In re Fema Trailer Formaldehyde Prods. Liab. Litig.

• Decision Date: 18 January 2012
• Docket Number: MDL No. 07–1873.
• Citation: 838 F.Supp.2d 497
• Parties: In Re: FEMA TRAILER FORMALDEHYDE PRODUCTS LIABILITY LITIGATION. This Document Relates to All Cases.
• Court: U.S. District Court — Eastern District of Louisiana

838 F.Supp.2d 497

In Re: FEMA TRAILER FORMALDEHYDE PRODUCTS LIABILITY LITIGATION. This Document Relates to All Cases.

MDL No. 07–1873.

United States District Court, E.D. Louisiana.

Jan. 18, 2012.

ORDER AND REASONS

KURT D. ENGELHARDT, District Judge.

Before the Court are the following motions: 1) Fluor Enterprises, Inc.'s Motion for Partial Judgment on the Pleadings to Dismiss Negligent Failure to Warn Claims in the Third and Fourth Supplemental and Amended Administrative Master Complaints (Rec. Doc. 17751); and 2) CH2M Hill Constructors, Inc.'s and Shaw Environmental, Inc.'s Joint Rule 12(b)(6) Motion to Dismiss Failure to Warn Claims in the Third and Fourth Supplemental and Amended Administrative Master Complaints (Rec. Doc. 17753).

I. Background:

In this multi-district litigation (“MDL”), the plaintiffs are individuals who resided in emergency housing units (“EHUs”) provided by the Federal Emergency ManagementAgency (“FEMA”) after Hurricanes Katrina and Rita made landfall in August and September 2005. In general, they claim injuries resulting from alleged exposure to the release of formaldehyde in these units. Plaintiffs have sued over 100 entities, including the manufacturers of the EHUs, the United States Government, and the government contractors who FEMA retained to deliver, set up, and/or maintain the EHUs. Each of the movants is a contractor defendant.

The plaintiffs allege that each of the contractor defendants “received a No–Bid contract from FEMA and was tasked with, amongst other things, performing significant functions in the transportation, delivery, installation, maintenance and repair, de-installation and refurbishment of the temporary housing units provided by FEMA to the victims of hurricanes Katrina and Rita in the States of Louisiana, Mississippi, Alabama, and Texas.” See Third Supplemental & Amended Administrative Master Complaint (Rec. Doc. 4486) (“AMC”) at ¶¶ 106–108. They assert claims against the contractor defendants under Louisiana law invoking three general theories: (1) that the contractor defendants are liable as “manufacturers” under the Louisiana Products Liability Act (LPLA); (2) that the contractor defendants are liable under Louisiana's general law of negligence for increasing formaldehyde levels in the EHUs by way of cracks and increased moisture caused by improper installation ( e.g., “blocking” or jacking the trailers with their weight off their wheel base) or improper maintenance; and (3) that the contractor defendants are liable under Louisiana's general law of negligence for “failing to sufficiently warn the plaintiffs of the inherently dangerous properties or the foreseeable conditions of the temporary housing units when used for long term occupancy.” See AMC at ¶¶ 293–304.

The instant motion filed by Fluor Enterprises, Inc. (“FEI”) (Rec. Doc. 17751) addresses only the third theory of recovery: failure to warn under Louisiana's general law of negligence.¹ The instant motion filed by CH2M Hill Constructors, Inc. (“CH2M”) and Shaw Environmental, Inc. (“Shaw”) seeks to dismiss plaintiffs' negligent failure to warn claims under Alabama, Louisiana, Mississippi, and Texas law (Rec. Doc. 17753).

II. Plaintiff's Allegations:A. General Allegations:

“The residence of each Named Plaintiff was rendered unhabitable following Hurricanes Katrina and/or Rita, leaving each plaintiff homeless” and with “nowhere else to go ... in the aftermath of the greatest natural disaster in the history of the United States.” AMC ¶¶ 128, 171. FEMA responded to this emergency situation pursuant to “the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. § 4121, et seq. (the ‘Stafford Act’),” which enables FEMA to provide temporary housing assistance by providing either “financial assistance” or “direct assistance” in “the form of temporary housing units ... directly to individuals or households who, because of a lack of available housing resources, would be unable to make use of the alternative ‘financial assistance.’ ” AMC ¶ 142. Toward this end, FEMA contracted with three corporations (the “Procurement Defendants”), tasking them “with the identification, selection and procurement of approximately 143,000 temporary housing units ..., which FEMA purchased from the manufacturers and off dealer lots, and intended for Gulf Coast residents in the four states at issue [Alabama, Louisiana, Mississippi, and Texas].” AMC ¶ 143.

