Update on Qui Tam Case against JM Eagle and Formosa Plastics

WASHINGTON, Feb. 18 - J.M. Eagle's president and other company representatives have made inaccurate statements that misinterpret the federal government's decision not to intervene at the present time in the qui tam case against JM Eagle and Formosa Plastics Corp. (USA), says Phillips & Cohen LLP, which represents the whistleblower, the Commonwealth of Virginia, the State of Tennessee and 25 California cities and water districts in the lawsuit. The actual circumstances of the government's decision are explained below.

Four states and 43 cities and water districts that have joined the whistleblower lawsuit against JM Eagle and Formosa Plastics Corp. (USA). The lawsuit alleges that JM Eagle supplied their water and sewer systems with pipes that JM knew were substandard.

1) JM EAGLE STATEMENT: JM Eagle President Walter Wang said in an open letter to "valued customers" dated Feb. 12, that federal investigators came to the "conclusion that we [JM Eagle] have always operated with the highest principles and standards, and that all of the products we [JM Eagle] manufacture exceeded quality standards."

FACT: The federal investigation never came to any such conclusion. That characterization is totally JM Eagle's and never was made by the federal government.

2) JM EAGLE STATEMENT: Wang writes in the Feb. 12 letter that he provided "definitive proof" to the federal government and that "the truth has set [JM Eagle] free at the federal level."

FACT: The federal government sent a letter (dated Feb. 8, 2010) stating:

"The [Federal] Government's decision to decline intervention at this time should not be construed as a statement about the merits of the case. Indeed, the Government retains the right to intervene at a later date upon a showing of good cause. Moreover, although the Government is not currently a litigant, it remains the real party in interest, and is entitled to the majority of any damages and penalties recovered on its behalf." [Emphasis added; legal citations omitted.]

3) Wang fails to note that the federal government is a relatively small purchaser of JM Eagle pipe. He is using a complete mischaracterization of the government's decision to distract from the seriousness of the case.

FACT: The pipe in question in the lawsuit is primarily used by states, municipalities and local water districts. The quantity purchased by those users greatly exceeds the quantity purchased by the federal government. This is why Nevada, Virginia, Delaware, Tennessee, San Diego, Sacramento, San Jose, the Los Angeles Department of Water and Power and 39 other California municipalities and water districts have joined the case.