A federal jury in California found on Thursday that the nation’s largest maker of plastic pipe defrauded states and municipalities over a decade by knowing selling them defective pipe for use in their drinking water, firefighting, irrigation and other essential public systems.
The jury’s decision entitles the states and municipalities to be compensated for their losses by the manufacturer, JM Eagle, a private company based in Los Angeles that has 20 plants in the United States and Mexico. The amounts are to be determined in the next phase of the proceedings, a second trial under the same judge but with a different jury.
Three states and 42 municipalities participated in the seven-week trial, and hundreds more qualify to participate in the second one because they also bought the affected pipe.
JM sold billions and billions of this pipe over 10 years. It is enormously disruptive and terribly expensive to replace these pipes.
The lawsuit was filed in 2006 by a former engineer for the company, John Hendrix, whose duties included handling customer complaints. He said the company trained him to look for ways to attribute pipe failures to construction errors rather than flaws in the pipe itself. Later, when he was assigned to oversee the certification of a new manufacturing process, he came to the conclusion that the company had been selling substandard pipe since 1996 and had manipulated test results to make it look stronger then it really was. After he told superiors about his concerns, he was fired.