KPT drywall lawsuit settled
A landmark settlement in toxic drywall cases was reached last month, one that may bring relief to thousands of homeowners and put an end to hundreds of state and federal cases filed against insulation manufacturers.
Judge Eldon Fallon, United States District Court in New Orleans, presided over a consolidation of cases involving Chinese imported drywall that homeowners claimed have created a toxic atmosphere in their homes. Plaintiffs’ Steering Committee (PSC) and Knauf Plasterboard Tianjin (KPT) jointly agreed on terms that will put an end to all future litigation against Knauf and its subsidiaries.
The settlement is intended to cover all plaintiffs in the drywall litigations in both federal and state court whose homes or businesses have KPT drywall. Approximately 5,200 plaintiffs have specifically alleged that their homes contain KPT drywall; of these, some 2,700 have submitted in some form evidence of the presence of KPT drywall. Plaintiffs include homeowners, commercial owners and tenants, among others.
The Remediation Fund has three options:
Program Contractor Remediation Option: The Program Remediation Option provides the class member with the convenience of having Moss & Associates, who has been approved by the PSC and the Knauf defendants, remediate the class member’s property.
For more information on the drywall remediation program, visit mosscm.com/drywall.
Self-Remediation Option: The Self-Remediation Option provides the class member with the choice to select his or her own qualified contractor to remediate the property
Cash-Out Option: The Cash-Out Option provides a cash payment with no obligation to remediate the property, but the amount of cash will be less than the amount that would be expended under the two remediation options. In addition, the homeowner must take steps to assure, among other things, notice to subsequent purchasers of the presence of KPT drywall.
The scope of the remediation repair will cover all affected drywall, and with limited exceptions, unaffected drywall, will be removed from the home and replaced with domestic drywall; the electrical wiring, smoke alarms, fire alarms, and other safety systems will be replaced; and the parties have agreed on a protocol for replacement of built-in appliances, such as refrigerators and microwaves.
A stipend will cover the costs of moving and storage during the remediation, and help pay for damaged personal appliances.
Stephen Saltzburg, a law professor at George Washington University Law School and an expert in mass tort settlements, reviewed the settlement terms, stating that “the settlement is a very creative solution to a very complex problem.” He added: “The plaintiffs received complete remediation — all costs covered — with no reduction in plaintiffs’ recovery for attorneys’ fees or costs. It is unlikely that plaintiffs will do better in separate litigation. It is, in short, a settlement that appears fair, comprehensive and just.”
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At Lowe’s, pivotal decisions continue
Describing 2011 as a pivotal year for the nation’s No. 2 home center chain, Lowe’s executives continued to hammer on their theme transformation from retailer to a “home improvement company” during its annual conference last month.
What exactly is a home improvement company? CEO Robert Niblock explained.
“At the heart of our strategy is Lowe’s fundamental mission to deliver a better customer experience — in fact, the best it can be,” Niblock continued. “Better experiences begin the day a customer first thinks about the need for home improvement and continue until that project or need is fulfilled.”
The customer is something the Lowe’s team has studied in scientific detail. Senior VP marketing and advertising Tom Lamb defined the company’s target customer by first breaking down home improvement consumers into four distinct groups, each with primary shopping motivation that influences their habits.
• “Diligent maintainers” are those who get the project done and move on. They represent 15% of households and 10% of home improvement spending;
• “Opportunistic diehards” are those who relentlessly search for the best deals. They represent 20% of households and about 20% of spend;
• “Inquisitive curators” are those who seek out expert opinion and innovation for their home as a retreat. They represent 30% of households and 30% of spend; and
• Finally, the “trendsetting upgraders” are those who love exploring and experimenting with their homes. These consumers represent 30% of households and 40% of spend.
Lamb described the target customer as a combination of “inquisitive curators” and “trendsetting upgraders.” Together these two groups are described as “creators,” and they represent more than 70% of home improvement dollars. Creators value reputation, customer experience, product range, availability and good value, he said. The retailer believes that by meeting the expectations of the creator customer, it will exceed the expectations of all customers.
The creator mind-set also applies to the commercial business customer, who makes up about 25% of Lowe’s sales today, he added.
Getting to know the customer, and retain the customer, will determine the success of the company’s goals. Niblock pointed to tough decisions — including a round of 20 store closings in October — as part of a changing world.
“In 2011 we made a series of very hard, very critical but very important decisions to create Lowe’s of the future,” Niblock said. “Rather than be a home improvement retailer focused on store expansion as the engine for growth, we’ll be a home improvement company focused on maximizing asset productivity in order to grow.”
