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 Construction, Public Policy, Pipe/Profile/Tubing, Extrusion, Legal
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

Image

Residents ask court to close pipe maker

November 21, 2014 3:22 pm ET

Residents living by National Pipe & Plastics Inc.'s new factory in an industrial zone of Endicott, N.Y., say the facility has “devastated the...    More

Image

Ineos making its UK shale play

November 21, 2014 9:29 am ET

Chemical giant Ineos Group AG is planning to be the biggest player in the United Kingdom's shale gas industry.    More

UK court hearing case of rotomolding worker killed in 280 C oven

November 21, 2014 9:00 am ET

The management at a United Kingdom rotational molding plant are facing criminal charges for the death of a worker who was trapped inside a 280...    More

Image

New York City officials avoid taking a stand on plastic bag fee

November 20, 2014 11:28 am ET

New York Mayor Bill de Blasio's administration claimed Nov. 19 to be committed to dramatically reducing plastic bag consumption in New York City, but ...    More

Image

Agilyx facing nearly $50,000 in fines from Oregon DEQ

November 20, 2014 11:59 am ET

Agilyx Corp., a plastic waste-to-oil company, is facing nearly $50,000 in fines for alleged hazardous waste violations at its Tigard, Ore., research f...    More

Market Reports

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

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 Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

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

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events