JM Eagle Will Appeal Jury Verdict in False Claims Act Case Because Jury Was Not Permitted to See All of the Evidence

LOS ANGELES, Nov. 14, 2013 /PRNewswire/ -- JM Eagle, the world's largest maker of plastic pipe, said that it would immediately appeal today's jury verdict in a lawsuit brought by a former disgruntled employee, who alleged that the company made false claims in relation to its production of pipe he claimed to be substandard.

"While we respect and thank the jury members for their service, we disagree strongly with the verdict," said Neal Gordon, JM Eagle's Vice President of Marketing and Waterworks Sales. "We believe we have valid grounds for an appeal, which we will file as immediately as possible, and we look forward to having this verdict reviewed and set aside."

"During a seven-week trial with over 20 witnesses, JM Eagle presented irrefutable evidence that our products meet and even exceed national standards based on hundreds of independent tests and audits by outside certifying agencies," Mr. Gordon said.

JM Eagle retained the former head of the U.S. Army Corps of Engineers to review its quality control and quality assurance systems, including visiting JM Eagle plants and meeting with the director of a nationally recognized independent testing laboratory that has conducted more than 1,000 tests on JM Eagle products submitted by not only by the company but third parties such as regulatory agencies, pipe installers, owners of piping systems, and municipal water utilities.

"Based on everything I personally observed and learned while conducting my review, I do not believe that any allegations of poor quality products from JM Eagle could be credible or have merit,"  Major General (Ret.) Merdith W.B. Temple, concluded in his report.

Mr. Gordon said the fact that JM Eagle has received claims from its vast customer base on less than 0.1% of 11.4 billion feet of pipe sold in the last 10 years "is clear and convincing evidence that our pipe meets industry standards."

"But we are determined to see this matter through to its just conclusion as a matter of principle and to defend the reputation of our company."

"JM Eagle has been subjected to years of false and scurrilous allegations by a disgruntled former employee who had been fired for attempting to solicit a kickback scheme from a JM Eagle customer and to years of smear attacks that are meritless," he added.

JM Eagle noted that the whistleblower has demonstrated an unquestionable lack of integrity.  In fact, the plaintiffs' attorneys didn't call him to the witness stand during the trial, which speaks volumes as to the fundamental weakness their case.

The company said the case should never have been brought in the first place, and described it as an example of the "legal gold rush" that critics said would result from the expansions of the False Claims Act in recent years.

For more than three years, JM Eagle received subpoena after subpoena from the Justice Department without knowing what allegations had been lodged against it or who had lodged them, because the complaint was filed under seal while the government investigated.

Under the False Claims Act, the plaintiffs' attorneys were allowed to unilaterally add 10 states, the District of Columbia, 21 California cities and 21 California water districts as plaintiffs, many of which were included without their knowledge or consent.

Since the case was filed, the federal government, District of Columbia, State of California and seven states withdrew from the case or declined to join it. The District of Columbia and the Los Angeles Department of Water and Power found that they didn't even have any plastic pipe in their municipal systems.

The state attorneys general of California, Delaware and Tennessee have publicly stated that their own investigations of JM Eagle pipe yielded no real issues. The Palm Beach Post reported in a Feb. 7, 2010 story that Florida Attorney General Bill McCollum had decided not to join the lawsuit. The newspaper reported the following: McCollum said his office agreed with the U.S. Justice Department that the case is without merit. "After we looked at it, we concluded the same thing. So we chose not to join in this one," said McCollum…"

JM Eagle suspects that many other municipal governments would have dropped out, but to do so they would have to hire attorneys and make numerous court filings. For these small cities and municipal water districts, it was easier and cheaper to simply do nothing.

Even after learning about the lawsuit, two of the five "exemplar" plaintiffs in the case, Palmdale and South Tahoe, acquired tens of thousands of additional feet of JM Eagle pipe that were installed in their public utility systems.

One of the exemplar plaintiffs, the City of Reno claimed that three pipe breaks in a waste water reclamation project supported the false claim allegations. But evidence presented during the trial revealed that Reno had nominated that very same project involving JM Eagle pipe for a 2002 Outstanding Achievement in Civil Engineering award, after the two breaks had occurred and were promptly repaired by JM Eagle. The nomination stated that JM Eagle piping was "the backbone" of the project.

Evidence presented at trial clearly demonstrate, that, of the projects at issue in this case, none of the five exemplar plaintiffs even tested the JM Eagle pipe in their systems they alleged contained the substandard pipe.  Furthermore, they did not generally have any complaints about JM Eagle's products after they were installed in their systems. And they provided no other hard evidence that the actual pipe was installed, on the projects at issue in this case, was not manufactured to industry standards.

The company presented evidence at trial that JM Eagle pipe has been continuously certified to American Water Works Association ("AWWA") standards as well as by Underwriters Laboratories (UL) and NSF International.

These certifications have been maintained and affirmed by unannounced audits and inspections some 400 times each year across the company's 22 plants, conducted by numerous certifying agencies including UL, NSF, the International Association of Plumbing and Mechanical Officials ("IAMPO"), International Organization for Standards (ISO); Canadian Standards Association (CSA); and FM Approvals.

The company demonstrated that its products had been inspected by outside auditors an estimated 10,000-plus times since JM Eagle's inception in 1983, and throughout that time it had maintained its certifications with these agencies.

"JM Eagle is so confident that its pipe will not fail that it has guaranteed it for 50 years, which is unprecedented in the industry," Mr. Gordon said.

The company said that both JM Eagle leadership and its more than 1,000 employees are proud of the quality and reliability of the products that it makes.

"We feel it is of utmost importance to defend the reputation of the company in the face of meritless allegations and to honor the integrity, skill and dedication of our employees," Mr. Gordon said.

SOURCE JM Eagle