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False claims lawsuit against JM Eagle and Formosa Plastics USA -- Resources


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"'JM Eagle marketed its pipe knowing for nine years that it couldn't pass these tests,' says Mary Inman, an attorney and partner with San Francisco-based firm Phillips and Cohen, which is representing the states and municipalities in the case.

According to Inman, the money at stake could easily run into the billions of dollars. 'There was $2.2-billion worth of product sold within the window to the plaintiffs at issue, but that doesn't cover the real damage here,' she said. 'If the pipe will not last as long as it is reputed to last, our clients are gonna have to replace it much sooner, and the replacement cost is much larger.'"

"'This pipe is buried under the streets of every major city in the country,' said Eric R. Havian, a lawyer with Phillips & Cohen who represented the states and municipalities.

'JM sold billions of this pipe over those 10 years,' Mr. Havian said. 'It is enormously disruptive and terribly expensive to replace these pipes.'"

"Nevada Attorney General Catherine Cortez Masto said, 'The PVC pipe has already failed across the Silver State and will have to be replaced sooner than expected - a budget nightmare for our cash-strapped state, cities and local agencies. We know from firsthand experience that this PVC pipe will prematurely leak or break and can jeopardize lives. Today's verdict demonstrates that manufacturers cannot get away with fraud that puts lives at risk.'"

"State and local governments across the country may have to replace their water systems because of defective pipes, according to a whistle-blower lawsuit unsealed this week."

"The whistle-blower, John Hendrix, accuses his former employer, one of the world's largest pipe manufacturers, of falsifying test results about the quality of its products. Pipes that should last 50 years are in some cases rupturing in their very first year, according to Mr. Hendrix and some state documents. This can lead to explosions, leaks, fires and other dangers."

"[Hendrix] says his own company cut corners for profit and hid internal tests...anywhere from 50 to 80 percent failure rates..."

"They didn't care whether they were defective or not, and their only concern was if somebody found out they were defective," said Nevada Attorney General Catherine Cortez Masto.

  • "J-M can't dodge FCA suit over defective pipes" - Law360.com

"In ruling for plaintiffs, Judge Wu concluded, 'If J-M's goal is to have the court rule that plaintiffs cannot prevail by proving only that they received pipe that did not conform to JM's testing obligations ... [then controlling case law] suggest[s] that J-M will not achieve that goal.'"

"The lawsuit by former JM Eagle engineer John Hendrix contended that the company violated industry production standards and used low-grade ingredients to produce its PVC pipe, resulting in reduced tensile strength and costly ruptures even on year-old pipes that are advertised to last 50 years.

"'Billions of dollars of this pipe is now in the nation's infrastructure, and it's going to last a fraction of the time it was supposed to last,' said Mary Inman, part of that plaintiff's team of lawyers at San Francisco law firm Phillips & Cohen."

"But now, JM Eagle finds itself in a protracted legal battle that is damaging its reputation and could perhaps cost the plastics powerhouse hundreds of millions of dollars in damages.

Nevada, Virginia, Delaware, Tennessee and 43 municipalities and water districts, including the Los Angeles Department of Water and Power, have joined a lawsuit accusing the company of manufacturing poor quality PVC pipe since at least 1997."

"Calleguas General Manager Don Kendall said his district had five major breaks of JM Eagle pipes along Kanan Road from 1999 to 2008, resulting in repairs that cost the district several million dollars.

"'We eventually replaced the entire reach of pipeline because of the uncertainty of when the next break would occur, since they were happening on a more frequent basis,' Kendall said. Calleguas supplies water to most Ventura County residents."

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