The federal judge presiding over the MDL involving litigation claiming trailers issued after Hurricane Katrina allegedly exposed residents to formaldehyde has declined to dismiss government contractors that hauled and installed the trailers.  In re  FEMA Trailer Formaldehyde Products Liability Litigation, MDL No. 1873 (E.D. La.).  Judge Engelhardt rejected the motion of Shaw Environmental Inc. and CH2M Hill Constructors, Inc. to be dismissed from a multiple-plaintiff case in the trailer MDL.  The court rejected the contractors’ arguments that the plaintiffs lacked standing;  he also rejected the contractors’  argument that the FEMA trailer residents failed to plead claims cognizable under the Louisiana Products Liability Act.

The plaintiffs in this case are Louisiana residents who had lived in trailers issued by the Federal Emergency Management Agency. They sued the makers and distributors of FEMA trailers
in November, 2007. Then in early 2009, the plaintiffs added trailer haulers and installers,
Shaw and CH2M Hill, as defendants.

The contractors argued first that the plaintiffs lacked standing because they had failed to link  particular plaintiffs to any particular defendant involved in their specific unit.  The court ruled that because the original complaint matched plaintiffs to trailer manufacturers, those originally named plaintiffs had standing to add defendants in the chain of distribution. Those plaintiffs who failed to assert any linkage at all were dismissed without prejudice.

Second, the contractors argued prescription, the Louisiana version of laches, asserting that the plaintiffs’ products liability claims prescribed on May 18, 2007, or one year after the first trailer suit was filed. The contractors claimed that the plaintiffs should have known about their claim for formaldehyde exposure by that date. Judge Engelhardt, however, ruled that the clock started from the date of injury, and it is impossible to determine in advance exactly when each plaintiff became aware of his or her injuries.

“What each … plaintiff knew about formaldehyde exposure or the possibility of legal claims relating thereto; what injury each such plaintiff allegedly experienced from such exposure, and when knowledge of these alleged injuries occurred, are questions that can be answered only a case-by-case basis. These facts are not evident from the face of the complaints,” Judge Engelhardt wrote.

Finally, Judge Engelhardt rejected the contractors contention that the state product liability act did not apply to them because they were not manufacturers of the trailers.  While Louisiana law determines that the proper assembly of a defective part does not create manufacturer liability, here, in contrast, plaintiffs contended that the alleged formaldehyde-related defect occurred in part because of the assembly process used by the contractors.  An alleged defect which manifests itself in the assembly process can impose Louisiana Products Liability Act “manufacturer” liability on a party when the defect is created by the assembly process, he concluded.

Readers will recall that last December, the court properly refused to grant class certification to the six proposed subclasses of plaintiffs in this MDL, finding they did not meet the standards required for class certification under Rule 23. The plaintiffs had sought certification of four state subclasses of individuals who resided in trailers provided by the Federal Emergency Management Agency in Louisiana, Texas, Alabama and Mississippi following hurricanes Katrina and Rita, as well as a future medical monitoring subclass, and an economic loss subclass.  And the court has begun selecting bellwether cases for the first trials.