That concern is being raised anew with a recently-proposed settlement involving drywall sold at Lowe's. The suit, filed in Georgia state court, concerns some of the defective Chinese drywall sold by the home improvement chain.
The settlement totals $6.5 million, $2.1 million of which would go to the plaintiffs' attorneys. Meanwhile, class members are set to receive gift cards in varying amounts -- $50, $250, or $2,000 -- depending on how much money they can prove that they lost, according to ProPublica. Those who can prove damages greater than $2,000 are also eligible to receive as much as $2,500 in cash.
Out in the cold
What about plaintiffs who lost much more than the $4,500 they are entitled to receive under the settlement? Those consumers are basically out of luck. Once a class member uses up his $2,000 in gift cards and his $2,500 maximum cash, he isn't entitled to any further relief. The settlement also prohibits class members from pursuing any further litigation against Lowe's.
Worse, if consumer payouts total less than $2.5 million, the remaining money will go right back into Lowe's pockets.
The settlement is wide-reaching: it includes every consumer throughout the country who bought defective drywall from Lowe's. Those who want to be excluded from the class -- and preserve their right to sue individually -- must notify the court by November 9. That date is over a week before the judge decides whether to issue a final order approving the settlement.
Similar past settlement rejected
In March, a California judge rejected a class action settlement after determining that it provided too little to class members. That case involved allegedly misleading statements made by Honda about its Civic Hybrid's gas mileage capabilities. Judge Virginia Phillips ruled that the settlement -- which handed $3 million to attorneys but gave consumers rebates toward future Honda purchases -- provided nothing of value to the class.
That case drew national attention, with 26 state attorneys general arguing that the agreement didn't meet the "heightened scrutiny" standard required of coupon settlements.
The Georgia case is only one in a sea of cases involving the Chinese drywall manufacturers Knauf Plasterboard Tianjin Co. and Taishan Gypsum Co. In June, a handful of federal cases were consolidated in New Orleans.
The drywall at issue was imported into the U.S. between 2004 and 2006, partially as a result of the still-thriving housing market. The aftermath of Hurricane Katrina, which devastated homes in the Gulf region in 2005, only increased the already high demand. In all, around 550 million pounds of the drywall was imported.
The drywall emits an egg-like sulfur smell, which eventually corrodes metal fixtures and causes health problems ranging form coughing and wheezing to asthma and pneumonia.
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