance companies
were using the APE to deny coverage for such incidents. Because the LDI had based its
32
State of Louisiana Advisory Letter No. 97-91 at 3-4 (June 4, 1997) (posted at
. See also
Advisory Letter No. 01-01 (warning about “excessive use” of total pollution exclusion).
33
Id. at 2 (emphasis added). See also C. Noel Wertz, The Role of Regulators in Environmental
Claims, 7 Coverage, No. 3, at 27 (Nov./Dec. 1997) (available on Lexis/Nexis) (explaining LDI=s
position regarding the polluter’s exclusions); John A. MacDonald, The Assault on the Insurance
Regulatory and Judicial Systems: Three Decades of Broken Insurance Industry Promises and
Regulatory and Litigation Deceit in Pollution Cases, 7 Coverage, No. 6, at 3 (Nov./Dec. 1997)
(available on Lexis/Nexis).
- 12 -

approval of the APE on assurances that the APE did not preclude coverage for such events, 34 it
and other state insurance departments required this endorsement to prevent use of the APE to
deny coverage for such events. As a result, insurance companies were not allowed to charge for
this endorsement. This endorsement, then, is not an expansion of coverage, but merely a
confirmation of coverage that remained in the standard CGL after the APE was added. 35 The
same is true for the hostile fire endorsement. 36
THE TREND IN STATE COURT DECISIONS LIMITING
THE “ABSOLUTE POLLUTION EXCLUSION” TO ITS INTENDED PURPOSE
A survey of state appellate and supreme court decisions confirms the trend of state courts
to limit the applicability of the APE to traditional environmental pollution. Today, in part
because of the insurance industry’s over-reaching and its representations to regulators in the
1980s, two-thirds of the state appellate and supreme courts that have addressed the issue have
limited the exclusion to true environmental pollution. This trend is demonstrated by the attached
survey of appellate decisions in the 50 states and the District of Columbia. Those courts agree
that the APE should not apply to preclude the CGL policy’s traditional coverage for tort liability.
Some cases have rejected use of both the “sudden and accidental” and “absolute” exclusions in
the same products-liability coverage case. 37
34 Letter of Sept. 21, 2000, from C. Noel Wertz, Senior Attorney, LDI, to Michael L. Vetter,
ISO, regarding ISO Filing No. GL 99-099FO Louisiana.
35 Thus, the LDI stated that, “notwithstanding erroneous court decisions, ISO is well aware that
such occurrences are not pollution incidences as originally contemplated” in the mid-1980s. Id.
36 ISO confirmed in a seminar in 1985 that these premises and other ordinary risks remained
covered notwithstanding addition of the APE. Insurance Coverage Litigation § 15.07[C], at 15-
101.
37
See, e.g., Bituminous Cas. Corp. v. Advance Adhesive Tech., Inc., 73 F.3d 335, 338, reh=g
denied, 85 F.3d 645 (11th Cir. 1996) (applying Georgia law); Stoney Run Co. v. Prudential-LMI
(Cont’d . . .)
- 13 -

Decisions by the High Courts in California, New York, and D.C.
In June, July, and August 2003, the highest courts of California, New York, and the
District of Columbia confirmed that the exclusion should be limited to its intended reach –
precluding coverage only in those cases involving true environmental pollution. Other appellate
courts have concurred. 38
In MacKinnon v. Truck Insurance Exchange, 39 the California Supreme Court considered
whether the APE applied to exclude injury to a tenant resulting from a landlord’s negligent use
of pesticides in an apartment building. The court reversed the lower court’s award of summary
judgment in favor of the insurer, Truck Insurance Exchange, and held that the APE did not
clearly exclude ordinary acts of negligence involving toxic chemicals such as pesticides.
(. . . cont’d)
Commercial Ins. Co., 47 F.3d 34, 37 (2d Cir. 1995) (applying New York law); Red Panther
Chem. Co. v. Insurance Co. of State of Pa., 43 F.3d 514 (10th Cir. 1994) (applying Mississippi
law); Regent Ins. Co. v. Holmes, 835 F. Supp. 579, 582 (D. Kan. 1993); Minerva Enters., Inc. v.
Bituminous Cas. Corp., 851 S.W.2d 403, 405 (Ark. 1993); American States Ins. Co. v. Koloms,
687 N.E.2d 72 (Ill. 1997); Sullins v. Allstate Ins. Co., 667 A.2d 617 (Md. 1995); Western
Alliance Ins. Co. v. Gill, 686 N.E.2d 997 (Mass. 1997); West Am. Ins. Co. v. Tufco Flooring,
Inc., 409 S.E.2d 692 (N.C. App. 1991). Contra National Elec. Mfrs. Ass’n v. Gulf Underwriters
Ins. Co., 162 F.3d 821 (4th Cir. 1998) (applying D.C. law; called into question by Richardson v.
Nationwide Mut. Ins. Co., 826 A.2d 310 (D.C. 2003), vacated on reh’g, 832 A.2d 752 (D.C.
2003)); American States Ins. Ins. Co. v. Nethery, 79 F.3d 473 (5th Cir. 1996) (applying
Mississippi law); Brown v. American Motorists Ins. Co., 930 F. Supp. 207 (E.D. Pa. 1996), aff’d,
111 F.3d 125 (3d Cir. 1997).
38
E.g., Doerr v. Mobil Oil Corp., 774 So. 2d 119 (La. 2000), on reh’g, 782 So. 2d 573 (La.
2001), subsequent appeal, 811 So. 2d 1135 (La. App. Ct. 2002), writ denied, 817 So. 2d 105 (La.
2002); Anderson v. Highland House Co., 757 N.E.2d 329 (Ohio 2001); Keggi v. Northbrook
Prop. & Cas. Co., 13 P.3d 785 (Ariz. Ct. App. 2000). Compare Amarada Hess Corp. v. Zurich
Ins. Co., 29 Fed. Appx. 800, 806 (3d Cir. 2002) (noting that insurer’s position rejecting coverage
for policyholder’s handling of toxic chemicals “would have the practical effect of excluding
coverage for all of the [policyholder’s] business activities”).
39
73 P.3d 1205 (Cal. 2003).
- 14 -

In reaching its decision, the California court first discussed the various reasons courts
narrowly have construed the APE. Some courts have relied on the history of the pollution
exclusion, which was intended to cover only “traditional environmental contamination.” Some
courts have also recognized that a broad reading of the APE to cover any contaminant or irritant
“would have absurd or otherwise unacceptable results.” Other courts have also recognized that
the phrase “discharge, dispersal, release or escape” contains terms of art describing
environmental pollution and implies expulsion of a pollutant over an extended area, and not a
localized toxic accident.
In analyzing the case before it, the California Supreme Court first stated that, under a
CGL policy, a policyholder has a reasonable expectation that it will have coverage for ordinary
acts of negligence resulting in bodily injury and that coverage should therefore be found unless
the APE “conspicuously, plainly and clearly” apprises the insured that ordinary acts of
negligence will not be covered. The court then found that the insurer’s broad construction of the
APE would yield results that no one would consider reasonable, such as excluding a hypothetical
allergic reaction to swimming pool chlorine. 40 The court also reviewed the definitions and uses
of the terms “discharge, dispersal, release or escape” and found that the application of pesticides
around an apartment does not plainly signify the common understanding of the “dispersal” of a
“pollutant.” 41
Finally, the court held that the plain meaning of the APE turns on the meaning of the term
“pollutant.” The court stated that the scope of the APE should be limited to injuries arising from
events commonly thought of as pollution, i.e., environmental pollution, and that this
40
Id. at 239-40.
41
Id. at 241.
- 15 -

interpretation comports with the APE’s history as well as the purpose of CGL policies. The
court stipulated that, although “environmental pollution” may need further clarification and was
not a “paragon of precision,” the common understanding of the term was sufficient to decide the
case before it. 42
In Belt Painting Corp. v. TIG Insurance Co., 43 the New York Court of Appeals found
that the APE in a TIG insurance company policy was ambiguous when applied to a claim for
bodily injury arising from inhalation of paint or solvent fumes. Relying on two earlier decisions
rejecting pollution exclusions in the context of asbestos bodily injury and lead-paint poisoning,
the New York court reaffirmed that “the purpose of the exclusion was to deal with broadly
dispersed environmental pollution.” 44
In analysis potentially relevant to potential liability for Chinese drywall claims, the court
then found that the exclusion to be ambiguous since it “does not clearly and unambiguously
exclude a personal injury claim from indoor exposure to a plaintiff-insured’s tools of its trade.” 45
The court found that the “drifting” of paint fumes did not meet the “environmental implications”
of the terms, “discharge, dispersal, seepage, migration, release or escape” of “pollutants”
required by the clause. The court was “reluctant to adopt an interpretation that would infinitely
enlarge the scope of the term ‘pollutants,’ and seemingly contradict both a ‘common speech’
understanding of the relevant terms and the reasonable expectations of a business person.” 46 In
42
Id. at 243-44.
43
795 N.E.2d 15 (N.Y. 2003).
44
Id. at 18 (citing Continental Cas. Co. v. Rapid-American Corp., 609 N.E.2d 640 (N.Y. 1993)
and Westview Assocs. v. Guaranty Nat’l Ins. Co., 740 N.E.2d 220 (N.Y. 2000)).
45
Id. at 20.
46 Id. at 20-21
- 16 -

eaching this decision, the New York court also reviewed the genesis of the APE, stating that it
originated with insurers’ efforts to avoid potentially open-ended liability for long-term, gradual
discharge of hazardous waste and byproducts. Finally, the court rejected the insurer’s contention
that the removal of the language “into or upon land, the atmosphere or any water course or below
of water” in the APE was a material difference that indicated an intent to extend the exclusion to
indoor as well as outdoor pollution.
In Richardson v. Nationwide Mutual Insurance Co., 47 the D.C. Court of Appeals reversed
a lower court’s decision which had relieved Nationwide of its duty to defend and indemnify a
policyholder for serious personal injuries, including brain damage, suffered as a result of a faulty
gas furnace that leaked carbon monoxide inside a structure. The district court relied on the
pollution exclusion in barring coverage as a matter of law. On appeal, a majority of the three-
member panel disagreed, holding that the clause did not apply because its intended purpose was
to preclude coverage for traditional environmental pollution that was the subject of federal and
state environmental laws.
In reaching its decision, the majority recognized that the courts are sharply divided
regarding the meaning of the exclusion. However, the majority “rejected the purportedly literal
approach” of some courts and aligned itself with the trend holding that the clause should apply
only to traditional “environmental” pollution. 48 The court found that the clause was drafted in
response to and used the same terminology as CERCLA (or “Superfund”), 42 U.S.C. § 9601, and
other federal and state environmental statutes and regulations. The panel concluded: “The
47
826 A.2d 310 (D.C. June 12, 2003), vacated & reh’g en banc granted, 832 A.2d 752 (D.C.
Sept. 29, 2003). On September 29, 2003, the court granted Nationwide’s petition for rehearing
en banc and vacated its Answer to the Certified Question of Law.
48
Id. at 320.
- 17 -

exclusion should not reflexively be applied to accidents arising during the course of normal
business activities” simply because they involved a “discharge, dispersal, release or escape” of
an “irritant or contaminant.” 49 The court therefore held that the case before it fell outside the
exclusion because it did not involve the kind of situation for which the exclusion was designed.
In a lengthy, impassioned dissent, one panel judge found that carbon monoxide fumes
constitute “pollutants” because they are “gaseous” “contaminants” which includes “fumes.” The
dissent criticized the majority for looking to the history of the exclusion when, in the dissenting
judge’s view, the language of clause was “plain and unambiguous.” 50
Other Cases Limiting the Reach of “Absolute” or “Total” Exclusions
Other state appellate courts also have concluded that the APE does not apply to injuries
caused by gases (carbon monoxide) originating from defective heaters or ovens. 51 For example,
the Supreme Court of Ohio refused to apply an APE to the release of carbon monoxide from a
faulty apartment heater. 52 The court refused to apply the exclusion to preclude coverage because
the exclusion does not “clearly, specifically, and unambiguously state that coverage for carbon
monoxide poisoning is excluded.” 53
49 Id. at 328-29.
50 Id. at 354.
51 Andersen v. Highland House Co., 757 N.E.2d 329, 331 (Ohio 2001); American States Ins. Co.
v. Koloms, 687 N.E.2d 72 (Ill. 1997); Western Alliance Ins. Co. v. Gill, 686 N.E.2d 997 (Mass.
1997); see also Motorists Mut. Ins. Co. v. RSJ, Inc., 926 S.W.2d 679, 682 (Ky. Ct. App. 1996).
52 Andersen, 757 N.E.2d at 331.
53 Id. at 331. See also Koloms, 687 N.E.2d at 81 (insurance industry sought to avoid “the
enormous expense and exposure resulting from the explosion of environmental litigation”)
(internal quotation marks and citation omitted); Gill, 686 N.E.2d at 998-99 (the exclusion’s
language “brings to mind products or byproducts of industrial production that may cause
environmental pollution or contamination.”).
- 18 -

Similarly, the court in Koloms 54 held that the 1986 APE did not preclude coverage for the
policyholder’s potential liability for carbon-monoxide poisoning from a furnace, based in part on
the history of the exclusion:
Our review of the history of the pollution exclusion amply
demonstrates that the predominant motivation in drafting an
exclusion for pollution-related injuries was the avoidance of the
“enormous expense and exposure resulting from the ‘explosion’ of
environmental litigation.” . . . Similarly, the 1986 amendment to
the exclusion was wrought, not to broaden the provision’s scope
beyond its original purpose of excluding coverage for
environmental pollution, but rather to remove the “sudden and
accidental” exception to coverage which, as noted above, resulted
in a costly onslaught of litigation. 55
The court refused to expand the exclusion’s reach to situations outside the area of environmental
pollution:
We would be remiss, therefore, if we were to simply look to the
bare words of the exclusion, ignore its raison d’être, and apply it to
situations which do not remotely resemble traditional
environmental contamination. The pollution exclusion has been,
and should continue to be, the appropriate means of avoiding “the
yawning extent of potential liability arising from the gradual or
repeated discharge of hazardous substances into the environment.”
. . . We think it improper to extend the exclusion beyond that
arena. 56
The Koloms court rejected the insurance company’s argument that, because carbon monoxide is
defined as a “very toxic gas” and is “regulated by the federal government as single ‘pollutant’ . .
. under the Clean Air Act,” the 1986 exclusion precludes coverage. 57
54 687 N.E.2d 72 (Ill. 1997).
55 Id. at 81 (emphasis added).
56 Id.
57
Id. at 76. Courts have reached similar conclusions when the “sudden and accidental”
polluter=s exclusion has been used as a bar to coverage for products liability an other
(Cont’d . . .)
- 19 -

The court in Koloms criticized the overbroad language of the exclusion, and its overbroad
application, particularly in light of the exclusion’s ambiguity: “Like many courts, we are
troubled by what we perceive to be an overbreadth in the language of the exclusion as well as the
manifestation of an ambiguity which results when the exclusion is applied to cases which have
nothing to do with ‘pollution’ in the conventional, or ordinary, sense of the word.” 58
Other courts have refused to read the term “pollutant” to include non-industrial pollution.
For example, in Tufco, 59 the policyholder resurfaced the floor of a Perdue chicken-processing
facility with styrene monomer resin, releasing vapors. As a result, $500,000 worth of chicken
parts were damaged. Perdue sued the policyholder, and the policyholder submitted a claim for
coverage. The insurance company denied coverage based on an “absolute” pollution exclusion.
The trial court upheld the policyholder’s insurance coverage. The lower court found that,
because the flooring material contained styrene monomer resin, it did not constitute a “pollutant”
under the exclusion.
On appeal, the North Carolina Court of Appeals affirmed. The appellate court concluded
that, because the flooring material was not an “unwanted purity,” but something the policyholder
used appropriately, as intended, the exclusion did not qualify as a “pollutant” under the
“absolute” pollution exclusion:
[T]he common understanding of the word “pollute” indicates that
it is something creating impurity, something objectionable and
(. . . cont’d)
nonindustrial pollution claims. E.g., Thompson v. Temple, 580 So. 2d 1133 (La. Ct. App. 1991);
Gamble Farm Inn, Inc. v. Selective Ins. Co., 656 A.2d 142 (Pa. Super. Ct. 1995).
58
687 N.E.2d at 79. Accord Donaldson v. Urban Land Interests, Inc., 564 N.W.2d 728 (Wis.
1997).
59
West Am. Ins. Co. v. Tufco Flooring East, Inc., 409 S.E.2d 692 (N.C. Ct. App. 1991).
- 20 -

unwanted. The flooring material (styrene monomer resin) brought
upon the premises by [the policyholder] was wanted. It was not
impure. When [the policyholder] purchased its CGL insurance, it
understood “pollutant” in the same way that the Oxford English
Dictionary defines “pollutant,” as an unwanted impurity, not as the
raw materials which [the policyholder] purchased to do its job. 60
The Tufco court considered an insurance industry publication explaining a polluter’s
exclusion entitled “Commercial Liability Insurance, Vol. 1, Section V, Annotated CGL Policy
(1985).” 61 After careful consideration, the court found no indication that, in revising the
polluter’s exclusion, the insurance industry intended to extend the clause to preclude coverage
for non-environmental damage. 62 Instead, the court found the clause’s continued use of
environmental terms of art such as “discharge” and “release” evidenced the insurance industry’s
intent to exclude coverage only for environmental pollution. The Tufco court thus refused to
expand the exclusion’s scope by judicial fiat: “[T]his Court agrees with the . . . historical
limitation that the pollution exclusion clause does not apply to non-environmental damage.” 63
Insurance Company=s Failure to Give Policyholder Notice of Reduced Coverage
Courts also may refuse to apply pollution exclusions broadly when the insurance
company has not given adequate notice of a reduction in coverage. For example, in Horace
Mann Insurance Co. v. Jackson, 64 a Minnesota appellate court affirmed the trial court’s
judgment upholding insurance coverage for the policyholder’s liability for lead-paint injury.
The
policyholder there owned rental property and was sued for injuries allegedly caused by the
60
Id. at 698.
61
Id. at 699.
62
Id. at 699-700.
63
Id. at 699.
64
No. CX-97-175, 1997 WL 537022 (Minn. Ct. App. Sept. 2, 1997).
- 21 -

ingestion of lead paint debris found inside the building. The lessor’s insurance policy contained
a standard “sudden and accidental” pollution exclusion until January 3, 1991. At that time, the
policyholder received a replacement insurance policy containing both an APE and a specific
exclusion for lead. The insurance company argued that both exclusions precluded coverage for
the policyholder’s liability.
The Minnesota Court of Appeals disagreed. The court concluded that the pre-1991
pollution exclusion did not apply to preclude coverage for lead-paint liability, but rather “was
directed at claims involving pollution of the natural environment.” 65 The court also refused to
apply the so-called APE to preclude coverage for the policyholder’s liability, finding that the
insurance company had failed to adequately notify the policyholder of the reduction in coverage
represented by inclusion of the “absolute” pollution exclusion in its insurance policy incepting
on January 3, 1991. The court noted that, if an insurance company does not give adequate notice
of such changes in coverage, the reduction in insurance coverage is void: “[W]hen an insurer
substantially reduces a policyholder’s coverage, it has an affirmative duty to notify the
policyholder in writing.’ . . . If proper notice is not given, any reduction in coverage is void and
the terms of the prior policy apply.” 66
The court concluded that a flier included with the insurance policy suggesting that the
policyholder read his insurance policy did not give sufficient notice of the substantial reduction
in coverage effected by the inclusion of the “absolute” pollution exclusion:
65 Id. at *3.
Although the stuffer suggested that the policyholder “take a few
minutes to read about the improvements to [his] homeowner’s
66 Id. (citing Benton v. Mutual of Omaha Ins. Co., 500 N.W.2d 158, 160 (Minn. App. 1993);
Canadian Universal Ins. Co. v. Fire Watch, Inc., 258 N.W.2d 570, 575 (Minn. 1977)).
- 22 -

coverage,” the front and inside of the stuffer did not suggest, much
less clearly state, that the HM-3 policy, in any way, reduced
coverage. Rather, to the contrary, part of the heading stated,
“You’ll see that we’ve increased the limits of coverage, expanded
definitions, added some new coverage and improved service.”
That gives the reader absolutely no inference that a substantial
lessening of coverage is now in force because of the change. 67
As a result, the court rejected the insurance company’s “claim that its intent was to ‘clarify’
coverage not to reduce coverage.” The court, therefore, affirmed the trial court=s holding
voiding the insurance company’s “absolute” pollution exclusion.
Cases Applying Pollution Exclusions to Preclude Coverage
Many courts, however, particularly when insurance companies first used the 1986 APE to
reject coverage, have adopted insurance company arguments that the absolute or TPE limits
coverage for non-industrial pollution claims. 68 In many of the cases, the courts were not
presented with the evidence, discussed above, of the insurance industry’s historical purpose and
intent regarding the 1986 exclusion. Many also were decided before more recent cases that have
rejected the attempts by insurance companies to fit so many square pegs into a round APE hole.
Insurance companies also have given policyholder’s favorable settlements to preserve rulings
67
1997 WL 537022, at *3.
68
E.g., Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 2008 Ga. Lexis 746 (2008); American States
Ins. Co. v. Nethery, 79 F.3d 473 (5th Cir. 1996); Park-Ohio Indus., Inc. v. Home Indem. Co., 975
F.2d 1215 (6th Cir. 1992); Shalimar Contractors, Inc. v. American States Ins. Co., 975 F. Supp.
1450 (M.D. Ala. 1997), aff’d, 158 F.3d 588 (11th Cir. 1998); Brown v. American Motorists Ins.
Co., 930 F. Supp. 207 (E.D. Pa. 1996), aff’d, 111 F.3d 125 (3d Cir. 1997); Board of Regents of
Univ. of Minn. v. Royal Ins. Co., 517 N.W.2d 888 (Minn. 1994); Landshire Fast Foods of
Milwaukee, Inc. v. Employers Mut. Cas. Co., No. 03-0896, 2004 WL 135412 (Wis. Ct. App. Jan
28, 2004); Terramatrix, Inc. v. United States Fire Ins. Co., 939 P.2d 483 (Colo. Ct. App. 1997);
Cook v. Evanson, 920 P.2d 1223, 1227 (Wash. Ct. App. 1996).
- 23 -

that reject coverage for non-environmental claims in reliance on “absolute pollution
exclusions.” 69
CONCLUSION
Despite its moniker – chosen by insurance industry drafters – the so-called APE does not
apply to any claim that an insurance company claims adjuster or lawyer decides may involve a
“pollutant” or “pollution.” The insurance industry obtained approval for the exclusion in the
1980s based on representations that “nobody would read it that way.” Various federal and state
courts have rejected the overuse – and abuse – of the exclusion to disclaim coverage for all
manner of the claims that do not involve industrial pollution. As the Rhode Island Supreme
Court stated at the end of June 2000 in discussing the 1973 predecessor of the 1986 exclusion:
As these cases suggest, state regulators as a practical matter often
are the only parties who are in a position to negotiate language
changes in proposed commercial insurance contracts. Under these
circumstances, it is reasonable to hold insurers to the
representations they made to regulators when seeking approval for
a pollution-exclusion clause like this one, which is susceptible to
more than one plausible interpretation. 70
The trend in state supreme and appellate court decisions rejects anti-coverage positions
taken by insurance companies with regard to the exclusion. Recent cases support efforts by
policyholders to enforce CGL insurance when an insurance company seeks to exclude coverage
for claims that involve something other than traditional environmental pollution. For those
69
Bernhardt v. Hartford Fire Ins. Co., 648 A.2d 1047 (Md. Ct. Spec. App. 1994), cert. granted,
655 A.2d 400 (Md. 1995), cert. dismissed, 659 A.2d 296 (Md. 1995) (appeal dismissed due to
settlement).
70
Textron, Inc. v. Aetna Cas. & Sur. Co., 754 A.2d 742, 753 (R.I. 2000).
- 24 -

easons, policyholders should not accept insurance companies’ use of “absolute” or “total”
pollution clauses to deny coverage in cases that do not involve true environmental pollution.
- 25 -

Survey of Appellate Court Decisions on “Absolute” and “Total”
Pollution Exclusion in the 50 States and the District of Columbia
State Limiting Exclusion
to “Industrial” or
“Environmental”
Pollution
Alabama Essex Ins. Co. v.
Avondale Mills, Inc.,
639 So. 2d 1339 (Ala.
1994)
Arizona Keggi v. Northbrook
Prop. & Cas. Ins. Co.,
13 P.3d 785 (Ariz. Ct.
App. 2000)
Arkansas Minerva Enters., Inc.
v. Bituminous Cas.
Corp., 851 S.W.2d
403 (Ark. 1993)
California MacKinnon v. Truck
Ins. Exch., 73 P.3d
1205 (Cal. 2003)
Applying the
Exclusion Literally
Colorado TerraMatrix, Inc. v.
United States Fire Ins.
Co., 939 P.2d 483
(Colo. Ct. App. 1997)
Connecticut
District of Columbia Richardson v.
Nationwide Mut. Ins.
Co., 826 A.2d 310
(D.C. 2003), result
vacated and reh’g en
banc granted, No. 01-
SP-1451, 2003 WL
22232039 (D.C. Sept.
29, 2003)
Product or Material
Injury from indoor
release of asbestos
Injuries from bacteriacontaminated
water
Damage to home from
backup of raw sewage
Injury from use of
pesticides
Property damage and
injuries from
ammonia vapors from
a printer
Carbon monoxide
fumes leaking from
faulty furnace

