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Lumber Liquidators Lawsuit

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A CBS News investigation has revealed that Chinese-made laminate wood flooring sold by Lumber Liquidators contains illegal levels of formaldehyde, a known human carcinogen. As a result of the company’s sale and distribution of formaldehyde-containing laminate flooring, affected consumers are filing lawsuits against Lumber Liquidators alleging that it violated safety standards, and seeking damages related to the sale of a product that contains unsafe levels of a cancer-causing substance.

 

Chinese-Made Laminate Flooring Contains Toxic Levels of Formaldehyde: “60 Minutes” Report

A segment recently aired on “60 Minutes” reported on mislabeled Chinese-made laminate flooring sold by Lumber Liquidators that allegedly contained levels of formaldehyde higher than those allowed by California law. Investigators visited factories in China that manufacture the laminate flooring for Lumber Liquidators, which have been labeling the flooring “CARB 2”, meaning it complies with California safety standards, which will become national standards later this year.

However, factory managers admitted to investigators that the flooring labeled “CARB 2” did not meet these safety standards. In fact, some of the flooring tested contained 7 to 20 times more formaldehyde than California standards allow. It is estimated that this type of flooring could be in “hundreds of thousands” of American homes.

“60 Minutes” Update

On March 8, “60 Minutes” issued an update on the events surrounding the Lumber Liquidators flooring controversy. In the week since the original segment aired, CBS sent the results of the testing it had commissioned to the Consumer Products Safety Commission (CPSC). The network has also been flooded with letters from consumers concerned about their own laminate floors, according to 60 Minutes contributor Anderson Cooper. Additionally, the California Air Resources Board has provided updated information for consumers with frequently asked questions about composite wood flooring products.

CPSC Investigation

March 25 – The U.S. Consumer Products Safety Commission (CPSC) confirmed today that it is investigating Lumber Liquidators over the formaldehyde content in its laminate wood floors. CPSC chairman Elliot Kaye said the group’s tests will attempt to mimic how the flooring is used in a home setting, which has been a subject of debate since Lumber Liquidators maintains the “60 Minutes” investigation used an unrealistic test on its flooring.

DOJ to File Criminal Charges Against Lumber Liquidators

April 29 – Lumber Liquidators announced today that the U.S. Justice Department is seeking criminal charges against it relating to the formaldehyde content of its Chinese flooring. The charges are being filed under the Lacey Act which, among other things, makes it illegal to import or sell illegally sourced wood products. The probable loss resulting from the charges is about $10 million, the company said.

Lumber Liquidators Denies Allegations

Tom Sullivan, founder and chairman of Lumber Liquidators, has denied that the company’s laminate wood floors contain illegal levels of formaldehyde, and that its products are 100% safe.

“These attacks are driven by a small group of short-selling investors who are working together for the sole purpose of making money by lowering our stock price. They are using any means to try and scare our customers with inaccurate allegations,” Sullivan said in a prepared statement. “Their motives and methods are wrong and we will fight these false attacks on all fronts.”

Lowe’s Has Same ‘Toxic’ Laminate Flooring as Lumber Liquidators: Seeking Alpha

Xuhua Zhou, the analyst who first brought the Lumber Liquidators issue to light in a 2013 article published in Seeking Alpha, now claims in a new report that similar laminate flooring sold at Lowe’s may contain unsafe levels of formaldehyde.

“New evidence has come to my attention that Lumber Liquidators may not have been the lone violator when it comes to laminate floor sourcing,” Zhou said. “Lowe’s, a behemoth in home improvement, has been selling similar questionable products as recent as late March.”

Lumber Liquidators Pulls Chinese Flooring

Lumber Liquidators has announced plans to pull all of its Chinese-made laminate flooring, according to the Wall Street Journal. The company has also hired Freeh Group International Solutions LLC, founded by former FBI director and federal judge Louis J. Freeh, to help review its laminate floor sourcing and compliance policies.

CEO ‘Unexpectedly’ Resigns

May 21 – Lumber Liquidators’ chief executive officer Robert Lynch ‘unexpectedly’ quit his post this week, according to the New York Times. The retailer’s shares fell 16% within hours of Lynch’s resignation, and more than 30% since the “60 Minutes” report aired on March 1.

Class Actions Consolidated in Virginia

The U.S. Judicial Panel on Multidistrict Litigation (JPML) has consolidated 10 class action lawsuits filed against Lumber Liquidators in the Eastern District of Virginia, according to the Washington Examiner. Although only 10 cases are currently affected by the MDL, more than 100 similar lawsuits could eventually be included in the litigation, according to JPML Chair Sarah S. Vance.

What is Formaldehyde?

Formaldehyde is a colorless, flammable and gaseous chemical used to manufacture building materials like pressed wood products, fiber board and plywood. The substance is also found in cigarette smoke, fuel burning appliances and kerosene space heaters. Since formaldehyde is a by-product of combustion and other inherent processes, it can be found at significant levels in various environments.

Health Concerns

The toxic effects of formaldehyde exposure include eye, nose and throat irritation, according to the Environmental Protection Agency (EPA). Effects from exposure at high levels include coughing, wheezing, chest pain and bronchitis. When ingested, formaldehyde can cause corrosion of the gastrointestinal tract and inflammation of the mouth, esophagus and stomach. Occupational studies have identified links between formaldehyde exposure and increased incidences of lung and nasopharyngeal cancer.

