Knauf is set for trial - as a defendant - on 3/15/10 in the Hernandez case and last December Knauf actually ACCEPTED service (waived the requirements of The Hague) of a complaint with over 2000 plaintiffs on it. So they are definitely NOT hiding, despite your advice to the foreign defendants to do so.

Not sure what your motivation is in implying, if not outright stating, that no homeowner (or builder or installer or supplier) will see a dime from any of the foreign manufacturers, but your facts are even more inaccurate than the News-Press' are. I suggest a fact check, or at the very least logging on to the Court's website, before your next post.

If the manufacturers have assets outside of China, then based on what Dan has written, the victims would have a chance recovering from such manufacturers. However, it will remain to be seen how much of the problem can be traced back to such manufacturers with major assets outside of China.

My point was that I would think an attorney would look at the court file and the notice of withdrawal before posting something for the entire world to see. People with Knauf drywall have nothing to fear about collecting on a judgment. At least not at this point. After they settle, which they will, they may start playing hardball with any remaining property owners that wait to come out of the woodwork.

Also, a look at the complaints filed in NOLA will reveal that not only are the manufacturers being sued, but the builders, the installers, suppliers, distributors, are also being sued. In some states, such as Florida, all of those entities are jointly and severaly liable for 100% of the damages. So a homeowner would have a judgment against not only Taishan Gypsum (for example), but all those other entities as well. I understand that the lawsuits against the other, domestic, entities is not the subject of this blog, but I think it needs to be mentioned because there are property owners out there reading this and thinking there is no point in pursuing legal action because they won't "get anything" from "the Chinese." Sadly, that may be true, but there are plenty of other defendants to pursue.

I actually think that for most of the non-Knauf homeowners, it will be the insurance companies of those domestic defendants that have to pay up. But that's a topic for another blog. :)

Maybe not. As a matter of public policy, non-US courts have been loathe to enforce judgements that involve large punitive damage awards and courts in general are reluctant to enforce default awards.

Knauf GIPS is a german multinational company which wholly owns( they have not fully conceded this point but they are screwed due to prior statements., Knauf Tijian, the Chinese subsidiary. They also own Knauf insulation in the US, which is a rapidly growning insulation company.

The plan to seize ships, was always to seize them to take the cargo unless they were an owned asset as I understand it. (In rem jurisdiction.) You will have to temporally sieze the vessel to take the cargo though. As you know they just can't give it to you. Done here all the time. You send sheriff, US Marshall abord with his guys to "seize the vessel" to secure cargo. We even had a nucleur sub seized once bu a subcontractor right before it was handed over to US Navy. Why the media drafted it that way who knows. But it is semanatics here I believe.

The investors in question were all importers of the dryway that joined together in groups consortiums to make a quick million or hundreds by inporting and selling the product typically wholesale after katrina. Buy a sheet for 2.00 and sell it for 5.00. etc. They are all US residents. Really just sellers or wholesalers under US law.

Unfortunately, without face to face communication, the ease at which we can misunderstand each other is almost an equal sub-plot of this saga.

For example, the talk about going after "investors" confused me, because in general you can't go after shareholders as shareholders, but you *can* go after them as something else.

For example, if US company A invests in Chinese company B, and then you sue Chinese company B, then A is not liable as a shareholder. However if A invests in Chinese company B, and then licenses, distributes, advertises products from company B, then you can nail A. But in this situation you wouldn't be trying to sue company B at all, but rather company A.

The other reason why you are unlikely to see any money from the Chinese company has nothing to do with the enforcement of judgment but rather you can argue that the Chinese company did nothing wrong. The Chinese company manufactured a bad product, sure, but it never made any claims that it was anything other than a bad product, and the Chinese company can claim that it didn't market the projects in the US, and that it sold exactly what the buyer (who is the distributor) asked to be produced.

Two points is are:

1) this isn't the tainted milk situation where the manufacturer did something so bad that they knew that something really bad is going to happen (i.e. if they put asbestos into the paneling then you'd have a different situation)

2) this isn't a food case. Food cases are very different, because both Chinese and US makes the standards and penalities for bad food much higher than for non-food products.

