Another Chinese drywall maker must face Florida and Virginia state court jurisdiction in lawsuits over defective drywall, Federal and state courts have ruled this month.
The first decision came in Florida: In a case pitting U.S. homebuilder Lennar against the Chinese firm Taishan Gypsum, Miami-Dade Circuit Court Judge Joseph Farina denied Taishan's bid to avoid coming under Florida law, the Miami Herald reports (" Miami judge rules against Chinese drywall maker," by Douglas Hanks).
Taishan had claimed to have no actual operations or company presence in Florida. But Farina sided with Lennar, the Herald reports, "citing Taishan's efforts during Florida's housing boom to sell its product in the U.S. market. The company sent samples to U.S. dealers, hosted Florida construction executives for tours of Taishan's plants in China and customized some drywall materials to be imprinted with a Tampa phone number for one Florida distributor." Wrote Farina in an opinion (his last before retiring from the bench), "Taishan actively courted the Florida market."
While other drywall makers (most notably Knauf Plasterboard Tianjin Inc., which is owned by a German conglomerate) had accepted U.S. jurisdiction and have moved to settle defective drywall claims, Taishan has followed a course of passive resistance — first ignoring the U.S. cases altogether and failing to respond, then coming to court only to argue that the court lacked jurisdiction. According to a Thomson Reuters News & Insight report, Judge Farina's decision marks the first time a U.S. court has rejected Taishan's stance (" Chinese drywall company stuck in U.S. court," by Nate Raymond).
But the Florida decision was followed a few days later by a similar decision in Federal court, applicable to suits originally brought in both Florida and Virginia. Reuters reports that Judge Eldon Fallon, ruling in the consolidated Chinese drywall proceedings in New Orleans Federal Court, says that Taishan must face the jurisdiction of Virginia law in a case originating there (" Chinese drywall maker must face U.S. lawsuits: judge," by Andrew Longstretch).
In a 142-page opinion, Fallon first described the ordeal faced by attorneys working to hold Taishan to account. Thirteen attorneys traveled to Hong Kong to question three Taishan executives, not about their product, but about their business contact with Virginia, solely to determine whether Taishan should reasonably be held subject to the U.S. legal system in the case. Writes Fallon: ‘The Court, after reviewing the transcripts from the depositions, concluded that the "depositions were ineffective because of disagreement between interpreters, counsel, and witnesses, translation difficulties, speaking objections, colloquy among counsel and interpreters, and in general ensuing chaos.'"
Fallon ordered the parties to try again — "this time with knowledgeable and prepared witnesses, a single translator, and Court supervision." Things went better, Fallon writes, and "On June 29, 2012, over three years since the creation of MDL 2047, and after a year-and-a-half of personal jurisdiction discovery on Taishan, the Court presided over a hearing on Taishan's motions."
And when the time finally came to rule, the Judge ruled against Taishan. Taishan had a contract with Virginia building materials supplier Venture Supply, executed by fax in the State of Virginia, Fallon observed; that, coupled with the company's "substantial revenue" from its business dealings with Venture ($785,000), was enough to satisfy Virginia's "long arm" statute for personal jurisdiction.
Further, Fallon ruled, holding Taishan to account in a Virginia court is consistent with the U.S. Constitution's requirement for due process, and "does not offend traditional notions of fair play and substantial justice," as required by court precedent.
Fallon reached a similar decision, using much the same reasoning, in a second case involving Florida plaintiffs. But given Taishan's determination and stubbornness in resisting even the idea of responding to the lawsuits, there's no telling when — if ever — plaintiffs harmed by the company's contaminated drywall may actually recover damages.