More than two years after an investigative report alleged that laminate flooring sold at Lumber Liquidators contained high — and potentially dangerous — levels of formaldehyde, the flooring retailer has agreed to pay $36 million to close the books on class-action lawsuits brought by customers.
Lumber Liquidators announced Tuesday that it had reached a memorandum of understanding with a group of law firms to settle two Virginia lawsuits accusing the company of selling noncompliant composite flooring that contained hazardous levels of formaldehyde.
Under the deal, Lumber Liquidators will $22 million in cash and $14 million in store credit to customers who purchased the laminate flooring between Jan. 1, 2009 and May 31, 2015.
The deal, which must still be approved by a judge, does not constitute an admission by the company of any fault or liability related to the flooring.
“We are pleased to have entered into this MOU, and welcome it as an important step toward resolving this legacy issue and moving forward,” Dennis Knowles, CEO of Lumber Liquidators, said in a statement.
The lawsuits included in the settlement were filed individually but combined [PDF] by a federal judge in Virginia in 2015, with firm Cohen Milstein taking lead.
How’d We Get Here?
Lumber Liquidators found itself on the receiving end of several class-action lawsuits in 2015 following reports that the company had violated federal and state laws by selling Chinese-manufactured laminated wood products containing formaldehyde at levels known to pose serious health risks.
The dangerous levels of formaldehyde used in the wood come to light through a 60 Minutes report in March 2015.
Testing of the laminated wood Lumber Liquidated sourced from suppliers in China allegedly contained more formaldehyde than its domestically sourced laminates and similar products sold by competitors.
The findings also spurred an investigation by federal regulators at the Consumer Product Safety Commission and allegations that it had illegally imported the flooring, which used wood that had been illegally harvested from protected forests in the Russian Far East.
In Oct. 2015, the company pled guilty to the Lacey Act — a law that bans illegally harvested animal and plant products, including trees, from sale in the United States — and to pay $10 million to the federal government and a wildlife charity.
Following the lawsuits and investigations, Lumber Liquidators’ CEO Robert Lynch resigned from the company.
While Lumber Liquidators stopped selling the products shortly after the 60 Minutes report, the products remained in many customers’ homes.
In June 2016, the company announced that it had reached an agreement with federal safety regulators that Lumber Liquidators wouldn’t restart the sales of the products and that it would provide customers who already installed the flooring with test kits.