Something else is that this drywall thing started during a period of China-bashing after the milk scandal when Chinese companies were seen as general purveyors of shoddy goods. The general view has changed since then in part due to the Toyota situation. I do think that most of the "bash China" atmosphere was part of an effort of US companies and non-Chinese companies to get themselves off the hook.

One other thing is that just because a Chinese company stalls doesn't mean that they don't have a case on the merits. Even if you are right, fighting a case to the bitter end can be expensive so doing an end run doesn't mean that you weren't morally right in the first place.

The thing is that if there is a good chance that you will win the case, you can have the court issue a preliminary injunction that bars the defendant from moving assets out of the United States.

The problem with doing this is that you have to demonstrate that you are likely to win in the end, and if your goal is not to win in the merits but rather to shake down the company with a long drawn out legal proceeding in hopes that they will settle, then this defeats the purpose. The other problem is that if the court issues a restraining order, and then you lose, you are then liable for damages that resulted from the assets being frozen.

I think the reason that the drywall defendants having stalled on service is that the plaintiffs actually have a case, and most of the defendants don't seem to be Chinese, or for that matter foreign.

All parties in such cases could be held not just liable for damages but criminal as well if it can be proved they knowingly gave financial support to the importation of a hazardous substance into the US.

The Chinese companies may get away with this and simply lose the US and a few other markets, but plenty of blame and recoverable cash lies with domestic US parties. Punishing the US parties may persuade others not to engage in such business with Chinese companies and thus do more damage to importing Chinese products than just hammering a few drywall companies.

Didn't the original stories about this document the fact that the US buyers deliberately went for the lowest priced drywall, meant for Chinese consumption, while many of the drywall companies had dedicated export production lines?

Also bringing in criminal sanctions is going to be extremely difficult. You not only have to show that some one did something wrong, but absent a regulation involving strict liability, you are going to show some sort of evil intent. Knowingly giving financial support to the importation of a hazardous substance is not illegal, after all people unload gasoline from tankers every day.

With all due respect, I have better things to do with my time than to read the pleadings in cases in which I am not involved. The article referred to a Chinese defendant and I really do not think it is incumbent upon me to go check the pleadings to confirm the accuracy of the reporting, but I do very much thank you for your doing so, particularly since it has no impact on the thrust of my post, which (because this is a China blog and not a Germany one) deals with the difficulty of collecting from Chinese defendants.

Please explain.

Thanks. You are right.

I agree with you. There is plenty of fault to go around and it will be the little guy who ends up paying.

the article says "Chinese company." Knauf Tianjin is a Chinese company. But again, you have missed the point. What is your angle on all of this anyway? Are you a lawyer wanting more drywyall cases?

You are absolutely right. No courts like default judgments and foreign courts tend not to like US judgments at all, particularly those that involve punitive damages.

I have been involved in many many vessel and/or cargo seizures in probably at least ten countries and I have never heard of seizing a vessel to get at the cargo on it. I have heard of getting a court order to seize cargo on a vessel, but not seizing a vessel to get to the cargo. In what country(s) can you seize a vessel to get to the cargo.

Why are you assuming that the loose lips belong to the press and not to the lawyer? One of the lawyers involved in the drywall litigation told me that there was a lawyer who did talk about how he was going to seize the ships that carried the drywall.

I agree. The talk of going after "investors" does not make a whole lot of sense either.

I again agree with you. Most goods purchased from China are bought and paid for (at least in large part) before they go on the ship. This usually means that title to these goods has passed to the buyer and so cannot be seized to enforce a claim against the Chinese seller.

Prejudgment writs of attachment in the US can be extremely risky for the reasons you have stated. Some states require the plaintiff to post a bond double the amount of the value of the assets being seized. It is much cheaper/easier to seize assets before judgment in countries like China and Korea than in the US. In my experience, only Canada is tougher than the US.

I think the press has failed to deal enough with some of the issues you raise. When I spoke at the drywall conference, one of the things I talked about was how Chinese products typically have levels of quality lower than the average American can even imagine. I often use t-shirts as the example. In the US, no matter what you pay for a t-shirt, you expect it to survive the first washing. Not true in China, where some t-shirts are pretty much priced for one washing.

Did the Americans buy "one washing" drywall and pay accordingly? If so, are they not liable/responsible for having done so?