Nevada AG hails verdict in defective PVC pipe case
November 16, 2013
Nevada Attorney General Catherine Cortez Masto is hailing a jury verdict that found a company knowingly made defective water and sewer pipes sold to dozens of municipalities and water districts across several states.
Thursday's verdict in U.S. District Court in Los Angeles against JM Manufacturing capped a seven-year legal case brought by Nevada, New Mexico, Virginia and 42 cities and water districts.
"It's been a hard fought victory," Masto said in a statement. "We know from firsthand experience that this PVC pipe will prematurely lead or break and can jeopardize lives."
The verdict, she said, "demonstrates that manufacturers cannot get away with fraud that puts lives at risk."
The company, now known as JM Eagle, has denied the charges and says it will appeal the verdict. Neal Gordon, a JM vice president, told the Reno Gazette-Journal that the company "presented irrefutable evidence that our products meet and even exceed national standards."
"We feel it is of utmost importance to defend the reputation of the company in the face of meritless allegations and to honor the integrity, skill and dedication of our employees," he said.
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Damages will be determined in a penalty phase that has not yet been scheduled by the court.
Masto said evidence showed JM lied from 1996 to 2006 about whether its PVC pipe met strength and durability standards specified in government contracts and that the company used subpar manufacturing standards to cut costs and boost profits.
Witnesses in the whistleblower case testified that JM plant managers who failed to meet production quotas had their pay docked or lost their jobs, and those who met the quotas could double their monthly salaries.
Masto said evidence showed managers removed "reject" tags from pipe that quality control had identified as defective and shipped it to unknowing customers.
There are more than 600 miles of JM pipe in Nevada. Masto said the state has spent millions to replace relatively new JM water pipes that failed despite being considered "100-year" pipe.
The Nevada AG's investigation uncovered 16 failures of JM pipe at various locations, including High Desert Prison in southern Nevada and other projects of the city of Reno, Las Vegas Valley Water district and Truckee Meadows Water Authority.