Chinese drywall manufacturers snub U.S. Courts investigating defects
Virtually every day, another article appears in the U.S. media discussing the thousands of homes where defective Chinese drywall has caused substantial problems. The drywall breaks down, emitting chemicals and odors, has been shown to ruin copper piping and to cause health problems. While a number of lawsuits have been filed, the Chinese manufacturers have simply refused to appear in court. They recognize that U.S. judgments against them will not be enforced in China, allowing them to ignore the consequences of their negligence with impunity. Fortunately for consumers in most of the affected states, the retailers and intermediaries involved in the purchase and installation of the defective drywall will be held accountable: unfortunately, many of those intermediaries are completely without fault or will not survive the economic impact of these claims.
For consumers in some states, however, the problem is even more substantial. If a state has rejected joint and several liability, thereby eliminating the duty of an at-fault with a "deep pocket" to make an innocent victim whole, innocent victims will achieve little or no compensation for a defect that has virtually destroyed new homes. In Michigan, the problem goes even deeper. Through tort "reform" adopted during the Engler era, even the retailers who sold the drywall would not be required to stand behind it: unless they were independently negligent, retailers in Michigan have no liability for selling a defective product. Thus, a Michigan resident would be required to prove that the retailer knew of the drywall defect before purchase, in order to hold the seller accountable.
The major problem with this "retailer immunity" is that is takes away the retailer's incentive to either confirm the quality of its suppliers, or to demand insurance indemnity coverage in the event of a defect. Ultimately, the consumer is left at the mercy of unscrupulous, ignorant or simply negligent manufactuers. In a "flat world," we have learned that this policy exposes consumers to injury from defective toys, clothing, medicines, and all manner of products that are shipped to this country from unaccountable sources who are only a step above criminal enterprises.
A note discussing this issue was recently published by Ashley Thompson in the University of Michigan Journal of Law Reform.