A New Jersey Superior Court judge has dismissed a case in which pipe maker JM Eagle alleged a whistle blower and the law firm representing him illegally obtained documents relating to the fraud case they brought against JM Eagle.
Judge Douglas Wolfson of the Superior Court of New Jersey, Middlesex County, on June 30 heard oral arguments on motions brought by the law firm representing John Hendrix and his law firm Phillips & Cohen LLP. The judge granted both motions, according to the counsel for the two defendants, Brian Molloy of Wilentz Goldman & Spicer.
Another case involving the attorneys and JM Eagle is continuing in California, however.
Wilentz filed the motions on May 5 after JM Eagle launched its suit in February. Wilentz argued in the motions that JM Eagle should not have cause of action against parties that exposed a company's fraud.
“The law encourages this conduct; it does not punish it,” the motion argued.
JM Eagle, called J-M Manufacturing Co. in the alleged fraud period, filed a lawsuit in February in New Jersey against Hendrix and Phillips & Cohen alleging they stole documents. Wilentz's May 5 motions argued that the case should be dismissed because federal law, New Jersey law and the False Claims Act “all encourage people with knowledge of corporate fraud to expose and remedy that fraud by filing suit under the qui tam provisions of the FCA laws.”
JM Eagle is North America's largest producer of PVC pipe. Hendrix questioned the quality of pipe made by J-M from 1996-2006 and sold to dozens of U.S. government agencies. Phillips & Cohen argued J-M deceived inspection agencies and ignored failing test results. Nevada, New Mexico, Virginia and dozens of cities and water districts were among the plaintiffs in the fraud case. Legal actions in the case date back to 2006.
J-M filed a suit against Phillips & Cohen in California, accusing the law firm of libel for a headline in a press release issued by the law firm last November. The headline read: “J-M faces billions in damages after jury finds J-M liable for making and selling faulty water system pipes.”
Late last year a federal jury in California found J-M had violated the False Claims Act. Judge Elizabeth Allen White wrote on June 26, 2014 that the finding was not the same thing as finding JM made and sold faulty water pipes, rather that J-M misrepresented uniform compliance
Judge Allen White recently ruled JM Eagle could have a case that the press release mischaracterized the jury verdict and that JM Eagle could prevail on its claims of defamation and trade libel against Phillips & Cohen. Phillips & Cohen stated to Plastics News that it disagreed with that ruling and planned to appeal.
In the New Jersey motions, Wilentz argued that collection of evidence for a False Claims Act suit “is lawful conduct protected by the federal and state FCAs.”