Monday, May 11, 2015 - As plaintiffs argue before the Judicial Panel on Multidistrict Litigation for lawsuits against Lumber Liquidators to be transferred into an MDL, the company has halted the sale of its controversial Chinese-manufactured laminate flooring as of May 7. The company announced on the day that it will also hire former FBI director Louis J. Freeh to review the company‘s compliance policies as it prepares for litigation.
Lumber Liquidators announced that it spent more than $15 million on air quality tests, lawyers and other tools needed to effectively deal with the fallout of the concerns raised in the "60 Minutes" in just the first month following the report. The company has also stated that a group will be put together to investigate the products involved in the lawsuits and that the product will remained shelved until that review has finished.
The public awareness related to the toxic flooring was first brought to light by the investigative television show "60 Minutes," which discovered the presence of formaldehyde while reporting undercover from a Chinese plant where the floor boards are manufactured. The flooring accused of containing the toxic chemical has allegedly been sold to more than a million customers in the U.S. Officials questioned during the undercover investigation confessed to the use of false labels to cover up the use of illegal levels of formaldehyde within the boards.
Formaldehyde a carcinogen that is toxic to adults and especially children, and in some cases can lead to cancer. The level of the toxin in the flooring manufactured in China for Lumber Liquidators was in some cases well over 10 times the legal limit allowed in California, where a large portion of the lawsuits were first filed.
Plaintiffs in the case have filed multiple briefs with the JPML asking for their cases to be transferred to different regions of the U.S. A majority of the plaintiffs have requested for the lawsuits to be centralized in the Northern District of California, although oppositions have recently been filed seeking the transfer to place the courts in district courts in Florida and Virginia. The JPML has announced that it will it will hear and discuss arguments relating to the transfer of the Lumber Liquidators lawsuits at a May 28 session taking place in Minneapolis.
Lumber Liquidators has acted in response to the findings in the "60 Minutes" segment, offering air quality test to customers who may have purchased the dangerous floorboards. The tests, which will yield results in roughly a week after it is returned to stores, have thus far reported that 97 percent of the flooring tested does not exceed dangerous levels of formaldehyde.
Though California has state laws governing the maximum amount of formaldehyde allowed in building materials, the Environmental Protection Agency is still in the midst of a five-year battle to pass laws relating to their "Formaldehyde Emissions Standards for Composite Wood Products." The final rule is expected to be published sometime in the fall of 2015.
The "60 Minutes" report has hit the building retailer hard, as the Lumber Liquidators stock has sunk nearly 50 percent in 2015. Upcoming rulings on the transfer of the cases and the possibility of federal mandates on formaldehyde levels materializing later this year will be watched closely by the company as both these factors may very well influence the severity of the lawsuits related to the defective flooring.