In August 2015, Judge Anthony J. Trenga, of the U.S. District Court for the Eastern District of Virginia, named Steven J. Toll, Managing Partner of Cohen Milstein as co-lead counsel in a class action lawsuit against Lumber Liquidators. The lawsuit alleges that the flooring company sold noncompliant composite flooring that contains hazardous levels of cancer-causing formaldehyde.
The lawsuit seeks to represent a nationwide class of consumers who allege that Lumber Liquidators sold China-manufactured flooring from February 2012 to February 2015, that was tainted with hazardous levels of formaldehyde while falsely labeling their products as meeting or exceeding California Air Resources Board emissions standards. This composite laminate flooring was sold nationwide under the brand name Lumber Liquidators “Dream Home.”
According to a consolidated amended complaint filed in April 2015 by the lead plaintiffs, Lumber Liquidators reported gross margins that were significantly higher than those of its major competitors, Home Depot and Lowe’s Cos. Inc., which it attributed to partnerships in China that allowed it to cut out middlemen and work directly with suppliers.
The complaint alleges that in reality, the company was buying engineered and laminate flooring manufactured in China that contained and emitted dangerously high and illegal levels of formaldehyde, as well as wood that had been illegally harvested from protected forests in the Russian Far East, home to the critically endangered Siberian tiger and Far East leopard, which are both among the rarest animal species on the planet.
The U.S. Lacey Act bans trading in illegally sourced wood products imported in violation of foreign laws.
The company’s allegedly false statements led to its stock price soaring from $19.17 to a high of $115.44 in less than two years, but these values plummeted resulting in a “massive loss in shareholder value” when the company came under suspicions of violating the law, according to the plaintiffs.