Almost a year ago, a federal jury issued a 49-page verdict saying J-M Manufacturing Co. falsely represented to government entities that its PVC pipe products uniformly complied with industry standards set for strength and durability.
After seven weeks of testimony and deliberations in a whistle blower trial, jurors found the company — now called JM Eagle — in violation of the False Claims Act. The verdict ended the first part of a two-phase trial that had focused on JM pipes bought by five cities and water districts out of the 40-plus plaintiffs that signed onto the lawsuit.
Monetary damages — and perhaps much more — are to be decided by a new jury in the next phase of litigation. One JM official likened the possible scope of Phase II to a new trial for the world's largest producer of PVC pipe.
On Sept. 29, U.S. District Judge George Wu indicated the second half of the trial will go beyond the five “exemplar” plaintiffs from California, Nevada, and New Jersey and he may retry some issues.
“When I talk about Phase II, I am talking about Phase II of the entire case. That's right; right? We are not talking about a Phase II that is limited to the exemplar plaintiffs? Phase II would be all plaintiffs,” the judge said, according to a transcript of the status conference.
The judge told the plaintiffs' lawyers, who are with the law firm of Phillips & Cohen LLP, to itemize all of the claims that they are seeking some form of recovery on and to explain the basis for each one.
“Is it fraudulent inducement? Is it falsification?” Wu asked.
The judge said he considered Phase I, which involved 46 claims from the handful of plaintiffs, as a “put up or shut up” part of the trial to see “if the theories the plaintiffs had would fly.”
“Phase II would be the case,” the judge said. “In other words, it would be the litigation of everything, all claims by all plaintiffs, in other words, the hundreds and maybe thousands of claims that we are talking about, that would be Phase II.”
The judge told the parties involved that there “may not be that much useful that goes into Phase II from Phase I.”
JM officials are pleased about the judge's remarks. Their lawyers have said in legal briefs that there was not sufficient evidence to support the verdict.
“Judge Wu stated that there was not much useful to be learned from last year's verdict,” Neal Gordon, JM's vice president of marketing, said in an email. “JM Eagle strongly agrees with the court, and we look forward to a new trial on the merits in the next phase of litigation.”
However, a spokeswoman for the plaintiffs' law firm offered a different interpretation of the status conference.
“The judge wants each side to file briefs and argue why or why not the rest of the plaintiffs should have a trial and whether the outcome of the [Phase I] trial should or should not apply to the other plaintiffs,” she said in a telephone interview.
Her law firm has said that the five exemplar plaintiffs were selected from the larger group to streamline the trial but all the cities, states and water districts named in the case could share in the damages recovered. The firm's lawyers have said their clients bought some $2.2 billion of pipe in the 10-year time frame of the lawsuit, which was filed in 2006.
The crux of their case is that JM changed how it produced some pipe to cut costs by using a cheaper PVC compound and speeded extrusion lines. They questioned whether JM products were manufactured in a consistent manner that assured they met the strength and durability requirements set by Underwriters Laboratories and the American Water Works Association.
As the judge sets up parameters for the case to proceed, the parties are also talking about a timeline. The proposed schedules indicate the trial could resume as soon as September 2015 or as late as December 2017.
