Lumber Liquidators Ceases Sale of Chinese Laminate Flooring and CEO Resigns, Gilman Law LLP Reports
By Business Wire News
By Business Wire News
Lumber Liquidators Holdings, Inc. (NYSE:LL) and Lumber Liquidators, Inc. (together “Lumber Liquidators” or the “Company”) has announced (i) that the Company will discontinue the sale of laminate flooring products manufactured in China, and (ii) the unexpected resignation of its former CEO, Robert Lynch. According to Gilman Law LLP, the announcements come as the Company faces a growing number of product liability and securities lawsuits stemming from, among other matters, its sale of Chinese-manufactured laminate wood flooring products. Just prior to his resignation, Lumber Liquidators former CEO, Robert Lynch, was quoted as saying “we believe it is the right decision to suspend the sale of these products,” referring to its Chinese manufactured laminate flooring. The Company also announced the termination and replacement of its Chief Merchandising Officer, William Schlegel.
Lumber Liquidators, headquartered in Toano, Virginia with stores in 46 states, is the nation’s largest retailer of hardwood flooring. On March 1, 2015, 60 Minutes ran a story focusing on the excessive formaldehyde levels contained in certain laminate flooring Lumber Liquidators purchased from manufacturers in China. Among other things, the report noted that certified testing of laminate wood flooring purchased from Lumber Liquidators locations in Virginia, Florida, Texas, Illinois, and New York revealed levels of formaldehyde that exceed those permitted by the California Air Resources Board (CARB). A number of those manufacturers admitted that certain flooring manufactured for Lumber Liquidators was not CARB Phase 2 compliant.
The board of directors (the “Board”) of Lumber Liquidators Holdings, Inc., including then CEO Lynch, is the subject of a derivative suit filed by Gilman Law on March 6, 2015 in the Delaware Court of Chancery, C.A. No. 10764, alleging that the directors of the Company breached their fiduciary duties in connection with their failure to oversee the operations of the Company as they relate to the manufacture and sale of their wood laminate products, as well as the import and trade of illegally sourced lumber from the Russian Far East in violation of the Lacey Act. The complaint also challenges the alleged unlawful insider selling of tens of millions of dollars of Lumber Liquidators stock by certain members of the Board during a time when the Company stock was allegedly inflated due to a failure of the Company and it management to properly disclose the activities of and accurate financial information regarding the Company. Finally, the lawsuit alleges that the actions or inaction of the Board has subjected Lumber Liquidators to damages on a number of fronts, including federal securities laws violation suits, product liability suits, and government investigations and possible criminal action by various arms of the U.S. government.
Among other things, the complaint notes that Lumber Liquidators confirmed in its securities filings that federal authorities, including agents from the Department of Homeland Security Investigations and the Department of Justice, executed search warrants at the headquarters of Lumber Liquidators on September 26, 2013 looking for information relating to the importation of certain of its wood flooring products. The Company further noted in a more recent securities filing that the Department of Justice plans to pursue criminal charges surrounding allegations that Lumber Liquidators violated the Lacey Act.
Court documents indicate that Lumber Liquidators has also been named a defendant in numerous product liability lawsuits, all of which allege the Company’s sale of Chinese-manufactured laminate wood flooring has violated consumer fraud and protection laws.
If you are an investor who purchased Lumber Liquidators common stock on or after January 1, 2011, and continues to hold any of the stock purchased as of the present date, and would like more information concerning the Gilman lawsuit involving Lumber Liquidators, then please contact Gilman Law LLP today, at 1-888-252-0048 or www.investment-losses.com, to protect your legal rights.
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