MOSCOW (MRC) -- Formosa Plastics Corp. USA and scores of government entities that allege they were sold defective PVC pipes for sewer systems from 1996-2005 have agreed to a USD22.5 million settlement in a whistle-blower lawsuit, said Plasticsnews.
The Taiwan-based plastics giant was sued along with J-M Manufacturing Co., which is now called JM Eagle, by a whistle blower, three states, and 42 cities and water districts. The lawsuit says the defendants violated the False Claims Act by knowingly selling pipe that would fail earlier than promised.
Details about the proposed settlement between Formosa and the plaintiffs came to light as the first part of a two-phase trial wraps up before U.S. District Court Judge George H. Wu in California. If a jury finds liability, a second phase of the trial will determine damages.
In a joint motion filed on Oct. 28, Formosa and the plaintiffs are asking the judge to approve a proposed settlement that covers all claims against FPC-USA in both federal and state actions. Los Angeles-based JM Eagle is the largest pipe extruder in North America, according to Plastics News' ranking. Formosa is its former parent company.
All parties have reason to settle, according to the motion, which says Formosa faces significant litigation risks considering its PVC resin was a principal ingredient in hundreds of millions of feet of J-M's PVC pipe at issue.
"The risks are great, even if only a small portion of claims against FPLC-USA are ultimately successful," the motion says. "For their part, plaintiffs also face many burdens in their claims…"
The plaintiffs would have to establish the timing, source and scope of Formosa's discovery of alleged false claims to the plaintiffs.
"The settlement provides the plaintiffs with an immediate benefit and eliminates the risk that, given the circumstances of this case, the plaintiffs could recover less than the settlement from FPC-USA or take nothing," the motion says.
The proposed settlement has been signed by attorneys and attorney generals representing Formosa; Hendrix; the states of Nevada, Virginia and New Mexico; and 21 cities and 21 water districts in California.
As MRC wrote before, Formosa Chemicals & Fibres Corp restarted in early October its No.2 styrene monomer (SM) unit. Located in Kaohsiung, Taiwan, the unit has a production capacity of 350,000 mt/year.
ormosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company"s chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company's plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
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