The whistleblower case that has been slowly unfolding against JM Eagle, the largest plastic pipe extruder in North America, took somewhat of a surprising turn Nov. 14 when jurors deadlocked and a mistrial was declared in the second phase of litigation.
After 12 years in federal court, the impartial panel didn't award any monetary damages to the five government entities — the first of dozens of plaintiffs — claiming to have received PVC pipe of questionable quality from 1996-2006, when the company did business as J-M Manufacturing Co.
Nothing?
The two cities and the three utilities, who made up the so-called "exemplar" plaintiffs, were seeking about $48 million to replace their buried water and sewer pipes in the event of "future failures," according to one exhibit.
The plaintiffs knew before the jury started deliberating they wouldn't be getting that much in compensatory damages. The judge had limited the amount of money they could recover essentially to the cost of the pipe. The exhibit puts the length of pipe installed in the communities at 118,623 linear feet and the current cost of that much pipe at $2.17 million.
Still, it was something.
But after a week of reviewing testimony and asking questions, jurors said they couldn't reach any consensus about what monetary damages were owed to the cities of Reno, Nev., and Norfolk, Va., and the water utilities of Palmdale, Calleguas and South Tahoe, Calif. The 22-day trial was over.
Court documents indicate the jury was "stuck," had conflicting interpretations of their instructions, had differing views of the evidence represented and wanted guidance about what to do.
"The jury's frustration is palpable and has been given voice, both through the spontaneous plea of one juror, the formal request for early adjournment ... and the court's observation that they were 'frazzled,'" a Nov. 12 J-M filing says. "…It is also clear that they (sic) jury is focused on the terms of the contracts, which (assuming the jury can find them in the multiple volumes of exhibits provided) have several parts and run into hundreds of pages."
What a difference 5 years — exactly to the day — makes.
Back on Nov. 14, 2013, the first jury in this bifurcated case unanimously determined J-M represented that every piece of PVC pipe it sold met American Water Works Association and UL standards, but those representations were false because the pipe wasn't manufactured or tested in a manner that assured it uniformly had the quality, strength and durability required by the industry standards.
JM Eagle was found to be in violation of the False Claims Act.
The next day, one of the plaintiff's attorneys said the verdict opened "JM Eagle up to potentially billions of dollars in damages" and not just from the three states and 42 cities/water districts that signed on to the lawsuit but possibly other customers that bought the pipe.
The plaintiffs alone spent $2.2 billion on sticks of JM Eagle pipe in that 10-year period and they argued, in part, that the performance of those products was a matter of the luck of the draw. With such big dollar figures bandied about so confidently, it was surprising that all the plaintiffs in the initial group would come up empty handed.
Then again, maybe the plaintiffs drew some quality pipe for their infrastructure projects. Witnesses testified Calleguas pipes have been performing for 16 years. Norfolk's pipes continue to work as intended. Palmdale's and Reno's pipes have met expectations to date, and South Tahoe's have been continuously delivering water for 22 years.
The judge had told jurors: "If any plaintiff does not meet its burden, you should put zero on the verdict form for the damages suffered by that plaintiff."
The jury certainly met its burden. The public court record doesn't indicate precisely why or how badly the members were deadlocked. But court filings and non-redacted jury notes posted online show it took their civic duty seriously. Jurors considered testimony about quick burst and longitudinal tensile strength test results and long-term pipe strength. They heard experts debate whether those relationships are general or direct or mathematically "calculational." They looked over thick contracts for mentions of pipe lifespans and wondered if pipes that failed standardized industry tests were scrapped. They asked for transcripts, exhibits and clarification, but couldn't reach any unanimous consensus for any plaintiffs.
Jurors also asked if the plaintiffs are eligible for the J-M warranty regardless of the outcome of the trial. Maybe that's telling. In April 2010, JM Eagle began offering an unprecedented 50-year warranty that is retroactive to pipes purchased as long ago as Dec. 1, 1982. Maybe one or more jurors think defective products should be handled by warranty claims when problems arise vs. litigation about possible premature failure. That's certainly a more common, less frazzling way to go.
But here we are heading into the teen years in a case where another jury could be seated, overwhelmed and deadlock over deciding what, if any, damages should be awarded.
There is another legal route available, however, if U.S. District Judge George Wu deems fit. He has overseen the case , which was filed in 2006 and made public in 2010, from the beginning and JM Eagle has been asking him to issue a direct verdict since early 2014. The pipe maker renewed that request for a judgment as a matter of law (JMOL) on Oct. 31 and is likely to again soon.
The defendants say JMOL is appropriate because the plaintiffs have been fully heard and "there is no legally sufficient evidentiary basis for a reasonable jury to find for the (parties)." A JMOL action can be taken "when economy and expedition will be served."
Maybe it's time to head toward a more economical, expeditious close to this case.
