Laminate flooring made in China and sold by Lumber Liquidators nationwide was found to contain levels of formaldehyde in excess of California Air Resource Board standards, according to a 60 Minutes investigation that aired Sunday night and triggered a frenzy of consumers worried about health risks and installers concerned not only about their own health but their liability.
Hardwood Floors spoke with two legal attorneys experienced in small business litigation—D. Jeffrey Craven, principal of Phoenix, Ariz.-based Thomas Craven PLLC and frequent contributor to HF; and Kerry Raleigh Tipton, founder of Tampa, Fla.-based Kerry Raleigh Tipton PA—to share their answers to the most common questions HF has received from wood flooring business owners and contractors.
Q: If I installed hardwood laminate flooring from Lumber Liquidators, can I be sued?
The simple answer is yes, Tipton said.
“In product liability cases such as this, plaintiffs typically sue anyone in the distribution chain of the defective product (manufacturers, suppliers, wholesalers, retailers, installers, etc.),” she said.
But there is a difference between being sued and being found liable. To assess potential liability (i.e., Will you be found guilty if sued?), Craven provided a mental flowchart.
- Did the installer purchase the product from Lumber Liquidators and was that product determined to be unsafe? It is far less likely for the installer to be found liable if the homeowner purchased the product and hired the installer to install it.
- If the installer purchased the product, did the installer provide a warranty for the product itself? If the installer only warranted the installation, Craven said, then the installer may not be liable for a defective product.
- After that, did the installer make any representation to the homeowner that the product was safe? An installer could be held liable if he or she told the homeowner the product was safe when, in fact, it wasn’t.
- Did the installer know at the time of installation that the product was unsafe or gave off high levels of formaldehyde? If yes, he or she could be exposed to liability.
Q: I worked with laminated hardwood flooring from Lumber Liquidators, what should I do?
According to Tipton, an installer or company should then take the following steps to reduce exposure to liability:
- Preserve records. Companies who have worked with laminate flooring from Lumber Liquidators are on notice that there may be claims against them, and the law requires the preservation of documents and records related to laminate flooring. This could include sales records, purchase records from the distributor, testing records and insurance policies.
- Review the insurance policy. While an insurance policy may defend against filed claims, it also may require certain actions (such as notifying the insurer) for the coverage to apply.
- Assess risk. Who purchased the laminate products? What is the dollar value of the sales? Have there been complaints regarding the flooring?
- Know the laws that govern the business and compliance with said laws. A review of federal and state laws should be undertaken.
Installers and business owners should carefully coordinate an action plan with legal counsel. An installer may want to alert each client who had laminate flooring installed and offer to refund or remove the flooring, but they should not admit liability or assume the liability of others in the distribution chain, Tipton said. An installer may also want to communicate with the persons or entities ahead of them in the distribution chain and ask for records, practices and policies concerning the laminate products, but again, any action should be discussed with an attorney.
Q: Can consumers join a lawsuit against Lumber Liquidators?
California residents may be able to join the lawsuit filed by Lozeau Drury LLP and Goldstein, Borgen, Dardarian and Ho, said Tipton. This is the lawsuit referenced in the 60 Minutes report.
Outside of California, there is a Lumber Liquidators section on the website ClassAction.org. Craven advises signing up for its notifications, which will send an email if a new class action lawsuit against the company is announced.
Other options include conducting a search of local state and federal court case databases, reaching out to consumer watchdog groups or inquiring with the state attorney general office’s consumer protection division.
A couple law firms have promoted their own investigations of Lumber Liquidators. Hagens Berman Sobol Shapiro LLP is looking for consumers who purchased “Dream Home” laminate flooring. Kirby McInerey LLP is investigating claims against the Lumber Liquidators board of directors for possible breaches of federal and state law, and is looking for shareholders.
A company anywhere in the distribution chain of the laminate flooring should not contact the firms representing consumers in these class action lawsuits, but instead should meet with a business or construction defect defense attorney, Tipton said.
Q: Are there other lawsuits against Lumber Liquidators?
The “60 Minutes” investigation focused on the class action lawsuit filed by the Global Community Monitor and Lozeau Drury LLP, but according to the company’s most recent annual filing with the U.S. Securities and Exchange Commission, there are four more class action lawsuits against Lumber Liquidators.
Joseph Balero filed a class action lawsuit in California on Dec. 11, 2014, that makes allegations similar to the Global Community Monitor lawsuit. Balero claims the laminate wood flooring sold by Lumber Liquidators in California do not comply with the formaldehyde levels stipulated in CARB Phase 2.
Greg Kiken filed a class action lawsuit in Virginia in November 2013 that alleges the company misled shareholders about its operations. Specifically, the lawsuit claims shareholders were made unaware of how and where Lumber Liquidators sourced its wood from. The lawsuit came after an Environmental Investigation Agency report claimed that Lumber Liquidators was using wood illegally logged from Russian Far East forest and protected Siberian tiger habitat.
Dana Gold filed a class action lawsuit in California in December 2014 that alleges Lumber Liquidators’ Morning Star bamboo flooring brand is defective, and that the company falsely represented the quality of the product and concealed its defective nature.
A retirement trust representing the City of Hallandale Beach Police Officers and Firefighters filed a securities class action lawsuit in Virginia in September 2014 that alleges Lumber Liquidators made material false and/or misleading statements that caused losses to investors.
