Delaware Supports Fraud Allegations Against JM Eagle in Whistleblower Case; Asks Whistleblower to Pursue Claims on its Behalf

Oct 12, 2010, 14:19 ET from Phillips & Cohen LLP

LOS ANGELES, Oct. 12 /PRNewswire/ -- The whistleblower lawsuit against JM Eagle -- alleging the manufacturer knowingly supplied inferior pipe for water and sewer systems -- got a vote of confidence from the Delaware Attorney General today, who wants the whistleblower to prosecute the state's claims, said lawyers for the whistleblower and other states, municipalities and water districts that have joined the case.

The state of Delaware filed notice last Friday with the federal district court in Los Angeles that it was withdrawing its notice of intervention, but "would like the relator [whistleblower] to proceed with the action on its behalf."

". . . The State of Delaware believes there is substantial evidence to support the allegations of the relator's Second Amended Complaint" against JM Eagle, the state said in its notice. In an affirmation of the whistleblower's credibility, Delaware also said the whistleblower is "well positioned to represent the interests of Delaware." The state reserved the right to intervene again later. (

The Attorney General explained in the notice that his office would not actively participate at this time because "we simply do not have the resources to litigate this case."

The Delaware False Claims and Reporting Act and similar other state laws allow whistleblowers to pursue fraud cases to recover damages on behalf of those states whether or not the state officially intervenes in the lawsuit.

"JM Eagle has conducted a scorched-earth litigation strategy against the governmental entities that have intervened in the case, demanding millions of pages of documents," said Mary A. Inman, a San Francisco attorney with Phillips & Cohen LLP, which is representing the whistleblower and other parties in the "qui tam" (whistleblower) lawsuit. "Delaware simply decided that it did not have the resources to fight JM Eagle on its own. We are pleased that the state believes we will represent its interests successfully."

The states of Nevada, Tennessee and Virginia and 47 municipalities and water districts in California have joined the whistleblower lawsuit to recover damages caused by the alleged fraud. The federal government and other states also have decided not to join the lawsuit, but all reserve their rights to join the case at a later time to recover funds they are owed.

"While we certainly would have welcomed Delaware's active participation in the case, we have enough resources to pursue their claims, as they have asked us to do," said Eric R. Havian, another San Francisco attorney with Phillips & Cohen. "JM Eagle calls our client 'disgruntled' and not credible, but the Attorney General, with this statement of support for our client and our case, obviously recognizes those attacks as baseless falsehoods."

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SOURCE Phillips & Cohen LLP