TUESDAY, JUNE 23, 2015
TOANO, VA--As lawsuits pile up against U.S. flooring retailer Lumber Liquidators, the company has suspended the sale of laminated flooring products imported from China.
Lumber Liquidators has been under fire in recent months, facing accusations that certain composite flooring products contain excessive amounts of formaldehyde.
Various reports, including 60 Minutes, allege that Lumber Liquidators’ flooring products made in China do not meet California emissions standards, despite labeling to the contrary.
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| Lumber Liquidators |
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Lumber Liquidators is North America's largest specialty flooring retailer, operating over 355 stores in 46 states and Canada. The company is under investigation regarding its importing practices. |
Formaldehyde is a chemical widely used to manufacture building materials and household products. The chemical can cause irritation of the skin, eyes, nose and throat. High levels of exposure may cause cancer, according to the U.S. Environmental Protection Agency.
Lawsuits, DOJ Investigation
More than 100 lawsuits have been filed against the Toano, VA-based company, according to reports.
The lawsuits involve homeowner claims that the company falsely represented that its flooring complied with California Air Resource Board standards and other requirements governing the emissions of formaldehyde.
At least 10 of the lawsuits have been consolidated in the U.S. District Court for the Eastern District of Virginia, Legal Newsline reported June 17.
The company’s hardwood importing practices are also currently under investigation by the U.S. Department of Justice. The company disclosed in February that the DOJ was "contemplating seeking criminal charges under the Lacey Act."
Suspending Sale
Lumber Liquidators suspended the sale of China-made laminate flooring products in May, according to Ashleigh McDermott, a Lumber Liquidators spokeswoman.
Media outlets have “incorrectly reported” that the company has decided to stop selling the products permanently, McDermott said.
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| California Air Resource Board |
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Formaldehyde is a volatile organic chemical widely used to manufacture building materials and household products. |
A special board committee is currently assessing the company’s sourcing compliance program and other related policies, according to the Lumber Liquidators.
The committee’s preliminary findings determined that the company’s Chinese laminate flooring suppliers had sold product to the company that was "certified and labeled as compliant with California formaldehyde standards."
The company said it is investigating the underlying certification processes of its suppliers.
Preliminary Test Results
Moreover, Lumber Liquidators reported that over 3,400 testing kits from approximately 2,600 households with laminate flooring sourced from China had been reviewed and analyzed.
“Of those households, over 97 percent had indicated indoor air concentrations of formaldehyde that were within the guidelines set by the World Health Organization as protective against sensory irritation and long-term health effects,” the company said, noting that the U.S. does not have a national standard for recommended indoor home air concentrations.
“Despite the initial positive air quality testing results we have received, we believe it is the right decision to suspend the sale of these products,” the company’s former CEO Robert M. Lynch said in a statement issued before his unexpected resignation May 21.
Leadership Changes
Company founder Thomas Sullivan is acting CEO of the company as it conducts a nationwide search for Lynch’s replacement.
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Company founder Thomas Sullivan (at center) is acting CEO of the company. Three company leaders have resigned or been terminated recently. |
Lynch’s resignation followed CFO Daniel Terrell’s decision to step down. The company has appointed Gregory A. Whirley Jr., currently a senior manager with Ernst & Young LLP, as interim CFO.
Last week, Lumber Liquidators announced that William K. Schlegel, the company’s Chief Merchandising Officer, will be terminated effective June 19.
A securities class-action lawsuit names Schlegel the “go-to guy “for the company’s Chinese operations, according to the New York Post.
Marco Q. Pescara, the company’s Chief Marketing Officer, will be assuming Schlegel’s role as Merchandising Officer in addition to his marketing post.
Lumber Liquidators is North America’s largest specialty retailer of hardwood flooring, operating more than 355 stores in 46 states and Canada.
Tagged categories: Building materials; Coating chemistry; Construction chemicals; Floors; Good Technical Practice; Health and safety; Wood; Wood composites
