60 Minutes tonight revisited its Lumber Liquidators report first broadcast in March, that the largest supplier of U.S. hardwood and laminate flooring is selling laminate floors made in China falsely labeled as CARB compliant when they have levels of formaldehyde exceeding limits set by the California Air Resources Board.
Its problems stem back to charges of Lacey Act violations and the company headquarters was raided by federal agents.
Anderson Cooper began the report with an interview with activist Denny Larsen, who has led a class action suit against Lumber Liquidators for selling non-CARB compliant flooring in California. Larsen is seeking replacement of the floors by Lumber Liquidators. Here's how correspondent Cooper described it:
Lumber Liquidators is a U.S. company, but much of its laminate flooring was made in China. And as we discovered when we first reported this story in March, it may fail to meet health and safety standards, because it contains high levels of formaldehyde, a known cancer-causing chemical. Lumber Liquidators has insisted ever since our report that its Chinese-made laminate flooring is safe, but it doesn't appear that way.
60 Minutes cameras showed California homeowners tearing out their flooring, and recounted the progress of a class action suit that would require Lumber Liquidators to replace the non-CARB compliant flooring it has installed in California. The initiators of the class action suit said laboratories testing the flooring for them found formaldehyde levels so high they thought their testing equipment was malfunctioning.
Expanding on its March 2015 report, 60 minutes showed a bar chart with results of flooring it from 31 retail locations around the country, where it found elevated levels of formaldehyde in violation of the California regulations in samples from Lumber Liquidators. Comparable testing on flooring from Lowe's and Home Depot found formaldehyde levels within the limits. But flooring from at least some Lumber Liquidators locations exceeded it, according to 60 Minutes. The California CARB standard is set to become a national standard for formaldehyde later this year. Lumber Liquidators announced earlier this year it is would stop sourcing of its laminate flooring in China.
Attorney Richard Drury, representing one class action suit, told 60 Minutes: "The average level in Lumber Liquidators products that we found was over six to seven times above the state standard for formaldehyde. And we found some that were close to 20 times above the level that's allowed to be sold." According to LawyersandSettlements.com, the number of Lumber Liquidators lawsuits consolidated for pretrial proceedings jumped in a month to 135. Lumber Liquidators lawsuits allege homeowners who put certain laminate flooring in their home are exposed to unreasonably high levels of formaldehyde, putting them at risk of health problems and lowering their home’s value.
A chart by 60 Minutes showed some of the test results for formaldehyde exceed California CARB limits by 1,000%.
After 60 Minutes' March report, the company was set on the defensive. Lumber Liquidators' stock price fell, it fired its CFO, and on May 20 its CEO Daniel Lynch quit. Soon after Lumber Liquidators said it would stop manufacturing laminate flooring in China. As fallout from reports that the company sold and installed flooring with formaldehyde to consumers, Lumber Liquidators offered testing kits so homeownerscouild measure the off-gassing of formaldehyde released from the glue in laminates. In its latest quarter, Lumber Liquidators lost $20 million as sales fell.
On Friday, August 14, however, Lumber Liquidators stock rose, as Tiger Management purchased 238,000 shares, according to its SEC filing.
Lumber Liquidators contends the formaldehyde testing methods used in the tests its flooring failed - in which the flooring is broken up, or so-called "destructive testing" - do not match the real-life conditions under which formaldehyde gas escapes from laminate flooring in a home setting. Some industry trade associations support this view.