Tennessee Latest Intervening State to Withdraw from Lawsuit Against JM Eagle

Mar 08, 2011, 19:08 ET from JM Eagle

Tenth Government Entity Opts Out of 'Whistleblower' Complaint Against World's Largest Plastic-Pipe Maker, Two Additional States and the District of Columbia Decline to Intervene

LOS ANGELES, March 8, 2011 /PRNewswire-USNewswire/ -- The lawsuit against JM Eagle continues to unravel, as the state of Tennessee, an original intervener in the case, filed papers with the U.S. District Court in Los Angeles to withdraw its intervention in the suit against the world's largest manufacturer of PVC pipe.  The case was filed on behalf of a disgruntled fired ex-employee, by the law firm Phillips & Cohen LLP.  

"We applaud the decision of Tennessee to remove itself from this meritless lawsuit," said Bryan Daly, an attorney with Sheppard Mullin, the legal firm representing JM Eagle.  "As the mass exodus continues we are more confident than ever this suit will be revealed for what it is, a blatant attempt to extort money from a good company."

The plaintiff's contingency fee law firm named eleven states and the District of Columbia as "real parties in interest" which invited those entities to join, or "intervene" in the lawsuit.  Only four states originally elected to do so, and in a rare reversal, two of those four have since formally withdrawn from the lawsuit.

Following Delaware, Tennessee is now the second state to withdraw its intervention, a very exceptional event in these types of cases. Further, the state of New York and the District of Columbia have not filed intervention notices in the case.

The states of California, Indiana, Massachusetts, Florida and more recently Illinois have all filed formal notices declining to intervene in this matter.

"Tennessee's decision supports the overwhelming conclusion that the allegations against JM Eagle are unfounded," said Neal Gordon, JM Eagle vice president of marketing. "It mirrors those of eight other states, the District of Columbia, and the federal government in opting out of participation in the case."

A few points in addition:

  • The U.S. government conducted its own intensive three-year investigation of JM Eagle's products and quality-control processes and declined to join the case in February of last year.  Federal statistics show that 94 percent of these kinds of lawsuits are eventually dismissed when the federal government chooses not to get involved.
  • Results of recent tests by the independent Jana Laboratories confirm the quality and reliability of JM Eagle PVC pressure pipe, both currently and during the period covered by the lawsuit. The lab conducted the tests on pipe from the same batch provided to the federal government for its own inquiry. The company's products have been certified by the industry-standard certification bodies NSF International and UL to meet all long-term strength requirements. In addition, the number of claims against the company's pipe over the last 10 years was less than one-tenth of 1 percent, with most of those claims related to installation, transportation or other non-manufacturing errors.
  • One of the plaintiff's key witnesses in a sworn statement denied ever saying that JM Eagle intentionally compromised the quality of its pipe. Brian Wang, a long-time plant manager, denied under oath that JM ever sacrificed pipe quality by using cheaper ingredients, speeding up production or failing to replace parts on extruders. Wang, who is the most senior JM Eagle employee listed in the lawsuit's Second Amended Complaint, worked for J-M Manufacturing, now JM Eagle, from 1984 to June 2006, including as a plant manager at three of the company's 22 plants.
  • JM Eagle has spent more than $350 million in the last 15 years to deploy the most modern manufacturing practices and equipment available to ensure that its products set the standard for superior quality in the plastic-pipe industry, including a recent capital-improvement project budgeted at $20 million.
  • In addition to its own rigorous in-house testing, JM Eagle is subjected to more than 400 unannounced audits and inspections each year across its 22 plants, conducted by reputable, independent agencies including Underwriters Laboratories, NSF International, Factory Mutual , International Association of Plumbing and Mechanical Officials, Canadian Standards Association and International Organization for Standardization.
  • JM Eagle recently announced an unprecedented 50-year warranty against manufacturing defects for its pipe products. This warranty is unmatched by any other pipe manufacturer.
  • Vendors and suppliers providing various raw materials and equipment have issued letters verifying the quality of the products used by JM Eagle in the manufacture of its plastic pipes.  These letters confirm that all plastic pipe manufacturers use essentially the same standards-compliant raw materials to make their products as JM Eagle. This is in direct opposition to claims made in the lawsuit.
  • There is clear evidence that John Hendrix, the fired ex-employee who brought the lawsuit, was also the architect of a kickback scheme to defraud JM Eagle. The company has a sworn affidavit confirming that he offered to inflate a claim in return for money to be sent directly to his home. Also, after Hendrix was fired, he was caught impersonating a JM Eagle employee in order to obtain from a lab proprietary test results on the company's pipe, using his personal e-mail address and offering to pay with his personal credit card.
  • A diverse coalition of civil rights and community organizations—including the National Association for the Advancement of Colored People, Anti-Defamation League, the Mexican American Legal Defense and Education Fund, and the Asian Pacific American Legal Center—cosigned a letter expressing outrage over racially insensitive language contained in the complaint about the ethnicity and nationality of JM Eagle's employees and leaders. APALC also sent a letter to Phillips & Cohen's named partners demanding that they withdraw the irrelevant and offensive references from the lawsuit. In a condescending and insulting reply to the request, Phillips & Cohen refused to drop the needless race-baiting language. Their insensitive refusal is proof of Phillips & Cohen purposefully putting racial intent into the lawsuit.

About JM Eagle

With 22 manufacturing plants throughout North America, JM Eagle manufactures the widest array of high-grade, high-performance polyvinyl chloride and high-density polyethylene pipe across a variety of industries and applications including utility, solvent weld, electrical conduit, natural gas, irrigation, potable water and sewage. More information can be found at www.jmeagle.com.