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A triumph for the “light bulb freedom” movement, which opposed the phaseout of traditional incandescent bulbs starting Jan. 1, 2012, may turn out to be a hollow victory. Supporters had hoped to delay the implementation of the new energy-efficient light bulb standards with a rider on the 2012 Omnibus funding bill. Congress passed the bill right before Christmas, along with the light bulb rider, which bars the Department of Energy (DOE) from enforcing the planned phaseout of 100-watt energy-inefficient incandescent bulbs. So no citations, no fines, no government agents swooping into hardware stores in search of illegal light bulbs.
Good thing, too. They might have trouble finding any. Most lighting manufacturers retooled their factories long ago to produce energy-efficient halogens, LEDs and incandescent bulbs. Retailers big and small have been selling these products for at least two years. Few were waiting for the last week in December to put their old 100-watt bulbs on clearance.
Depending on how you look at it, the light bulb rider is either a well-deserved slap back at the federal government’s overreach or an ill-conceived and illogical fight against energy conservation. Either way, the measure is temporary. The funding bill expires on Sept. 30, and so does the provision that forbids the DOE from spending any funds on enforcement.
The National Electrical Manufacturers Association (NEMA), which represents more than 95% of the U.S. lighting manufacturing industry, was not happy about the reprieve. Its members — companies like Osram Sylvania, GE Lighting and Philips Lighting — have poured millions into research, development and promotion of new lighting options to replace the energy-inefficient pear-shaped bulb. In fact, many of them are producing incandescent bulbs that meet the new federal standards and look exactly like the old bulbs.
Joseph Higbee, director of communication and marketing for NEMA, points out that the rider on the Omnibus bill did nothing to change the standards or the timetable outlined in the Energy Independence and Security Act, signed into law by President George Bush in 2007. It was a bipartisan bill, and the mandates were clear: Manufacturers had until January 2012 to make 100-watt light bulbs that used 30% less energy. For 75-watt, the deadline was January 2013. The 60-watt and 40-watt bulbs had until January 2014 for their makeover.
The ink was barely dry before squiggly CFLs began appearing, and soon after, the LEDs. Energy-saving incandescents also went into development. “In 2007, the manufacturers [already] knew they could make a product that could meet the requirements,” Higbee said. “It was not a shot in the dark.”
But the newer bulbs were more expensive, not everyone liked the way they performed, and as the 2012 deadline approached, radio commentator Rush Limbaugh and the Tea Party both held up the regulations as emblematic of government interference in citizens’ everyday lives. Light bulbs became a lighting rod for freedom of choice.
While it’s unlikely that a U.S. manufacturer would go back to producing an energy-inefficient 100-watt bulb — which would still be illegal, despite the lack of enforcement — off-shore suppliers may see an opportunity. “This could create a competitive disadvantage for compliant manufacturers,” Higbee stated.
Further complicating matters is the fact that state attorney generals are empowered by the 2007 law to uphold its standards. Whether or not they choose to do so — in the absence of DOE action — could create some controversy, not to mention a patchwork of enforcement.
And then there’s the issue of what will happen in September. Rep. Joe Barton (R-Texas) has been attempting to roll back parts of the 2007 law signed by President Bush, specifically those dealing with lighting efficiency standards. He introduced the Better Use of Light Bulbs Act (initially called the BULB Act) but it failed a House of Representatives vote last July. Barton continued to lobby his colleagues on the Hill, and after the Omnibus bill passed with the light bulb rider, he issued the following statement:
“This is an early Christmas present for all Americans. It restores the freedom, at least temporarily, for you to choose the light bulbs you want to illuminate your home. This means Americans (especially low- and middle-income people) can continue to flip the switch on an affordable and reliable product, instead of turning to one that costs five times more and may not live up to manufacturers’ promises.
“I am gratified that my fellow members of Congress recognized that the ideas I laid out in the BULB Act (H.R. 91), along with Reps. Blackburn and Burgess, were based on the principles of a free market. This was a blatant case of government interference and over-regulation. Allowing people freedom of choice on something as basic as a light bulb is a no-brainer. Today’s vote only repeals the de facto ban for a year, but I will continue to work to make sure it becomes permanent.”
While opponents of the standards continue their battle, manufacturers claim that their new products — which save consumers money because they use less energy — are becoming cheaper. Silvie Casanova, a spokesperson for Philips Lighting, pointed out that the Philips EcoVantage line put out a traditional-looking incandescent bulb that retails for $2.99 for a two-pack. Philips has also dropped the price on its AmbientLED 60-watt-equivalent LED bulb from $39.97 to $24.97, due to technological advances that allow greater production in quantity. With a utility company rebate, the price can come down to $14.97 in some areas. That’s for a bulb that will last 20 years.
“Manufacturers have spent the last four years working toward this [new standard],” Casanova said. “It still remains a law, one which Philips is certainly going to abide by. I suspect retailers will likely abide by the law as well, stocking shelves with higher-efficiency products.”