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Eduardo v. Taishan Gypsum Co., Ltd.

United States District Court, E.D. Virginia, Norfolk Division

May 20, 2019

EDUARDO AND CARMEN AMORIN, et al., Individually, and on behalf of all Others similarly situated, Plaintiffs,


          Mark S. Davis, Chief United States District Judge.

         This matter is before the Court for determination of a “trial plan" for 175 “Virginia Plaintiffs" who are members of a certified class of property owners (or former property owners)[1] who suffered various forms of damages caused by Defendant Taishan's defective drywall sold in Virginia under the "Venture Supply" brand name.

         A. Procedural Background

         The instant case was part of a larger proceeding before the United States Judicial Panel on Multidistrict Litigation, which began in 2009 and involved more than 3, 500 properties in Florida, Louisiana, and Virginia. Following remand from the MDL to this Court, the Virginia Plaintiffs and the Defendants submitted competing “trial plans" to the undersigned Judge. Plaintiffs ask this Court to adopt the pre-remand rulings of Judge Fallon, who presided over the MDL in the Eastern District of Louisiana, and Defendants ask this Court to revisit, and reject, various rulings made by Judge Fallon, most notably the “damages formula" adopted to calculate "remediation damages"[2] on a class-wide basis for all Plaintiffs that are current owners of an affected property.

         Judge Fallon's MDL rulings did not endeavor to collectively address any of the Plaintiffs "other damages" (including "loss of use" damages) in light of the widely varying facts specific to each Plaintiff, finding instead that remand to the appropriate district court where the properties are situated (Virginia, Florida, and Louisiana) was necessary to allow for individualized damages calculations. Depending on the resolution of various post-remand issues, the instant case could require as many as 175 damages evidentiary hearings.

         There are several unique features of the instant multi-district litigation, including: (1) default judgement was entered against Defendants many years ago, leaving the proper damages calculation as the only issue to be litigated, and this Court therefore emphasizes that its intent is to develop a streamlined and expeditious plan to conduct any necessary damages evidentiary hearings, not “trials," as Defendants have long-since forfeited their trial rights; (2) as characterized by Judge Fallon, Defendants' litigation conduct appears to reveal that their "whole approach is just delay," and even if Defendants did not have the specific intent to delay, their conduct (defaulting, appearing to challenge jurisdiction, appealing jurisdictional rulings, withdrawing from the case after an adverse result on jurisdiction, appearing to challenge class certification after it was completed, filing subsequent interlocutory appeals, etc.) slowed the instant case to a "glacial pace," and effectively deprived Plaintiffs of recovery for nearly a decade even though liability has long been established, Jt. App'x 23, at 24:2-18;[3] (3) before adopting the formula applicable to current owners, Judge Fallon conducted a hearing on "remediation damages, and Defendants fully participated and had the opportunity to cross-examine Plaintiffs' experts, call their own experts, and otherwise challenge the remediation formula;[4] and (4) the remediation formula adopted in the MDL is being applied by Judge Fallon as to the Louisiana Plaintiffs, and has likewise been adopted by Judge Cooke in the Southern District of Florida as to the remanded Florida Plaintiffs. Jt. App'x 20, 21.

         B. Ruling on the Remediation Formula

         On April 30, 2019, this Court conducted a hearing on the parties' vastly diverging "trial plans." After hearing from counsel from both sides, for the reasons outlined in Judge Cooke's order adopting "all of Judge Fallon's [MDL] findings of facts and legal conclusions," Jt. App'x 21, at 2, this Court similarly adopts all of Judge Fallon's findings of fact and legal conclusions made prior to his suggestion of remand. In so ruling, this Court applies Fourth Circuit precedent reflecting an apparent presumptive rule that it "would be improper to permit a transferor judge to overturn orders of a transferee judge even though error in the latter might result in reversal of the final judgment of the transferor court." In re Food Lion, Inc., Fair Labor Standards Act Effective Scheduling Litig., 73 F.3d 528, 531 (4th Cir. 1996) (quoting Weigle, S.A., The Judicial Panel on Multidistrict Litigation, Transferor Courts and Transferee Courts, 78 F.R.D. 575, 577 (1977)); see 6 Newberg on Class Actions § 18:47 (5th ed.). In other words, the wisdom of the transferee judge's rulings is a matter to be resolved by the appropriate appellate court.

