A federal judge in Los Angeles said Dec. 18 that last year's jury verdict issued against J-M Manufacturing Co. — now JM Eagle — for falsely representing that its PVC pipes uniformly complied with industry standards only applies to the handful of public utilities held up as so-called exemplar plaintiffs.
In all, more than 40 states, cities and water districts that purchased about $2.2 billion of JM products from 1996-2006 signed on to the whistleblower lawsuit, which alleges the world's largest PVC pipe manufacturer violated the False Claims Act.
The five exemplar plaintiffs were supposedly selected from the larger group to streamline the two-phase trial with the first jury to decide if JM was liable for breaking the federal law and a second jury to be seated was to determine monetary damages.
After seven weeks of testimony and eight days of deliberations, the first-phase jury came back in November 2013 with a unanimous verdict that JM violated the False Claims Act by falsely representing uniform compliance with pipe strength and durability requirements set by Underwriters Laboratories and the American Water Works Association.
Since then, lawyers from both sides have argued about how the case would proceed and whether all the government entities would share in any damages recovered in the second phase. They got part of their answer on Dec. 18.
U.S. District Court Judge George Wu, who is presiding over the trial, limited the scope of the first jury finding to the five plaintiffs from California, Nevada and New Jersey that sued over the questionable quality of JM pipes used in 46 of their projects.
The judge's decision seems like it bodes well for JM Eagle. An email seeking comment from a JM spokesman was not immediately answered. However, an Oct. 22 legal brief filed by the company's lawyers lays out their argument about why the entire case couldn't be litigated in “one stroke” to reach “some kind of global judgment.
“Because the five exemplars were selected by the plaintiffs and were never intended to be representative (much less found by the court to be so), use of the verdict to bind JM with respect to the claims of the non-exemplar plaintiffs would be a clear violation of due process,” says the JM brief filed by the law firm of Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenber & Rhow, PC.
Lawyers for the plaintiffs at the law firm of Phillips & Cohen LLP declined comment. They had argued in a legal brief also filed Oct. 22 that their clients are “indistinguishable.”
“The only difference from plaintiff to plaintiff, aside from their location and details of their operation, is the amount of C900 or C905 pipe that each entity actually acquired and the content of their published specifications, neither of which has any relevance to the question of whether J-M's representations were false, whether J-M knew they were false, and whether they had the natural tendency or capability to influence those acquiring PVC pipe.”
The crux of the plaintiffs' case is that JM changed how it manufactured some pipe made in the 10-year period by using a cheaper PVC compound and speeding extrusion lines to cut costs. They called into question whether JM products were made in a consistent manner that met industry standards or whether end users got the luck of the draw.
Defense lawyers have said in other legal briefs that the first jury finding says little more about the company and its products than could be said of any manufacturer: JM isn't perfect and that's why warranties are offered.
