Jury trial underway on JM Eagle whistle-blower lawsuit

By Catherine Kavanaugh
Staff Reporter

Published: September 19, 2013 3:54 pm ET
Updated: September 20, 2013 2:01 pm ET

Related to this story

Topics Public Policy, Legal, Construction, Extrusion, Pipe/Profile/Tubing
Companies & Associations J-M Manufacturing Co. Inc.

A jury trial is underway in a federal courtroom in California to determine whether J-M Manufacturing Co. defrauded 45 cities, states and government entities by selling defective PVC pipe for sewer systems from at least 1996 through 2005.

The lawsuit alleges J-M, which became JM Eagle Co., violated the False Claims Act by knowingly selling pipe that would fail earlier than promised.

Formosa Plastics, JM Eagle's former parent company, had been a co-defendant. Los Angeles-based JM Eagle is the largest pipe extruder in North America, according to Plastics News' ranking.

Attorneys for J-M call the fraud allegations meritless, malicious and legally deficient. They contend a "dishonest and disgruntled" former employee cobbled together incorrect testing standards and baseless insinuations. They also say there is no proof the plaintiffs received substandard pipes.

The case stems from a 2006 whistle-blower lawsuit brought by John Hendrix, a former J-M quality assurance engineer at a New Jersey plant. Hendrix claims J-M lied about the quality of PVC pipes used all over the country and that the pipes will rupture earlier than expected.

Hendrix was fired in November 2005 after writing a memo that said J-M cherry-picked the product it subjected to tests, and that much of the PVC pipe sold did not meet Underwriters Laboratories Inc. standards, particularly for longitudinal tensile strength (LTS).

Hendrix is a plaintiff along with the states of Nevada, New Mexico and Virginia, 21 cities in California and 21 water districts in California.

The case is being argued before U.S. District Court Judge George H. Wu, who ruled in March that JM Eagle could be liable under the False Claims Act if it not only sold state and local governments faulty pipe but if it failed to conduct adequate testing on its pipes.

The lawsuit says when Walter Wang, the son of late Taiwanese billionaire Y.C. Wang, who controlled Formosa Plastics Corp., became president of J-M manufacturing, the company substituted cheaper and lower quality ingredients in its PVC compound and used shortcuts to speed up the manufacturing process, which hurt the pipes' tensile strength.

After the production changes, J-M failed to requalify its pipe as industry standards require and instead falsely represented that the pipes were unchanged, the lawsuit alleges.

In one of its court filings, defense attorneys contend Hendrix's allegations boil down to unsupported conclusions and disagreements over technical matters.

However, attorneys for the plaintiffs plan to call as many 30 witnesses to show otherwise.

The jury of six men and six women also could hear from as many as 40 defense witnesses before they begin deliberations. The case is scheduled to go to the jury on Nov. 6.

If the jurors find liability, a second phase of the trial will determine damages.


Comments

Jury trial underway on JM Eagle whistle-blower lawsuit

By Catherine Kavanaugh
Staff Reporter

Published: September 19, 2013 3:54 pm ET
Updated: September 20, 2013 2:01 pm ET

Post Your Comments


Back to story


More stories

Plastics executive pleads guilty in federal firearm case

January 23, 2015 12:37 pm ET

Richard Cummings, 43, a former manager at Tri Town Precision Plastics Inc. in Deep River, Conn., has pleaded guilty to violating federal firearms...    More

Image

Recycling Partnership coalition kicks off its initial curbside project

January 22, 2015 3:51 pm ET

The Recycling Partnership's inaugural effort to boost curbside recycling around the country kicked off this week in Columbia, S.C.    More

Image

ACC's 'Roadmap' gaining traction

January 22, 2015 1:56 pm ET

Nearly a year into the launch of the latest effort to promote greater use of plastics in automotive applications, a trade group behind the push says...    More

Image

Auto supplier Cooper-Standard to trim operations in Europe

January 22, 2015 11:08 am ET

Novi, Mich.-based Cooper-Sandard Holdings Inc. said Jan. 21 it plans to consolidate its operations in Europe, including reducing manufacturing in...    More

China's growth hits 24-year low

January 21, 2015 10:17 am ET

The world's second largest economy reported its 2014 gross domestic product growth at 7.4 percent, the lowest since 1990. The plastics industry exhibi...    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events