         Alternatively, even if this Court applies a lesser degree of deference, in light of the opportunities Defendants have already had in the MDL to contest class-wide remediation damages, and the absence of any changed circumstances, this Court would still adopt Judge Fallon's ruling. See 6 Newberg on Class Actions § 18:47 (identifying the varying degrees of deference applied across different circuits as "no collateral review," "substantial deference" and "law of the case"); Jt. App'x 21 (Judge Cooke's review of the spectrum of approaches from the Fourth Circuit's "bright line rule" precluding review, to the Fifth Circuit's "law-of-the-case" approach, finding that Judge Fallon's rulings should be adopted under any approach); cf. Carlson v. Bos. Sci. Corp., 856 F.3d 320, 325 (4th Cir. 2017) (explaining that, even under law of the case doctrine, a judge should proceed with an added degree of hesitancy when asked to overrule the earlier determination of another coequal judge).[5] Assuming that the least deferential "law of the case" standard were applicable, Defendants fail to demonstrate that Judge Fallon's damages ruling violates due process and/or conflicts with Virginia law merely because it is derived from a mathematical model tied to square footage rather than being based on an individualized inspection of each subject property followed by an “estimate" of the cost to remediate such structure.[6] Notably, not only did Defendants fully participate in the MDL damages hearing addressing the propriety of the remediation formula, but they were voluntarily absent during the damages class certification process, a process that necessarily involved addressing the “commonality" and “typicality" of the various plaintiffs' remediation damages. See In re Chinese-Manufactured Drywall Prod. Liab. Litig., No. MDL 2047, 2014 WL 4809520, at *4, *15 (E.D. La. Sept. 26, 2014) (concluding that the damages class should be certified and that "the average cost of repairing class members' homes is subject to calculation on a formulaic, square footage basis").[7]

         While this Court declines to revisit Judge Fallon's MDL rulings, it notes that Judge Fallon based his damages ruling on facially reasonable factual findings based on in-court credibility determinations made after hearing live expert testimony that has not been heard by this Court. Judge Fallon's fact-based findings include the following: (1) the scope of remediation work is consistent regardless of the building type; (2) the cost of the remediation work per square foot is consistent across various states and can be modified to reflect local conditions; and (3) the remediation formula is not tied only to a small sample of seven homes (as argued by Defendants) but rather has been tested by Plaintiffs' experts over years, across various states, and proven to be "a reliable measure of the costs on a square foot basis for a full scope remediation of Chinese drywall properties, when adjusted for location and time." In re Chinese-Manufactured Drywall Prod. Liab. Litig., No. MDL 2047, 2017 WL 1421627, at *12 (E.D. La. Apr. 21, 2017).[8]

         C. Remediation Damages - Current Owners

         As to any Plaintiff that is a “current owner" of an affected property that has not been fully remediated (seventy one claimants), the damages formula adopted by Judge Fallon will be applied to determine remediation damages. As to current owners that have completely remediated (two claimants), the parties agree that the actual cost of the remediation work is the appropriate property damage award.[9] For those Plaintiffs governed by the formula, the appropriate inputs will be: (1) the litigated "under air square footage"; and (2) the 2019 RS Means National square foot unit price, adjusted by locality.

         Although the Court adopts the damages formula for current owners who have not fully remediated, the Court agrees with Defendants that some limited written discovery should be permitted in order to verify ownership and square footage, as well as "set-offs" that must be made based on proceeds that claimants received from earlier settlements with different defendants. Defendants have already been provided preliminary proof of these matters, as well as Plaintiffs' proposed calculations under the formula.

         While each current owner may have a claim for "other damages" (loss of use and enjoyment, medical damages, etc.), no discovery will be permitted into these damages at this time. Such limitation will expedite the determination of remediation damages as Plaintiffs' counsel has represented that the vast majority of current owners will likely elect not to pursue the smaller quantum of "other damages" if they can ...

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