State Limiting Exclusion
to “Industrial” or
“Environmental”
Pollution
Applying the
Exclusion Literally
Florida Deni Assocs. of Fla.
v. State Farm Fire &
Cas. Ins. Co., 711 So.
2d 1135 (Fla. 1998)
Georgia Reed v. Auto-Owners
Ins. Co., 284 Ga. 286,
2008 Ga. Lexis 746
(2008)
Illinois American States Ins.
Co. v. Koloms, 687
N.E.2d 72 (Ill. 1997)
Kim v. State Farm
Fire & Cas. Co., 728
N.E.2d 530 (Ill. App.
Ct. 2000) (applying
exclusion because
pollution was
traditional
environmental
pollution)
Indiana American States Ins.
Co. v. Kiger, 662
N.E.2d 945 (Ind.
1996)
- 2 -
Pekins Hardwood
Lumber Co. v.
Bituminous Cas.
Corp., 378 S.E.2d 407
(Ga. Ct. App. 1989)
Product or Material
Damage from
accidental
contamination from
ammonia and
spraying of insecticide
Carbon monoxide
poisoning of tenant
from landlord’s
failure to maintain
rental property in
good repair
Damage from car
accident due to
reduced visibility
from smoke
Release of carbon
monoxide
Faulty dry cleaning
equipment released a
chemical into soil
requiring
environmental
remediation
Refusing to bar
coverage for leaks
from gas station
because
policyholder’s
business involved
selling gasoline

State Limiting Exclusion
to “Industrial” or
“Environmental”
Pollution
Iowa West Bend Mut. Ins.
Co. v. Iowa Iron
Works, Inc., 503
N.W.2d 596 (Iowa
1993)
Kansas Associated Wholesale
Grocers, Inc. v.
Americold Corp., 934
P.2d 65 (Kan. 1997)
Kentucky Motorists Mut. Ins.
Co. v. RSJ, Inc., 926
S.W.2d 679 (Ky. Ct.
App. 1996)
Louisiana Doerr v. Mobil Oil
Corp., 774So. 2d 119
(La. 2000)
Maine
Applying the
Exclusion Literally
Maryland Bernhardt v. Hartford
Fire Ins. Co., 648
A.2d 1047 (Md. Ct.
Spec. App. 1994)
(appeal settled due to
settlement by the
insurance company)
Massachusetts Western Alliance Ins.
Co. v. Gill, 686
N.E.2d 997 (Mass.
1997)
Michigan
Atlantic Mut. Ins. Co.
v. McFadden, 595
N.E.2d 762 (Mass.
1992)
- 3 -
Product or Material
Damage from sand
disposed of off site
Smoke from hostile
fire
Carbon monoxide
fumes leaking from
defective boiler
Release of
hydrocarbons from
wastewater facility
Bodily injury from
carbon monoxide
exposure due to
blocked chimney
Carbon monoxide
exposure due to
defective tandoori
oven
Lead poisoning

State Limiting Exclusion
to “Industrial” or
“Environmental”
Pollution
Applying the
Exclusion Literally
Minnesota Bd. of Regents of
Univ. of Minn. v.
Royal Ins. Co., 517
N.W.2d 888 (Minn.
1994)
Mississippi
Auto-Owners Ins. Co.
v. Hanson, 588
N.W.2d 777 (Minn.
Ct. App. 1999)
Missouri Boulevard Inv. Co. v.
Capitol Indem. Corp.,
27 S.W.3d 856 (Mo.
Ct. App. 2000)
Nebraska
New Hampshire Weaver v. Royal Ins.
Co., 674 A.2d 975
(N.H. 1996)
New Jersey Byrd ex rel. Byrd v.
Bumenreich, 722
A.2d 598 (N.J. Super.
Ct. App. Div. 1999)
New York Belt Painting Corp. v.
TIG Ins. Co., 795
N.E.2d 15 (N.Y.
2003)
- 4 -
Cas. Indem. Exch. v.
City of Sparta, 997
S.W.2d 545 (Mo. Ct.
App. 1999)
Product or Material
Asbestos abatement
Lead-paint exposure
Back-up from
blockage of plumbing
system by grease and
other kitchen waste
Sewage sludge
Child’s exposure to
lead paint carried
home in father’s work
clothes
Lead paint
Inhalation of solvent
fumes

State Limiting Exclusion
to “Industrial” or
“Environmental”
Pollution
North Carolina West Am. Ins. Co. v.
Tufco Flooring E.,
Inc., 409 S.E.2d 692
(N.C. Ct. App. 1991)
North Dakota
Ohio Andersen v. Highland
House Co., 757
N.E.2d 329 (Ohio
2001)
Oklahoma
Applying the
Exclusion Literally
Owners Ins. Co. v.
Singh, No. 98-CA-
108, 1999 WL 976249
(Ohio Ct. App. Sept.
21, 1999)
Zell v. Aetna Cas. &
Sur. Ins. Co., 683
N.E.2d 1154 (Ohio
Ct. App. 1996)
Pennsylvania Madison Constr. Co.
v. Harleysville Mut.
Ins. Co., 735 A.2d
100 (Pa. 1999)
South Dakota S.D. State Cement
Plant Comm’n v.
Wausau Underwriters
Ins. Co., 616 N.W.2d
397 (S.D. 2000)
Texas Nat’l Union Fire Ins.
Co. of Pittsburgh, Pa.
v. CBI Indus., Inc.,
907 S.W.2d 517 (Tex.
1995)
- 5 -
Product or Material
Damage to chicken
from fumes from floor
resurfacing product
Carbon monoxide
from faulty furnace
Bodily injury from
fumes from
weatherproofing
product
Fumes from concrete
sealer used at
construction site
Emissions of cement
dust
Accidental release of
cloud of hydrofluoric
acid

State Limiting Exclusion
to “Industrial” or
“Environmental”
Pollution
Washington Kent Farms, Inc. v.
Zurich Ins. Co., 998
P.2d 292 (Wash.
2000)
Wisconsin Donaldson v. Urban
Land Interests, Inc.,
564 N.W.2d 728
(Wis. 1997)
- 6 -
Applying the
Exclusion Literally
Quadrant Corp. v.
Am. States Ins., No.
50647-1-I (Wash. Ct.
App. Sept. 22, 2003)
Peace ex rel. Lerner v.
Northwestern Nat’l
Ins. Co., 596 N.W.2d
429 (Wis. 1999)
Product or Material
Exposure to diesel
fuel from back-flow
due to faulty intake
valve
Injury from fumes
emanating from
waterproofing
material, which is
pollutant when used
as intended
Bodily injury from
breathing carbon
dioxide
Lead paint

L:\MASTERLS\Seminar\HB Chinese Drywall Conference (June 2009 New Orleans)\article for conference.DOC
- 7 -

CHINESE DRYWALL LITIGATION CONFERENCE
Which Contractors Will Be Covered by Their
CGL Insurance Policies for Liability Arising
Out of Chinese Drywall?
Stephen R. Mysliwiec
DLA Piper LLP (US)
500 Eighth Street, N.W.
Washington, D.C. 20004
(202) 799-4513
stephen.mysliwiec@dlapiper.com June 18, 2009
OCCURRENCE
Insuring Agreement:
Covers liability for damages because of
“bodily injury” or “property damage”
If the bodily injury or property damage is
caused by an “occurrence”
2

OCCURRENCE
“Property Damage”
“Physical injury to tangible property”
“Loss of use of tangible property that has not
been physically injured”
“Occurrence”
“An accident, including continuous or repeated
exposure to substantially the same general
harmful conditions”
Courts: damage is accidental if not expected or
intended by the policyholder
OCCURRENCE
Minority view:
Property damage: must be to property other than
the builder’s work – the house
Occurrence: faulty work or faulty materials is not
accidental
Builder expects or intends resulting property
damage
Breach of contract claims are not covered
3
4

OCCURRENCE
Minority view:
Liability for property damage caused by
Chinese drywall not covered by insuring
agreement in contractor’s CGL policy
Mississippi, Georgia, Pennsylvania, Iowa,
Nebraska
OCCURRENCE
Majority View:
Property Damage: insurance policy does not
require that property damage be to other property
Consistent with subcontractor exception to
“your work” exclusion
Occurrence: property damage caused by faulty
work or materials can be accidental
Breach of contract claims can be covered
Factual issue
5
6

OCCURRENCE
Majority View:
Liability for property damage caused by Chinese
drywall may be covered by insuring agreement in
contractor’s CGL policy
Florida, Texas, South Carolina, Arizona,
Tennessee, Virginia, Maryland, Kansas,
Louisiana
OCCURRENCE
Case to watch:
Cincinnati Ins. Co. v. Beazer Homes (6th Cir.)
(Indiana law)
7
8

OCCURRENCE
Cost of replacing Chinese drywall itself
No: French (4th Cir. 2006) (Maryland law)
Yes: Newman (S.C. 2008) (South Carolina law)
Yes: “damages because of bodily injury or
property damage”
OCCURRENCE
Claims of “bodily injury”:
Definition: “bodily injury, sickness or
disease”
Even in “minority” states, will often satisfy
the “occurrence” requirement
Even in “minority” states, will require insurer
to provide a defense, unless an exclusion
clearly applies
9
10

CHOICE OF LAW
Starting point for choosing applicable law: the state
where the coverage suit is filed
Law of state where coverage suit is filed may not
apply to coverage issues
Law of state where Chinese drywall was installed
may not apply to coverage issues
CHOICE OF LAW
“Place of Contracting” test:
Law of the state where the last act occurred to
complete the insurance policy
Factors:
Where the policy was bound by the insurer
The location of the insured
Where the premium was paid or received
Where the policy was delivered
Where the policy was countersigned by the
insurer
11
12

CHOICE OF LAW
“Place of Contracting” test:
Alabama, Louisiana, Georgia, South Carolina,
Virginia
CHOICE OF LAW
“Significant Contacts” test:
Law of the state with the most significant
relationship to the insurance coverage dispute
Factors:
Place of contracting
Place where policy was negotiated
Place where policy was to be performed
The location of the insured risk
The location of the parties
13
14

CHOICE OF LAW
“Significant Contacts” test:
Texas, Mississippi
CHOICE OF LAW
Florida: unsettled
USF&G v. Liberty Surplus (11th Cir. 2008)
Texas statute
North Carolina statute
South Carolina statue
15
16

CHOICE OF LAW
Under either the “place of contracting” test or the
“significant contacts” test:
Court has wide discretion
Law of state other than forum and other than
location of Chinese drywall may apply
CHINESE DRYWALL LITIGATION CONFERENCE
Which Contractors Will Be Covered by Their
CGL Insurance Policies for Liability Arising
Out of Chinese Drywall?
Stephen R. Mysliwiec
DLA Piper LLP (US)
500 Eighth Street, N.W.
Washington, D.C. 20004
(202) 799-4513
stephen.mysliwiec@dlapiper.com June 18, 2009
17

Which Contractors Will Be Covered by Their CGL Insurance
Policies for Liability Arising Out of Chinese Drywall?
Stephen R. Mysliwiec
DLA Piper LLP (US)
500 8th Street, N.W.
Washington, D.C. 20004
(202) 799-4513
(202) 799-5000 [fax]
stephen.mysliwiec@dlapiper.com
June 18, 2009

__________________
Stephen Mysliwiec is a partner at DLA Piper LLP (US) in Washington, D.C. He is
experienced in insurance coverage and construction defect litigation. In particular, he
advises clients with respect to liability arising out of the use of Chinese drywall. He also
advises clients regarding insurance and indemnity issues in complex real estate and
construction transactions. He is a frequent lecturer on insurance issues in the construction
industry. His article, "Insurance Coverage for Claims of Latent Defects: What Protection Is a
Builder Buying?", won the Burton Award for excellence in legal writing. Mr. Mysliwiec is a
graduate of the University of Notre Dame and of the Yale Law School, where he was an
officer of the Yale Law Journal. This paper is adapted from a paper originally prepared for
the National Association of Home Builders and is published with the Association’s
permission.

Which Contractors Will Be Covered by Their CGL Insurance
Policies for Liability Arising Out of Chinese Drywall?
Table of Contents
Page
Introduction......................................................................................................................................1
I. “Property Damage” Caused by an “Occurrence” ..............................................................1
II. “Bodily Injury” Caused by an “Occurrence”.....................................................................4
III. Number of Occurrences .....................................................................................................5
IV. The “Impaired Property” Exclusion...................................................................................6
V. The “Absolute Pollution Exclusion”..................................................................................8
A. Traditional or Literal Interpretation.......................................................................10
B. The Other Requirements for Application of the December 2004
Absolute Pollution Exclusion Might Not Be Met by Particular
Insured Contractors................................................................................................13
C. Effect of the Products-Completed Operations Hazard...........................................15
VI. Choice of Law..................................................................................................................16
VII. Practical Advice for Contractors......................................................................................18
Conclusion .....................................................................................................................................21
- i -

Introduction
Contractors, including general contractors, subcontractors, and remodelers, who are
sued by homeowners for damages caused by defective Chinese drywall will seek a defense
and indemnity for such suits under their commercial general liability (“CGL”) insurance
policies. 1 Insurers are expected to deny coverage under such policies on a number of
grounds, including the so-called absolute pollution exclusion. It will likely take years for the
courts to sort through the coverage issues that will be generated by claims for coverage
arising out of defective Chinese drywall. As discussed below, it is likely that some
contractors, under the law of some states, will obtain coverage -- while other contractors will
not. The main determinants of coverage will be: (i) the state in which the suit for insurance
coverage is filed, (ii) which state’s law is held to be applicable to the insurance coverage
dispute, and (iii) which iteration of the absolute pollution exclusion is included in the
insurance policy at issue. The following is an overview of the factors that will determine
whether contractors are covered by their CGL policies for liability arising out of Chinese
drywall.
I. “Property Damage” Caused by an “Occurrence”
To obtain coverage for any construction defect claim, a contractor must demonstrate
that the allegedly defective construction has caused “property damage” caused by an
“occurrence,” as those terms are used in the CGL policy’s insuring agreement. “Property
damage” is defined to mean physical injury to tangible property or loss of use of property
1 This paper uses the term "Chinese drywall" since that is the term that is most
commonly used in the media and by relevant parties. We note, however, that this issue may
turn out not to be a Chinese drywall problem but rather one that is shared by drywall
manufactured in the United States. This aspect of the problem will only be clarified once the
scientific cause of the problem is determined.
- 1 -

that has not been physically injured. An “occurrence” is defined to mean “an accident,
including continuous and repeated exposure to substantially the same general harmful
conditions.” In general, property damage is accidental if it was not expected or intended by
the contractor.
In the case of Chinese drywall, it is likely that the courts will hold that the fumes
given off by the drywall have caused property damage. Complaints against contractors
allege that the fumes from the drywall have damaged copper wiring, HVAC coils, and metal
jewelry, and that the odor of the fumes permeates the house, often causing the inhabitants to
evacuate their home. Such allegations are likely to satisfy the property damage requirement
in the contractor’s CGL policy. See, e.g., Essex Ins. Co. v. BloomSouth Flooring Corp., 562
F.3d 399, 406 (1st Cir. 2009) (applying Massachusetts law) (pervasive odor from carpet that
permeated building constituted property damage for purposes of subcontractor’s CGL
policy).
Under the law of most states, the property damage caused by Chinese drywall will
also be deemed to be caused by an occurrence, i.e. to be accidental, as long as the contractor
was not aware of the harmful effects of such drywall when it was installed. Although the
courts are divided on the issue, the courts of most states have held that property damage to a
builder’s work can be “accidental” for insurance purposes. The law of Florida, Texas, South
Carolina, Arizona, Tennessee, Virginia, Maryland and Kansas is particularly favorable on the
occurrence issue. See, e.g., Auto Owners Ins. Co. v. Newman, 2008 WL 648546, at *2 -*4
(S.C. March 10, 2008); Lamar Homes, Inc. v. Mid-Continent Ins. Co., 242 S.W.3d, 1, 13
(Tex. 2007); United States Fire Ins. Co. v. J.S.U.B., Inc. 979 So.2d 871, 885 (Fla. 2007).
The law of Louisiana is also favorable, although the Supreme Court of Louisiana has not yet
ruled on the issue. See, e.g., Broadmoor Anderson v. National Union Fire Ins. Co., 912
- 2 -

So.2d 400, 405-406 (La. App. 2005). States where the law is unfavorable on the
“occurrence” issue include Pennsylvania, Georgia, Iowa, and Nebraska. The law in other
states is still developing. Even in states where the law is favorable on the “occurrence” issue,
contractors will still be required to establish as a factual matter that they did not learn of the
harmful effects of the drywall at issue until after it was installed.
Whether a contractor is covered for the cost of removing and replacing the defective
Chinese drywall itself -- as opposed to the cost of repairing the property damage caused by
the drywall -- is less clear. Many decisions distinguish between the cost of repairing property
damage caused by faulty work or material, on the one hand, and the cost of repairing or
replacing the faulty work or material itself on the other. See, e.g., Auto-Owners Ins. Co. v.
Pozzi Window Co., 984 So.2d 1241, 1247-49 (Fla. 2008) (windows not covered if defectively
manufactured but covered if defectively installed). A strong argument can be made that the
cost of repairing or replacing Chinese drywall is covered to the extent that such repair or
replacement is necessary to repair the property damage caused by the drywall. See, e.g.,
Newman, 2008 WL 648546, at *5 (cost of replacing defective synthetic stucco is covered
because synthetic stucco must be removed in order to repair damage to the substrate caused
by synthetic stucco). In addition, an exception to the CGL policy’s “your work” exclusion
arguably contemplates coverage not only for work damaged by a contractor’s subcontractor
but also for the subcontractor’s faulty work itself. See, e.g., Lamar Homes, 242 S.W.3d at
11 (“when a general contractor becomes liable for damage to work performed by a
subcontractor . . . the subcontractor exception preserves coverage that the “your work”
exclusion would otherwise negate”); Limbach Co. v. Zurich American Ins. Co., 396 F.3d 358,
361-63 (4th Cir. 2005 (applying Pennsylvania law) (same).
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In sum, in most states the damage caused by Chinese drywall will meet the “property
damage” and “occurrence” requirements in the contractor’s CGL policy.
II. “Bodily Injury” Caused by an “Occurrence”
A builder’s CGL policy also provides coverage for “bodily injury” caused by an
“occurrence.” “Bodily injury” is generally defined to include sickness or disease. As to the
duty to defend, a contractor’s insurer will be required to defend a suit against the contractor if
there are any allegations in the complaint that the plaintiff has suffered adverse health effects
as the result of Chinese drywall, and if the other requirements for coverage are met or could
potentially be met. Hence, even in those few states holding that property damage to the
house cannot meet the “occurrence” requirement in the contractor’s policy, an allegation of
bodily injury will satisfy the “occurrence” requirement. Even if the plaintiff alleges bodily
injury in only a portion of the complaint, the contractor’s insurer will be required to defend
the entire complaint -- unless an exclusion in the policy definitively applies. Most
complaints that have been filed against contractors by homeowners allege that the drywall at
issue has harmed the homeowner’s health.
As to the duty to indemnify, the insurer’s duty is determined not by the allegations of
the complaint but rather by the actual facts, as determined at trial or as gleaned from the
settlement record. If a homeowner wins damages through a judgment or settlement for both
bodily injury and property damage, and if only the damages for bodily injury were deemed to
meet the “occurrence” requirement, the contractor and its insurer would be required to
allocate the damages between covered bodily injury and non-covered property damage.
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III. Number of Occurrences
Many CGL policies contain a deductible or self insured retention (“SIR”) applicable
on a per claim or per occurrence basis. Some policies also contain a cap or aggregate limit
on the total amount of deductibles or SIRs the insured must bear for all claims covered by the
policy. Insurers may claim that each house in which Chinese drywall was installed
constitutes a separate occurrence under the policy, thus permitting the insurer to apply a
separate deductible or SIR to each house. This could have the practical effect of reducing or
eliminating the insurer’s indemnity payments to an insured contractor, even if all the other
requirements for coverage were met. Even so, depending on the terms of the policy, the
insurer may still be required to pay for defending the contractor against suits for injury or
damage caused by Chinese drywall.
Most courts apply a “cause” test to determine how many occurrences -- and hence
how many deductibles or SIRs -- apply to multiple claims. Under the “cause” test, the focus
is on the number of events that caused the injuries and gave rise to the insured’s liability,
rather than on the number of different injurious effects. See, e.g., Colonial Gas Co. v. Aetna
Cas. & Sur. Co., 823 F.Supp. 975, 983-84 (D. Mass. 1993) (insured utility’s use of insulation
that was later banned constitutes one “occurrence” although it was installed in 390 homes).
At least one court, however, has held that each home in which defective synthetic stucco was
installed constitutes a separate occurrence for purposes of the general contractor’s claim for
coverage against its CGL insurers. See Lennar Corp. v. Great American Ins. Co., 200
S.W.2d 651, 682 (Tex. App. -- Houston [14th Dist.] 2006).
The law regarding the number of occurrences is not well developed, and the courts’
rulings regarding Chinese drywall could vary by state and by the facts of each particular case.
In general, contractors will attempt to develop facts showing that a single cause resulted in
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the several Chinese drywall claims against them. These facts might include the decision at
one point in time to use a single supplier or installer, or the common attributes of the drywall
regardless of the particular home in which it was installed. The ability of contractors to
demonstrate that, as a factual matter, their liability for Chinese drywall claims resulted from a
single cause will ultimately determine how a court will rule on the “number of occurrences”
issue in the contractor’s suit for insurance coverage.
IV. The “Impaired Property” Exclusion
In the first lawsuit between a contractor and its CGL insurer over coverage for the
builder’s liability for claims based on Chinese drywall, one of the grounds on which the
insurer has denied coverage is the “impaired property” exclusion. Builders Mut. Ins. Co. v.
Dragas Management Corp., C.A. No. 2:09cv185 (E.D. Va. filed April 27, 2009). This
exclusion excludes coverage for:
“Property damage” to “impaired property” or property that has not
been physically injured, arising out of:
1. A defect, deficiency, inadequacy or dangerous condition in
“your product” or “your work”; or
2. A delay or failure by you or anyone acting on your behalf to
perform a contract or agreement in accordance with its terms.
This exclusion does not apply to the loss of use of other property
arising out of sudden and accidental physical injury to “your product”
or “your work” after it has been put to its intended use.
“Impaired property” is defined in the policy to mean:
tangible property, other than “your product” or “your work,” that
cannot be used or is less useful because:
a. It incorporates “your product” or “your work” that is known or
thought to be defective, deficient, inadequate or dangerous; or
b. You have failed to fulfill the terms of a contract or agreement;
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if such property can be restored to use by:
a. The repair, replacement, adjustment or removal of “your
product” or “your work”; or
b. Your fulfilling the terms of the contract or agreement.
The “impaired property” exclusion has not often been applied by the courts, and it is
unlikely to be applied to claims against contractors based on Chinese drywall. The prong of
the exclusion applicable to “property that has not been physically injured” should not be
applicable to Chinese drywall because the drywall has caused physical injury to property,
both to elements of the house and to its contents. To the extent the definition of “impaired
property” includes property that “cannot be used or is less useful,” and to the extent Chinese
drywall causes such loss of use, the exclusion would only apply if the property could be
restored to use by “repair, replacement, adjustment or removal” of the Chinese drywall.
From all accounts, however, this requirement for application of the exclusion will not be met
because simply replacing the drywall will not restore the home to its previous use. Defective
Chinese drywall allegedly damages copper wiring, HVAC coils, metal jewelry, and other
parts of the home and its contents, and the odor given off by the drywall may have permeated
the affected house to such an extent that the house would have to be treated in some fashion
to remove the odor. See, e.g., Essex, Inc. Co. v. BloomSouth Flooring Corp., 562 F.3d 399,
407-09 (1st Cir. 2009) (“impaired property” exclusion not applicable to claim against insured
carpet installer because damage to offices from carpet odor did not cease upon removal of the
carpet).
Hence, it is not likely that insurance coverage under contractor’s CGL policy will be
barred based on the exclusion for “impaired property.”
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V. The “Absolute Pollution Exclusion”
One of the biggest fronts in the looming battle over insurance coverage for damages
resulting from the use of Chinese drywall will concern application of the CGL policy’s so-
called “absolute pollution exclusion.” Insurers are denying claims for coverage by
contractors on the grounds that the sulfur compounds allegedly being emitted by Chinese
drywall constitute “irritants or contaminants” within the definition of “pollutants” in the
absolute pollution exclusion.
Although there have been different versions of the absolute pollution exclusion since
it first appeared in the mid-1980s, the full text of the December 2004 version of the absolute
pollution exclusion policy is as follows:
f. Pollution
(1) “Bodily injury” or “property damage” arising out of the actual, alleged or
threatened discharge, dispersal, seepage, migration, release or escape of
“pollutants”:
(a) At or from any premises, site or location which is or was at anytime
owned or occupied by, or rented or loaned to, any insured. However,
this subparagraph does not apply to:
(i) “Bodily injury” if sustained within a building and caused by
smoke, fumes, vapor or soot produced by or originating from
equipment that is used to heat, cool or dehumidify the building,
or equipment that is used to heat water for personal use, by the
building’s occupants or their guests;
(ii) “Bodily injury” or “property damage” for which you may be
held liable, if you are a contractor and the owner or lessee of
such premises, site or location has been added to your policy as
an additional insured with respect to your ongoing operations
performed for that additional insured at that premises, site or
location and such premises, site or location is not and never
was owned or occupied by, or rented or loaned to, any insured,
other than that additional insured; or
(iii) “Bodily injury” or “property damage” arising out of heat,
smoke or fumes from a “hostile fire”;
- 8 -

