JM Eagle emailed a letter Thursday to customers, telling them to rest assured North America's largest pipe extruder stands behind its products with a 50-year warranty and will rigorously defend its reputation in court.
Last month a federal jury found the Los Angeles-based company guilty of violating the False Claims Act in a whistleblower case brought by a fired production assurance engineer and 45 government entities.
The plaintiffs' attorneys said three states and 42 cities and water districts bought $2.2 billion of “shoddy” JM pipes from 1996-2006 -- a period in which they contend production quotas prompted plant managers to remove “reject” tags from pipe that failed to meet quality standards and ship it to customers.
Damages will be determined in a second phase of the trial and could total billions of dollars, the plaintiffs' attorneys with Phillips & Cohen LLP said after the unanimous verdict was reached Nov. 14.
However, Neal Gordon, the vice president of marketing and waterworks sales for JM Eagle, is telling customers the “contingency-fee lawyers” are misleading the public.
“The verdict is so unclear in terms of what was actually determined at trial that we intend to appeal,” Gordon says in the email. “This case is far from over. There will be many more hearings and motions before the court and the possibility of a second trial before the final outcomes are known.”
The appeal will be based on what Gordon describes as the withholding of key evidence, such as test results showing JM Eagle pipe passed tests commissioned by the plaintiffs and federal government.
The company also is taking issue with the wording of a form filled out by the jury. Gordon says it was “phrased in such a way that if a single piece of pipe out of the billions of feet of pipe manufactured by JM Eagle during that 10-year period was non-compliant, then JM Eagle was held liable even if all the remainder of our pipe complied with industry standards.”
Gordon said certifying agencies, including Underwriters Laboratories, have conducted more than 10,000 unannounced inspections since the company's 1983 inception. JM Eagle has been continuously certified in that time, he added.
“Most importantly, the real life evidence in the field shows that the pipe in the ground has performed well and that, among the water projects plaintiffs selected to present at trial, the plaintiffs have never suffered even a single failure in the field,” Gordon wrote on letterhead with JM Eagle's logo, which says “Building essentials for a better tomorrow.”
However, as soon as the 7-week trial concluded, Eric Havian, one of the lead plaintiffs' attorneys, said the Calleguas Municipal Water District in Thousand Oaks, Calif., spent $4 million to replace JM Eagle pipe that had broken and leaked seven times.
For the trial, evidence related to five government entities was presented from the larger group. The others are the cities of Reno, Nev., and Norfolk, Va., and the South Tahoe Public Utility District and Palmdale Water District, which are both in California.
In his email, Gordon said Reno did experience breaks in three sticks of pipe but it was prior to installation.
“That is three 20-foot sticks of pipe out of the 61,145 feet of JM Eagle pipe that this plaintiff acquired between 1996 and 2006,” Gordon said. “Court filings show that the hydro testing was performed improperly, but that's beside the point. The fact is that JM Eagle promptly replaced that pipe, and it has been in operation for over a decade now.”
JM Eagle is determined to “see this matter through to a just conclusion,” Gordon's email says in closing.