Formaldehyde Exposure Symptoms

  • Burning, dryness, redness and itching of the eyes
  • Nasal dryness, soreness
  • Runny nose
  • Dry throat
  • Sinus congestion
  • Post-nasal drip

Secondary effects associated with formaldehyde exposure may include:

  • Cough
  • Chest tightness
  • Excessive phlegm production
  • Repeated sinus infections
  • Eye infections
  • Bronchitis

Where Can I Get My Floors Tested for Formaldehyde?

Since the “60 Minutes” segment aired, our law offices have been contacted by a number of homeowners who are concerned that their laminate floors may contain dangerous amounts of formaldehyde. We have located a laboratory, Benchmark International, that is capable of testing large quantities of laminate flooring. Schmidt & Clark, LLP, is not affiliated with Benchmark International and has no financial incentive for referring you to their business; we are simply providing our website visitors and Facebook followers access to a company that can provide testing of your laminate flooring.

Lumber Liquidators to Pay for Safety Tests

Lumber Liquidators says it stands by its products and will pay for safety tests of its laminate flooring, according to ABC News. The company has volunteered to send air quality kits — the same kind federal officials used to test workplace formaldehyde exposure — to customers who request them. If the tests find elevated levels of formaldehyde, Lumber Liquidators said it will pay for additional testing and possibly to reinstall the flooring.

Lumber Liquidators Class Action Lawsuits

California

A laminate flooring class action lawsuit has been filed against Lumber Liquidators on behalf of Global Community Monitor, a non-profit organization. The complaint alleges that Lumber Liquidators knowingly produced laminate wood flooring that contained formaldehyde levels well over safety standards set by the California Air Resources Board (CARB).

According to the class action, Lumber Liquidators not only knowingly produced laminate wood flooring that exceeded CARB levels, but also advertised and warrantied the guarantee that their products were in compliance with California safety regulations. The lawsuit calls for Lumber Liquidators to comply with CARB formaldehyde standards, as well the reimbursement of all monies paid in due to ill-advised laminate wood flooring, the damages, and punitive damages.

On March 31, another class action lawsuit was filed in California alleging that Lumber Liquidators provided “inherently unreliable” test kits to consumers seeking to find out whether their laminate flooring contains dangerous levels of formaldehyde. The suit claims the kits “do not use testing methods that are commonly accepted and that CARB recommends,” and that they were designed to under-report the formaldehyde content of the floors.

April 17 – A class action lawsuit was filed today in California Central District Court alleging that Lumber Liquidators employed laboratories that did not have proper credentials to test their flooring for formaldehyde. The complaint contends that Pure Air Control Services, the parent company of the labs named in the class action, is not accredited to test for the chemical.

Nevada

In early March 2015, A Las Vegas family filed a class action lawsuit against Lumber Liquidators in Nevada District Court after tests revealed that laminate flooring installed in their home contained illegal levels of formaldehyde. “As a consumer you try and go out and purchase stuff for your home to make it beautiful, and you find out in the long run, that it could possibly be bad for you,” said Noah Bennett, who filed the lawsuit.

Later the same month, another Las Vegas resident filed a separate class action lawsuit against Lumber Liquidators citing similar allegations. Rosie Oakes, her husband and dog allegedly suffered severe respiratory illnesses shortly after installing nearly 700 feet of laminate flooring purchased from the company. The complaint asks Lumber Liquidators to test and — if necessary — remove the tainted flooring.

Virginia

Also in March, a Fairfax County man filed a class action lawsuit against Lumber Liquidators in U.S. District Court for the Eastern District of Virginia. Plaintiff William Marmonti is seeking compensation for himself and anyone else similarly situated for the cost and installation of the floors, court and attorneys’ fees, loss in home value, as well as all profits and other money Lumber Liquidators earned from their “deceptive, misleading and unlawful conduct.”

New York
Four New Yorkers have filed a class action against Lumber Liquidators in Manhattan Federal Court. The suit accuses the company of failing to warn about the formaldehyde content in its Chinese flooring, and of lying that the floors were CARB complaint.

Securities Lawsuit

An securities lawsuit has been filed against the directors of Lumber Liquidators Holdings Inc. on behalf of an investor in Delaware Chancery Court. The complaint accuses the board of engaging in insider trading by selling shares while knowing the company faced imminent criminal charges over importing Chinese flooring that came from illegally sourced trees in Russia.

According to the lawsuit, Thomas Sullivan, Lumber Liquidators’ founder and chairman, along with CEO Robert Lynch, used non-public information to decide when to sell a combined $19 million worth of the company’s stock.

The board’s stock sales “were unusual and well-timed; to take advantage of the inflated stock price before the true facts regarding the company’s operations were revealed to the market,” James Costello, a Lumber Liquidators shareholder, said in the suit.

Specifically, Sullivan and Lynch have been accused of selling a large portion of their shares in the months before a raid of the company’s offices and a retail outlet in 2013. Federal agents were looking for evidence that Lumber Liquidators obtained illegal Russian lumber purchased through Chinese sources, according to the lawsuit.

The complaint further accuses the board of failing to properly oversee Sullivan’s and Lynch’s stock sales, and of allowing them and other company executives to become “unjustly enriched” by them.

False Advertising Lawsuit

A Virginia woman is suing Lumber Liquidators over allegations that the company falsely advertised its Chinese laminate flooring as being complaint with formaldehyde emissions standards. Plaintiff Genevieve Baldwin alleges that LL’s claims that its Chinese flooring complied with emissions standards are false, as the products have been found to emit formaldehyde levels in excess of legally permissible limits, and that the company also failed to disclose the toxic formaldehyde risk to consumers.

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