(August 18, 2010) A plaintiffs lawyer who won $6.5 million that will be paid mostly in Lowe's gift cards for his class action clients and more than $2 million in fees and costs in a settlement of a suit over allegedly stinky drywall calls it the first opportunity for consumers to "get a dime" out of such a case.
"We're the first people that have gotten anything for the consumer," said Don Barrett, the Lexington, Miss., attorney who leads the plaintiffs' team. "It's a good settlement."
The class action suit, filed just six weeks ago in Muscogee County Superior Court in Columbus, Ga., centers on defective drywall that may emit a sulfurous, rotten-egg smell, though it's not clear how severe the smell was in the drywall purchased by plaintiffs in the Columbus case. Nonetheless, Lowe's Home Centers Inc. has hammered out a settlement agreement that includes $2.16 million for fees and costs of the four plaintiffs attorneys and $6.5 million -- payable mostly in store gift cards -- for anyone who purchased drywall from Lowe's stores from -- in the words of the settlement -- "the beginning of time" through July 27. The deal also requires that Lowe's place $1 million in escrow to pay for the cost of publicizing and administering the payoff.
The Columbus case is similar to others filed in federal courts against retailers and manufacturers for damage to homes where allegedly defective and toxic Chinese-made drywall was installed. Some of the plaintiffs and attorneys in the Georgia case, including Barrett, also are involved in the federal cases. But he notes important differences: In the Columbus case, none of Lowe's suppliers were proven to have provided Chinese-made drywall, and the plaintiffs' problems were much less severe than those in the known Chinese drywall cases.
In the Lowe's case, the 39 original plaintiffs, including one who lives in Muscogee County, merely "thought they had a smell" but did not have to replace walls and appliances because the odor decreased over time, Barrett said.
"It's not chump change -- especially since Lowe's didn't sell any Chinese drywall," said Barrett. "If they had been a seller of Chinese drywall, in the first place, we would have taken it to federal court. In the second place, the figure $9.6 million wouldn't have been appropriate. It would have to be more."
Barrett said he filed the case in the Muscogee Superior Court because he wanted a quick resolution. "The federal cases in other states have dragged on for years," he said.
Muscogee County Superior Court Judge Bobby Peters said he has given preliminary approval of the settlement and set a fairness hearing for 2 p.m. Nov. 19, which would also be the deadline for those who have purchased the drywall from Lowe's to opt out of the class.
If the settlement goes forward, consumers who don't opt out would be bound by the deal, which amounts to a Lowe's gift card for either $50 or a maximum of $2,000, depending on whether they kept receipts for purchase of the drywall. If they have receipts and documentation for damages -- either medical bills or related home repair costs -- they could get up to $2,500 cash, according to the preliminary settlement agreement filed in Muscogee County.
The agreement received a bad review from ProPublica, the nonprofit public interest investigative journalism organization.
"The figures involved are small compared with what the federal courts have established as the general cost of repairing a home contaminated by defective drywall," said an article on the organization's website, www.propublica.org. "The U.S. Consumer Product Safety Commission says the only way to repair such homes is to remove the drywall and electrical wiring, a job that can cost $100,000 or more.
The articles quote consumer advocates saying the gift cards wouldn't go far for those whose homes have been built with drywall affected with the problems alleged in the suit: high amounts of sulfur that can emit noxious fumes that corrode electrical wiring, air conditioning units and refrigerators and cause respiratory problems for residents.
But Barrett contends the criticism is misguided because the federal suits involve much more serious problems. "They are letting the perfect be the enemy of the good," he said of the critics. "In other words, in a settlement, you negotiate and you come up with a figure that hopefully both sides are just barely happy with."
In addition to Barrett, of the Don Barret Law Firm in Lexington, Miss., the other plaintiffs attorneys are: C. Austin Gower Jr. of the Charles A. Gower firm in Columbus, the local counsel in the case; Patrick W. Pendley of Pendley, Baudin & Coffin, Plaquemine, La.; and Dewitt Lovelace of the Lovelace Law Firm, Miramar Beach, Fla.
Defense attorneys are: Jannea S. Rogers of Adams and Reese in Mobile, Ala., and William B. Gaudet and Francis V. Liantonio Jr. of Adams and Reese in New Orleans. Calls to the defense attorneys were not returned.
Lowe's announced the agreement and sent out electronic copies of the 65-page settlement. In the settlement agreement, Lowe's "vigorously denies" any wrongdoing or liability. The retailer even denies having ever sold defective drywall. And, at the same time, the agreement allows the company to limit claims from those who say they have purchased defective drywall from Lowe's stores.
"Lowe's proactively agreed to provide compensation to certain Lowe's customers and others who claim to be affected by this allegedly defective drywall," said a statement from Karen S. Cobb, a public relations representative for the Mooresville, N.C.-based corporation. "Lowe's entered into this agreement as part of our commitment to serving our customers, not because such a step is or has been required by law, or because drywall purchased from Lowe's has been proven deficient in any way."
The settlement agreement says the products to be covered "include any and all drywall -- made domestically or in China -- sold by the company and allegedly harmful and or defective for any reason whatsoever, including but not limited to the emission of sulfide gasses with noxious rotten egg-like smells causing corrosion of metals, including copper and silver, and including any other alleged damage to real or personal property, or causing irritant effects or potential health hazards."
Lowe's drew praise from the plaintiffs' side for its handling of the matter. "I'm a plaintiffs lawyer. I deal with corporate malfeasance all the time," Barrett said. "I have to take my hat off to Lowe's. They stepped up and tried to do the right thing."
The case is Glen Vereen, on behalf of himself and all others similarly situated, v. Lowe's Home Centers Inc., Muscogee County Superior Court case No. SU10-CV-2267B.