Formosa defends $22.5M settlement in PVC pipe case

By Catherine Kavanaugh
Staff Reporter

Published: December 17, 2013 11:46 am ET
Updated: December 17, 2013 11:49 am ET

Related to this story

Topics Construction, Pipe/Profile/Tubing, Extrusion, Legal

Attorneys for Formosa Plastics Co. USA (FPC-USA) say PVC pipe maker JM Eagle has no legal standing to object to the proposed $22.5 million settlement Formosa reached with 45 government entities in a whistle-blower lawsuit.

U.S. District Judge George H. Wu is scheduled to rule Dec. 19 on the settlement between FPC-USA, the former parent company of JM Eagle, and the states, cities and water districts that bought questionable pipe for water and sewer systems from 1996-2006.

The settlement was reached with help from a mediator just before the start of a 7-week trial where JM and FPC-USA were co-defendants. The judge granted Formosa a conditional dismissal on Sept. 13 and the trial went forward against JM Eagle.

On Nov. 14, jurors found JM Eagle guilty of violating the False Claims Act by manufacturing pipes of questionable quality, representing that the pipe conformed to industry standards, and then selling it for municipal water and sewer systems. JM Eagle plans to appeal.

In the meantime, JM Eagle attorneys are calling the proposed FPC-USA settlement “paltry” compared to the plaintiffs’ statements that the pipe maker could owe billions of dollars of damages. On Dec. 6, they asked the federal judge to reject the proposal or delay approval.

Formosa attorneys question the timing of JM Eagle’s attempt to block or postpone the settlement in a legal brief they filed Dec. 13. They note that JM Eagle did not object when the court ordered the parties to participate in mediation or when the settlement was disclosed to the court or when Formosa was given a conditional dismissal from the first phase of the trial.

“Having decisively lost the phase one trial, J-M now objects to the settlement and seeks to hold FPC-USA hostage in this action,” says the brief submitted by Formosa’s legal team with Holland & Knight LLP.

The brief goes on to say JM Eagle has no standing to challenge the settlement because it doesn’t cause the pipe maker any kind of legal prejudice or strip the defendant of any legal right, claim or defense.

The settlement was achieved during lengthy negotiations mediated by retired Chief U.S. Magistrate Judge Edward A. Infante. FPC-USA and the attorney generals of Nevada, New Mexico and Virginia and dozens of local officials have agreed to it. The settlement awaits the judge’s ruling as to whether it is fair, reasonable and adequate.

Damages owed by JM Eagle to the plaintiffs are to be determined in a second phase of the trial.

“J-M may not look forward to ‘going it alone’ in this action, particularly in the aftermath of its recent and decisive trial loss; but J-M has no basis to prevent FPC-USA from settling the FCA claims against it,” Formosa’s Dec. 13 brief says.

Formosa officials admit no liability in the proposed settlement and agree to settle to avoid further legal expenses in the case, which dates back to 2006.

JM Eagle officials have vowed to appeal in a recent letter to customers reminding them about a 50-year warranty on their pipes. The appeal will be based on evidence not allowed during trial, including test results showing the company’s pipe passed tests commissioned by the plaintiffs and federal government, as well as the wording of a jury form.

JM Eagle attorneys say the jury form was phrased in such a way that the company was liable even if only a single piece of pipe was non-compliant out of billions of feet of pipe manufactured in the 10-year period.

JM Eagle officials also say real-life evidence shows the pipe in the ground performs well.


Comments

Formosa defends $22.5M settlement in PVC pipe case

By Catherine Kavanaugh
Staff Reporter

Published: December 17, 2013 11:46 am ET
Updated: December 17, 2013 11:49 am ET

Post Your Comments


Back to story


More stories

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

Image

New Vinyl Building Council leader out to build on grassroots efforts

January 20, 2015 12:54 pm ET

As the new executive director of the Vinyl Building Council, Kevin Koonce will oversee advocacy for the most-used plastic in building and...    More

Image

Plastics help create net-zero energy home

January 20, 2015 3:31 pm ET

The New American Home — a working lab of best construction practices since 1984 — has reached its greenest goal yet with plastic pushing...    More

Image

Public utilities appeal latest decision in JM Eagle case

January 20, 2015 1:08 pm ET

The law firm representing public utilities in a False Claims Act lawsuit against J-M Manufacturing Co. — now called JM Eagle — plans to...    More

Image

Mohawk buying IVC Group for $1.2 billion to grow in luxury vinyl tile

January 14, 2015 5:29 pm ET

Mohawk Industries Inc., which bills itself as the world's largest flooring company, is acquiring IVC Group — a rapidly growing manufacturer of l...    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