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SIDING MANUFACTURER NAILED FOR MASSIVE LIABILITY

Aug 11, 1997

The National Law Journal

VERDICTS AND SETTLEMENTS column

Siding Manufacturer Nailed For Massive Liability

CASE TYPE: liability

CASE: Naef v. Masonite Corp., 944033 (Cir. Ct., Mobile Co., Ala.)

PLAINTIFFS' ATTORNEYS: J. Cabraser, Jonathan D. Selbin and Fabrice V. Nijhoff, of San Francisco's Lieff, Cabraser, Heimann & Bernstein L.L.P.; Richard of Mobile's McRight, Jackson, Dorman, Myrick & Moore; Everette Doffermyre, Leslie Bryant and Ralph J. Knowles, of Atlanta's Doffermyre, Shields, Canfield & Knowles; John T. Crowder Jr. and Robert T. Cunningham Jr., of Mobile's Cunningham, Bounds, Yance, Crowder & Brown; Steven J. , Mark S. Willis and Victoria C. Arthaud of Washington, D.C.'s Cohen Milstein, Hausfeld & Toll; Michael F. Ram, of San Francisco's Levy, Ram & Olson L.L.P.

DEFENSE ATTORNEYS: M. Bickford, of San Francisco's Tobin & Tobin; Robert H. Schulman, of , D.C.'s Howrey & Simon; Steven J. Harper of Chicago's Kirkland & Ellis; Phillip A. Wittman, of New Orleans' Stone, Pigman, Walther, Wittmann & Hutchinson; Sandy G. Robinson, of Mobile's Cabaniss, Johnston, Gardner, Dumas & O'Neal; Broox G. Holmes, of Mobile's Ambrecht, , DeMouy, Crowe, Holmes & Reeves L.L.C.

SETTLEMENT AMOUNT: driven, up to estimated $ 150 million, according to defendants; up to $ 1 billion or more, according to plaintiffs MASONITE CORP., A division of International Paper Co., has been selling its popular hardboard siding for use on home exteriors for more than 30 years.

"Until the late 1970s, Masonite made the product properly," said plaintiffs' counsel Jonathan D. Selbin. The pressed wood product requires great heat and pressure to ensure that it can withstand moisture. But, he charged, following the energy crisis of the late 1970s, Masonite "cut back on the heat, and the product became defective." The siding would swell after rainfalls and, unlike natural wood, would not shrink back, he said. Subsequently, homeowners began complaining that the siding was rotting, buckling and generally failing, he said.

In 1994, some of these homeowners began filing products liability actions against Masonite. In November 1995, a class of Masonite hardboard siding plaintiffs was certified, covering the period from 1990 to the present.

Masonite denied that the siding was defective. The company blamed any problems on faulty installation.

On Sept. 13, 1996, a Mobile, Ala., jury found the product defective. A second phase to determine damages, including punitives, was scheduled to begin in July. But on July 14, the parties settled. The exact amount will be determined by the number of valid claims filed; Masonite estimates the claims at $ 100 to $ 150 million. "We expect there will be $ 1 billion in claims for the life of the settlement," Mr. Selbin said. The siding has been used on more than 4 million homes.

On final approval of the settlement, Masonite will pay plaintiffs' counsel $ 47.5 million in attorney fees and $ 2.5 million in costs up front; plaintiffs' attorneys will receive a total of 15 percent of the claims over the life of the settlement, Mr. Selbin noted. These fees are above the amount paid to plaintiffs for replacing and repairing siding.

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