(b) At or from any premises, site or location which is or was at any time
used by or for any insured or others for the handling, storage, disposal,
processing or treatment of waste;
(c) Which are or were at any time transported, handled, stored, treated,
disposed of, or processed as waste by or for:
(i) Any insured; or
(ii) Any person or organization for whom you may be legally
responsible; or
(d) At or from any premises, site or location on which any insured or any
contractors or subcontractors working directly or indirectly on any
insured’s behalf are performing operations if the “pollutants” are
brought on or to the premises, site or location in connection with such
operations by such insured, contractor or subcontractor. However, this
subparagraph does not apply to:
(i) “Bodily injury” or “property damage” arising out of the escape
of fuels, lubricants or other operating fluids which are needed
to perform the normal electrical, hydraulic or mechanical
functions necessary for the operation of “mobile equipment” or
its parts, if such fuels, lubricants or other operating fluids
escape from a vehicle part designed to hold, store or receive
them. This exception does not apply if the “bodily injury” or
“property damage” arises out of the intentional discharge,
dispersal or release of the fuels, lubricants or other operating
fluids, or if such fuels, lubricants or other operation fluids are
brought on or to the premises, site or location with the intent
that they be discharged, dispersed or released as part of the
operations being performed by such insured, contractor or
subcontractor;
(ii) “Bodily injury” or “property damage” sustained within a
building and caused by the release of gases, fumes or vapors
from materials brought into that building in connection with
operations being performed by you or on your behalf by a
contractor or subcontractor; or
(iii) “Bodily injury” or “property damage” arising out of heat,
smoke or fumes from a “hostile fire.”
(e) At or from any premises, site or location on which any insured or
any contractors or subcontractors working directly or indirectly on
any insured’s behalf are performing operations if the operations are
- 9 -

to test for, monitor, clean up, remove, contain, treat, detoxify or
neutralize, or in any way respond to, or assess the effects of,
“pollutants.”
(2) Any loss, cost or expense arising out of any:
(a) Request, demand, order or statutory or regulatory requirement that any
insured or others test for, monitor, clean up, remove, contain, treat,
detoxify or neutralize, or in any way respond to, or assess the effects
of, “pollutants”; or
(b) Claim or “suit” by or on behalf of a governmental authority for
damages because of testing for, monitoring, cleaning up, removing,
containing, treating, detoxifying or neutralizing, or in any way
responding to, or assessing the effects of, “pollutants.”
However, this paragraph does not apply to liability for damages because of
“property damage” that the insured would have in the absence of such request,
demand, order or statutory or regulatory requirement, or such claim or “suit”
by or on behalf of a governmental authority. 2
A. Traditional or Literal Interpretation
The most important factor in whether the absolute pollution exclusion will apply to
claims against a particular contractor based on Chinese drywall will be which state’s law is
applied to the contractor’s claim for coverage. The courts of several states construe the
absolute pollution exclusion literally, despite the resulting application of the exclusion to
harm that is well beyond the liability for traditional environmental pollution that gave rise to
the exclusion. These courts generally refuse to consider extrinsic evidence showing that the
insurance industry assured insurance regulators and others when the exclusion was being
adopted that the exclusion applied only to traditional pollution and would not be applied
according to its literal terms. Substances held to be “pollutants” by such courts include
ammonia, carbon monoxide, adhesives, asbestos, cement or cement components, paint
2 The term “pollutants” is defined in part to mean a “solid, liquid, gaseous or thermal
irritant or contaminant.” The definition specifically refers to smoke, vapor, soot, fumes,
acids, alkalis, chemicals, and waste, defined as including material to be recycled, reclaimed
or reconditioned, as examples of irritants or contaminants.
- 10 -

fumes, lead paint, sealants and coating materials, solvents, etches, cleaners and their fumes,
pesticides, petroleum products, smoke, municipal waste or garbage, and radioactive
materials. States taking this “literal” approach include Florida, Texas, Virginia, Georgia and
Mississippi, among others. See, e.g., Deni Associates of Florida v. State Farm Fire & Cas.
Ins. Co., 711 S.2d 1135, 1139-41 (Fla. 1998) (applying exclusion to accidental ammonia spill
occurring during an office move); City of Chesapeake v. States Self-Insurers Risk Retention
Group, Inc., 628 S.E.2d 539, 541 (Va. 2006) (exclusion applied to injuries caused by
trihalomethanes in city water supply); Firemen’s Ins. Co. v. Kline & Son Cement Repair,
Inc., 474 F.Supp.2d 779, 799 (E.D. Va. 2007) (constrained by precedent, court applies
exclusion to contractors’ liability for injuries resulting from subcontractor’s application of
epoxy sealant to concrete warehouse floor).
The courts of other states have held that the absolute pollution exclusion is
ambiguous, and such courts consider extrinsic evidence to determine the exclusion’s reach.
These courts have concluded that the exclusion was intended to apply only to traditional
environmental pollution, and that to apply it literally would extend the exclusion beyond its
intended scope. These courts have held that the exclusion does not apply to the same set of
substances to which the literalist courts have applied it. States taking this “traditional”
approach include Alabama, Arizona, California, Louisiana, New Jersey, New York, Illinois,
Massachusetts, Maryland, North Carolina, Ohio, and the District of Columbia, among others.
The modern trend seems to be to apply the exclusion only to traditional environmental
pollution. See, e.g., Belt Painting Corp. v. TIG Ins. Co., 795 N.E.2d 15 (N.Y. 2003)
(exclusion not applicable to release of paint fumes in the normal course of a painting
contractor’s painting business); MacKinnon v. Truck Ins. Exch., 73 P.3d 1205 (Cal. 2003)
(exclusion not applicable to landlord’s liability for death of tenant caused by negligent
- 11 -

spraying of pesticide in apartment building); Doerr v. Mobil Oil Corp., 774 So.2d 119 (La.
2000) (exclusion not applicable to injuries arising out of release of hydrocarbons from waste
water treatment facility); West American Ins. Co. v. Tufco Flooring East, Inc., 409 S.E.2d
692, 696-700 (N.C. App. 1991) (exclusion not applicable to injuries caused by floor coating
that emitted styrene vapors).
States that apply the absolute pollution exclusion literally are likely to hold that the
sulfur compounds that are allegedly given off by Chinese drywall are “pollutants” within the
meaning of the absolute pollution exclusion. States that limit the absolute pollution
exclusion to traditional environmental pollution are likely to hold that the fumes given off by
Chinese drywall are not “pollutants” within the meaning of the absolute pollution exclusion.
As discussed in Part VI. below, however, just because a home is located in a particular state
does not mean that the law of that state will apply to the contractor’s claim for insurance
coverage for that home.
With respect to the insurer’s duty to defend, the particular allegations of the
complaint are usually controlling and could affect the court’s decision about whether the
insurer must provide a defense. The insurer has the burden of proving application of an
exclusion. If there is any possibility that the absolute pollution exclusion might not apply to
the facts that are ultimately developed in the suit, the exclusion will not relieve the insurer of
its duty to defend the suit. Complaints that allege only generally that Chinese drywall is
defective many not contain allegations that are sufficient to permit the insurer to prove that
the absolute pollution exclusion is clearly applicable on the face of the complaint.
With respect to the insurer’s duty to indemnify, the actual scientific cause of the
problems caused by Chinese drywall could affect a court’s application of the absolute
pollution exclusion. For example, if the court found that the cause of the problems were
- 12 -

inadequate ventilation, the court would be less likely to apply the absolute pollution
exclusion than if the cause were the use in the drywall of the fly ash byproduct of burning
coal. In addition, if the chemical compound being emitted from the drywall is a hazardous
substance or a regulated pollutant, it is more likely that the court would apply the absolute
pollution exclusion to the emission of such a substance. See, e.g., American States Ins. Co. v.
Nethery, 79 F.3d 473, 476-77 (5th Cir. 1996) (applying Mississippi law) (trichloroethane in
paint and glue fumes held to be a pollutant within the meaning of the exclusion, in part,
because trichloroethane is regulated as a hazardous substance by EPA under CERCLA). To
the extent, however, that it is shown that the emissions from Chinese drywall are the same as
those given off by non-defective drywall, courts may be less inclined to apply the absolute
pollution exclusion to such emissions. As a general matter, courts are less inclined to apply
the absolute pollution exclusion to damage caused by ordinary building materials, installed
by contractors in the ordinary course of their business, than to other types of irritants or
contaminants alleged to be within the absolute pollution exclusion.
B. The Other Requirements for Application of the December 2004 Absolute
Pollution Exclusion Might Not Be Met by Particular Insured Contractors.
In order for the absolute pollution exclusion to apply, at least under the December
2004 version of the exclusion, one of five requirements in the exclusion must be met. The
requirements listed at subparts f.(1)(b) and f.(1)(c) of the exclusion are not met by Chinese
drywall because a house containing such drywall is not a premises, site, or location used for
the handling, storage, disposal, processing or treatment of waste; and the alleged pollutants
were not transported, etc. as waste by or for any insured or any person for whom an insured
is legally responsible. In addition, the requirements at subparts f.(1)(d) and f.(1)(e) of the
- 13 -

exclusion are not met because the “pollutants” from Chinese drywall continue to be released
long after the contractor has ceased “performing operations.”
Hence, in order for the December 2004 absolute pollution exclusion to apply -- even
in those states that interpret the exclusion literally -- the requirements of subpart f.(1)(a) of
the exclusion must be met. This subpart provides that the exclusion applies only to the
release of “pollutants” “at or from any premises, site or location which is or was at any time
owned or occupied by, or rented or loaned to, any insured.” This requirements for
application of the pollution exclusion may or may not be satisfied by particular contractors:
A high production builder may meet this requirement if the builder or another
insured on the builder’s policy took title to the house prior to sale. The
requirement would not be met, however, if title to the house were in an
affiliate of the builder which was not an insured under the same policy as the
builder.
A custom builder who builds houses on lots owned by the homeowner is
unlikely to have ever owned the house and hence would not meet this
requirement for application of the absolute pollution exclusion.
A remodeler doing work on a preexisting home would not have owned the
house and hence would not meet this requirement for application of the
absolute pollution exclusion.
A subcontractor would not have owned the house and hence would not meet
this requirement for application of the absolute pollution exclusion. 3
In short, under the law of states interpreting the absolute pollution exclusion literally,
the subcontractor may be in a better position than many general contractors to avoid the
December 2004 version of the absolute pollution exclusion and obtain insurance coverage for
the cost of repairing Chinese drywall.
3 The general contractor may be an insured on the subcontractor’s policy, and the
general contractor may own the house during construction. This should not defeat coverage
for the subcontractor, however, because subpart f.(1)(a)(ii) of the exclusion provides an
exception if the “owner” of the house has been added to the subcontractor’s policy as an
additional insured and the house is not and never was owned by any other insured.
- 14 -

C. Effect of the Products-Completed Operations Hazard
Some CGL policies contain versions of the absolute pollution exclusion that
expressly except property damage that falls within the “products-completed operations
hazard.” Other CGL policies include coverage for the products-completed operations hazard
but with no express statement that such coverage is meant to override the absolute pollution
exclusion. Property damage caused by fumes given off by Chinese drywall after the house is
completed would fall within the products-completed operations hazard. If a contractor’s
CGL policy contains an express exception to the absolute pollution exclusion for damages
within the products completed operations hazard, the exclusion will not apply. See Hydro
Systems, Inc. v. Continental Ins. Co., 929 F.2d 472, 474-75 (9th Cir. 1991) (applying
California law) (express exception to absolute pollution exclusion for products-completed
operations hazard did not apply to styrene gas used in fiberglass bathtubs but only because
gas was not emitted from completed tubs but rather during manufacturing process). In
addition, the products-completed operations hazard may also prevail over a contrary absolute
pollution exclusion even where the exclusion does not contain an express exception for
damages within the product-completed operations hazard. See West American Ins. Co. v.
Tufco Flooring East, Inc., 409 S.E.2d 692, 696-97 (N.C. App. 1991) (coverage for products-
completed operations hazard applied to contractor, despite the policy’s absolute pollution
exclusion, where styrene fumes emitted from contractor’s floor coating caused property
damage). Even in states that have held that the absolute pollution exclusion is unambiguous
and should be read literally, contractors may argue that the products-completed operations
hazard creates an ambiguity where the contractor’s liability arises from the contractor’s
normal business operations, such as home building or installation of drywall. Such
ambiguities are resolved in favor of coverage.
- 15 -

VI. Choice of Law
As discussed above, the states differ in their interpretation of issues such as the CGL
policy’s “occurrence” requirement and the “absolute pollution exclusion.” These differences
among the states can be determinative of the outcome of a contractor’s claim for insurance
coverage of liability for Chinese drywall. In this regard, it is important to note that just
because the homes containing Chinese drywall are located in a particular state does not mean
that a court will apply that state’s law to determine whether a contractor’s insurance policy
covers the contractor’s liability for those homes. The rules for choosing which state’s law
applies to any particular insurance coverage dispute are fraught with uncertainty. This
uncertainty may allow contractors and insurers to persuade courts to apply the law of states
favorable to their respective positions on insurance coverage.
The process of determining the state law that will apply to an insurance coverage
dispute starts with knowing the state in which the coverage lawsuit will be filed. The courts
of each state have different methods of choosing which state’s law will be applied to the
dispute. The two main “choice of law” tests followed by the states are the “place of
contracting” test and the “significant contacts” test. Each test, however, effectively gives the
judge much discretion in its application.
The “place of contracting” test requires that the court apply the law of the state where
the insurance policy was made. Generally speaking, an insurance policy, like any other
contract, is made where the last act necessary to complete the policy occurred. Courts often
differ, however, as to when and where this last act took place. The place of application, the
location of the insured, where the premium was paid, where the premium was received,
where the policy was delivered, and the place where the policy was countersigned by the
insurance company have all been cited by courts as the place where the contract was formed.
- 16 -

Other states follow the “significant contacts” test. This is an even more diffuse test in
which a court attempts to discern the state with the most significant interest in resolution of
the coverage dispute. Factors that the courts consider in doing so include (i) the place where
the insurance policy was executed, (ii) the place where the policy was negotiated, (iii) the
place where the policy was to be performed, (iv) the location of the insured risk, and (v) the
location of the parties. The location of the insured risk may not be the state in which the
affected homes are located but rather the state in which the contractor performs most of its
work.
Among the states in which Chinese drywall has been discovered, states following the
“place of contracting” test include Alabama, Louisiana, Georgia, South Carolina, and
Virginia. States following the “significant contacts” test include Texas and Mississippi. A
Texas statute, however, requires that Texas law be applied if the policyholder is a citizen or
inhabitant of Texas (in the case of a corporation, meaning incorporated under the laws of
Texas), and if the policy was issued by an insurer doing business in Texas in the course of
the insurer’s business in Texas. A North Carolina statute requires that North Carolina courts
apply North Carolina law to all insurance policies made within the state, applied for in the
state, or that cover property in the state. The choice of law rule in Florida is unsettled, and
the issue is currently pending before the Florida Supreme Court. See USF&G v. Liberty
Surplus Ins. Corp., 550 F.3d 1031, 1033-35 (11th Cir. 2008) (certifying to Florida Supreme
Court question of whether Florida would apply place of contracting or significant contacts
test to determine the law applicable to insurance coverage for construction defect claim
against contractor).
Regardless of which “choice of law” rule is applied by the court hearing the insurance
coverage suit, the court could decide that the law of a state other than the state in which the
- 17 -

homes containing Chinese drywall are located should apply to the insurance coverage
dispute. For example, under the place of contracting test, a Florida builder of homes in
Florida may have purchased its CGL policy from an insurer in New York; the policy may
have been countersigned by the insurer in New York; and the policy may provide that it is
not effective until countersigned by the insurer. Such a builder would have a strong
argument that the law of New York should be applied by the Florida court to interpret the
policy. By the same token, if the court were to apply a “significant contacts” test to the same
Florida builder, the court could also decide that the law of a state other than Florida should
apply to the insurance coverage suit. That law could be the law of the state where the
insurance policy was finally entered into, or it could be the state which is the principal
location of the risk, i.e. where the greatest number of the builder’s homes were built. See,
e.g., St. Paul Fire and Marine Ins. Co. v. Building Construction Enterprises, Inc., 526 F.3d
1166, 1168-69 (8th Cir. 2008) (applying Missouri’s significant contacts test, court applies
Missouri law to a coverage dispute over a construction defect claim involving a military base
in Kansas because the insured was located in Missouri, the insurance contract was entered
into in Missouri, and only 10% of the insured’s work was performed in Kansas); Terminal
Freezers Inc. v. U.S. Fire Ins., 2008 WL 2544898, at *3-*5 (W.D. Wash. June 23, 2008)
(applying significant contacts test, court held that insured owner’s property insurance policy
was governed by law of Washington, where the insured was located, rather than by the law of
California, where the damaged building was located, in part to avoid the inconsistencies
resulting from applying the law of the state in which the loss occurred).
VII. Practical Advice for Contractors
Contractors who learn that they may be affected by Chinese drywall should promptly
ask their insurance broker to give the contractor’s primary and excess CGL insurers notice
- 18 -

that claims based on Chinese drywall may be asserted against them. Such notice is required
by the CGL policy not just when the contractor is actually sued but also when the contractor
learns of circumstances that are reasonably likely to result in such a suit. A contractor who
fails to give such notice runs the risk that its insurer will deny coverage on the grounds of late
notice (although many states prohibit an insurer from denying coverage on such grounds
unless the late notice has resulted in material prejudice to the insurer).
In addition, a contractor who desires to respond to homeowner complaints regarding
Chinese drywall should be mindful that its CGL policy imposes obligations on the contractor
who intends to seek insurance coverage for the cost of repairs. A contractor who agrees with
a homeowner to remediate defective Chinese drywall before a judgment is entered against
the contractor, or before a suit is even filed against the contractor, runs two risks. The first
relates to the CGL policy’s insuring agreement, which requires the insurer to pay “those
sums that the insured becomes legally obligated to pay as damages.” Some insurers have
argued that a contractor who settles with a homeowner before a judgment is entered against
the contractor or before a lawsuit is filed against the contractor is not “legally obligated” to
pay damages. Most courts have rejected this argument. See, e.g., Wanzek Const., Inc. v.
Employers Ins. of Wausau, 667 N.W.2d 473, 477 (Minn. 2003) (lawsuit not required to be
filed against contractor). A few courts, however, have held that a lawsuit must be filed
against the insured before the insured’s settlement with the claimant can satisfy the “legally
obligated to pay as damages” requirement. See, e.g., San Diego Housing Commission v.
Industrial Indemnity Co., 68 Cal. App. 4th 526, 543 (1998) (lawsuit required); Zurich Ins.
Co. v. Carus Corp., 689 N.E.2d 130, 134 (Ill. App. 1997) (lawsuit required). But see Central
Illinois Light Co. v. Home Ins. Co., 795 N.E.2d 412, 422-23, 425, 429-30 (Ill. App. 2003)
(lawsuit not required). In addition, at least one court has gone so far as to conclude that the
- 19 -

“legally obligated to pay as damages” requirement is not met unless a judgment in a lawsuit
has been entered against the insured. See Certain Underwriters at Lloyd’s of London v.
Superior Court, 24 Cal. 4th 945, 961 (2001).
The second risk run by a contractor who settles with a homeowner involves the
standard requirement in a CGL insurance policy that the contractor obtain the insurer’s
consent before voluntarily making any payment to the homeowner or assuming any
obligation or incurring any expense. In light of this obligation, contractors who agree with
homeowners to remediate problems caused by Chinese drywall should do at least two things.
First, they should consult with counsel so that the remediation constitutes a settlement of the
homeowner’s claim against the contractor and not just a voluntary undertaking by the
contractor. As part of the settlement, the homeowners may be required to release all or part
of their claims against the contractor, and to assign to the contractor their rights to pursue
recovery against third parties, including the homeowners’ insurer. Second, the contractor
should notify its CGL insurer prior to making any repairs and seek the insurer’s consent to
the contractor’s action, Although the “consent to settle” requirement has been softened by
many states, which require the insurer to demonstrate that the insurer was materially
prejudiced by a violation of this requirement before it may deny coverage based on such a
violation, ideally the contractor should obtain the insurer’s consent before proceeding with
the repairs. If the insurer drags its feet and does not either grant or deny consent, the
contractor will have a strong argument that the insurer may not deny coverage on the basis of
the failure to obtain consent. The courts have not looked kindly on insurers who have
equivocated in response to an insured’s request for such consent.
- 20 -

Conclusion
The availability of coverage for contractors relating to Chinese drywall will depend
on the particular terms of their insurance policies, in particular the wording of the pollution
exclusion in those policies, and also on which state’s law is selected to apply to the
interpretation of those policies. The coverage issues relating to Chinese drywall are likely to
be decided on a case by case basis by the courts over the next few years.
Stephen R. Mysliwiec
DLA Piper LLP (US)
500 8th Street NW
Washington, DC 20004
Phone: (202) 799-4000
Fax: (202) 799-5000
Email: stephen.mysliwiec@dlapiper.com
- 21 -

By: Veronica M. Bates
TRIGGER OF COVERAGE
1. “Pure” or “strict” manifestation rule -
• triggers coverage upon actual discovery of
injury

TRIGGER OF COVERAGE cont.
2. “Relaxed” manifestation rule -
• triggers coverage in first policy period during
which discovery of injury is possible
TRIGGER OF COVERAGE cont.
3. “Exposure” rule -
• triggers coverage in any policy period in
which exposure to cause of injury occurred

TRIGGER OF COVERAGE cont.
4. “Injury-in-fact” rule -
• triggers coverage at the time of the underlying
injury, even if not yet manifested
TRIGGER OF COVERAGE cont.
5. “Injury-causing event” rule -
• triggers coverage at the time of the underlying
injury-causing event

TRIGGER OF COVERAGE cont.
6. Triple Trigger
• All policies triggered during period of
continuing exposure and manifestation
NUMBER OF OCCURRENCES
1. Cause Test
• determined by the number of causes for a
loss(es)
• Not the number of claims or different types of
damages
2. Effects Test
• determined by how many “effects”
(injuries/damages) result from an event(s)

ALLOCATION
1. Pro Rata
• Time on Risk
• allocate amongst multiple insurers based upon
each insurer’s length of policy period(s)
• Proportionate Policy Limits
• Proportion of Injuries During Each Policy
Period
• Total Number of Policies
• Combination of Above
ALLOCATION cont.
2. Joint and Several
• insured selects single policy limit
• all insurers reallocate based upon that
limit
3. Stacking
• each triggered policy can be called upon
to respond up to full limits
• all limits added together

OTHER CONSIDERATIONS
• Deductibles
• Self Insured Retentions
• Gaps in Coverage
• Policy Language
• specific to limits, allocation, sharing,
number of occurrences
901 Main Street
Suite 5200
Dallas, Texas 75202
214.749.6000
www.hsblaw.com

Chinese Drywall Litigation
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
ATTORNEYS AT LAW
www.nldhlaw.com
1. Additional Insured Issues
2. Subrogation Opportunities
Additional Insured Issues
• General Contractors will tender claims
as Additional Insureds (AI) under CGL
policies issued to subcontractors
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
Slide 1
Slide 2

NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Additional Insured Issues
• Definition of Additional Insured (AI):
– An individual or entity that is not
automatically included as an insured under
the policy of another, but for whom the
named insured’s insured insured’s s policy provides a certain
degree of protection.
– Named insured = Subcontractor
– AI = General Contractor
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Additional Insured Issues
• Conferring Additional Insured Status:
Certificates of Insurance
vs.
Additional Insured Endorsement
Slide 3
Slide 4

NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Additional Insured Issues
• What does an Additional Insured
Endorsement Cover?
– Same as if the additional insured have
have
been provided his own CGL policy?
or
– Only for the additional insured’s insured insured’s s vicarious
liability relating to the acts of the named
insured?
Additional Insured Issues
• It depends on the language of the
endorsement
– But many courts ignore or do not follow the
language
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 5

Additional Insured Issues
• Two Types of AI Endorsements:
– ISO / blanket (more common)
• Long form and short form
– Manuscript (more restrictive)
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Additional Insured Issues
• ISO AI Long Form Endorsement (CG 20 09)
– There are several versions
• 1985
• 1993
• 2004
The trend is to reduce coverage
afforded to the AI.
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com

Additional Insured Issues
• The most widely used AI endorsement:
• CG 20 10 11 85
• Original Version (1985) covered AI
while work was in progress and for
completed operations
• Interpreted to cover AI as if it was his
own policy
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Additional Insured Issues
• The most widely used AI endorsement:
• CG 20 10 10 93
• 1993 version tried to exclude coverage
for completed operations
• 1993 version tried to exclude coverage
unless the Named Insured was
negligent
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com

Additional Insured Issues
• 2004 Version: CG 20 10 10 04
– 2004 revisions now require a causal
connection between the named insured’s
acts/omissions and the AI’s liability.
Limiting coverage to injuries:
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
“caused, in whole or in part…”
by the named insured’s acts/omissions
Additional Insured Issues
• 2004 Version: CG 20 10 10 04
• No Coverage for Completed Operations!
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com

Additional Insured Issues
• 2004 Version: CG 20 10 10 04
– Completed Operations exclusion:
This insurance does not apply to "bodily injury" or
"property damage" occurring after:
1. All work, including materials, parts or
equipment furnished in connection with such work,
on the project (other than service, maintenance or
repairs) to be performed by or on behalf of the
additional insured(s) at the location of the covered
operations has been completed; or
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Additional Insured Issues
• 2004 Version: CG 20 10 10 04
– Completed Operations exclusion (cont.):
2. That portion of "your work" out of which the injury or
damage arises has been put to its intended use by any
person or organization other than another contractor or
subcontractor engaged in performing operations for a
principle as part of the same project
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com

NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Subrogation
Opportunities
Subrogation Opportunities
• Workers Compensation Subrogation
• Contribution / Indemnity Claims
• Property Subrogation
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 15
Slide 16

Subrogation Opportunities
Targets are:
• builders
• subcontractors
• building inspectors
• drywall sellers
• drywall distributors
• drywall manufacturers
• Architects
• Others
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Subrogation Opportunities
• Workers’ Workers Compensation
– Carriers should educate their W.C. units
– Claimants:
• dock workers
• warehouse workers
• installers
• remediation workers
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 17
Slide 18

Subrogation Opportunities
• Workers’ Workers Compensation
– Different causation / evidentiary standards
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Subrogation Opportunities
• Contribution / Indemnity Claims
– Targets are “upstream upstream”:
• subcontractors
• distributors
• manufacturers
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 19
Slide 20

Subrogation Opportunities
• Contribution / Indemnity Claims
– Proper General Release
• Extinguishing all claims by property owner
• Potential personal injury carve-out carve out
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Subrogation Opportunities
• Contribution / Indemnity Claims
– Voluntary Payments Defense
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 21
Slide 22

Subrogation Opportunities
• Property Subrogation
– Evidence Retention / Preservation is key!
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Subrogation Opportunities
• Property Subrogation
– Evidence Retention / Preservation is key
• Avoid Spoliation
1. Put targets on notice
2. Preserve samples
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 23
Slide 24

Subrogation Opportunities
• Hurdles / Risks
– Statutes of Repose
• Improvements to Real Property
• Product Liability
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Subrogation Opportunities
• Hurdles / Risks
– Economic Loss Doctrine
– Recoverability Issues
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Slide 25
Slide 26

Subrogation Opportunities
NELSON • LEVINE • de LUCA & HORST
A Limited Liability Company
ATTORNEYS AT LAW
www.nldhlaw.com
Thank You
Slide 27

Liability Issues
Hugh J. Turner Jr.
Akerman Senterfitt
hugh.turner@akerman.com
Robert Brown III
Alters, Boldt, Brown, Rash & Culmo
bob@abbrclaw.com
HB Litigation Conference on Chinese Drywall
Thursday, June 18, 2009
The Ritz-Carlton
Ritz Carlton
New Orleans, Louisiana
Litigation Commences

Who Is Involved
In The Lawsuits?
Manufacturers
Shippers
Suppliers
Installers
Builders
Homeowners
The Parties

Manufacturers
• Knauf Gips, KG (entities)
• Beijing New Building Material, PLC
- Taishan Gypsum Co., Ltd.
- a.k.a. Shandong Taihe Dongxin Co., Ltd.
• Pingyi Zhongxing Paper-Faced Plasterboard Co. Ltd.,
- a.k.a. Shandong Chenxiang Building Materials Co. Ltd.
• USG Corporation
• Georgia-Pacific Gypsum, LLC
Primary Target Has Been Knauf
Parent company in Germany
Dongguan
Tianjin
Wuhu
Facilities located in China

Shippers
Rothchilt International, Ltd.
2004-2006:
2004 2006:
Chinese Drywall Arrives In USA
Dongguan
Tianjin
Wuhu

Suppliers
84 Lumber Co.
All Florida Drywall Supplies, Inc.
All Interior Supply, Inc.
Banner Supply Co.
Black Bear Gypsum Supply, Inc.
Interior & Exterior Building Supply LP
L&W Supply Corporation
La Suprema Enterprise, Inc.
La Suprema Trading, Inc.
Pro-Build Pro Build Holdings, Inc.
Rinker Materials of Florida, Inc.
1st Drywall, LLC
ABC Drywall Corporation
Active Drywall South, Inc.
All Country Drywall Service, Inc.
Alpha & Omega Contractors, Inc.
B&B Stucco, Inc.
Bill Pfannkuch Framing, Inc.
BMD, Inc.
Design Drywall of South Florida,
LLC
Florida Style Services, Inc.
Harrell's Drywall, Inc.
J.D.M. Builders, Inc.
Installers
Manny's Drywall, Inc.
MDW Drywall, Inc.
Northeast Drywall Co.
Ocean Coast Drywall of South
Florida, Inc.
Ocean Construction, Inc.
Precision Drywall
Residential Drywall Inc.
Rightway Drywall Inc.
S.D. & Associates, Inc.
South Kendall Construction
Corp.

