Two lawsuits filed against Lumber Liquidators by shareholders in 2013 and 2015 were settled on Nov. 17, and charges against the company were dropped.
The first lawsuit was originally filed in November 2013 as Kiken v. Lumber Liquidators Holdings Inc. It alleged Lumber Liquidators made misleading statements about the levels of formaldehyde in certain laminate flooring products that artificially inflated the value of its stock.
Lumber Liquidators, under the terms of the settlement, issued shares worth $16.8 million. In addition, it expects to contribute, through insurers, $26 million in cash to a settlement fund in the fourth quarter of 2016.
The second lawsuit was filed in March 2015, after a “60 Minutes” investigation claimed Lumber Liquidators’ Chinese laminate contained unsafe levels of formaldehyde. The lawsuit was filed for breach of fiduciary duty, corporate waste and unjust enrichment, among other reasons.
Lumber Liquidators settled this lawsuit for a combination of corporate governance changes, a $26 million payment in insurance proceeds and attorneys’ fees of $5 million.
