Story on Lumber Liquidators

[Malcolm Schweizer]

Today on Facebook an ad popped up for a law firm asking me if I had bought flooring from Lumber Liquidators, and offering to help me sue them.

[Scott Shepherd]

I went to LL to buy some wood for a project and while the guy was typing the order in, I asked him about it and asked him if their sales had been hurt by the story. He said initially their sales were way down, but things had come back to normal now. He told me that they had requests from customers about testing and they were sending out free test kits to customers. He said so far, they had received over 2,500 test kits back, or the results (I'm not sure how he worded it) and so far, there has not been one test that was positive.

That's pretty strong evidence- 2,500 kits reporting zero issues?

He also said the guy that brought all this up has now said he's no longer pursuing LL at all.

So....a short seller pushes a story that tanks the company stock, the guy makes all his money,then he decides not to pursue it any longer? If that's true, then that guy should go to prison for manipulating the stock and he should be liable for the damages against the company, in my opinion.

[Kent A Bathurst]

If that's true, then that guy should go to prison for manipulating the stock and he should be liable for the damages against the company, in my opinion.

Hoeing the wrong row. 60 Minutes published the story......you'd have to go after them. And, the fact that they did broadcast that story would give him a pretty unassailable defense that there was merit to his claims...........unless the 60 Min suit uncovered fraud and collusion in their story.

[Scott Shepherd]

Section 10(b) of the Securities Exchange Act of1934 (the “Exchange Act”) prohibits the use of “anymanipulative or deceptive device or contrivance”in contravention of SEC rules.


I'm not sure how create a story that may turn out to be untrue and pushing it to a news channel isn't manipulative or deceptive, when you profited heavily from the fall of the stock price.

[Phil Thien]

Section 10(b) of the Securities Exchange Act of1934 (the “Exchange Act”) prohibits the use of “anymanipulative or deceptive device or contrivance”in contravention of SEC rules.


I'm not sure how create a story that may turn out to be untrue and pushing it to a news channel isn't manipulative or deceptive, when you profited heavily from the fall of the stock price.

What (in the 60-Minutes Story) did they get wrong? I haven't watched it lately but I remember they showed a guy in a Chinese facility that supplies LL indicating the product in the box didn't match the certification. And that they purchased samples from LL stores in the U.S. and had them tested, and that the samples didn't pass.

[Kent A Bathurst]

OK. But I don't see it - what did he do? Call up 60 MIn and say: "I've got a story I think you should investigate"?

I'm asking from a pragmatic, real-life, perspective of the justice system. Especially in today's "too big to jail" environment.

[Scott Shepherd]

The LL people said they disputed those facts and their side of the story was left out of the airing.

However, if the initial panic that was created that it's emitting toxic levels that can harm people is fraudulent then someone should be held accountable. If they go through all of this and send out 10,000's of test kits and have zero come back that are out of the California limits, then it means the story was fraudulent.

However, we're not there yet, I'm only reporting the numbers I heard from the LL employee. Maybe they send out 10,000 and get 1000 positive, in which, the case was true, but right now, with 2500 in and zero bad, that's a LOOOOOONGGGGGGGGGGGGGGGGG way from having to rip up and replacing the flooring in millions of homes nationwide, which is where the story was heading.

[Kent A Bathurst]

Well, thankfully the random retail clerk at a random LL store is an unbiased source with access to all the detailed inside information.

[Phil Thien]

The LL people said they disputed those facts and their side of the story was left out of the airing.

Yeah, a skilled editor could make Mother Theresa look sketchy, so I guess we will have to wait until more details come in.

The thing is, though, that it is possible that LL sold materials that didn't meat the standards (and which they KNEW didn't meat the standards) initially, but which do so now (due to outgassing).

I guess we just need more details to emerge.

[Scott Shepherd]

Well, thankfully the random retail clerk at a random LL store is an unbiased source with access to all the detailed inside information.

As opposed to the zero local stories about people's tests coming back positive and LL having to fix them?

Since that airing, I haven't seen one single story that showed anyone that had an issue from it. If there are no people having issues with it, then where's the story? On LL? Or on someone that manipulated the media for financial gain?

I'm not sure Phil, but you'd think if it were truly happening, you'd see the "Sky is falling" stories all over the news and LL would be scrambling to try and fix those with issues. Yet again, no stories of that happening that seem to be making it to the front pages.

Was it an issue? I don't know. But what I do know is zero positive samples out of the 2,500 isn't weighing too good on the case against them right now.

