By: Daniel Fisher
November 1, 2013
A California jury soon will decide a whistleblower lawsuit that has rumbled on for years against the world’s largest PVC pipe manufacturer even after the federal government and several states dropped out, apparently for lack of evidence. The sheer persistence of the lawsuit shows how lawyers can use federal qui tam laws to extract lucrative settlements from manufacturers even in cases where the evidence is questionable.
For weeks, a jury in federal court in Los Angeles has been hearing evidence that JM Eagle sold millions of feet of faulty plastic pipe to governments and municipal water authorities across the country. The lawsuit is filled with detailed allegations that JM Eagle, a company built by the son of Taiwan’s second-richest man, used cheap materials and substandard production methods to save money, and that it bamboozled Underwriters Laboratories and other industrial-standards organizations by giving them cherry-picked samples to test. If true, these allegations could subject JM Eagle to hundreds of millions or billions of dollars in penalties under the law originally passed to curb Civil War abuses by crooked military suppliers.
The case is interesting for what the jury didn’t hear, however. Such as: The results of government-commissioned tests on randomly selected samples from JM Eagle plants across the country, which showed the pipe passed industry standards. And allegations the whistleblower, a $45,000-a-year quality-control engineer named John Hendrix, was fired not for submitting a critical memo to management two days before his termination, but for soliciting bribes from a customer.