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Trex Co. Inc. (TREX - Snapshot Report) has settled a class action lawsuit filed in California against charges of misrepresentations and defects in its first-generation composite products. The litigation was mainly related to mold growth and color issues of the products. The U.S. district court granted preliminary approval to a Settlement Agreement on Aug 19.

Relief will be available to consumers who experienced a certain level of mold growth, color fading or color variation in the products bought between Aug 1, 2004, and Aug 19, 2013. Trex will provide qualified claimants a one-time cash payment or the opportunity to receive other relief, including a rebate certificate on its newer-generation shelled products.

The cost of the settlement has been pegged at $8.25 million. Attorneys’ fees will be around $1.475 million. Both are pending the final approval by the court. The settlement will allow Trex to avoid additional expensive, time-consuming litigation and focus on delivering quality products and service to consumers.

The class action was the second faced by Trex. Several years ago it settled a previous class action for first-generation Trex and Timbrex decking and railing alleged as having rot, splintered and degraded.

One of Trex’s competitors, Advanced Environmental Recycling Technologies Inc. , also settled a class action suit several years ago. The suit was for its Choice Dek product line, as customers were facing trouble in keeping their decking free from mold and surface stains.

Winchester, VA-based Trex manufactures and distributes wood/plastic composite products and related accessories, primarily for residential and commercial decking and railing applications in the United States. The stock currently retains a Zacks Rank #3 (Hold).

Other stocks in the same industry with favorable Zacks rank include CaesarStone Sdot-Yam Ltd. (CSTE) with a Zacks Rank #1 (Strong Buy) and Masco Corp. (MAS - Analyst Report) with a Zacks Rank #2 (Buy).

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