Dive Brief:
- Lumber Liquidators pleaded guilty to violating the Lacey Act — which involves making false import declarations about the origin of the timber used in its hardwood flooring — and must pay $10 million as part of a U.S. Department of Justice settlement.
- Lumber Liquidators' CEO Robert Lynch resigned in May, after the DOJ launched its investigation, amid allegations that some of its wood flooring contained toxic chemicals, such as formaldehyde.
- The company still is facing more than 100 class action lawsuits involving the Chinese laminate flooring it sold.
Dive Insight:
Lumber Liquidators began its rapid fall from favor after "60 Minutes" aired a segment accusing the company of selling formaldehyde-laden Chinese laminate flooring. The negative publicity led to a sales and stock drop, which the company is still trying to recover from.
"We will continue to focus on strengthening Lumber Liquidators across every area of the organization and executing on our value proposition to improve operational efficiencies and deliver value to our stakeholders,” Chairman John Presley said in a statement announcing the settlement.
According to Lumber Liquidators, the million settlement will be divided as follows: a $7.8 million fine, an $880,825 community service payment, and $350,000 to the National Fish and Wildlife Foundation and the Rhinoceros and Tiger Conservation Fund. An additional forfeiture of $969,175 will go to an unspecified party.
The aftermath of that story resulted in major builders, including Lennar and Pulte, publicly distancing themselves from the company. Some construction industry experts predicted the Lumber Liquidators controversy would be a possible boon to other manufacturers and some builders, as the fear of high formaldehyde levels in laminate flooring could steer some consumers to choose higher-priced solid wood or tile instead.