“Plaintiffs submit that each of the housing units ... purchased by FEMA, contained dangerous levels of formaldehyde due to the Manufacturing Defendants' use of certain materials in their construction, and/or posed the threat of producing dangerous levels of formaldehyde due to the Federal Government's intended use of the housing units as temporary residences for at least 18 months, but that the Manufacturing Defendants failed to warn the Federal Government about these dangers....” AMC ¶ 133. “Formaldehyde is found in construction materials such as particle board, fiberboard and plywood, as well as glues and adhesives used in the manufacture of the housing units.” AMC ¶ 136. According to plaintiffs, federal law required display of a health notice, which reads in part: “Some of the building materials used in this home emit formaldehyde. Eye, nose and throat irritation, headache, nausea, and a variety of asthma-like symptoms, including shortness of breath, have been reported as a result of formaldehyde exposure. Elderly persons and young children, as well as anyone with a history of asthma, allergies, or lung problems, may be at greater risk. Research is continuing on the possible long-term effects of exposure to formaldehyde.” Id. Plaintiffs allege that formaldehyde has been classified as a “probable human carcinogen by the U.S. Environmental Protection Agency (“EPA”)” and that, according to the Agency for Toxic Substances and Disease Registry (“ATSDR”), “there is no recognized safe level of exposure, and ... any level of exposure to formaldehyde may pose a cancer risk, regardless of duration.” AMC ¶ 137.

According to plaintiffs, “the Federal Government was conducting initial formaldehyde air sampling of the subject housing units at FEMA staging facilities in Mississippi as early as October 11, 2005 and as late as Jan. 17, 2006.” AMC ¶ 175. Plaintiffs allege that these “sampling results showed that the levels detected in nearly every trailer exceeded the ATSDR minimum risk levels associated with exposures up to and exceeding 14 days, that most levels exceeded the EPA recognized level at which acute health effects can manifest, and that several exceeded the OSHA workplace maximum levels.” Id.

B. Allegations Against the Contractor Defendants:

Plaintiffs allege that after procuring the EHUs, the United States government contracted with the “No–Bid Defendants” (referred to herein by the Court as the “contractor defendants”), tasking them “with the transportation, installation, site identification and preparation of locations and group sites, preparation of infrastructure to handle the units, inspection of the temporary housing units, maintenance and repair, refurbishment and restoration, and the eventual de-installation and removal of the units.” AMC ¶ 152.

1. Pick-up, Transport, and Delivery of the EHUs:

“The No–Bid Defendants contracted with FEMA to pick-up and transport the temporary housing units from FEMA-controlled staging areas and deliver them to areas which The No–Bid Defendants were tasked with operating.” AMC ¶ 154. “These new areas included staging areas to be managed and maintained as assigned to one of The No–Bid Defendants or individual locations and addresses where the No–Bid Defendants assigned that temporary housing unit would have obligations to manage and maintain it.” Id. “The No–Bid Defendants were tasked under their contracts with FEMA to identify and prepare the infrastructure for the various group site locations,” which included “ensuring there would be adequate water, sewage, electricity, etc.” AMC ¶ 156.

2. Installation of the EHUs:

“Once the temporary housing unit(s) ... were transported and delivered to a particular location, the No–Bid Defendants had the responsibility for installing that temporary housing unit.” AMC ¶ 157. “The No–Bid Defendants installed the temporary housing units by ‘blocking’ the unit,' ” which “meant raising the plaintiff's unit several feet into the air and off of its wheel base, and setting it on concrete blocks.” Id. Plaintiffs allege that by blocking the units, “the No–Bid Defendants created stress and flexing on the frames of the unit as it w[as] not designed to be lifted off ... the wheel base.” AMC ¶ 158. According to plaintiffs, “[t]he stress and flexing of temporary housing units' frames caused by the No–Bid Defendants' ‘blocking’ them with weight off of the wheels created distortion in the travel trailer's shell allowing increased moisture intrusion which contributed to increased formaldehyde exposures.” AMC ¶ 159.

Plaintiffs further allege that “temporary housing unit(s) ... provided by FEMA were for the most part travel trailers ... designed for and intended for periodic, recreational use and not for long-term habitation.” AMC ¶ 160. They allege that “[b]y installing the travel trailers on concrete blocks for extended occupancy, the No–Bid Defendants knowingly and intentionally modified the design and the actual use of these units ... by converting them into a temporary housing unit to be used as a residence for long term occupancy in some instances exceeding 18 months.” Id. According to plaintiffs, “[t]he No–Bid Defendants failed to consult with the manufacturers of the temporary housing units, including the Manufacturing Defendants, with regard to the installation, warnings, warranty issues or advisability of using travel trailers for long term residence and occupation.” AMC ¶ 161.

3. Inspection of the EHUs:

According to the plaintiffs, “the No–Bid Defendants were tasked with...