• Beazer Homes Corp.
• Boynton Beach XVI Corp.
• Boynton Beach Associates, LLLP
• Breezes at Galloway Inc.
• Centerline Homes, Inc.
• Certain Homes, Inc.
• Engle Homes, Inc.
• Galloway Home Builders Inc.
• Galloway Sunset Estates Inc.
• G.L. Homes
• Hansen Homes of South Florida, Inc.
Builders
• Lennar Corporation
• Lumar Builders, Inc.
• Northstar Homes
• Oakbrook Building and Design,
Inc.
• Paul Homes, Inc.
• Residential Development Corp.
• Taylor Morrison Services, Inc.
• Taylor Woodrow Communities at
Vasari
• Tousa Homes
• Treasure Coast Homes, LLC
• U.S. Home Corporation
What Types of Lawsuits Are
Being Filed?

Drywall Lawsuit Models
• Type 1: Homeowner as Plaintiff
• Type 2: Builder as Plaintiff
Causes of Action
• Negligence
• Negligent misrepresentation
• Strict liability for defective product
• Implied warranties
• Express warranties
• Breach of contract
• State consumer protection acts
• Fraudulent concealment / misrepresentation
• Private nuisance
• Unjust enrichment
• Medical monitoring

Negligence
• Elements
- Duty
- Breach
- Cause in fact and proximate cause
- Damages
Negligent Misrepresentation
• Elements
- Misrepresentation of material fact
- Representer:
- knew of the misrepresentation;
made it without knowledge of truth or
falsity; or should have known it was false
- Damages

Express Warranty
• Elements
- Express statement
- Sale of a defective product
- Proximate cause
- Damages
Breach of Contract
• Elements
- Existence of a contract
- Privity
- Breach
- Damages

Private Nuisance
• Elements
- Wrongful act
- Deprivation of quiet enjoyment
- Proximate cause
- Damages
Unjust Enrichment
• Elements
- Unjustly enriched by wrongful action
- To the detriment of the Plaintiff
- Retention of profits
- Inequitable to retain profits

Medical Monitoring
• Elements:
- Exposure to a proven hazardous substance at greater
than “background”
- Caused by defendant’s negligence
- As a proximate result, a significantly increased risk of a
serious latent disease exists
- Existing monitoring procedure permits early detection,
and
- The regimen is different than in the absence of exposure
and reasonably necessary
Property Damages
• Remediation
• Repair/Replacement of personal property
• Rental of substitute housing
• Moving costs
• Diminution of value
• Loss of enjoyment
• Lifetime Warranty

Personal Injury Damages
• Pain and suffering
• Medical bills
• Medical Monitoring
Type 2
Claims Brought By Builders
Vicarious liability
Common law indemnity
Products liability
Negligence
Equitable subrogation
Unjust enrichment
Breach of implied warranties of merchantability
and fitness for a particular purpose
Breach of express warranty
Breach of contract

Vicarious Liability
A corporation is liable for the acts of its agent
when the agent acts with actual or apparent
authority. An agent acts within the scope of its
authority if:
– The corporation, by its words words or conduct, represented
to Plaintiff that the agent had the authority to transact
the company's business;
– Plaintiff relied on the corporation's representation; and
– Plaintiff changed its position in reliance on the
corporation's representation.
Common Law Indemnity
Indemnity is a right which inures to one who discharges
a duty owed by him, him, but but which, which, as between between himself himself and and
another, should have been discharged by the other, and and
is available only where the whole fault is in the one from
whom indemnity is sought. See Houdaille Industries, Industries,
Inc. v. Edwards, Edwards,
374 So .2d 490 (Fla. 1979).
Shifts the entire loss from one who, although without
fault, has been obligated to pay because of some
vicarious, constructive, derivative, or technical liability to
another who should bear the costs because it was the
latter's wrongdoing for which the former is held liable.
For the right to indemnification to arise, there must be a
special relationship between the parties that gives rise to
the technical liability of the would-be would be indemnitee.

Equitable Subrogation
Designed to afford relief where one is required
to pay a legal obligation which ought to have
been met, either wholly or partially, by another.
Appropriate where:
– The subrogee made payment to protect its own
interest;
– The subrogee did not act as a volunteer;
– The subrogee was not primarily liable for the debt;
– The subrogee paid off the entire debt; and
– Subrogation would not work any injustice to the right
of a third party.
Type 2
Damages
A declaration that Defendants are responsible for the
costs and expenses of monitoring, repairing repairing and and
replacing allegedly defective drywall
Compensatory damages
Consequential damages, including business disruption
costs
Punitive damages
Permanent injunction mandating that Defendants replace
all allegedly defective drywall with drywall free of defects
Permanent injunction mandating that Defendants
remediate all damage
Attorneys' fees and costs

What Are The Defenses?
Economic Loss Doctrine
DEFENSES
– Recognized in several states, including Florida and most other states states
facing
drywall litigation except Louisiana, which permits recovery for economic
loss.
– Generally prohibits tort recovery when a product damages itself, causing
economic loss, but does not cause personal injury or damage to any any
property other than itself. See East River Steamship Corp. v. Delaval, Inc., Inc. ,
476 U.S. 858 (1986).
– Applies "only in circumstances where the parties are either in contractual contractual
privity or the defendant is a manufacturer or distributor of a product." product."
See
Indemnity Ins. Co. v. Am. Aviation, Aviation,
891 So. 2d 532 (Fla. 2004).
– Homeowner may not sue under tort for purely economic losses when there
are contractual remedies. Fraudulent inducement is an exception to this
general rule, but the rule still applies when the fraud alleged is in the
performance of a contract.
– Most notably applies between homeowners and home builders, but may may
also apply between other parties.

DEFENSES
Florida - Economic Waste Doctrine
Florida
– Cost to correct the defect was not the proper
measure of damages; rather, the measure of
damages should be the difference between
the value of the home as it was delivered
compared with the value of the home as it
should have been delivered.
See Heine v. Parent Construction, Inc., Inc. , 4 So. 3d 790 (Fla. 4th DCA
2009)
Causation
DEFENSES
Causation
– Particularly relevant with respect to personal
injury claims
Attempt to establish that the drywall was not the
proximate cause of the damages
Establish through medical experts
Daubert challenges

DEFENSES
Florida - Strict Liability May Not Apply
– Strict products liability does not apply to structural improvements
improvements
to real estate.
See Plaza v. Fisher Development, Inc., Inc. , 971 So. 2d 918 (Fla.
3d DCA 2007) (holding that the installer of a conveyor
system in a Pottery Barn store was not liable for personal
injuries resulting from a defect in the conveyor system
because the conveyor system was an improvement to real
property and thus not a "product").
An exception exists "where the injuries result not from the
real property as improved by the alleged defective product
but directly from a defective product manufactured by
defendant, which product may have itself been incorporated
into the improvement of the realty before the injury from the
product occurred." See Fed. Ins. Co. v. Bonded Lightning
Protection Sys., Inc., Inc. , 2008 WL 5111260 (S.D. Fla. Dec. 3,
2008).
DEFENSES
Innocent Seller Defense
– In some states, such as Mississippi and Texas, where a retailer
sells a product that it does not change in any way, and the
retailer is unaware of any obvious defect in it, the retailer is
essentially immune from liability.
"It is the intent of this section to immunize innocent sellers
who are not actively negligent, but instead are mere conduits
of a product." Miss. Code Ann. § 11-1-63 11 63(h). (h).
"A manufacturer shall indemnify and hold harmless a seller
against loss arising out of a products liability action, except
for any loss caused by the seller's negligence, intentional
misconduct, or other act or omission, such as negligently
modifying or altering the product, for which the seller is
independently liable." Tex. Civ. Civ.
Prac. Prac.
& Rem. Rem.
Code §
82.002.

Louisiana
DEFENSES
Louisiana – New Home Warranty Act, La. R. S.
9:3141 et seq.
– May provide a homeowners' exclusive remedy in suits
against builders.
– Contains pre-suit pre suit notice provisions.
– May exclude consequential damages.
– Does not apply to certain types of "defects"
Dampness, condensation or other damage due to the failure
of the owner to maintain adequate ventilation or drainage.
Any defect in, or any defect caused by, materials or work
supplied by anyone other than the builder, or any employee,
agent, or subcontractor of the builder.
Mold and mold damage.
DEFENSES
Warranty Defenses
– Burden is on the home purchaser to prove by
a preponderance of the evidence that a
builder's proposed repairs are unreasonable.
See Friedman v. U.S. Home Corp., Corp. , 452 So.
2d 1111 (Fla. 2d DCA 1984).

DEFENSES
Lack of Privity of Contract
– Defense to warranty-related warranty related and contractual
claims
– There is an exception for cases involving
condominiums. Condo developers and contractors
are subject to statutory warranties under Fla.
Stat. § 718.203
Blame shifting
– Builders' suits (Lennar, Mitchell Company)
– Claims of common law indemnity against
suppliers and manufacturers
DEFENSES
Factual Defenses
– Other construction defects are the culprits
– Alternative causation facts (i.e. cross-
contamination, defective additives applied to the
drywall, negligent offshore storage)

Who Are The Experts?
• Science Experts
- Industrial Hygienists
- Chemists
- Toxicologists
- Epidemiologists
- Neurologists
- Pathologists
- Pulmonologists
- Physicists
Experts
• Construction Experts
- Architects
- Engineers
- Estimators
- Realtors
• Economists

What Are The Current Issues
In The Cases?
Current Issues
Service of Process
– Service, even under the Hague Convention, involves
considerable time and expense when dealing with
foreign defendants.
– In this case, service must be made on companies in
Germany, Taiwan and China.
– Complaints must be translated into native languages,
such as mandarin Chinese, and companies must be
retained to effect service overseas. The cost can
amount to several thousand dollars, and the process
takes several months.
– Lennar filed suit nearly five months ago and has yet
to effect service on the foreign defendants.

Current Issues
Service of Process (cont.)
– Procedure:
For Chinese and German entities – request that
the court appoint a special process server to make
service on a "Central Authority" in those foreign
countries pursuant to the Hague Convention.
For Taiwanese entities such as Rothchilt – letters
rogatory (Taiwan is not a signatory to the Hague
Convention).
Current Issues
Service of Process (cont.)
– Issues To Consider:
German Central Authorities may refuse to accept
service under certain circumstances.
Taiwan has a strict protocol.
Chinese authorities often refuse to cooperate over
trivial matters.
Service on entities in Taiwan and China is
particularly slow.

Current Issues
• Case Assignments
- Southern District of Florida cases have been reassigned
to Judge K. Michael Moore.
- Some Eastern District of Louisiana cases have been
assigned or transferred to Judge Sarah Vance or
Judge Jay Zainey.
- Pending MDL in E.D. La. may drastically affect the
landscape of federal litigation.
Third Party Actions
Current Issues
– Defendant Rightway Drywall filed a third-party third party
complaint against Smoky Mountain Materials
Inc. in the Mitchell Company case.
– South Kendall Construction Corp. filed a
Crossclaim against Banner Supply in the
Vickers case.

Current Issues
• Bankruptcies
- WCI Communities, Inc.
- Black Bear Gypsum Supply, Inc.
Current Issues
"The Repair and Relocation Agreement is
a legally binding contract, which may
affect your legal rights. You have the right
to consult with an attorney should you
choose to do so, prior to executing the
agreement.."
– Culliton (S.D. Fla.) Case No. 8:09-cv 8:09 cv-00589 00589-JDW JDW-TGW TGW

Current Issues
Insurance Coverage
– Baker v. Am. Home Assurance Co.
Middle District of Florida (Case No. 2:09-cv 2:09 cv-00188 00188-
UA-DNF UA DNF)
Homeowner v. Homeowner's Insurer
– Builders Mutual Ins. Co. v. Dragas
Management Corp.
Eastern District of Virginia (Case No. 2:09-cv 2:09 cv-
00185-RBS
00185 RBS-TEM TEM)
Builder's Insurer v. Builder
Two Types
Indemnity Claims
– Contractual
– Non-Contractual Non Contractual (common law)
Potential Indemnitors
– Contractual – privity is required
– Non-Contractual
Non Contractual – any upstream party

Indemnity Claims (cont.)
Enforceability of Contractual Indemnity Provisions
– Product claims
U.S. Brass Corp. v. Dormont Mfg. Co., Co. , 242 Fed. Appx. 575 (10th Cir. 2007).
– Requires clear and unambiguous language
Fendley v. Power Battery Co., Co. , 561 N.Y.S.2d 760 (A.D. 1990).
– Negligence claims
Carlson Corp./Southeast School Bd. Of Seminole County, Fla., Fla. , 778 F. Supp. 518 (M.D.
Fla. 1991); Thyssen Elevator Co. v. Drayton-Bryan Drayton Bryan Co., 106 F. Supp. 2d 1342 (S.D. Ga.
2000).
– Duty to Defend
– Construction/Design Contracts
Indemnity Claims (cont.)
Fla. Stat. § 725.06 - Construction contracts;
limitation on indemnification
– Void unless monetary limitation and bears reasonable
commercial relationship to the contract and is part of
specifications or bid.
– May not be < $1M per occurrence UOA.
– Only applicable to acts, omissions or defaults of
indemnitor; indemnitor's contractors, subcontractors,
sub-subcontractors, sub subcontractors, materialmen or agents; and
indemnitee (or its officers, agents or employees –
subject to limitation).

Issues In Florida
• Chapter 558 Requirements
- Pre-Suit notification requirement
- Written notice on any contractor, subcontractor, supplier, or design
professional at least 60 days before bringing a lawsuit.
Issues in Virginia
Norfolk and Virginia Beach have banned the use
of drywall imported from China.
The state legislature has changed Va. Code §
55-70.1, 55 70.1, which relates to implied warranties in
new homes. The statute states that new homes
sold by builders are sold with the following
implied warranties, that the home is:
– (i) free from structural defects, so as to pass without
objection in the trade,
– (ii) constructed in a workmanlike manner, so as to
pass without objection in the trade, and
– (iii) fit for habitation

Issues in California
Since 2002, Civil Code section 895 et seq. is
similar to Florida's section 558 regarding pre-suit pre suit
notice of construction defects. It requires that
homeowners notify builders of any alleged
construction defects, and the builder then has
obligations to, in a timely fashion:
– inspect the home,
– provide the homeowner with documentation, including
plans and specifications for the subject property,
– provide notice to potentially liable third parties such
as subcontractors, and
– offer to repair or mediate the dispute.
Issues in California (cont).
Effective January 1, 2009, Civil Code section 2782(d)
modifies the indemnity rights between builders and
subcontractors. Now, if a builder tenders to a
subcontractor/installer of Chinese drywall pursuant a
contract for indemnification, the installer has two
options:
– defend the case with counsel of its own choosing and maintain
control over the homeowner's claim against the builder; or
– pay a portion of the builder's costs that directly relate to
defendant against allegations pertaining to the installer's scope scope
of work.

Chinese Drywall Conference
Sander L. Esserman
STUTZMAN, BROMBERG,
ESSERMAN & PLIFKA
A Professional Corporation
New Orleans
Is Chinese Drywall the
Next Mass Tort???
Bankruptcy Implications
2323 Bryan Street, Suite 2200
Dallas, Texas 75201
Phone (214) 969-4900
Facsimile (214) 969-4999
www.sbep-law.com

Potential Liability
• Homebuilders
• Distributors/Suppliers
• Importers
• Manufacturers
Chapter 11 could be… be
The Solution
or
The Problem

Are Chinese Drywall Issues Similar to Issues
Faced in Other Mass Tort Bankruptcies?
• Notice Issues
• Counsel Issues
• Committee Issues
• Class Action Issues
• Future Claims Issues
– FCR
Debtors’ Debtors Positions
• Prepetition Claims – Dischargeable
• No Class Actions Allowable
• Limited to assets left behind in Chapter 11
and not Reorganized Company
• No Future Claims
• Notice Adequate/Constitutional Issues

Notice Programs
• Probably Insufficient
• Compared to Other Mass Torts
– Asbestos
– Breast Implants
– Securities Cases
– Dalkon Shield
Issues to be Addressed
• No Notice Received
• No Claims Filed
• Ch. 11 Estate Closed and
Distributions Made

Search for New Defendants
• Contractors
• Others who are in the stream of
possession
• Insurance issues
Sander L. Esserman
Sander L. Esserman
STUTZMAN, BROMBERG, ESSERMAN & PLIFKA,
A Professional Corporation
Telephone: (214) 969-4900
esserman@sbep-law.com

Chinese Drywall –
Financial and Valuation Considerations
John A. Kilpatrick, Ph.D.
Greenfield Advisors
Seattle, Washington
June 18, 2009
www.greenfieldadvisors.com
Suite 650 – 2601 4 th Avenue
Seattle, Washington, USA 98121
+01-206-623-2935
How does Chinese drywall impact home
values?
How do we separate Chinese drywall stigma
from overall market recession meltdown?
How can mass appraisal be used?
1

How does Chinese drywall impact home values?
Pre-remediaiton
Post-remediaton
How does Chinese drywall impact home values?
General Formula:
Unimpaired Value
- Cost to “Cure”
- Residual Stigma
= Impaired Value
2

How does Chinese drywall impact home values?
Example (pre-remediation):
Unimpaired Value $100,000
- Cost to “Cure” - 40,000
- Residual Stigma - 40,000
= Impaired Value = 20,000
How does Chinese drywall impact home values?
Example (post-remediation):
Unimpaired Value $100,000
- Cost to “Cure” - 0
- Residual Stigma - 30,000
= Impaired Value = 70,000
3

How does Chinese drywall impact home values?
What are the components of stigma?
Primarily --
Loss of Marketability
Loss of Use and Enjoyment
Permanent Structural Defects
Appraisers call this “incurable depreciation”
How does Chinese drywall impact home values?
Does stigma ameliorate over time?
Some appraisers have hypothesized that it
can, and there is some anecdotal evidence
Most empirical p evidence says y
no
4

Home H Value Over 10 Yeaars
Home H Value Over 10 Yeaars
200,000
150,000
100,000
How does Chinese drywall impact home values?
Post-Remediation
50,000
0
Unimpaired Value Growing 5% per year
Impaired Value Growing 5% per year
Pre-Remediation
1 2 3 4 5 6 7 8 9 10 11
Empirically Observed Values of
Stigmatized Residences over Time
200,000
150,000
100,000
How does Chinese drywall impact home values?
50,000
0
Unimpaired Value Growing 5% per year
For stigma to dissipate in 10 years, impaired
values must grow by 11% annually
1 2 3 4 5 6 7 8 9 10 11
This phenomenon is rare in the real world
5

Home H Value Over 10 Yeaars
How does Chinese drywall impact home values?
200,000
Unimpaired Value Growing
5% per year
150,000
100,000
50,000
0
For stigma to dissipate in 2 years, impaired
values must grow by 32% per year
1 2 3 4 5 6 7 8 9 10 11
This leads to an absurd set of prices
How does Chinese drywall impact home values?
How can we measure stigma?
Survey research
Pricing studies (appraisals and/or statistics)
Case studies
Academic Studies
Engineering/architectural studies
6

Home H Value Over 10 Yeaars
How does Chinese drywall impact home values?
Engineering/architectural studies of stigma
Recognizes that “remediation” ≠ “cure”
Residual damages result in a foreshortening of
the economic life of the structure
Homeowners are paying too much to live in a
home which will deteriorate faster than
normal and/or require above average
lifetime maintenance
200,000
150,000
100,000
50,000
How do we separate the Chinese drywall impact
from the overall market meltdown?
0
Unimpaired Value Growing 5% per year
Impaired Value Growing 5% per year
1 2 3 4 5 6 7 8 9 10 11
Helpful to reflect back on the earlier
stigma slide
7

Home H Value Over 10 Yeaars
Home H Value Over 10 Yeaars
200,000
150,000
100,000
50,000
How do we separate the Chinese drywall impact
from the overall market meltdown?
0
Pre-meltdown anticipated value
trendline -- growing 5% per year
Impaired values
Actual unimpaired
values al es “post
meltdown”
1 2 3 4 5 6 7 8 9 10 11
Impaired values are now a function
of the “post-meltdown” model
150,000
100,000
50,000
How do we separate the Chinese drywall impact
from the overall market meltdown?
0
Pre-Remediation
Loss in Value
1 2 3 4
These values manifest in a much
shorter period, but prices may actually
stagnate over a period of years
Post-Remediation
Loss in Value
8

Use of Mass Appraisal Models
Consistent with academic methods
Effi Efficient i t – bboth th iin ti time and d iin cost t
Approved under USPAP
Accepted by the Courts
Widely used by tax assessors & others
Statistical validity, known error rates
Systematic methodology Fair and uniform
determination of damages
Typical Requirements:
Use of Mass Appraisal Models
Large number of subjects
Can be mass tort or class action
Also useful for “test cases”
Event Study (essentially a time series) or crosssectional
(using a control area)
9

Use of Mass Appraisal Models
Event Study (time series):
An “event” occurs at a known point in time –
market is disrupted and values change
suddenly
Use value trends before “event” to measure
unimpaired values
Use of Mass Appraisal Models
Event Study (time series):
New homes sold with Chinese drywall – original
selling prices may be a proxy for unimpaired
values
This assumes buyers were unaware of the
Chinese drywall problems
10

Use of Mass Appraisal Models
Event Study (time series):
Useful models include repeat sales indices
(used by OFHEO and Case/Shiller)
Also can use before/after hedonic models
Use of Mass Appraisal Models
Cross-sectional studies:
Particularly useful if “realization” of Chinese
drywall occurred over a period of time
Unimpaired values are measured using a
control area of comparable properties
Information from control area is then applied to
the affected properties
11

Use of Mass Appraisal Models
Cross-sectional studies:
Most commonly used is the hedonic pricing
model
Conceptually analogous to single appraisals
Uses a large g data set to formulate valuation
coefficients (called “adjustments” in a single
appraisal)
In Summary
Homes impacted by Chinese drywall may have value
impacts both from remediation costs as well as from
residual stigma
Stigma may be reduced by remediation, but probably
does not dissipate
Losses resulting from Chinese drywall can be easily
separated from recession impacts
Mass appraisal can be applied to efficiently and
systematically measure financial impacts
12