[Kent A Bathurst]

There are stories in the news about regional distributors paying for tests for their customers. More data will be appearing. From sources other than the company's own investigation.

Also - predictable - there are a number of stories about the the sharks in the water, scaring up enough potential injured parties to get a class certified by the courts, and start class-action suits.

My basic point, Scott, is that there is not - yet - enough legitimate, 3d party information [beyond the 60 Min muckraker's piece] to put a stake in the ground.

And, of course - unless something else shows up, I can't see a remote possibility of going after the short-selling hedge fund guy for manipulation. That case simply won't make.

[Mike Henderson]

That's pretty strong evidence- 2,500 kits reporting zero issues?

Unfortunately, even if every test of the air quality in every home came back negative, it would not be a defense against the claim that they sold product that did not meet the CARB standards. It might be evidence that the standard is stricter than necessary, but the offense has to do with the question of whether the product sold met the standard or not.

When we have sufficient testing by independent labs of the products sold, tested according to the test standards established by CARB, only then will we know whether there's a case against LL or not.

Mike

[To be more specific, you don't get to discharge pollution (for example) and then claim that no one was harmed by the pollution and therefore you should not be prosecuted. Environmental laws only require evidence that you discharged the pollution, and not that any specific people were harmed.]

[Scott Shepherd]

[To be more specific, you don't get to discharge pollution (for example) and then claim that no one was harmed by the pollution and therefore you should not be prosecuted. Environmental laws only require evidence that you discharged the pollution, and not that any specific people were harmed.]

Yeah, except the issue wasn't that they are not harming anyone. The claim and story was based around millions of homes being so toxic that people would have to leave until the floors were ripped up and replaced, and that 1000's and 1000's of people would be deadly ill because of it.

Again, where are the stories about all the people who got sick? Where are all the stories about people having to move out of their homes until the floors were fixed? I haven't seen a single one. That's what the story was about.

Like I keep saying, it might turn into an issue where there are 1000's of stories, but doesn't it even seem remotely odd that since the story was filmed 6 months ago and aired a month ago, that there hasn't been a single news story about someone that was actually harmed from it or actually has levels of formaldehyde that are above standards? Doesn't that strike anyone else as odd? It does me. That doesn't mean I believe it's all settled, it just means that I think it's odd that there's been no stories about anyone actually harmed.

[Mike Henderson]

Yeah, except the issue wasn't that they are not harming anyone. The claim and story was based around millions of homes being so toxic that people would have to leave until the floors were ripped up and replaced, and that 1000's and 1000's of people would be deadly ill because of it.

Again, where are the stories about all the people who got sick? Where are all the stories about people having to move out of their homes until the floors were fixed? I haven't seen a single one. That's what the story was about.

Like I keep saying, it might turn into an issue where there are 1000's of stories, but doesn't it even seem remotely odd that since the story was filmed 6 months ago and aired a month ago, that there hasn't been a single news story about someone that was actually harmed from it or actually has levels of formaldehyde that are above standards? Doesn't that strike anyone else as odd? It does me. That doesn't mean I believe it's all settled, it just means that I think it's odd that there's been no stories about anyone actually harmed.

I don't know where you're going with all of this. I didn't see the 60 minutes show (or whoever put the story on) and the show doesn't matter. Whoever put the story on, I'm sure they laid it on thick because that's what those programs do.

But the core of the story is that LL sold product that did not meet the CARB standards, and that's what this is all about. If they did, then they're in trouble. If they didn't, then they come out clean. The rest is just noise.

As I said before - When we have sufficient testing by independent labs of the products sold, tested according to the test standards established by CARB, only then will we know whether there's a case against LL or not.

Mike

[Scott Shepherd]

I don't know where you're going with all of this. I didn't see the 60 minutes show (or whoever put the story on) and the show doesn't matter. Whoever put the story on, I'm sure they laid it on thick because that's what those programs do.

But the core of the story is that LL sold product that did not meet the CARB standards, and that's what this is all about. If they did, then they're in trouble. If they didn't, then they come out clean. The rest is just noise.

As I said before - When we have sufficient testing by independent labs of the products sold, tested according to the test standards established by CARB, only then will we know whether there's a case against LL or not.

Mike

That's not what the story was Mike. The story wasn't about whether they were CARB compliant. That was mentioned, yes, but the story was based around the fact that they were poisoning millions of families, knowingly, and for profit.

My point is that so far, we've not seen one single case of that happening.

The story wasn't about simply not being CARB compliant, it was about poising millions of homes and all the horrific damage was being done to people.