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Judge rules that JM Eagle has cause to sue over press release

By: Catherine Kavanaugh

June 6, 2014

JM Eagle has a couple causes for legal action against a whistle blower’s law firm as a result of a November press release.

The firm put out the release after a federal jury decided that JM — North America’s largest manufacturer of PVC pipe — falsely represented uniform compliance with industry standards.

A case can be made that the press release mischaracterized the jury verdict and “there is a probability” JM will prevail on its claims of defamation and trade libel against the law firm of Phillips & Cohen, according to a tentative ruling adopted by Judge Elizabeth Allen White of the Los Angeles Superior Court.

The ruling points out several statements that are “reasonably susceptible of a defamatory interpretation” starting with the press release headline: “J-M faces billions in damages after jury finds J-M liable for making and selling faulty water system pipes.”

The ruling says, “A reasonable fact finder could conclude that this published statement implies a provably false accusation of fact because ... the jury found that JM made false representations of uniform compliance. The jury was not asked to find, and did not find, that JM’s water system pipes were faulty.”

In an emailed statement, Phillips & Cohen says, “We respectfully disagree with the ruling and plan to appeal it.”

JM Eagle attorneys contend in court documents that the whistle blower trial verdict simply means that it did not achieve absolute manufacturing perfection, which is why it and most businesses offer product warranties.

The ruling also singles out a press release statement that says the jury “decided that J-M Eagle management cared only about the amount of pipe J-M produced, not the quality of that pipe” as possible defamation because it “does not directly represent a finding by the jury.”

The ruling denied Phillips & Cohen’s motion to strike JM Eagle’s defamation and trade libel lawsuit as a strategic lawsuit against public participation (SLAPP). The law firm represents a fired employee who worked for the pipe maker when it did business as J-M Manufacturing Co. The whistle blower, John Hendrix, questioned the quality of pipe made from 1996-2006 and sold to dozens of cities, states and water districts across the country.

JM’s lawsuit says the widely publicized press release about the jury verdict hurt its reputation and sales and it is seeking damages at trial.

Phillips & Cohen contends the press release at issue gave a “true and fair report” of on-going litigation and that JM’s lawsuit was filed to harass the law firm.

The litigation is on-going because the whistle blower trial is only half over with monetary damages to be decided in a second phase.

In the meantime, JM Eagle has asked the trial judge to set aside the jury verdict or grant a new trial, partly on the grounds of insufficient and irrelevant evidence.

In addition, JM Eagle has another lawsuit pending against the whistle blower and his attorneys in New Jersey for theft of confidential documents.