Dr. John Kilpatrick is an economist and the Managing Partner of Greenfield Advisors, specializing in economic market
and valuation analysis, principally in real estate matters, headquartered in Seattle. He is also a Visiting Scholar
in Real Estate in the Zichlin School of Business, Baruch College, City University of New York.
He holds a Ph.D. in Finance from the University of South Carolina, where he also taught Real Estate and Corporate
Finance as a Lecturer in the Moore School of Business. He served as the founding Administrator of the South
Carolina Supercomputer Network and as the Secretary/Treasurer of the Academic Coalition for Intelligent
Manufacturing Systems, based in Washington, DC.
Dr. Kilpatrick is the author of four books and numerous journal articles. He is a frequent invited presenter before
national groups, including the U.S. Senate Subcommittee on Science, Technology, and Space and the National
Trust for Historic Preservation. His work in real estate finance has been the subject of recent articles in the New
York Times, the Boston Globe, and the Wall Street Journal. He is the author of chapter 29, “Brownfield
Valuation”, in Lexis-Nexis Matthew Bender’s Brownfield Law and Practice, and is a chapter contributor in the
forthcoming 3rd edition of the American Bar Association’s Brownfieds. In 2001, the National Park Service
honored Dr. Kilpatrick by producing a monograph summarizing his work in the valuation of historic
neighborhoods.
His recent clients include the U.S. General Services Administration, the Hearst Family, the Japan Real Estate Institute,
and numerous private investors, corporations, university endowments, trusts, and law firms. Among his other
honors, Dr. Kilpatrick is a member of the Faculty of Valuation of the Royal Institution of Chartered Surveyors
(UK) (UK), hhe iis th the Ed Education ti Ch Chairman i of f th the RReal l EEstate t t CCounseling li Group G of f America, A i serves on the th Education Ed ti
Committee and is a Fellow of the American Real Estate Society, and is featured in Who’s Who in America.
13

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Chinese Drywall
A Greenfield Advisors White Paper
John A. Kilpatrick, Ph.D., MRICS and Christopher A. Miner, MAI
June 5, 2009
The Chinese Drywall issue is rapidly unfolding,
and Greenfield Advisors has been tracking the
issues since they first came to light. The
following is based on the best information
available to date, which is believed to be
reliable
In 2005, a spike in housing construction
appeared in the southeastern United States as a
result of major hurricanes in the previous year.
Coupled with the booming housing market, this
led to a shortage of raw material including
drywall. To cope with this demand, non‐
standard sources of drywall were sought out
(much of the normal US drywall allotment
comes from Canada and Mexico). Knauf
International GmbH fulfilled this demand to a
large extent by manufacturing and importing
drywall from China, to the tune of 500 million
pounds in 2006, up from less than 2 million
pounds imported in 2005. By 2007 an easing of
the housing boom reduced these imports to 33
million pounds, although that is still enough to
affect thousands of homes.
The Chinese drywall was made using fly ash, the
residue from coal‐burning power plants. Fly ash
contains many dangerous compounds
(chromium, lead and arsenic among others). So
far, the only reported impact on human health
has been attributed to the sulfur‐based gas that
the drywall emits. This gas also corrodes
(oxidizes and pits) copper building components.
Initially this corrosive and caustic gas was
thought to be sulfur‐dioxide, but it has since
been determined to be mostly carbon
disulphide, carbonyl sulfide and strontium
sulfide. 1
As homes from 2006 began to age a bit, those
built with this Chinese drywall began to
manifest problems, notably rotten egg (sulfur)
smells and corroding copper plumbing, copper
heat exchanger coils, and exposed copper
wiring. Scores of lawsuits have cropped up as
people noticed the pattern and came to the
conclusion that the Chinese drywall was
contaminated and defective.
The extent of the problem spans many states.
At least two major home builders (Ryland and
Lennar) have attempted to remediate the
problem by replacing the sheetrock and the
more obviously corroded components in
customers’ homes.
The purpose of this paper is to raise the
awareness among real estate professionals
about this issue and to provide them with tools
to help them identify homes with this faulty
drywall. It also provides some background on
how some forms of impairment can cause
losses in value above the cost to cure, which is
referred to as ‘stigma’ in the real estate lexicon.
The paper also outlines some of the valuation
techniques that can be used to determine how
defective drywall impacts value.
At this time, new information regarding
Chinese‐made drywall is still being discovered.
This paper summarizes the information that we
know so far.

Builder Reactions
Some builders who installed the defective
drywall have opted to remove it, at their own
cost. They have chosen this route with the
expectation that removal of the offending
product would alleviate the source of
contention for homeowners. Implicit in this
action is that it is good for customer relations, it
removes the source of the problem, and it
closes the controversy without incurring
additional expense. The replacement of
damaged copper components is apparently
being determined on a case‐by‐case basis. The
status of copper components will vary
depending upon the environment and duration
of exposure to the gases from the drywall.
Some homeowners have reportedly replaced
the copper in heat exchangers three times
already.
Health Concerns
The defective drywall emits a rotten‐egg, sulfur‐
based smell. Unlike gypsum‐based drywall from
Mexico and Canada, China manufactures
drywall from fly ash residue, a waste material
captured from the chimneys of coal‐fired power
plants. When exposed to moisture and/or heat
the off‐gassing of sulfur‐based gasses has led to
reports of increased asthma attacks, coughing,
dizziness, fatigue, headaches, irritated eyes,
nausea, sinus problems, and sneezing.
Epidemiological studies are months from being
completed.
The Department of Health (DoH) in Florida has
recently reported that the levels of toxins
present in these homes do not rise to unsafe
levels. This, however, is based on industrial
standards rather than residential, and assumes
only eight hours of exposure in five out of seven
days per week, which is not analogous to a
more likely residential situation of exposure for
as much as 16 hours or more every day. The
question of health effects therefore remains
unresolved at present.
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Detection
Appraisal Issues
Chinese Drywall
June 5, 2009
Page 2
Appraisers may be aware of the defective
drywall and should consult with their clients
about how this issue should be handled. Red
flags to appraisers include the brand of drywall
used in the home, the location of construction,
the date of construction, and a noticeable sulfur
smell.
Brands
Knauf Plasterboard, a German brand owned by
Knauf International GmbH, imported Chinese‐
manufactured drywall through its subsidiary
Knauf Plasterboard, Tianjin Co. There is a
concern that Knauf also supplied “private label”
drywall to retailers to re‐sell as their own
product, making tracking more difficult.
However, to date evidence of this happening is
circumstantial and only one claimant has non‐
Knauf drywall.
Locations where used
Chinese‐manufactured drywall has reportedly
been installed in homes in Alabama, Arizona,
California, Florida, Louisiana, Mississippi,
Nevada, New Jersey, Ohio, Texas, Virginia,
Washington, Wisconsin, and Wyoming. Drywall
problems not explicitly linking Chinese
manufacture have also been reported in
Colorado, Georgia, Maryland, Nevada, New
Jersey, North Carolina, South Carolina, and
Texas. “America’s Watchdog” claims it has
found defective drywall in 41 states, but suits
have not been filed that widely so far.
Time period
Originally said to date back to 2005, Knauf is
now acknowledging that shipments of the
Chinese drywall were imported as far back as
2001. Chicago‐based USG reportedly imported
9400 tons of similar drywall into South Carolina
in April of 2006; exact locations where it was
used are unclear. The primary dates and area of

concern at the moment remain 2004‐2008 in
Florida, when an estimated 60% of all the
drywall in question entered the market.
Visual Clues
Several visual clues may be used to detect
Chinese drywall. A/C coils within walls can
corrode in as little as four years, and electrical
wiring may turn black. Cook top elements will
corrode and copper plumbing and air
conditioning coils corrode in just a few years.
While many companies are now marketing “test
kits,” the State of Florida considers these
generally to be ineffective and recommends a
visual inspection. Even a casual inspection by a
homeowner may be sufficient, as the “KNAUF”
branding isn’t difficult to spot anywhere that
drywall is exposed; for example, in the attic
behind insulation.
Odors
The most obvious red flag for appraisers is the
sulfur smell. However, the smell can be
contained by encapsulating paint or masked. If
the wallboard has been replaced, the smell will
not be noticeable. Excessive corrosion of metal
construction components that came in contact
with the sulfur‐based gas may or may not be
visible.
Laboratory testing
Non‐destructive testing seems to be falling
short. EMSL labs have not been particularly
successful with air samples as the gases
measure in the parts per billion in open spaces.
Corrosion scrapings (the oxidation and black
film) work somewhat better.
Destructive testing seems to work best. Dr.
Edward A. Sobeck, PhD of AssuredBio.com the
University of Tennessee and Irving Kraut, an
industrial hygienist from Naples Florida have
developed a process using Fourier Transformed
Infrared technology to detect the difference
between American and Chinese drywall from a
2”x2” sample.
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Chinese Drywall
June 5, 2009
Page 3
To compound the problem, some homes were
built or rebuilt with a combination of Chinese
and American drywall.
Remediation
Because the extent and long‐term effects of
the problem are still being discovered, a certain
cure is still yet undefined. As in many
impairment cases, the cost of a total cure may
prove to be infeasible because the value added
by the cure exceeds the cost of the cure.
The most expedient action is to replace the
defective drywall with good drywall. This
eliminates the emission of the sulfur‐based gas
and removes the smell. It stops the progression
of deterioration of metal construction
components that come in contact with the
sulfur‐based gasses. However, even after
replacement of the drywall, there may be
substantial residual effects from the drywall.
The sulfur‐based gases have sped the corrosion
of metal construction components such as
pipes, electrical components and metal wall
studs, thus shortening the economic life of
these components.
Accordingly, replacement of the drywall may
not effect a total cure. Residual effects might be
classified as incurable physical deterioration.
Obviously excessively corroded components
could be replaced with new components.
However, essentially all the known cases of use
of this drywall are in houses less than eight
years old. Replacement of plumbing in nearly‐
new houses may not be feasible if the copper
components can still provide years of service.
Certainly metal studs, as are used in commercial
construction, present a larger concern.
If the effects of corrosion could be gauged with
certainty, they might have the same effect on
value as‐if the builder had installed used piping
instead of new piping when building the house.
If the effects could be known to be curable
(now or later) with certainty, they would

probably not generate stigma. However, we are
still learning about the effects of defective
drywall.
Stigma
In real estate appraisal, stigma is term used to
describe loss in market value over and above
the cost of remediation. When present, it stems
from reduced marketability of the property or
loss of use and enjoyment. Stigma is also linked
to fear or uncertainty about the remediation.
Not every defect results in stigma. Stigma
generally does not accompany a defect where
the cure is easily ascertained by market
participants, totally curable and readily
quantifiable. A good example is a furnace that
stopped working in the summer time. Market
participants would simply consider the cost of
replacing the furnace into their pricing decision
– once replaced the property would not suffer
any residual value loss.
On the other hand stigma may be generated by
defects in properties where the cure is not
known to be absolute, where the timing of the
cure is uncertain, where there may be residual
effects even after the cure, where there may be
adverse health effects, etc. Examples are
properties that have been contaminated or
buildings into which water periodically intrudes,
is not controllable, and mold results.
In the case of defective drywall, some of the
unknowns are how the gases of installed
drywall may affect one’s health in the short
term and in the long term and how much
sooner will metal construction components
require replacement. Further study is required
to determine how these and other unknowns
impact the marketability and values of affected
properties. If there is a further diminution in
value in excess of the cost of an immediately
feasible cure, this can be identified as stigma.
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Chinese Drywall
June 5, 2009
Page 4
For purposes of this discussion, we will use the
word remediation in lieu of “an immediately
feasible cure”.
Side issues
While not strictly the domain of real estate
appraisers, lawyers will find interest in other
claims for damages. These damage claims may
fall under the headings of health, additional loss
in use and enjoyment, and punitive damages.
Further study may find that the drywall has
impacted the health of the occupants. This can
result in claims for the cost of medical
treatments and monitoring. Claimants may also
seek damages for pain and suffering.
People who live in houses with defective
drywall may suffer a loss of use and enjoyment
over and above that which is captured in the
stigma losses. The statutes and court findings
relative to loss of use and enjoyment vary from
state to state. For example, Maryland notes
that “A plaintiff who occupies a home is not
limited to the recovery of the diminished rental
value of it, but may be compensated for any
actual inconvenience and physical discomfort
which materially affected the comfortable and
healthful enjoyment and occupancy of his
home.” 2 Use and enjoyment may be a separate
issue from loss in value.
Detecting stigma
How can you tell if a property suffers from
stigma? Note: these tell‐tale signs are taken
from Greenfield Advisors’ experience in working
with contaminated and otherwise stigmatized
properties. They are presented, not because
these effects have been observed in properties
with defective drywall, but to alert the reader
to tell‐tale signs that, if present, indicate that
stigma may be present.
1. Longer marketing periods. Stigmatized
properties may sit on the market longer
than comparable unimpaired proper‐
ties. Some may simply be unmarked‐

able, in which case rather than a
“market value,” the property may have
some “value in use.” Be on the lookout
for extended marketing times for
properties that have defective drywall
or that have had defective drywall
replaced. Extended marketing times can
result in lost opportunities and
increased holding or marketing costs.
2. If an owner of a stigmatized house
wants to sell it and acquire a replace‐
ment home, but must sell the stigma‐
tized house in order to be able to close
on a replacement home, they may not
be able to convince a seller of a
potential replacement homes to extend
the closing while they market the
stigmatized home. If the seller of a
stigmatized home has to hold it for an
extended period of time after having
moved out, the excess cost of holding is
measurable.
3. The cost of marketing stigmatized
properties can be significantly greater.
One real estate broker we know
charges a consulting fee for assisting
property owners through the process of
preparing a contaminated property for
sale. This broker works with environ‐
mental consultants to identify the
extent of contamination and to
develop, and sometimes implement, a
remediation plan that can be evaluated
by the state. All this is done before a
property is ever listed.
4. Institutional controls. Stigmatized
properties may be subject to additional
governmental controls. While we are
unaware of any institutional controls
being added for properties with
defective drywall, we have observed
them in other contaminated properties.
For example, a brownfield property that
has been remediated by capping
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Chinese Drywall
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Page 5
contaminated soil with a layer of
uncontaminated soil requires approval
from the state before excavating below
the cap.
5. Lower prices. Stigma may result in
lower prices for impaired properties. To
be attributed to stigma, this loss in
value must be greater than the cost of
remediation or must persist after the
remediation has been completed. For
example, homes with asbestos insul‐
ation or siding may have restrictions on
remodeling or on use of the attic.
6. Disclosure requirements. To date
disclosure has not been mandated by
any state, however many realtor
associations are moving on this of their
own accord. In Sarasota, for example, a
disclosure form relating specifically to
Chinese‐manufactured drywall has
been introduced.
Measuring Effects of Stigma
Given the large body of literature on the topic
of stigma, this paper will simply provide a brief
primer. (See www.GreenfieldAdvisors.com for
additional reading and information about
stigma.)
Generally, stigma is measured is by comparing
the loss in value from an unimpaired state to an
impaired state to detect the total loss in value.
A further deduction for the cost to remediate
(i.e., effect a feasible cure) is included to yield
the loss in value attributable to stigma. Residual
stigma can be calculated as the change in value
between an impaired property and the same
property after remediation has been
implemented. In these kinds of appraisals, it is
useful to consider how the results of the
findings will be applied. This leads the way that
the research and analysis program is designed.
Traditionally, the loss in value is calculated as a
percentage of an unimpaired value before

allocating between remediation and stigma.
This loss in value becomes, in effect, an
adjustment and can be quantified using
methods used to extract any other appraisal
adjustment.
Stigma adjustment extraction
The process of calculating starts with identifying
transactional data for impaired properties. This
language is purposefully inclusive as it applies
to both sale and lease transactions and to both
residential and non‐residential properties.
Because of its predominance in the domain of
Chinese drywall impairment, we will continue
this example with residential properties and
explore the how stigma may impact the value of
the fee simple interest in these properties.
Any methodology which attempts to extract
stigma losses from sales prices critically
depends on the details of the underlying
transactions. For example, buyers (or sellers)
are not well aware of the problem, or not fully
appreciative of the long‐term impact, the sales
price will not reflect an actual arms‐length
transaction.
Matched pairs
When analyzing a small collection of impaired
comparable sales, the percentage loss in value
may be directly measured using matched pair
methodology. This methodology will result in a
set of pairs that can be analyzed for differences
based upon the circumstances of this
impairment. From this set, the appraiser can
exercise judgment to determine where, within
the range of value loss experienced by the set
of pairs, the circumstances of the immediate
appraisal indicated that the loss in value for the
subject property should lie.
For this methodology to be successful, it is
important to find sales of impaired properties
that bracket the impairment of the subject
property and that are as comparable as possible
to the subject property. If appraising multiple
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PHONE 206-623-2935 FAX 206-623-2985
HTTP://WWW.GREENFIELDADVISORS.COM
Chinese Drywall
June 5, 2009
Page 6
heterogeneous subject properties, multiple sets
of paired sales may be required.
When the number of subject properties
becomes large, some sort of expert system or
valuation matrix will need to be used.
Mass appraisal methodology
When analyzing many impaired properties,
mass appraisal methodology such as expert
systems, hedonic modeling, or hybrid
comparable selection and hedonic modeling
systems can be used. These same methods can
be used to extract adjustments. When using
regression analysis, a factor is statistically
derived for each variable being modeled.
Statistics relative to the calculation of each
factor are calculated in the regression output
results. The analyst can then determine if an
adjustment is statistically significant or not.
Another way that the percent loss in value of an
impairment can be captured can occur using a
few modeling techniques.
1. The model can be built using sales of
unimpaired properties and then used to
calculate the unimpaired values of
impaired properties. When so used, the
difference between the calculated value
and the actual sales price is the loss in
value.
2. The model can be built using a
"dummy" variable that indicates
whether a property is or is not
impaired. The contents of this field in
the data would be zero or one, with
zero representing no and one
representing yes. The regression
equation output presents a coefficient
for this variable along with statistics
that allow the analyst to determine if
the variable is statistically significant.
This methodology yields a dollar
amount when the dependent variable
(price) is expressed as a dollar amount
and really only suitable when the

subject properties and the data used to
build the model are homogenous.
When the regression equation uses the
natural logarithm of the price instead of
the dollar amount, the resultant
coefficient for the dummy variable is
the percentage loss in value
attributable to this characteristic. 3
3. The model may also be built using a
series of categorical dummy variables,
each expressing different defined levels
of impairment. For example one
variable might mean slightly impaired,
another might mean typical
impairment, and the last might mean
severe impairment. These terms would
have to be appropriately defined during
the data collection and input phase of
the analysis.
All three of these methods produce estimates
of the loss in value attributable to the
impairment. They also produce a model that
can be used to value the subject properties in
an unimpaired state. The advantage of mass
appraisal methodology is that the model can be
tested for accuracy, which is an important
component that goes to the admissibility of
evidence in a court case.
Because of the rarity and subtleties in lease
transactions and sale transactions of non‐
residential properties, the data should be
carefully evaluated before using a mass
appraisal model in these circumstances.
SUITE 650, FOURTH AVENUE
SEATTLE, WASHINGTON 98121
PHONE 206-623-2935 FAX 206-623-2985
HTTP://WWW.GREENFIELDADVISORS.COM
Summary
Chinese Drywall
June 5, 2009
Page 7
Chinese drywall has impurities in it that are not
found in American drywall. While the heat and
humidity of Florida and other southern states
enhance the effects of the sulfur‐based gasses,
there is no reason to believe these problems do
not effect both residential and commercial
properties in other parts of the United States.
In addition to a rotten‐egg smell, people living
in homes with Chinese drywall report
respiratory and other health issues.
Epidemiological studies are months from being
completed. In the meanwhile doctors are
advising families with extreme reactions to
move out of their homes.
Some large homebuilders are relocating
households (people and belongings) while they
replace the sheetrock and possibly damaged
copper components. Smaller homebuilders are
going bankrupt. Insurance Companies are
denying claims.
People who find they can’t sell their homes
(due to the condition and disclosure
requirements) and can’t afford to live
elsewhere are stuck living in an unhealthy
environment while weighing walking away from
their homes and ruining their credit ratings.
Bank‐owned properties are being sold “as‐is”
with the seller claiming no knowledge on the
presence of Chinese Drywall . This systematic
lack of knowledge further impairs the handling
of the problem.
At present, there are no US requirements for
drywall composition. The CDC and HUD are
working on a standard for drywall. The Florida
Board of Health and Attorney General’s office
are hard at work on the human issues.
The largest questions are who is going to pay to
remediate these homes and what long term
health issues might surface? Ads paid for by
attorneys anxious for law suits against
insurance companies, builders, suppliers, and

others are flooding the media. Some classes are
being formed for class actions.
With so many people unable to afford to
remediate or to move, one researcher is
proposing a system that treats the air to reduce
adverse health and corrosion effects. He likens
this process to treating the symptoms and
slowing the progression of a presently incurable
disease while waiting for the cure.
SUITE 650, FOURTH AVENUE
SEATTLE, WASHINGTON 98121
PHONE 206-623-2935 FAX 206-623-2985
HTTP://WWW.GREENFIELDADVISORS.COM
Chinese Drywall
June 5, 2009
Page 8
Greenfield Advisors is one of the leading
appraisal firms in the nation for valuation of
impaired properties. We are gathering data
relative to Chinese drywall from valuation
professionals and will be publishing our findings
just as soon as sufficient data can be analyzed.
Greenfield Advisors can be reached at 206‐623‐
2935.
Dr. John A. Kilpatrick is the President of Greenfield Advisors and a Visiting Scholar in Real Estate at the
Zichlin School of Business, Baruch College, in New York City. His Ph.D. is in Real Estate Finance, and he is
one of the nation’s leading expert witnesses on real estate matters in courts throughout the U.S. Dr.
Kilpatrick is a Fellow of the American Real Estate Society, a Member of the Faculty of Valuation of the
British Royal Institution of Chartered Surveyors, a National Appraisal Standards Instructor for the
Appraisal Foundation, the Education Chairman of the Real Estate Counseling Group of America, and
serves on the Publications Board of the Appraisal Institute.
Christopher A. Miner, MAI is the Managing Director, Real Estate Advisory Services of Greenfield
Advisors. A former chapter president of the Appraisal Institute, Mr. Miner remains involved as a
member of the Appraisal Institute's GIS Project Team within the Technology Special Interest Group. He
has authored six seminars and taught more than a dozen seminars and courses for the Appraisal
Institute and the University of Connecticut. The author of several articles and a chapter in the
forthcoming text Visual Valuation, (Appraisal Institute, 2009), he has a national reputation for GIS
applications in real estate site selection, valuation, and market analysis and for the valuation of marinas
and other waterfront properties. He has been involved in litigation before state and federal courts; is a
state certified (general) appraiser, a real estate broker, and a Realtor.
Greenfield Advisors was founded in Seattle in 1976 to provide high‐level analysis and consulting services
on complex real estate problems, with a focus on economic, market, and valuation studies. Over the
years, Greenfield has advised attorneys, investors, government agencies, trusts, and university
endowments on a variety of real estate problems.
1 Irving Kraut, consulting Environmental Director; JVI‐REO
2 See Gorman v. Sabo, 210 Md. 155, 162‐163 (1956)
3 Technically a small adjustment must be made to this factor to calculate the actual percentage, but the magnitude of the
adjustment is akin to a rounding difference. Most appraisers would find this adjustment to be trivial.

CHINESE DRYWALL LITIGATION
UPDATE
Arnold Levin, Esq., Levin, Fishbein, Sedran & Berman, Philadelphia, PA
(215) 592‐1500; alevin@lfsblaw.com
Ervin Gonzalez, Esq., Colson Hicks Eidson, Coral Gables, FL
(305) 476‐7400; ervin@colson.com
William Schuette, Esq., Jones Walker, Baton Rouge, LA
(225) 248‐2000; wschuette@joneswalker.com
Richard Lewis, Esq., Hausfeld LLP, Washington, DC
(202) 540‐7200; rlewis@hausfeldllp.com
TOPICS TO BE ADDRESSED
June 18, 2009
• Where was the Chinese drywall used?
• The health and property damage arising in homes with
Chinese drywall
• Remediation costs and health related expenses
• Who faces potential liability for the Chinese drywall
installation?
• What kind of expert you’ll need for your cases
• What is the difference between Chinese drywall and domestic
drywall?
• Status of the MDL and other class actions
2

BACKGROUND
• At least 60,000 homes affected (600 million pounds
of defective drywall)
• 60% came in through Florida ports
• Sulfur and other toxic emissions associated with
property and health damage
• Approximately 100 cases filed in federal and state
courts
3
4

5
6

7
8

WHERE WAS THE CHINESE DRYWALL USED
• Primarily in Southern and Southeastern
states, so far
• Florida and Louisiana probably primary
states
THE HEALTH AND PROPERTY DAMAGE ARISING
IN HOMES WITH CHINESE DRYWALL
• Corrosion of HVAC, plumbing and electrical
systems
• Damage to computers and other electronic
systems
• Damage to jewelry and artwork
• Exposure to noxious emissions
– Ear, nose and throat irritation
– Allergic symptoms
– Chronic conditions
9
10

REMEDIATION COSTS AND
HEALTH RELATED EXPENSES
• Replacement of drywall and/or other
contaminated building materials
• Other property damage
• Nuisance
• Property devaluation
• Medical monitoring
• Personal injury
• Consequential damages
WHO FACES POTENTIAL LIABILITY FOR THE
CHINESE DRYWALL INSTALLATION
• Manufacturers (e.g., Knauf Entities, Taishan
Gypsum)
• Importers (e.g., Banner Supply, RothChilt)
• Distributor/Suppliers (e.g., Venture Supply)
• Builders/Developers (e.g., Taylor Morrison)
• Subcontractors who installed the Chinese
Drywall (e.g., Porter‐Blaine)
• Insurers (e.g., Builders Mutual Insurance Co.)
11
12

WHAT KIND OF EXPERTS YOU’LL NEED
FOR YOUR CASES
• Engineers
• Chemist
• General contractor
• Building Materials Expert
• Toxicologist/Industrial Hygienist
• Pulmonologist
• ENT
• Allergist
WHAT IS THE DIFFERENCE BETWEEN CHINESE
DRYWALL AND DOMESTIC DRYWALL
• Atomic absorption and electron microscopy to
detect sulfur content and strontium content
• Possible source of sulfur and other
contaminants
– Mined gypsum
– Coal fire power plant fly ash
– Recycled defective drywall
– Other
13
14

STATUS OF THE MDL AND OTHER
CLASS ACTIONS
• JPML hearing Louisville, Kentucky
• First Pretrial Conference
Personal Injury
• Hydrogen Sulfide suspected.
– Produces the “rotten egg” smell
• Residents have reported eye/ear/nose/throat
irritation, cough and nausea.
– Symptoms associated with exposure
– Nonspecific symptoms
– No signature disease or condition idntified
• Epidemiology is limited and inconclusive.
15

Hydrogen Sulfide Exposure
• Believed that the body can metabolize 300‐
350 ppm
• Can detect “rotten egg” smell at 0.0047 ppm
• OSHA limit 10 ppm
• Eye irritation at 10‐20 ppm
• Pulmonary edema 320‐530 ppm
• Respiratory failure 1000 ppm
MDL Issues
• Defining the defendants
– Who are the appropriate defendants?
– Which defendants are subject to jurisdiction in US
District court?
– What standard of liability is applicable to each
defendant?

