2.2.0.7 false Litigation 0215 - Disclosure - Litigation true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Litigation [Abstract] 0 usg_LitigationAbstract usg false na duration Litigation. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Litigation. false 3 Litigation 1 usg_LitigationTextBlock usg false na duration Represents disclosure of potentially material legal matters. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>15. Litigation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">CHINESE-MANUFACTURED DRYWALL LAWSUITS </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">L&W Supply Corporation is one of many defendants in lawsuits relating to Chinese-made wallboard installed in homes primarily in the southeastern United States during 2006 and 2007. The wallboard was made in China by a number of manufacturers, including Knauf Plasterboard (Tianjin) Co., and was sold or used by many distributors, contractors, and homebuilders. Knauf Tianjin is an affiliate or indirect subsidiary of Knauf Gips KG, a multinational manufacturer of building materials headquartered in Germany. L&W Supply Corporation sold some Knauf Tianjin wallboard primarily in the Florida region in 2006. The other defendants in these lawsuits include Knauf Tianjin, two other Knauf Chinese wallboard facilities, Knauf Gips KG, other Chinese wallboard manufacturers unrelated to Knauf, homebuilders, contractors, and other distributors. The plaintiffs, most of whom are homeowners, claim that the Chinese-made wallboard is defective and emits elevated levels of sulfur gases causing, among other things, a bad smell and corrosion of copper or other metal surfaces. Plaintiffs also allege that the Chinese-made wallboard causes health problems such as respiratory problems and allergic reactions. The plaintiffs seek damages for the costs of removing and replacing the Chinese-made wallboard and other allegedly damaged property as well as damages for personal injury, including medical monitoring in some cases. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Federal Court Litigation. </i>All federal court lawsuits relating to Chinese-made drywall, wherever the lawsuits were originally filed, have been transferred to the United States District Court for the Eastern District of Louisiana for consolidated pretrial proceedings. This multi-district litigation is titled <i>In re Chinese-Manufactured Drywall Products Liability Litigation</i>, MDL No. 2047. The multi-district litigation includes several class actions, the largest of which was brought by more than 2,600 homeowners against Knauf Tianjin and approximately 500 other defendants, including other manufacturers of Chinese-made wallboard, homebuilders, contractors and distributors (including L&W Supply Corporation). L&W Supply Corporation has also been named as a defendant in individual homeowner lawsuits that are now part of the multi-district litigation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>State Court Litigation. </i>L&W Supply Corporation is a defendant in state court lawsuits filed in Florida and Louisiana relating to Chinese-made wallboard. As of the end of the second quarter of 2010, L&W Supply Corporation was a defendant in one homeowner class action filed in Florida state court relating to a single residential development and one individual homeowner lawsuit. Based on a review of our records, we do not believe that L&W Supply supplied drywall to any of the homes in the homeowner class action lawsuit and expect that we will be dismissed from that lawsuit. Our records indicate, however, that we did supply wallboard to the home at issue in the individual homeowner lawsuit, and we do not expect to be dismissed from that lawsuit. L&W Supply Corporation is also a defendant in ten individual homeowner lawsuits filed in Louisiana state court. Based on a review of our records, we do not believe that L&W Supply supplied wallboard to any of the homes identified in the Louisiana state court homeowner lawsuits. We expect that we will be dismissed from those lawsuits. L&W Supply Corporation is also a defendant in a lawsuit filed by Lennar Homes in Florida state court relating to Knauf Tianjin wallboard installed in homes built by Lennar in Florida. Our records indicate that L&W Supply Corporation supplied wallboard to 25 of the more than 600 homes in Florida that are part of the Lennar state court lawsuit. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In January 2010, L&W Supply Corporation was named as a defendant in a lawsuit filed in Louisiana state court by the Louisiana Attorney General against manufacturers, distributors, and homebuilders relating to Chinese drywall. The Louisiana Attorney General seeks to recover alleged losses to the state as a result of Chinese-made drywall installed in Louisiana homes. L&W Supply did not sell any Knauf Tianjin wallboard in Louisiana. L&W Supply Corporation sold in Louisiana in 2006 a limited amount of Knauf wallboard made at a different Knauf plant in China, but we are not aware of any evidence showing problems with this wallboard. This lawsuit has now been transferred to the federal court presiding over the multi-district litigation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Although USG Corporation did not manufacture, distribute, or sell any Chinese-made wallboard, all of the Chinese-made wallboard lawsuits filed against L&W Supply Corporation also name USG Corporation as a defendant. The lawsuit recently filed by the Louisiana Attorney General also names United States Gypsum Company and USG Interiors, Inc. as defendants, although neither company manufactured, distributed, or sold any Chinese-made wallboard. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Summary. </i>L&W Supply’s sales of the allegedly defective Knauf Tianjin wallboard, which were confined to the Florida region, were relatively limited. We believe that the amount of Knauf Tianjin wallboard potentially sold by L&W Supply Corporation could completely furnish approximately 250-300 average-size houses; however, the actual number of homes likely is greater because some homes contain a mixture of different brands of wallboard and because some of the wallboard was used in condominiums, which typically are smaller than houses and use less wallboard. Our records contain the addresses of the homes and other construction sites to which L&W Supply delivered wallboard, but do not specifically identify the manufacturer of the wallboard delivered. Therefore, where Chinese-made wallboard is identified in a home, we can determine from our records whether L&W Supply delivered wallboard to that home. As a result of this review, we have obtained dismissals of more than 200 lawsuits filed against us on the basis that we did not supply the wallboard to the home at issue. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We have reviewed our records regarding most of the homes (including both houses and condominiums) identified to date in the litigation as well as claims received outside of litigation. To date, L&W Supply Corporation has confirmed that it delivered wallboard of some kind to approximately 290 of them. Of those approximately 290 homes, we have determined that L&W Supply Corporation delivered Knauf Tianjin wallboard to approximately 154 of those homes. We have resolved the claims relating to approximately 98 of the 154 homes for which Knauf Tianjin wallboard has been verified. We do not yet have sufficient information to determine whether the wallboard delivered to the remaining homes was Knauf Tianjin or other Chinese-made wallboard. Although the rate at which new claims and suits have been filed has slowed, it is likely that additional homes to which L&W Supply Corporation delivered Knauf Tianjin wallboard will be identified. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Although the vast majority of Chinese drywall claims made against L&W Supply Corporation relate to Knauf Tianjin board, L&W Supply Corporation has received a few claims relating to other Chinese-made wallboard. L&W Supply Corporation did sell other Chinese-made wallboard, the vast majority of which was manufactured by Knauf at other plants in China. However, we are not aware of any instances in which the wallboard from the other Knauf Chinese plants has been determined to cause odor or corrosion problems. If the other Knauf Chinese-made wallboard is determined to cause such problems, claims against L&W Supply Corporation and its potential liability could increase. L&W Supply Corporation has also received a few claims relating to houses to which it shipped wallboard made in China by manufacturers other than Knauf entities, but the amount of wallboard and the number of houses involved are minimal. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We have recorded a reserve in connection with the Chinese-manufactured wallboard lawsuits. This reserve takes into account, among other things, the number of homes for which claims have been asserted against L&W Supply Corporation, our claim costs to date and the estimated costs of resolving remaining property damage claims relating to China-made wallboard. Taking into account all factors known to date, we do not believe that these lawsuits and other similar lawsuits that might be filed will have a material adverse effect on our results of operations, financial position or cash flows. However, there can be no assurance that the lawsuits will not have such an effect. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">DOMESTIC WALLBOARD LITIGATION </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In the second quarter, two lawsuits were filed against United States Gypsum Company alleging that our wallboard, which is manufactured in the United States, has the same problems associated with Chinese-made wallboard. Similar lawsuits have been filed against at least four other domestic wallboard manufacturers. The lawsuits against United States Gypsum Company are captioned <i>Varnado v. United States Gypsum Company</i>, No. 1:10cv218, and <i>Morrison v. United States Gypsum Company</i>, No. 1:10cv223, and were filed in the United States District Court for the Southern District of Mississippi. The plaintiffs claim that their homes contain drywall made by United States Gypsum Company and that the drywall emits sulfide gases, causing a rotten egg smell, corrosion of copper and other metal surfaces, and has or may have caused adverse health effects. Both plaintiffs have claimed in another lawsuit that these same homes contain defective Chinese-made drywall which has caused the same problems. Both plaintiffs seek to represent a class of homeowners in the United States, or alternatively Mississippi only, whose homes contain allegedly defective drywall made by United States Gypsum Company. Recently, the federal court denied plaintiffs’ motions to consolidate the “U.S.-made drywall” cases against United States Gypsum Company and other domestic manufacturers into a single multi-district proceeding. We believe that these lawsuits are completely without merit and intend to defend them vigorously. We do not believe that these lawsuits will have a material adverse effect on our results of operations, financial position or cash flows. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">ENVIRONMENTAL LITIGATION </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We have been notified by state and federal environmental protection agencies of possible involvement as one of numerous “potentially responsible parties” in a number of Superfund sites in the United States. As a potentially responsible party, we may be responsible to pay for some part of the cleanup of hazardous waste at those sites. In most of these sites, our involvement is expected to be minimal. In addition, we are involved in environmental cleanups of other property that we own or owned. We believe that appropriate reserves have been established for our potential liability in connection with these matters. Our reserves take into account all known or estimated undiscounted costs associated with these sites, including site investigations and feasibility costs, site cleanup and remediation, certain legal costs, and fines and penalties, if any. However, we continue to review these accruals as additional information becomes available and revise them as appropriate. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">OTHER LITIGATION </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We are named as defendants in other claims and lawsuits arising from our operations, including claims and lawsuits arising from the operation of our vehicles, product warranties, personal injury and commercial disputes. We believe that we have recorded appropriate reserves for these claims and suits, taking into account the probability of liability, whether our exposure can be reasonably estimated and, if so, our estimate of our liability or the range of our liability. We do not expect these or any other litigation matters involving USG to have a material adverse effect upon our results of operations, financial position or cash flows. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Represents disclosure of potentially material legal matters. No authoritative reference available. false 1 2 false UnKnown UnKnown UnKnown false true