Cross Border/Commercial Litigation: Potential Implications of Lumber Liquidators Importation of Unsafe Laminate Flooring

http://www.cbsnews.com/…/lumber-liquidators-linked-to-heal…/

60 Minutes recently covered an interesting story.  The story represents yet another instance where consumers need to be extremely cautious over the product they are purchasing.

In this case, Lumber Liquidators — a prominent chain marketing flooring materials for residential and commercial use — outsourced to China production of most of its laminate flooring products.  The outsourcing of production is nothing new, and laws in both the United States and Canada permit its companies to engage in such conduct.  A longer debate of the propriety of such corporate policies, including the impact on home nation economies, will be left for another day.

Per the 60 Minutes report, Lumber Liquidators either failed to keep adequate oversight over the levels of formaldehyde in their flooring, or — as inferred by the report — perhaps opted to reduce its overhead by 10-15% by permitting for cheaper flooring with dangerous levels of formaldehyde to be sold to consumers in 46 U.S. states.

Beyond the liability likely assumed by Lumber Liquidators — whether via negligence, gross negligence or intentional acts — this stands as an example of why U.S. and Canadian consumers need to be extremely cautious in buying something that is ‘to cheap to be true,’ and to identify the production source of the product.  Sadly, in too many countries regulation is loose or non-existent. Notwithstanding, it has become very popular for Western corporations — in cost-saving moves — to outsource production to developing nations, thus arguably putting profits (multiple times over) over people.

Last, if Lumber Liquidators — whose CEO appeared on 60 Minutes and, with the exception of responses to a couple of the questions posed, seemed reasonably candid — did not assume strong oversight over the manufacturing of its Chinese-made flooring products (something that, based upon the report, seems quite likely), then it is looking at serious liability concerns.  Presumably, the corporation is represented by strong legal counsel.  If so, then also — presumably — such legal counsel would have or should have warned its client to put in place strong controls for both the testing of, and the labeling of, its flooring products.  These companies rely upon such commercial lawyers to not only educate them regarding the ‘ins and outs’ of cross-border law, but also to advise them on necessary precautions to minimize possible liability.  Here, Lumber Liquidators is likely facing a lawsuit with potential liability in the hundreds of millions of dollars.

So, this begs the eternal questions — “what the heck happened and why?”