MDL Issues
• General Causation – Property Damage
– Do houses without Chinese drywall exhibit the
same or similar problems?
– Is there a scientifically feasible mechanism?
– Scientific evidence of the mechanism occurring?
– Reasonable alternative explanations?
– Scientific evidence of any alternate explanation?
MDL Issues
• General Causation –Personal Injury
– H2S or other toxin being produced?
– Produced in sufficient concentration to cause
harm?
– What injuries are associated with exposure?
– Are the injuries acute or chronic?

BACKGROUND
PROCEDURE
MULTIDISTRICT LITIGATION: A DEFENSE PERSPECTIVE
William Schuette
Jones, Walker, Waechter, Carrier & Denegre
8555 United Plaza Blvd.
Baton Rouge, Louisiana 70809
225.248.2056
wschuette@joneswalker.com
The Judicial Panel on Multidistrict Litigation (JPML) was created by Congress in 1968, 28
USC 1407. It is composed of seven federal district or appellate court judges selected by
the Chief Justice of the United States Supreme Court. On its own initiative or on motion
of a litigant, the JPML may take notice that multiple suits pending in the district courts
of the United States present one or more common factual issues and order those
proceedings consolidated for pretrial proceedings. Based on various factors, the JPML
selects a venue and judge to which all pending and future cases presenting the common
factual issues are transferred.
The purpose of the multidistrict litigation procedure is to reduce the costs and
possibility of inconsistent rulings inherent in repetitive litigation. Since its inception, the
multidistrict litigation procedure has been used in a variety of types of cases including
products liability, intellectual property, automotive recalls, securities, antitrust,
commercial fraud, medical devices and pharmaceutical.
With some modifications primarily related to the transfer to and remand from the MDL
and the manner of filing and serving pleadings the Federal Rules of Civil Procedure
apply. A copy of the Rules of Procedure of the Judicial Panel of Multidistrict Litigation is
attached. Also attached is a copy of the FAQ page from the JPML’s web site.
DIFFERENCES FROM CLASS ACTIONS
The standards for establishing an MDL proceeding are much broader than those
required for certification of a class action. Rather than a showing of numerosity
necessary for a class action, an MDL requires only two or more federal proceedings. A
class action requires a finding that the common questions of law and fact outweigh the
individual issues whereas an MDL only requires that there be some common question of
fact. These differences make the MDL available in far more situations than those in
which a class action could be certified.

Unlike a class action, MDL is a procedural consolidation of independent actions
presenting some common factual issue. It is intended to streamline discovery and
pretrial proceedings in multiple cases presenting common issues of fact; however, these
independent cases are not tried together. After discovery and pretrial proceedings are
complete, the cases are remanded to the original district court for trial. Although the
procedural, discovery and other interlocutory rulings and judgments in one case are not
legally binding in other cases, as a practical matter such matters are not revisited absent
good cause. An MDL can render final judgments that may be dispositive of a case such
as granting a motion for summary judgment asserting a lack of general causation;
however, the MDL would have to require similar motions and notice simultaneous
hearings in all of the consolidated cases to make the ruling binding on all litigants.
MDL and class action are not mutually exclusive. An MDL can incorporate a certified
class action as one of the consolidated proceedings.
USE OF MDL: A DEFENSE PERSPECTIVE
MDL proceedings are a unique mix of procedures employed in class actions and large
consolidated cases that if used appropriately can avoid the problems associated with
both procedures.
General v. Specific Determinations One advantage of an MDL is that it provides a
mechanism for resolving common issues of law and fact in an efficient fashion while
preserving the litigants’ rights to an individual determination of case‐specific issues,
claims and defenses. From a defendant’s perspective, this can result in significant
defense cost savings. For example, a defendant can invest the time, effort and
resources into resolving an issue one time rather than fighting the same battle in
multiple venues with exponentially increased costs and possibly inconsistent results.
Although this makes an MDL a “high stakes” proceeding, the advantages of consistency
and efficiency generally outweigh the downside.
The preservation of a traditional trial for resolution of case‐specific issues is particularly
important. First, it allows an MDL to be used in cases in which a class action could not
be certified due to the predominance of individual issues. Second, it helps to overcome
defendants’ primary common aversion to class actions and consolidations of large
numbers of cases, that case‐specific defenses will be overwhelmed by the large number
of cases presented.
Discovery Another advantage of an MDL is the coordination of discovery in a single
venue which provides obvious cost savings by avoiding repetitive discovery.
Additionally, because expert witnesses will not be subjected to multiple depositions in
proceedings across the country, it is easier to find and retain the most competent
professionals willing to serve as litigation experts. A hidden advantage of expert
witnesses and corporate representatives not being subjected to multiple depositions is

that there is a much smaller chance that they may make some inconsistent statement
due to memory lapse or other inadvertence.
A Note On Costs Many plaintiffs’ counsel may believe that defendants are
unconcerned about litigation costs and, in fact, use high litigation costs against plaintiffs.
This certainly was a tactic employed by some corporate defendants in the past but times
have changed. Even prior to the current recession, corporate defendants were
increasingly conscious of defense costs demanding reduced rates and limiting defense
efforts. The current economic situation has exacerbated this trend. On the plaintiffs’
side, the willingness of successful plaintiffs’ law firms to invest resources in cases and
their ability to share information electronically has dramatically evened the playing field.
This has resulted in a situation in which both sides share a common interest in reducing
litigation costs.
DRYWALL PROCEEDINGS
Although an MDL has been established for federal drywall litigation, neither a venue nor
judge has yet been selected. Therefore, we can only attempt to predict what the
proceedings may look like based on the purpose of MDL and prior experiences.
Relevant Examples Experiences in several past MDL proceedings (Vioxx, breast
implant and asbestos) may be predictors of how the current MDL might be used.
The breast implant MDL presented substantial issues of general causation. Based on a
developing body of epidemiologic studies, defendants denied that the implants were
capable of causing the types of injuries claimed by plaintiffs. Plaintiffs relied on earlier
studies that showed a marginal effect. Analyzing the breast implant scientific studies,
their results and conclusions required highly specialized knowledge of medicine,
chemistry, toxicology and statistics not generally possessed by judges and attorneys. In
a groundbreaking decision, the Court appointed a panel of experts to analyze the
available information and provide an opinion as to whether there was a scientific
consensus that breast implants could cause the claimed injury. The panel’s conclusion
that the epidemiology failed to demonstrate general causation was the most important
development in the litigation.
It would be difficult to find a better example of a defendant using an MDL than Merck’s
handling of the Vioxx litigation. The availability of the MDL procedure reduced pressure
to use a class action to coordinate and consolidate the litigation nationwide. Avoiding
the class action, Merck prevented the possibility that a single catastrophic judgment
could be rendered against it. Merck lost little in accepting MDL proceedings because it
was not seriously asserting a general causation defense. Merck’s primary defense was
not that Vioxx could not cause plaintiffs’ claimed injuries (increased incidence of heart
attacks). Rather, after establishing that there were many other general causes of heart
attacks, Merck focused its defense on specific plaintiff’s claims of injury. Pursuing this

strategy Merck obtained several favorable judgments after proving a lack of specific
causation, that is Merck was able to show that there was insufficient evidence to
conclude that a specific plaintiff’s heart attack was due to Vioxx rather than the
numerous other risk factors. This success was largely responsible for the nationwide
settlement.
Finally, in asbestos litigation, most of the general causation issues were worked out in
numerous state court proceedings. Other than the chrysotile defense, defendants do
not currently argue that occupational asbestos exposure cannot cause asbestosis, lung
cancer or mesothelioma. Rather, defenses are focused on such case‐specific issues as
the accuracy of the diagnosis, the presence of alternative causes and risk factors and the
sufficiency of the exposure to particular products. Such individualized issues are not
generally appropriate for centralized resolution. Although their traditional role of
resolving general issues is largely moot, the asbestos litigation MDLs have been actively
engaged in promoting settlements of both individual cases and inventories of cases.
A Look Ahead
Unlike the situation presented in the asbestos litigation MDLs, the factual and
procedural environment of drywall litigation is rapidly evolving and should present
numerous common issues of law and fact for resolution in the MDL.
Defining the Defendants Initially it appeared that the involved drywall was produced
by a single Chinese/German manufacturer and was sold and distributed through a
limited supply chain. However, new potential defendants seem to be identified daily.
These include construction materials suppliers, home builders and sellers. Further,
there is now speculation that domestically manufactured drywall that contained fly ash
may cause the same types of problems as the Chinese drywall. Fundamental common
issues related to the identity and nature of the defendants include:
Who are the appropriate defendants?
Which defendants are subject to jurisdiction in a US district court?
What standard of liability is applicable to each type of defendant?
The MDL should provide a means of efficiently resolving the first two issues for all of the
consolidated cases. Resolving the third issue, what standard of liability is applicable, will
be more complex. Most, if not all, states impose strict products liability on the
manufacturer of a defective product. Further, most states allow some distributors to be
treated as manufacturers under certain conditions. Finally, on the other end of the
spectrum, house builders and sellers may be liable only for negligence or there may be
state‐specific remedies. With regard to the distributors, builders and sellers, the MDL
will have to consider whether state laws and remedies make a material difference in the

applicable standard of liability. Despite this additional complexity, the MDL should
prove to be an efficient and consistent procedure for defining the applicable standards
of care.
General Causation‐Property Damage In most reports, the emerging explanation of
the cause of the problem is the Chinese drywall contains sulfur compounds that in the
high moisture environments of the Gulf South undergo chemical and/or bacterial
reactions to produce hydrogen sulfide gas and sulfuric acid‐like compounds. These
byproducts produce the “rotten egg” smell and property damage described by the
affected homeowners. On the other hand, the manufacturers and their representatives
claim that the concentration of the sulfur‐containing compounds is far too low to
produce the scope of damage described and, therefore, there must be some other
cause. Thus, the MDL will be presented with classic general causation issues.
Do houses without Chinese drywall exhibit the same or similar property
damage?
Are houses with Chinese drywall experiencing the described property damage at
a greater rate than non‐Chinese drywall houses?
Is there a scientifically feasible mechanism by which Chinese drywall can produce
the described property damage?
Are there any scientific studies demonstrating that this mechanism is actually
occurring?
Are there alternate reasonable explanations for the described property damage?
Are there any scientific studies demonstrating that the alternate mechanisms are
occurring?
At the present time, most of the evidence is anecdotal with the scientific community
only beginning to weigh in. It appears that similar to the breast implant litigation much
of the science will be driven by the litigation and could result in contradictory studies,
reports and conclusions. Analyzing these will require specialized scientific knowledge
and a court appointed panel of experts may be appropriate to determine 1) whether
Chinese drywall is causing the described property damage, 2) how it is causing the
property damage, and 3) what property damage is attributable to the Chinese drywall.
General Causation‐Personal Injury In the current reports, most claims of personal
injury appear to be related to hydrogen sulfide inhalation. Hydrogen sulfide is a multi‐
system poison that can affect the nervous and respiratory systems. However, hydrogen
sulfide also occurs naturally in the environment and human intestines, and enzymes
produced in the human body are capable of detoxifying a certain amount of hydrogen

sulfide indefinitely. Some of the residents of homes with Chinese drywall have reported
symptoms including eye/ear/nose/throat irritation, headaches, cough and nausea.
Although these are symptoms associated with chronic low level hydrogen sulfide
exposure, they are extremely non‐specific and, therefore, not sufficient to prove that
chronic exposure is actually occurring.
The human body’s ability to oxidize hydrogen sulfide is believed to be exceeded at
concentrations of 300‐350 ppm. To put this in context, about 50% of individuals can
detect a “rotten egg” smell at a concentration of 0.0047 ppm. The OSHA exposure limit
for an 8 hour time weighted average is 10 ppm or less. Eye irritation occurs at a
concentration of 10 to 20 ppm. Pulmonary edema occurs at 320 to 530 ppm. Inhalation
of a single breath of concentrations above 1000 ppm can cause death by respiratory
failure. Although high concentrations of hydrogen sulfide can be lethal, information
concerning long term health consequences of chronic low level exposures is
inconclusive. A 1995 study of Russian and Finnish pulp and paper workers exposed to
chronic low level concentrations of hydrogen sulfide demonstrated increases in
miscarriages and reproductive health issues but the findings have not been replicated.
Whether Chinese drywall is producing hydrogen sulfide or other byproducts toxic to
humans in sufficient concentrations to cause personal injuries, and what injuries can be
reasonably attributed to the exposure are issues of general causation particularly suited
for resolution by an MDL. However, the non‐specific character of the claimed personal
injuries will create numerous plaintiff specific causation issues related to the “dose”
experienced by a particular plaintiff and alternate risk factors which will require
individualized trials.
Settlement Promoting resolution of litigation through settlement was a goal of all
past MDLs and there is no reason to believe that this will not be a primary goal of the
drywall MDL. After resolution of the common issues and possibly an initial series of
individual trials so that the parties have a greater understanding of likely future results,
active involvement by the MDL in attempting to resolve cases through settlement
should be expected.

RULES OF PROCEDURE
OF THE
JUDICIAL PANEL ON MULTIDISTRICT LITIGATION
TABLE OF CONTENTS
I. GENERAL RULES/RULES FOR MULTIDISTRICT LITIGATION
UNDER 28 U.S.C. §1407
JUDICIAL PANEL ON
MULTIDISTRICT LITIGATION
FILED
April 2, 2001
MICHAEL J. BECK
CLERK OF THE PANEL
Effective November 2, 1998,
With Amendments Effective
June 1, 2000, & April 2, 2001
Rule 1.1: Definitions
Rule 1.2: Practice
Rule 1.3: Failure to Comply with Rules
Rule 1.4: Admission to Practice Before the Panel and Representation in Transferred Actions
Rule 1.5: Effect of the Pendency of an Action Before the Panel
Rule 1.6: Transfer of Files
Rule 5.1: Keeping Records and Files
Rule 5.11: Place of Filing of Papers
Rule 5.12: Manner of Filing Papers
Rule 5.13: Filing of Papers: Computer Generated Disk Required
Rule 5.2: Service of Papers Filed
Rule 5.3: Corporate Disclosure Statement
Rule 6.2: Applications for Extensions of Time
Rule 7.1: Form of Papers Filed
Rule 7.2: Motion Practice
Rule 7.3: Show Cause Orders
Rule 7.4: Conditional Transfer Orders for “Tag-Along Actions”
Rule 7.5: Miscellaneous Provisions Concerning “Tag-Along Actions”
Rule 7.6: Termination and Remand
Rule 16.1: Hearing Sessions and Oral Argument
II. RULES FOR MULTICIRCUIT PETITIONS FOR REVIEW
UNDER 28 U.S.C. §2112(a)(3)
Rule 17.1: Random Selection
Rule 25.1: Filing of Notices
Rule 25.2: Accompaniments to Notices
Rule 25.3: Service of Notices
Rule 25.4: Form of Notices
Rule 25.5: Service of Panel Consolidation Order
CONVERSION TABLE

RULE 1.1: DEFINITIONS
- 2 -
RULES OF PROCEDURE
OF THE
JUDICIAL PANEL ON MULTIDISTRICT LITIGATION
I. GENERAL RULES/RULES FOR MULTIDISTRICT LITIGATION
UNDER 28 U.S.C. §1407
As used in these Rules “Panel” means the members of the Judicial Panel on Multidistrict Litigation
appointed by the Chief Justice of the United States pursuant to Section 1407, Title 28, United States Code.
“Clerk of the Panel” means the official appointed by the Panel to act as Clerk of the Panel and shall
include those deputized by the Clerk of the Panel to perform or assist in the performance of the duties of the
Clerk of the Panel.
“Chairman” means the Chairman of the Judicial Panel on Multidistrict Litigation appointed by the Chief
Justice of the United States pursuant to Section 1407, or the member of the Panel designated by the Panel to
act as Chairman in the absence or inability of the appointed Chairman.
A “tag-along action” refers to a civil action pending in a district court and involving common questions
of fact with actions previously transferred under Section 1407.
RULE 1.2: PRACTICE
Panel.
Where not fixed by statute or rule, the practice shall be that heretofore customarily followed by the
RULE 1.3: FAILURE TO COMPLY WITH RULES
The Clerk of the Panel may, when a paper submitted for filing is not in compliance with the provisions
of these Rules, advise counsel of the deficiencies and a date for full compliance. If full compliance is not
accomplished within the established time, the non-complying paper shall nonetheless be filed by the Clerk of the
Panel but it may be stricken by order of the Chairman of the Panel.
RULE 1.4: ADMISSION TO PRACTICE BEFORE THE PANEL AND REPRESENTATION IN
TRANSFERRED ACTIONS
Every member in good standing of the Bar of any district court of the United States is entitled without
condition to practice before the Judicial Panel on Multidistrict Litigation. Any attorney of record in any action

- 3 -
transferred under Section 1407 may continue to represent his or her client in any district court of the United
States to which such action is transferred. Parties to any action transferred under Section 1407 are not required
to obtain local counsel in the district to which such action is transferred.
RULE 1.5: EFFECT OF THE PENDENCY OF AN ACTION BEFORE THE PANEL
The pendency of a motion, order to show cause, conditional transfer order or conditional remand order
before the Panel concerning transfer or remand of an action pursuant to 28 U.S.C. §1407 does not affect or
suspend orders and pretrial proceedings in the district court in which the action is pending and does not in any
way limit the pretrial jurisdiction of that court. A transfer or remand pursuant to 28 U.S.C. §1407 shall be
effective when the transfer or remand order is filed in the office of the clerk of the district court of the transferee
district.
RULE 1.6: TRANSFER OF FILES
(a) Upon receipt of a certified copy of a transfer order from the clerk of the transferee district court,
the clerk of the transferor district court shall forward to the clerk of the transferee district court the complete
original file and a certified copy of the docket sheet for each transferred action.
(b) If an appeal is pending, or a notice of appeal has been filed, or leave to appeal has been sought
under 28 U.S.C. §1292(b) or a petition for an extraordinary writ is pending, in any action included in an order
of transfer under 28 U.S.C. §1407, and the original file or parts thereof have been forwarded to the court of
appeals, the clerk of the transferor district court shall notify the clerk of the court of appeals of the order of
transfer and secure the original file long enough to prepare and transmit to the clerk of the transferee district court
a certified copy of all papers contained in the original file and a certified copy of the docket sheet.
(c) If the transfer order provides for the separation and simultaneous remand of any claim, crossclaim,
counterclaim, or third-party claim, the clerk of the transferor district court shall retain the original file and
shall prepare and transmit to the clerk of the transferee district court a certified copy of the docket sheet and
copies of all papers except those relating exclusively to separated and remanded claims.
(d) Upon receipt of an order to remand from the Clerk of the Panel, the transferee district court shall
prepare and send to the clerk of the transferor district court the following:
(i) a certified copy of the individual docket sheet for each action being remanded;
(ii) a certified copy of the master docket sheet, if applicable;
(iii) the entire file for each action being remanded, as originally received from the transferor
district court and augmented as set out in this rule;
(iv) a certified copy of the final pretrial order, if applicable; and
(v) a “record on remand” to be composed of those parts of the files and records produced
during coordinated or consolidated pretrial proceedings which have been stipulated to
or designated by counsel as being necessary for any or all proceedings to be conducted
following remand. It shall be the responsibility of counsel originally preparing or filing
any document to be included in the “record on remand” to furnish on request sufficient
copies to the clerk of the transferee district court.

Rule.
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(e) The Clerk of the Panel shall be notified when any files have been transmitted pursuant to this
RULE 5.1: KEEPING RECORDS AND FILES
(a) The records and files of the Panel shall be kept by the Clerk of the Panel at the offices of the
Panel. Records and files may be temporarily or permanently removed to such places at such times as the Panel
or the Chairman of the Panel shall direct. The Clerk of the Panel may charge fees, as prescribed by the Judicial
Conference of the United States, for duplicating records and files. Records and files may be transferred
whenever appropriate to the Federal Records Center.
(b) In order to assist the Panel in carrying out its functions, the Clerk of the Panel shall obtain the
complaints and docket sheets in all actions under consideration for transfer under 28 U.S.C. §1407 from the
clerk of each district court wherein such actions are pending. The Clerk of the Panel shall similarly obtain any
other pleadings and orders that could affect the Panel's decision under 28 U.S.C. §1407.
RULE 5.11: PLACE OF FILING OF PAPERS
All papers for consideration by the Panel shall be submitted for filing to the Clerk of the Panel by mailing
or delivering to:
Clerk of the Panel
Judicial Panel on Multidistrict Litigation
Thurgood Marshall Federal Judiciary Building
One Columbus Circle, N.E., Room G-255, North Lobby
Washington, D.C. 20002-8004
No papers shall be left with or mailed to a Judge of the Panel.
RULE 5.12: MANNER OF FILING OF PAPERS
(a) An original of the following papers shall be submitted for filing to the Clerk of the Panel: a proof
of service pursuant to Rule 5.2(a) and (b) of these Rules, a notice of appearance pursuant to Rule 5.2(c) and
(d) of these Rules, a corporate disclosure statement pursuant to Rule 5.3 of these Rules, a status notice pursuant
to Rules 7.2(f), 7.3(e) and 7.4(b) of these Rules, a notice of opposition pursuant to Rules 7.4(c) and 7.6(f)(ii)
of these Rules, a notice of related action pursuant to Rules 7.2(i), 7.3(a) and 7.5(e) of these Rules, an application
for extension of time pursuant to Rule 6.2 of these Rules, or a notice of presentation or waiver of oral argument
pursuant to Rule 16.1(d) of these Rules. An original and eleven copies of all other papers shall be submitted
for filing to the Clerk of the Panel. The Clerk of the Panel may require that additional copies also be submitted
for filing.
filing.
(b) When papers are submitted for filing, the Clerk of the Panel shall endorse thereon the date for

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(c) Copies of motions for transfer of an action or actions pursuant to 28 U.S.C. §1407 shall be filed
in each district court in which an action is pending that will be affected by the motion. Copies of a motion for
remand pursuant to 28 U.S.C. §1407 shall be filed in the Section 1407 transferee district court in which any
action affected by the motion is pending.
(d) Papers requiring only an original may be faxed to the Panel office with prior approval of the
Clerk of the Panel. No papers requiring multiple copies shall be accepted via fax.
RULE 5.13: FILING OF PAPERS: COMPUTER GENERATED DISK REQUIRED
(a) Whenever an original paper and eleven copies is required to be submitted for filing to the Clerk
of the Panel pursuant to Rule 5.12(a) of these Rules, and where a party is represented by counsel, one copy of
that paper must also be submitted on a computer readable disk and shall be filed at the time the party’s paper
is filed. The disk shall contain the entire paper exclusive of computer non-generated exhibits. The label of the
disk shall include i) “MDL #_ ,” ii) an abbreviated version of the MDL descriptive title, or other appropriate
descriptive title, if not yet designated by the Panel, iii) the identity of the type of paper being filed (i.e. motion,
response, reply, etc.), iv) the name of the counsel who signed the paper, and v) the first named represented party
on the paper.
(b) The paper must be on a 3 ½ inch disk in WordPerfect for Windows format.
(c) One copy of the disk may be served on each party separately represented by counsel. If a
party chooses to serve a copy of the disk, the proof of service, as required by Rule 5.2 of these Rules, must
indicate service of the paper in both paper and electronic format.
(d) A party may be relieved from the requirements of this Rule by submitting a written application
for a waiver, in a timely manner in advance of submission of the paper, certifying that compliance with the Rule
would impose undue hardship, that the text of the paper is not available on disk, or that other unusual
circumstances preclude compliance with this Rule. The requirements of this Rule shall not apply to parties
appearing pro se. Papers embraced by this Rule and submitted by counsel after June 1, 2000 without a
computer disk copy or Panel-approved waiver of the requirements of this Rule shall be governed by Rule 1.3
of these Rules.
RULE 5.2: SERVICE OF PAPERS FILED
(a) All papers filed with the Clerk of the Panel shall be accompanied by proof of previous or
simultaneous service on all other parties in all actions involved in the litigation. Service and proof of service shall
be made as provided in Rules 5 and 6 of the Federal Rules of Civil Procedure. The proof of service shall
indicate the name and complete address of each person served and shall indicate the party represented by each.
If a party is not represented by counsel, the proof of service shall indicate the name of the party and the party's
last known address. The proof of service shall indicate why any person named as a party in a constituent
complaint was not served with the Section 1407 pleading. The original proof of service shall be filed with the
Clerk of the Panel and copies thereof shall be sent to each person included within the proof of service. After
the “Panel Service List” described in subsection (d) of this Rule has been received from the Clerk of the Panel,
the “Panel Service List” shall be utilized for service of responses to motions and all other filings. In such

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instances, the “Panel Service List” shall be attached to the proof of service and shall be supplemented in the
proof of service in the event of the presence of additional parties or subsequent corrections relating to any party,
counsel or address already on the “Panel Service List.”
(b) The proof of service pertaining to motions for transfer of actions pursuant to 28 U.S.C. §1407
shall certify that copies of the motions have been mailed or otherwise delivered for filing to the clerk of each
district court in which an action is pending that will be affected by the motion. The proof of service pertaining
to a motion for remand pursuant to 28 U.S.C. §1407 shall certify that a copy of the motion has been mailed or
otherwise delivered for filing to the clerk of the Section 1407 transferee district court in which any action affected
by the motion is pending.
(c) Within eleven days of filing of a motion to transfer, an order to show cause or a conditional
transfer order, each party or designated attorney shall notify the Clerk of the Panel, in writing, of the name and
address of the attorney designated to receive service of all pleadings, notices, orders and other papers relating
to practice before the Judicial Panel on Multidistrict Litigation. Only one attorney shall be designated for each
party. Any party not represented by counsel shall be served by mailing such pleadings to the party's last known
address. Requests for an extension of time to file the designation of attorney shall not be granted except in
extraordinary circumstances.
(d) In order to facilitate compliance with subsection (a) of this Rule, the Clerk of the Panel shall
prepare and serve on all counsel and parties not represented by counsel, a “Panel Service List” containing the
names and addresses of the designated attorneys and the party or parties they represent in the actions under
consideration by the Panel and the names and addresses of the parties not represented by counsel in the actions
under consideration by the Panel. After the “Panel Service List” has been received from the Clerk of the Panel,
notice of subsequent corrections relating to any party, counsel or address on the “Panel Service List” shall be
served on all other parties in all actions involved in the litigation.
(e) If following transfer of any group of multidistrict litigation, the transferee district court appoints
liaison counsel, this Rule shall be satisfied by serving each party in each affected action and all liaison counsel.
Liaison counsel designated by the transferee district court shall receive copies of all Panel orders concerning their
particular litigation and shall be responsible for distribution to the parties for whom he or she serves as liaison
counsel.
RULE 5.3: CORPORATE DISCLOSURE STATEMENT
(a) Any nongovernmental corporate party to a matter before the Panel shall file a statement
identifying all its parent corporations and listing any publicly held company that owns 10% or more of the party’s
stock.
(b) A party shall file the corporate disclosure statement within eleven days of the filing of a motion
to transfer or remand, an order to show cause, or a motion to vacate a conditional transfer order or a conditional
remand order.

