California PVC pipe maker JM Eagle target of False Claims Act suit

May 6, 2010  |  Class Actions, Whistleblower/Qui Tam

Four states and 43 cities, towns and water districts in California have joined in a False Claims Act lawsuit against JM Eagle, a California PVC pipe maker alleged to have sold defective PVC pipes to government-owned utilities across the country.  The states involved include Nevada, Virginia, Tennessee and Delaware.

The lawsuit was filed originally by a former engineer with the company, John Hendrix, who alleges that JM Eagle violated industry standards by using low-grade materials in the production of its PVC pipe.  According to the whistleblower‘s complaint, the practice reduced the pipe’s tensile strength and caused it to rupture prematurely even though it was claimed to last 50 years.  In particular, the former employee alleged that over half the JM Eagle pipe made in the last decade had been manufactured with lower-grade Taiwanese resins in factories with aging equipment that couldn’t keep up with a production schedule ramped up to satisfy the country’s building boom.  Hendrix also alleges that the company dispensed with its experienced managers and engineers in favor of new college graduates from Taiwan who were so meagerly paid that they were forced to live in a company boarding house.

In response to the suit, JM Eagle has announced that it will retroactively extend the one-year warranty on its PVC pipe to 50 years, even to cover pipe sold as far back as 1982, when the company was acquired from Johns-Manville.  California Attorney General Jerry Brown has declined to intervene in the suit.

For the full story, go to the LA Times.

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