Feds Pass on 'Qui Tam' Lawsuit against JM Eagle

JM Eagle said that the Federal District Court in Los Angeles unsealed and publicly released its court order regarding the federal government’s decision not to intervene in a qui tam lawsuit challenging the quality of its PVC (polyvinyl chloride) water pipe products and related processes.

The government made its decision official on Feb. 9, following an extensive three-year investigation in which JM Eagle provided tens of thousands of pages of documents and certifications. Government investigators also consulted industry experts and requested samples of pipe in order to conduct their own third-party testing.

“We are pleased the federal government, after completing its thorough investigation, has decided not to intervene in the lawsuit,” said JM Eagle Chief Executive Officer Walter Wang. “We gave our full cooperation during the course of the investigation, and have always been confident that we would be vindicated.”

A qui tam lawsuit is filed by a private party, in this case a disgruntled former employee, in the name of the federal government. After the filing, the federal government is required to investigate and decide whether or not to intervene and take over the case. If there is a recovery from the lawsuit, the private party can receive a substantial share of the recovery.

“The charges made in the lawsuit are baseless and false,” said Wang. ”Our products meet applicable quality standards.”

JM Eagle’s pipe products are certified by independent agencies, such as Underwriter’s Laboratories and NSF International, to comply with their applicable quality standards.

Despite the federal government’s decision, the former employee has decided to continue with his suit on his own and, according to a press release distributed by his attorneys, has been joined by a number of states and municipalities. According to a New York Times article, the former employee is John Hendrix of Clifton, N.J. The report says: "Hendrix said he uncovered the problem after he was asked to oversee the certification of a new manufacturing process that put the pipes through a prescribed battery of tests. He concluded that JM Eagle had been selling substandard plastic pipe since 1996, and that it had subsequently manipulated test results. When he told his superiors of his concerns, they said the problems were a normal 'business risk,' according to the complaint. When he pressed harder, he was fired."

The New York Times article also said that Nevada, Virginia, Delaware, Tennessee and more than 40 water authorities in California have joined the lawsuit.

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