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(c) Once a corporate disclosure statement by a party has been filed in an MDL docket pursuant to
subsection (b) of this Rule, such a party is required to update the statement to reflect any change in the
information therein i) until the matter before the Panel is decided, and ii) within eleven days of the filing of any
subsequent motion to transfer or remand, order to show cause, or motion to vacate a conditional transfer order
or a conditional remand order in that docket.
RULE 6.2: APPLICATIONS FOR EXTENSIONS OF TIME
Any application for an extension of time to file a pleading or perform an act required by these Rules must
be in writing, must request a specific number of additional days and may be acted upon by the Clerk of the
Panel. Such an application will be evaluated in relation to the impact on the Panel's calendar as well as on the
basis of the reasons set forth in support of the application. Any party aggrieved by the Clerk of the Panel's
action on such application may submit its objections to the Panel for consideration. Absent exceptional
circumstances, no extensions of time shall be granted to file a notice of opposition to either a conditional transfer
order or a conditional remand order. All applications for extensions of time shall be filed and served in
conformity with Rules 5.12, 5.2 and 7.1 of these Rules.
RULE 7.1: FORM OF PAPERS FILED
(a) Averments in any motion seeking action by the Panel shall be made in numbered paragraphs,
each of which shall be limited, as far as practicable, to a statement of a single factual averment.
(b) Responses to averments in motions shall be made in numbered paragraphs, each of which shall
correspond to the number of the paragraph of the motion to which the responsive paragraph is directed. Each
responsive paragraph shall admit or deny wholly or in part the averment of the motion, and shall contain the
respondent's version of the subject matter when the averment or the motion is not wholly admitted.
(c) Each pleading filed shall be:
(i) flat and unfolded;
(ii) plainly written, typed in double space, printed or prepared by means of a duplicating
process, without erasures or interlineations which materially deface it;
(iii) on opaque, unglazed, white paper (not onionskin);
(iv) approximately 8-1/2 x 11 inches in size; and
(v) fastened at the top-left corner without side binding or front or back covers.
(d) The heading on the first page of each pleading shall commence not less than three inches from
the top of the page. Each pleading shall bear the heading “Before the Judicial Panel on Multidistrict Litigation,”
the identification “MDL Docket No.___” and the descriptive title designated by the Panel for the litigation
involved. If the Panel has not yet designated a title, an appropriate descriptive title shall be used.
(e) The final page of each pleading shall contain the name, address and telephone number of the
attorney or party in active charge of the case. Each attorney shall also include the name of each party
represented.

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(f) Except with the approval of the Panel, each brief submitted for filing with the Panel shall be
limited to twenty pages, exclusive of exhibits. Absent exceptional circumstances, motions to exceed page limits
shall not be granted.
(g) Exhibits exceeding a cumulative total of 50 pages shall be fastened separately from the
accompanying pleading.
(h) Proposed Panel orders shall not be submitted with papers for filing.
RULE 7.2: MOTION PRACTICE
(a) All requests for action by the Panel under 28 U.S.C. §1407 shall be made by written motion.
Every motion shall be accompanied by:
(i) a brief in support thereof in which the background of the litigation and factual and legal
contentions of the movant shall be concisely stated in separate portions of the brief with
citation of applicable authorities; and
(ii) a schedule giving
(A) the complete name of each action involved, listing the full name of each party
included as such on the district court’s docket sheet, not shortened by the use
of references such as “et al.” or “etc.”;
(B) the district court and division in which each action is pending;
(C) the civil action number of each action; and
(D) the name of the judge assigned each action, if known.
(b) The Clerk of the Panel shall notify recipients of a motion of the filing date, caption, MDL docket
number, briefing schedule and pertinent Panel policies.
(c) Within twenty days after filing of a motion, all other parties shall file a response thereto. Failure
of a party to respond to a motion shall be treated as that party's acquiescence to the action requested in the
motion.
(d) The movant may, within five days after the lapse of the time period for filing responsive briefs,
file a single brief in reply to any opposition.
(e) Motions, their accompaniments, responses, and replies shall also be governed by Rules 5.12,
5.2 and 7.1 of these Rules.
(f) With respect to any action that is the subject of Panel consideration, counsel shall promptly notify
the Clerk of the Panel of any development that would partially or completely moot the matter before the Panel.
(g) A joinder in a motion shall not add any action to the previous motion.
(h) Once a motion is filed, any other pleading that purports to be a “motion” in the docket shall be
filed by the Clerk of the Panel as a response unless the “motion” adds an action. The Clerk of the Panel, upon

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designating such a pleading as a motion, shall acknowledge that designation by the distribution of a briefing
schedule to all parties in the docket. Response time resulting from an additional motion shall ordinarily be
extended only to those parties directly affected by the additional motion. An accelerated briefing schedule for
the additional motion may be set by the Clerk of the Panel to conform with the hearing session schedule
established by the Chairman.
(i) Any party or counsel in a new group of actions under consideration by the Panel for transfer
under Section 1407 shall promptly notify the Clerk of the Panel of any potential tag-along action in which that
party is also named or in which that counsel appears.
RULE 7.3: SHOW CAUSE ORDERS
(a) When transfer of multidistrict litigation is being considered on the initiative of the Panel pursuant
to 28 U.S.C. §1407(c)(i), an order shall be filed by the Clerk of the Panel directing the parties to show cause
why the action or actions should not be transferred for coordinated or consolidated pretrial proceedings. Any
party or counsel in such actions shall promptly notify the Clerk of the Panel of any other federal district court
actions related to the litigation encompassed by the show cause order. Such notification shall be made for
additional actions pending at the time of the issuance of the show cause order and whenever new actions are
filed.
(b) Any party may file a response to the show cause order within twenty days of the filing of said
order unless otherwise provided for in the order. Failure of a party to respond to a show cause order shall be
treated as that party's acquiescence to the Panel action contemplated in the order.
(c) Within five days after the lapse of the time period for filing a response, any party may file a reply
limited to new matters.
(d) Responses and replies shall be filed and served in conformity with Rules 5.12, 5.2 and 7.1 of
these Rules.
(e) With respect to any action that is the subject of Panel consideration, counsel shall promptly notify
the Clerk of the Panel of any development that would partially or completely moot the matter before the Panel.
RULE 7.4: CONDITIONAL TRANSFER ORDERS FOR “TAG-ALONG ACTIONS”
(a) Upon learning of the pendency of a potential “tag-along action,” as defined in Rule 1.1 of these
Rules, an order may be entered by the Clerk of the Panel transferring that action to the previously designated
transferee district court on the basis of the prior hearing session(s) and for the reasons expressed in previous
opinions and orders of the Panel in the litigation. The Clerk of the Panel shall serve this order on each party to
the litigation but, in order to afford all parties the opportunity to oppose transfer, shall not send the order to the
clerk of the transferee district court for fifteen days from the entry thereof.
(b) Parties to an action subject to a conditional transfer order shall notify the Clerk of the Panel
within the fifteen-day period if that action is no longer pending in its transferor district court.

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(c) Any party opposing the transfer shall file a notice of opposition with the Clerk of the Panel within
the fifteen-day period. If a notice of opposition is received by the Clerk of the Panel within this fifteen-day
period, the Clerk of the Panel shall not transmit said order to the clerk of the transferee district court until further
order of the Panel. The Clerk of the Panel shall notify the parties of the briefing schedule.
(d) Within fifteen days of the filing of its notice of opposition, the party opposing transfer shall file
a motion to vacate the conditional transfer order and brief in support thereof. The Chairman of the Panel shall
set the motion for the next appropriate hearing session of the Panel. Failure to file and serve a motion and brief
shall be treated as withdrawal of the opposition and the Clerk of the Panel shall forthwith transmit the order to
the clerk of the transferee district court.
(e) Conditional transfer orders do not become effective unless and until they are filed with the clerk
of the transferee district court.
(f) Notices of opposition and motions to vacate such orders of the Panel and responses thereto shall
be governed by Rules 5.12, 5.2, 7.1 and 7.2 of these Rules.
RULE 7.5: MISCELLANEOUS PROVISIONS CONCERNING “TAG-ALONG ACTIONS”
(a) Potential “tag-along actions” filed in the transferee district require no action on the part of the
Panel and requests for assignment of such actions to the Section 1407 transferee judge should be made in
accordance with local rules for the assignment of related actions.
(b) Upon learning of the pendency of a potential “tag-along action” and having reasonable
anticipation of opposition to transfer of that action, the Panel may direct the Clerk of the Panel to file a show
cause order, in accordance with Rule 7.3 of these Rules, instead of a conditional transfer order.
(c) Failure to serve one or more of the defendants in a potential “tag-along action” with the
complaint and summons as required by Rule 4 of the Federal Rules of Civil Procedure does not preclude transfer
of such action under Section 1407. Such failure, however, may be submitted by such a defendant as a basis
for opposing the proposed transfer if prejudice can be shown. The inability of the Clerk of the Panel to serve
a conditional transfer order on all plaintiffs or defendants or their counsel shall not render the transfer of the
action void but can be submitted by such a party as a basis for moving to remand as to such party if prejudice
can be shown.
(d) A civil action apparently involving common questions of fact with actions under consideration
by the Panel for transfer under Section 1407, which was either not included in a motion under Rule 7.2 of these
Rules, or was included in such a motion that was filed too late to be included in the initial hearing session, will
ordinarily be treated by the Panel as a potential “tag-along action.”
(e) Any party or counsel in actions previously transferred under Section 1407 or under
consideration by the Panel for transfer under Section 1407 shall promptly notify the Clerk of the Panel of any
potential “tag-along actions” in which that party is also named or in which that counsel appears.

RULE 7.6: TERMINATION AND REMAND
In the absence of unusual circumstances—
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(a) Actions terminated in the transferee district court by valid judgment, including but not limited to
summary judgment, judgment of dismissal and judgment upon stipulation, shall not be remanded by the Panel
and shall be dismissed by the transferee district court. The clerk of the transferee district court shall send a copy
of the order terminating the action to the Clerk of the Panel but shall retain the original files and records unless
otherwise directed by the transferee judge or by the Panel.
(b) Each action transferred only for coordinated or consolidated pretrial proceedings that has not
been terminated in the transferee district court shall be remanded by the Panel to the transferor district for trial.
Actions that were originally filed in the transferee district require no action by the Panel to be reassigned to
another judge in the transferee district at the conclusion of the coordinated or consolidated pretrial proceedings
affecting those actions.
(c) The Panel shall consider remand of each transferred action or any separable claim, cross-claim,
counterclaim or third-party claim at or before the conclusion of coordinated or consolidated pretrial proceedings
on
(i) motion of any party,
(ii) suggestion of the transferee district court, or
(iii) the Panel's own initiative, by entry of an order to show cause, a conditional remand
order or other appropriate order.
(d) The Panel is reluctant to order remand absent a suggestion of remand from the transferee district
court. If remand is sought by motion of a party, the motion shall be accompanied by:
(i) an affidavit reciting
(A) whether the movant has requested a suggestion of remand from the transferee
district court, how the court responded to any request, and, if no such request
was made, why;
(B) whether all common discovery and other pretrial proceedings have been
completed in the action sought to be remanded, and if not, what remains to be
done; and
(C) whether all orders of the transferee district court have been satisfactorily
complied with, and if not, what remains to be done; and
(ii) a copy of the transferee district court's final pretrial order, where such order has been
entered.
of these Rules.
Motions to remand and responses thereto shall be governed by Rules 5.12, 5.2, 7.1 and 7.2
(e) When an order to show cause why an action or actions should not be remanded is entered
pursuant to subsection (c), paragraph (iii) of this Rule, any party may file a response within twenty days of the

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filing of said order unless otherwise provided for in the order. Within five days of filing of a party's response,
any party may file a reply brief limited to new matters. Failure of a party to respond to a show cause order
regarding remand shall be treated as that party's acquiescence to the remand. Responses and replies shall be
filed and served in conformity with Rules 5.12, 5.2 and 7.1 of these Rules.
(f) Conditional Remand Orders
(i) When the Panel has been advised by the transferee district judge, or otherwise has
reason to believe, that pretrial proceedings in the litigation assigned to the transferee
district judge are concluded or that remand of an action or actions is otherwise
appropriate, an order may be entered by the Clerk of the Panel remanding the action
or actions to the transferor district court. The Clerk of the Panel shall serve this order
on each party to the litigation but, in order to afford all parties the opportunity to oppose
remand, shall not send the order to the clerk of the transferee district court for fifteen
days from the entry thereof.
(ii) Any party opposing the remand shall file a notice of opposition with the Clerk of the
Panel within the fifteen-day period. If a notice of opposition is received by the Clerk
of the Panel within this fifteen-day period, the Clerk of the Panel shall not transmit said
order to the clerk of the transferee district court until further order of the Panel. The
Clerk of the Panel shall notify the parties of the briefing schedule.
(iii) Within fifteen days of the filing of its notice of opposition, the party opposing remand
shall file a motion to vacate the conditional remand order and brief in support thereof.
The Chairman of the Panel shall set the motion for the next appropriate hearing session
of the Panel. Failure to file and serve a motion and brief shall be treated as a
withdrawal of the opposition and the Clerk of the Panel shall forthwith transmit the
order to the clerk of the transferee district court.
(iv) Conditional remand orders do not become effective unless and until they are filed with
the clerk of the transferee district court.
(v) Notices of opposition and motions to vacate such orders of the Panel and responses
thereto shall be governed by Rules 5.12, 5.2, 7.1 and 7.2 of these Rules.
(g) Upon receipt of an order to remand from the Clerk of the Panel, the parties shall furnish
forthwith to the transferee district clerk a stipulation or designation of the contents of the record or part thereof
to be remanded and furnish the transferee district clerk all necessary copies of any pleading or other matter filed
so as to enable the transferee district clerk to comply with the order of remand.
RULE 16.1: HEARING SESSIONS AND ORAL ARGUMENT
(a) Hearing sessions of the Panel for the presentation of oral argument and consideration of matters
taken under submission without oral argument shall be held as ordered by the Panel. The Panel shall convene
whenever and wherever desirable or necessary in the judgment of the Chairman. The Chairman shall determine
which matters shall be considered at each hearing session and the Clerk of the Panel shall give notice to counsel
for all parties involved in the litigation to be so considered of the time, place and subject matter of such hearing
session.

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(b) Each party filing a motion or a response to a motion or order of the Panel under Rules 7.2, 7.3,
7.4 or 7.6 of these Rules may file simultaneously therewith a separate statement limited to one page setting forth
reasons why oral argument should, or need not, be heard. Such statements shall be captioned “Reasons Why
Oral Argument Should [Need Not] Be Heard,” and shall be filed and served in conformity with Rules 5.12 and
5.2 of these Rules.
(c) No transfer or remand determination regarding any action pending in the district court shall be
made by the Panel when any party timely opposes such transfer or remand unless a hearing session has been
held for the presentation of oral argument except that the Panel may dispense with oral argument if it determines
that:
(i) the dispositive issue(s) have been authoritatively decided; or
(ii) the facts and legal arguments are adequately presented in the briefs and record,
and the decisional process would not be significantly aided by oral argument.
Unless otherwise ordered by the Panel, all other matters before the Panel, such as a motion for reconsideration,
shall be considered and determined upon the basis of the papers filed.
(d) In those matters in which oral argument is not scheduled by the Panel, counsel shall be promptly
advised. If oral argument is scheduled in a matter the Clerk of the Panel may require counsel for all parties who
wish to make or to waive oral argument to file and serve notice to that effect within a stated time in conformity
with Rules 5.12 and 5.2 of these Rules. Failure to do so shall be deemed a waiver of oral argument by that
party. If oral argument is scheduled but not attended by a party, the matter shall not be rescheduled and that
party’s position shall be treated as submitted for decision by the Panel on the basis of the papers filed.
(e) Except for leave of the Panel on a showing of good cause, only those parties to actions
scheduled for oral argument who have filed a motion or written response to a motion or order shall be permitted
to appear before the Panel and present oral argument.
(f) Counsel for those supporting transfer or remand under Section 1407 and counsel for those
opposing such transfer or remand are to confer separately prior to the oral argument for the purpose of
organizing their arguments and selecting representatives to present all views without duplication.
(g) Unless otherwise ordered by the Panel, a maximum of twenty minutes shall be allotted for oral
argument in each matter. The time shall be divided equally among those with varying viewpoints. Counsel for
the moving party or parties shall generally be heard first.
(h) So far as practicable and consistent with the purposes of Section 1407, the offering of oral
testimony before the Panel shall be avoided. Accordingly, oral testimony shall not be received except upon
notice, motion and order of the Panel expressly providing for it.
(i) After an action or group of actions has been set for a hearing session, consideration of such
action(s) may be continued only by order of the Panel on good cause shown.

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II. RULES FOR MULTICIRCUIT PETITIONS FOR REVIEW
UNDER 28 U.S.C. §2112(a)(3)
RULE 17.1: RANDOM SELECTION
(a) Upon filing a notice of multicircuit petitions for review, the Clerk of the Panel or designated
deputy shall randomly select a circuit court of appeals from a drum containing an entry for each circuit wherein
a constituent petition for review is pending. Multiple petitions for review pending in a single circuit shall be
allotted only a single entry in the drum. This random selection shall be witnessed by the Clerk of the Panel or
a designated deputy other than the random selector. Thereafter, an order on behalf of the Panel shall be issued,
signed by the random selector and the witness,
(i) consolidating the petitions for review in the court of appeals for the circuit
that was randomly selected; and
(ii) designating that circuit as the one in which the record is to be filed
pursuant to Rules 16 and 17 of the Federal Rules of Appellate Procedure.
(b) A consolidation of petitions for review shall be effective when the Panel's consolidation order
is filed at the offices of the Panel by the Clerk of the Panel.
RULE 25.1: FILING OF NOTICES
(a) An original of a notice of multicircuit petitions for review pursuant to 28 U.S.C. §2112(a)(3)
shall be submitted for filing to the Clerk of the Panel by the affected agency, board, commission or officer. The
term “agency” as used in Section II of these Rules shall include agency, board, commission or officer.
(b) All notices of multicircuit petitions for review submitted by the affected agency for filing with the
Clerk of the Panel shall embrace exclusively petitions for review filed in the courts of appeals within ten days
after issuance of an agency order and received by the affected agency from the petitioners within that ten-day
period.
(c) When a notice of multicircuit petitions for review is submitted for filing to the Clerk of the Panel,
the Clerk of the Panel shall file the notice and endorse thereon the date of filing.
(d) Copies of notices of multicircuit petitions for review shall be filed by the affected agency with
the clerk of each circuit court of appeals in which a petition for review is pending that is included in the notice.
RULE 25.2: ACCOMPANIMENTS TO NOTICES
(a) All notices of multicircuit petitions for review shall be accompanied by:
(i) a copy of each involved petition for review as the petition for review is defined in 28
U.S.C. §2112(a)(2); and
(ii) a schedule giving
(A) the date of the relevant agency order;
(B) the case name of each petition for review involved;

- 15 -
(C) the circuit court of appeals in which each petition for review is pending;
(D) the appellate docket number of each petition for review;
(E) the date of filing by the court of appeals of each petition for review; and
(F) the date of receipt by the agency of each petition for review.
(b) The schedule in Subsection (a)(ii) of this Rule shall also be governed by Rules 25.1, 25.3 and
25.4(a) of these Rules.
RULE 25.3: SERVICE OF NOTICES
(a) All notices of multicircuit petitions for review shall be accompanied by proof of service by the
affected agency on all other parties in all petitions for review included in the notice. Service and proof of service
shall be made as provided in Rule 25 of the Federal Rules of Appellate Procedure. The proof of service shall
state the name and address of each person served and shall indicate the party represented by each. If a party
is not represented by counsel, the proof of service shall indicate the name of the party and his or her last known
address. The original proof of service shall be submitted by the affected agency for filing with the Clerk of the
Panel and copies thereof shall be sent by the affected agency to each person included within the proof of service.
(b) The proof of service pertaining to notices of multicircuit petitions for review shall certify that
copies of the notices have been mailed or otherwise delivered by the affected agency for filing to the clerk of
each circuit court of appeals in which a petition for review is pending that is included in the notice.
RULE 25.4: FORM OF NOTICES
(a) Each notice of multicircuit petitions for review shall be
(i) flat and unfolded;
(ii) plainly written, typed in double space, printed or prepared by means of a duplicating
process, without erasures or interlineations which materially deface it;
(iii) on opaque, unglazed white paper (not onionskin);
(iv) approximately 8-1/2 x 11 inches in size; and
(v) fastened at the top-left corner without side binding or front or back covers.
(b) The heading on the first page of each notice of multicircuit petitions for review shall commence
not less that three inches from the top of the page. Each notice shall bear the heading Notice to the Judicial
Panel on Multidistrict Litigation of Multicircuit Petitions for Review,” followed by a brief caption identifying the
involved agency, the relevant agency order, and the date of the order.
(c) The final page of each notice of multicircuit petitions for review shall contain the name, address
and telephone number of the individual or individuals who submitted the notice on behalf of the agency.

- 16 -
RULE 25.5: SERVICE OF PANEL CONSOLIDATION ORDER
(a) The Clerk of the Panel shall serve the Panel's consolidation order on the affected agency through
the individual or individuals, as identified in Rule 25.4(c) of these Rules, who submitted the notice of multicircuit
petitions for review on behalf of the agency.
(b) That individual or individuals, or anyone else designated by the agency, shall promptly serve the
Panel's consolidation order on all other parties in all petitions for review included in the Panel's consolidation
order, and shall promptly submit a proof of that service to the Clerk of the Panel. Service and proof of that
service shall also be governed by Rule 25.3 of these Rules.
(c) The Clerk of the Panel shall serve the Panel's consolidation order on the clerks of all circuit
courts of appeals that were among the candidates for the Panel's random selection.
* * * * *
CONVERSION TABLE
Renumbered Rule/Previous Rule Renumbered Rule/Previous Rule
1.1 1 7.1 9
1.2 5 7.2 10
1.3 4 7.3 11
1.4 6 7.4 12
1.5 18 7.5 13
1.6 19 7.6 14
5.1 2 16.1 16, 16.2 & 17
5.11 3 17.1 24
5.12 7 25.1 20
5.13 – 25.2 21
5.2 8 25.3 22
5.3 – 25.4 23
6.2 15 25.5 25

UNITED STATES JUDICIAL PANEL ON
MULTIDISTRICT LITIGATION
FREQUENTLY ASKED QUESTIONS
I. ALL PLEADINGS FILED BEFORE THE PANEL
˜ HOW SHOULD PLEADINGS BE FORMATTED FOR SUBMISSION TO THE PANEL?
Heading: Before the Judicial Panel on Multidistrict Litigation
MDL No.{insert appropriate # or leave blank for
new MDL} – MDL caption
TAG-ALONG MATTERS: Must reference the short case caption(s), district(s)
and case number(s) or attach schedule with cases listed.
NEW MOTIONS: Must have a separate schedule of actions with the complete
case captions. (Do not use the abbreviation et al.)
RESPONSES TO NEW MOTIONS: Do not require a schedule of actions.
Start out all pleadings by identifying the party filing the paper (e.g. plaintiff or
defendant) and identify the party(s) by name.
On the signature page be sure to include the filing attorney’s name, firm, address,
phone number, fax number and the names of the parties represented.
˜ HOW MANY COPIES OF MY PLEADING ARE REQUIRED?
An original (or fax) of the following papers is required: proof of service; notice of
appearance; corporate disclosure statement; status notice; notice of opposition;
notice of related action; application [request] for extension of time; and notice of
presentation or waiver of oral argument. An original and four copies of all
other papers are required.
Rule 5.12 was modified on 4/29/05. Click here to view the JPML rules.

