JM Eagle loses ruling in lawsuit that alleges defective water pipes

LOS ANGELES, CALIFORNIA, March 6, 2013 -- A federal district court judge has rejected a motion by JM Eagle Co. Inc. to dismiss a False Claims Act lawsuit brought by Phillips & Cohen that alleges JM Eagle sold certain states and local government agencies defective water pipes.

The decision clears the way for a trial on the false claims charges, set to begin Aug. 13 in Los Angeles.

U.S. District Court Judge George H. Wu ruled on March 4 that JM Eagle could be liable under the False Claims Act if it not only sold the state and local governments faulty pipes but also if it failed to conduct adequate testing on its pipes. The False Claims Act lawsuit against JM Eagle alleges both those points.

"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 J-M's testing obligations (as informed by the independent standards agencies), these cases suggest that J-M will not achieve that goal," Wu wrote in his opinion.

Last month, the judge refused Formosa Plastics Corp.'s request that he throw out the case against it. Formosa Plastics, JM Eagle's former parent company, is a co-defendant in the case.

"JM Eagle and Formosa Plastics have tried and failed many times to convince the court to dismiss the case, a partner with Phillips & Cohen, which is representing two states and 47 municipalities in the case. "We are confident our evidence clearly will prove that JM Eagle defrauded its customers by selling substandard pipe."