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION Page 2
Frequently Asked Questions
˜ WHAT IS THE BEST METHOD FOR TRANSMITTAL OF PLEADINGS TO
THE PANEL?
Consider using overnight delivery service in lieu of U.S. Postal Service (USPS).
All USPS mail being delivered to Washington, DC, is subject to being irradiated
and may be funneled through more than one U.S. Post Office before being
delivered. This process will cause substantial delay in delivery.
A Notice of Opposition or time sensitive status notification should be submitted
via fax to: 202-502-2888.
˜ WHAT ELSE IS REQUIRED?
A disk of your pleading in Adobe Acrobat (PDF) format, Rule 5.13 (modified
7/30/07).
A proof of service for new MDL matters shall indicate the name and complete
address of each person served and shall indicate the party(s) represented by each.
Once a “Panel Service List” has been received from the Clerk of the Panel, the
“Panel Service List” shall be utilized for service of responses by attaching the list
to your proof of service. See Rule 5.2.
II. NEW MATTERS BEFORE THE PANEL
˜ WHAT IS REQUIRED TO FILE A MOTION FOR SECTION 1407 TRANSFER
BEFORE THE PANEL?
Two civil cases with common questions of fact must be pending in two federal
district courts. See 28 U.S.C. §1407 and Rules of Procedure for the Judicial
Panel on Multidistrict Litigation.
You must have a motion, brief, schedule of actions and proof of service. See Rule
7.2 Motion Practice. Click to view the Checklist for Filing a New MDL
Motion which also contains sample formats for a motion, brief, schedule of
actions and proof of service.
Please include a courtesy copy of each complaint.

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION Page 3
Frequently Asked Questions
˜ IF A MOTION HAS ALREADY BEEN FILED WITH THE PANEL, DO I NEED TO
FILE MY OWN MOTION TO ASK FOR A DIFFERENT TRANSFEREE DISTRICT?
No. You may present arguments for a different transferee district in your
response. All venue arguments will be considered by the Panel.
˜ I UNDERSTAND THERE IS A MOTION TO TRANSFER PENDING BEFORE THE
PANEL, AND I HAVE RECENTLY FILED A COMPLAINT THAT WOULD
POTENTIALLY BE RELATED. WHAT CAN I DO TO LET THE PANEL KNOW
ABOUT MY CASE AND MY POSITION ON THE QUESTION OF SECTION 1407
TRANSFER?
You may file an “Interested Party Response.” An interested party is not required
to adhere to the briefing schedule established for the motion to transfer; however,
the Interested Party Response should be submitted as soon as possible to ensure
that there is ample time for it to be reviewed by the Panel. In an introductory
paragraph, identify the party(s) you represent and include the case caption, district
and civil action number of the case. Also, include a courtesy copy of the
complaint for the new case.
˜ HOW SHOULD COUNSEL NOTIFY THE PANEL ABOUT POTENTIALLY-RELATED
ACTIONS?
The best method is to submit a paper titled “Notice of Related Actions.” The
paper merely needs to alert the Panel of the pendency of these additional related
actions. You should only include “new” actions on your notice. If there are
numerous actions, please attach a schedule grouped by district in ascending
alphabetical order and within each district list cases in ascending order by civil
action number. Please feel free to call the staff at the Panel to ask for the most
recent case listing; our phone number is 202-502-2800.
˜ CAN I FILE A NOTICE OF APPEARANCE FOR MY RELATED ACTION?
No. We only file appearances for cases that are part of the motion before the
Panel. As a result, counsel appearing in the related actions will not be listed on
the Panel Attorney Service List.

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION Page 4
Frequently Asked Questions
˜ I FILED THE MOTION NOW BEFORE THE PANEL AND EXPECT NUMEROUS
OTHER CASES TO BE FILED IN THE NEAR FUTURE. HOW DO I AMEND
MY MOTION?
Contact the Chief Deputy Clerk of the Panel to establish a time frame for
submitting the amendment to your motion; if you file it too late it will not be
briefed in time for the Panel hearing session. It is best to submit just one
amendment to avoid setting numerous briefing schedules.
To file your amendment, prepare a pleading titled “Amendment to Motion for
Transfer.” This pleading should not repeat previous arguments and does not
require a separate brief. You will need a “Schedule of Additional Actions” and a
Proof of Service. The proof of service must state that you have served all new
counsel with a copy of the amendment as well as the previously filed motion
papers and must also state that counsel previously served with the original motion
are now being served with the amendment. Your proof of service must include
the name and address of the attorneys served and identify the party(s) each
attorney represents. If a Panel Attorney Service List has been prepared for those
included on the initial motion, the list should be referenced in and attached to
your proof of service and the list should be supplemented to include any
additional new counsel.
III. CONDITIONAL TRANSFER ORDER
When a potential “tag-along action” is brought to the attention of the Panel, the
Clerk of the Panel may enter an order transferring that action to the previously
designated transferee court to become part of the existing MDL docket. This
“Conditional Transfer Order” (CTO) is served on the counsel obtained from the
district court docket sheet and other counsel from the existing MDL docket.
Transmittal to the involved clerks is stayed for 15 days in order to afford all
parties an opportunity to oppose transfer.
˜ WHAT FORMAT SHOULD I USE TO FILE A NOTICE OF OPPOSITION TO A
CONDITIONAL TRANSFER ORDER (CTO)?
You may use a letter or pleading to submit your notice of opposition to a CTO.
You must include the MDL docket number and caption, the short caption of the
case whose transfer you are opposing, along with the name of the district court
where the case is pending and the civil action number. If you use a letter, address
it to the Clerk of the Panel. If you use a pleading, head it with “Before the
Judicial Panel on Multidistrict Litigation.” As with all papers submitted to the

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION Page 5
Frequently Asked Questions
Panel, be sure to identify the party you represent on the last page of the pleading.
See Rule 7.1 (e). Click to see a Checklist for Filing a Notice of Opposition and
a sample notice of opposition.
˜ CAN I FAX MY NOTICE OF OPPOSITION?
Yes. We find that faxing is the most reliable method of timely submitting
oppositions. Fax to: 202-502-2888
˜ DO I NEED TO SERVE MY NOTICE OF OPPOSITION ON OTHER COUNSEL?
No. When you fax your notice of opposition to the Panel, the transfer is stayed
and a letter is sent to you by the Panel with a copy to the counsel on the Panel
Service List. This correspondence serves as notification that the opposition has
been filed with the Panel and establishes the briefing schedule.
˜ ONCE I HAVE PROVIDED MY NOTICE OF OPPOSITION, DO I NEED TO DO
ANYTHING ELSE?
Yes. The notice must be followed within fifteen days by a motion to vacate the
CTO and a brief supporting the motion. Failure to file timely the required motion
and brief will be deemed as withdrawal of the notice of opposition.
˜ HOW DO I KNOW WHO TO SERVE WITH MOTION TO VACATE THE CTO?
A Panel Service List will be attached to the letter you receive from the Panel.
You will be instructed to serve your motion papers on those counsel and to
prepare a proof of service certifying that you served the “attached” Panel Service
List. See Rule 5.2 (a). Please do not retype our list.
Note: The Panel Service List may encompass substantially
fewer counsel than those listed on the Involved Counsel List
attached to the CTO, especially if there were numerous actions on
the CTO, so please be sure to use the Panel Service List. Failure
to attach a copy of the Panel Service List may lead to delay in
filing documents with the Panel.

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION Page 6
Frequently Asked Questions
˜ WHEN IS MY MOTION TO VACATE THE CTO DUE AT THE PANEL?
The motion papers are due in the Panel office 15 calendar days after the notice of
opposition is filed with the Panel. An exception is made if the timely opposition
was filed after the due date for oppositions (for example, the next business day),
then the motion papers would be due in 14 calendar days. Counsel are expected
to use reliable courier or delivery services to ensure timely filing with the Panel.
IV. GENERAL QUESTIONS ABOUT FILING A REPLY
˜ WHO MAY FILE A REPLY?
Only the movant may file a reply.
˜ WHEN IS MY REPLY DUE?
The reply is due in the Panel office five business days after the lapse of time
period for filing responses. If any of the responses were served by regular mail,
you may add three additional business days to the due date. This three-day grace
period is only for filing a reply.
V. RECENT DEVELOPMENTS
˜ I HAVE ALREADY FILED MY PAPERS WITH THE PANEL AND THE OTHER
RESPONDING COUNSEL HAVE PROVIDED THE PANEL WITH ERRONEOUS
INFORMATION. HOW DO I BRING THIS TO THE PANEL’S ATTENTION?
You should file a paper captioned “Supplemental Information” as soon as
possible. The paper should be direct and identify the inaccuracies with
supporting information. This pleading should be served on the Panel Service List.
˜ SEVERAL CASES THAT ARE CURRENTLY BEFORE THE PANEL HAVE BEEN
REMANDED TO STATE COURT OR DISMISSED. HOW DO I NOTIFY THE
PANEL OF THE RECENT DEVELOPMENTS?
You should prepare a letter the Clerk of the Panel stating the current status of the
cases and include a copy of the pertinent orders. Fax transmission to the Panel at
202-502-2888 is preferred. Service of the papers may not be necessary.

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION Page 7
Frequently Asked Questions
VI. MATTERS SET FOR HEARING
˜ WHEN WILL MY MOTION BE SET FOR HEARING?
Although we cannot offer a definitive date, the Panel generally holds hearing
sessions every two months. Hearings are traditionally held during the months of
January, March, May, July, September and November. Shortly after a hearing
session has concluded, the next hearing session is scheduled. A notice of hearing
is sent out to counsel approximately 45 days prior to the hearing date. The notice
of hearing is also available as a PDF document on the Panel website.
˜ WILL I BE ALLOWED TO PRESENT ORAL ARGUMENT?
Matters set for hearing are divided into two categories: matters set for oral
argument and matters considered without oral argument. If your matter is set for
oral argument, you will be provided with a form titled “Notice of Presentation or
Waiver of Oral Argument.” The form must be returned to the Panel office by a
specific date and must be served on the other counsel. You must have a written
response on file with the Panel in order to present oral argument.
˜ MAY I PRESENT ORAL ARGUMENT IF I AM AN INTERESTED PARTY?
Yes, as long as you have a written response on file with the Panel and have
submitted and served a “Notice of Presentation or Waiver of Oral Argument.”

Patricia M. Williams PhD, DABT
Diplomate of the American Board of Toxicology
President, Environmental Toxicology Experts, LLC.
pwilliams@etoxe.com
Associate Professor
Pontchartrain Institute for Environmental Sciences
Coordinator, Toxicology Research Laboratories
University of New Orleans

Drywall
Common building material typically made
of a layer of gypsum plaster pressed
between two thick sheets of paper, then kiln
dried.
MSDS sheets
Georgia Pacific—Calcium Pacific Calcium sulfate 60-100% 60 100%
Crystalline silica 0.1-1% 0.1 1%
ID: GP-71A GP 71A
USG Sheetrock® Sheetrock --Calc --Calcium
ium sulfate dihydrate >80%
Cellulose

MSDS
National Gypsum: SoundBreak SoundBreak Gypsum Board— Board
Calcium sulfate dihydrate 85-95% 85 95%
crystalline silica (Quartz) varies
Cellulose 5-15% 5 15%
Proprietary polymer additives 2-3% 2 3%
May contain: Fiberglas, synthetic, vitreous, continuous < 1%
MSDS MSDS : : GB--01507 GB 01507
American Gypsum
Gypsum (calcium sulfate) 80-100% 80 100%
Paper (Cellulose) 1-10% 1 10%
Starch 0-1% 0 1%
Boric Acid 0-1% 0 1%
Potassium Sulfate 0-1% 0 1%
Vermiculite 0-1% 0 1%
Glass Fiber 0-1% 0 1%
Paraffin Wax 0-2% 0 2%
Crystalline Silica 0-0.5% 0 0.5%
Very Preliminary Drywall
Analysis Results

Chinese Drywall Analysis
( incomplete to date—14 date 14 samples)
Strontium (12 samples 5-10 5 10 x > US drywall)
(1 sample 4.8 x > US drywall) (1 sample
2.0 x > US drywall)
Strontium
Carbon Disulfide (8 of 14 samples)
Iron sulfide (12 of 14 samples)
Strontium Sulfide (14 of 14 samples)
Bismuth (1 of 14 samples)
(Boston Chemical Data Corp, Marco Kaltofen)
EPA Chinese Drywall Analysis
Detected in Chinese Drywall:
Sulfur (not detected in US drywall)
Strontium—2,570 Strontium 2,570 ppm and 2,670 ppm (compared to
244-1,130 244 1,130 ppm in US drywall)
Iron—1,390 Iron 1,390 ppm and 1.630 ppm
(compared to 841-3,210 841 3,210 ppm in US drywall)
In addition, two organic compounds that are
associated with acrylic paints were detected in
Chinese Drywall
(not detected in the US drywall)

Gaseous emissions
Samples of corroded copper in wiring and HVAC
equipment confirmed for sulfur-related sulfur related corrosion
damage.
Hydrogen sulfide emissions in the amount of 1.1
ppm has been detected by St. Bernard Parish Fire
Chief (also a resident with Chinese drywall). (55 x
greater than ATSDR MRL intermediate duration
inhalation)
ATSDR MRLs for hydrogen sulfide:
---acute ---acute
duration (1-14 (1 14 days) inhalation=0.07 ppm (70 ppb)
---intermediate
---intermediate-duration
duration (15-364 (15 364 days) inhalation= inhalation= 0.02 0.02 ppm ppm
(20 ppb)
Sources of the Filler in the Drywall
from China
To be determined
Possibilities based on preliminary results:
incinerated wastes
coal fly ash
coal mine wastes
combination of sources
Analytical chemists have their work cut out for
them

Coal combustion residues
Derived from naturally occurring minerals
present in the source coal
Non-volatile Non volatile constituents (e.g. heavy metals)
are concentrated
Can present toxicity problems at higher
concentrations
May contain a variety of organic chemicals
Natural metals concentrated in coal
combustion residues:
Aluminum oxide
Iron oxide
Calcium oxide
Arsenic
Hexavalent chromium
Strontium
Cadmium
Copper
Lead
Nickel
Zinc
Selenium
Mercury
Other metals
metals

Radionuclides concentrated in coal
combustion residues:
Uranium and decay products Thorium and decay products
U 238 Th 232
Ra 226 Ra 228
Ra 222 Ra 220
Po 218 Po 216
Pb 214 Pb 212
Bi 214 Bi 212
Pb 210 Po 212
Bi 210
Po 210
Pb 206 (stable)
Pb

Coal Mine Waste
Coal may be sold as mined or processed.
In China alone, the annual production of coal mine waste
in 1994 was estimated at more than 10 8 tons with an
inventory of 1.6 x 10 9 tons.
Coal mine wastes stored as huge piles of loose rock and
mining slag, known as tips.
Coal mine waste tip spontaneous combustion is an
environmental problem in China and worldwide
The existence of sulphurous iron ore in the waste is the
main cause of spontaneous combustion
In China, the waste from coal mining is mainly used as
materials for road construction, brick making, building
construction, and power production
Ref: Ref: Liu, Liu, Li, Li, Qiao, Qiao, Wang, Wang, and and Pan. Pan. ““Management Management of of Spontaneous Spontaneous Combustion Combustion in in
Coal Coal Mine Mine Waste Waste Tips Tips in in China””, China , Water, Water, Air, Air, and and Soil Soil Pollution Pollution 103:441--444, 103:441 444,
1998 1998
Coal mine waste tips

Coal Fly Ash
Byproduct of the combustion of coal
Fly ash is a fine, powdery material that would “fly fly”
out of the power plant’s plant s stacks if it were not
captured
Power plants collect the fly ash and use it in
building products
Concentrations of constituents vary with the
combustion process and coal source
Flue Gas Desulfurization (FGD) material is
produced by power plant equipment that scrubs
sulfur dioxide from emissions. --used --used
for man-
made synthetic gypsum to make wallboard and
other products
Fly-ash Fly ash particles are spherical
Non-combustible Non combustible metals remain as ash products
(strontium, aluminum oxide, iron oxide, calcium
oxide, hexavalent chromium, and other elements).
Radionuclides are in a higher concentration than
in the original coal source
Polychlorinated dibenzo-p-dioxins dibenzo dioxins and
dibenzofurans
Crystalline and amorphous silica
Polycyclic aromatic hydrocarbons

Coal Fly Ash
Resident complaints
Electrical wiring turns black, eroded air
conditioning coils, appliances malfunction,
fine jewelry turns black
Drywall is very friable releasing continuous
dust
Dust sets off smoke alarms due to the
particulates in the indoor ambient air

Frequent Self-reported Self reported symptoms
Eyes burning, frequent tearing
Frequent nose bleeds
Sinus trouble
Increased flow of nasal mucus
Dried, irritated, sore throat and nasal
membranes
Difficulty breathing, frequent shortness of
breath, wheezing
Persistent hoarseness
Persistent cough
Vision
Blurred vision
Severe pain in eyes
Chronic eye irritation
Difficulty in vision
Sometimes see halos around
lights

Skin
Acne
Skin rashes
Hives
Persistent skin trouble
G-I I symptoms
Frequent nausea
Stomach trouble
Abdominal pain
Frequent vomiting
Diarrhea

Neurological Symptoms
Frequent or severe headaches
Dizziness
Forgetfulness or loss of memory
Depression
Frequent numbness or tingling of hands, arms,
legs or feet
Trembling of hands and arms
Severe anxiety
Sleep disorders and disturbances
Increased fatigue
Difficulty in concentration
Personality changes
Muscles and Joints
Muscle aches or pain
Joint pain
Swollen painful joints
Weakness
Reduced muscle strength

Sensitive populations
Infants
Children
Elderly
Increased vulnerability to the toxic effects of
contaminants
Completed Exposure Pathway
Inhalation of volatile and particulate contaminants
in air
Inhalation of contaminants in dust and particles
Incidental ingestion of contaminated dust and
particles
Dermal absorption from contaminated dust and
particles
Dermal absorption from contaminated air
Internal alpha irradiation from internal emitters

Contaminants in
gaseous emissions
Carbon Disulfide

Carbon Disulfide
Gas—evaporates Gas evaporates at room temperature
Heavier than the surrounding air—stays air stays close to
the ground
Targets the following organ systems:
--Central --Central
Nervous System
--cardiovascular --cardiovascular
system
--eyes --eyes
--kidneys --kidneys
--liver --liver
--skin --skin
Acute Symptoms of CS 2 Exposure
Vision disturbances
Changes in breathing
Chest pains
Headaches
Tiredness
Trouble sleeping
Skin burns or blisters

Long Term CS 2 Exposure
Diffuse encephalopathy—global encephalopathy global disease/dysfunction of the
brain
Parkinsonism—shaking shaking or trembling palsy, muscle tremors,
rigidity of movement, droopy posture, masklike facial expression. expression
Pyramidal signs—muscle muscle weakness, loss of normal capacity to
perform discrete finger and hand movements, Babinski’s Babinski s sign
Parkinsonism
Pyramidal signs
Cerebellar ataxia—gait ataxia gait disturbance
Cognitive impairments
Axonal polyneuropathy
Cardiovascular disease—CS disease
form thrombi (clot in blood vessels)
CS 2
2 risk factor for stroke; believed to
The ATSDR MRL for chronic (≥365 ( 365 days)
inhalation for carbon disulfide is 0.3 ppm (300
ppb)

Sulfur Dioxide
Sulfur Dioxide
An EPA regulated criteria air pollutant
EPA primary standard Annual level: 0.03 ppm (30
ppb)
Causes a wide variety of health impacts because of
its reactivity with other substances in the air.
Particularly sensitive groups include:
--people --people
with asthma who are active
--children --children
--elderly --elderly
--people --people
with heart or lung disease

Sulfur Dioxide
Short term exposure to high levels can be life-
threatening (IDLH = 100 ppm)
Exercising asthmatics are sensitive to respiratory
effects at 0.25 ppm (250 ppb) SO 2
Longer-term Longer term exposures to high levels of SO 2 gas
and particles cause respiratory illness and
aggravate existing heart disease
Sulfate particles collect in lungs—increase
lungs increase
respiratory symptoms and disease, difficulty in
breathing, premature death
Sulfur Dioxide
Significant increases in airway resistance in
moderately exercising asthmatics at 400
ppb-1.0 ppb 1.0 ppm
Two most sensitive asthmatics exhibited
bronchoconstriction at inhalation of
100 ppb sulfur dioxide for 10 minutes

SO 2 Symptoms of Chronic Exposure to fine
sulphate particle ≤ 0.3 μ
Cough
Phlegm
Rhinorrhea
Sore/dry throat
Sinus congestion
Wheezing
Eye irritation
bronchitis
SO 2 ATSDR acute inhalation (1-14 (1 14 days)
Minimal Risk Level for non-cancerous
non cancerous
health effects is 10 ppb (0.01 ppm)
ppm

Hydrogen Sulfide
Hydrogen Sulfide
Poisonous colorless gas with a characteristic
odor of rotten eggs
Ambient air concentrations between
0.11 -0.33 0.33 ppb.
Concentrations of hydrogen sulfide in urban
areas are generally < 1 ppb.

Exposure to lower concentrations of
H2S Neurological Effects:
Incoordination
Poor memory
Hallucinations
Personality changes
Anosmia (loss of sense of
smell)
Lower concentrations of H 2S Respiratory Effects:
Nasal symptoms
Sore throat
Cough
Dyspnea
Impaired lung function in
asthmatics

High concentrations of H 2S Respiratory arrest
Pulmonary edema
Tachypnea (rapid respiratory rate)
Bronchitis
Respiratory depression
Respiratory paralysis
H2S S is a powerful neurotoxin
Symptoms include:
Giddiness
Irritability
Drowsiness
Weakness
Confusion
Delirium
Amnesia
Headache
Sweating
Dizziness
Muscle cramping
Tremor
Excessive salivation
Cough
Convulsions
coma

GI Symptoms of H 2S Nausea
Vomiting
Diarrhea
Cardiac symptoms of acute exposure
to H 2S
Tachycardia (rapid heart rate)
Bradycardia (slow heart rate)
Hypotension (low blood pressure)
Cyanosis (blue tint to skin and mucous
membranes)

Other symptoms
Skin irritation
Lacrimation (tearing)
Inability to detect odors
Photophobia (heightened sensitivity to
light)
Blurred vision
ATSDR Minimal Risk Levels H 2S: S:
Acute duration (1-14 (1 14 days) inhalation
exposure: 0.07 ppm (70 ppm) ppm
Intermediate-duration Intermediate duration (15-364 (15 364 days)
inhalation exposure: 0.02 ppm (20 ppb)

Particulate Matter
Particulate Matter
National Ambient Air Quality
Standards
EPA regulates Annual Primary
Standards:
PM 2.5
PM 10
PM 2.5 = 15 µg/m g/m3 PM 10 = 150 µg/m
g/m 3

Gases and Particles
Capable of producing pulmonary damage
Damage to other organ systems when
inhaled
Produce cell necrosis and death
Increase permeability of alveolar walls
Example: radium dust is more toxic when
inhaled then when ingested

Airways of
Lungs
Lungs

pulmonary alveoli
Pulmonary alveoli and pneumocytes

Clearance from the
lungs is not clearance
from the body.
Particles cleared to:
Particulate Matter
1. Stomach and GI tract
2. Lymphatics and lymph nodes
3. Pulmonary vasculature
Sensitive Populations for toxicity of
particulate matter
Pre-existing Pre existing heart or lung disease
Older adults
Children

Symptoms from exposure to elevated
particle levels:
Irritation of the eyes, nose and
throat
Coughing
Phlegm
Chest tightness or pain
Palpitations of heart
Shortness of breath
Difficulty breathing
Asthma attacks
Heart attacks
Chemical contaminants
may be absorbed into the
particulate mass and/or
adsorbed onto the surface
of the particle that may be
inhaled.

Particles containing Heavy metals and
internal alpha emitters remain in the
body as chronic sources of exposure
due to body deposition toxicokinetics
Cumulative exposure to both
gaseous and particulate forms of
the toxicants must be considered
Particles may be stored for 20 years or more
in lymph nodes. (alpha emitters become a
source of chronic exposure)
Metals may be stored in bone or other
deposition sites. (Radium, Lead, Strontium)
Strontium may close epiphyseal plates
(growth plates) of a child
Radium and Lead may recirculate to cause
damage to other organs.

Deposit in bone
Lead
Radium
Strontium

Natural Decay Series: Uranium-238
Uranium 238

Alpha particles—concentrated particles concentrated source of
radiation
Dioxins
2,3,7,8-Tetrachlorodibenzo
2,3,7,8 Tetrachlorodibenzo-para para-dioxin dioxin
Group 1 Human Carcinogen
Sarcoma RR = 3.3 95% CI:1.24-8.76 CI:1.24 8.76
Risk increases in relation to both the duration
and the extent of exposure and is statistically
significant in the class with the longest period
(≥ 32 years) and the highest level of
exposure(≥6 exposure( 6 fgr/m 3 )

PAHs
Benzo[a]pyrene
Group 1 Human carcinogen