Damages Trial Against Compass Lexecon Client JM Eagle Results in a Hung Jury After Liability Verdict in Earlier Trial

Compass Lexecon President Daniel R. Fischel Testifies on Damage Issues at Trial

JM Eagle is a large manufacturer of PVC pipe which sells pipe to municipalities and other governmental entities around the country. The recent damages trial against JM Eagle was preceded by a liability trial where JM Eagle was found liable by a jury for making false representations about whether its pipe was manufactured or tested in a manner that assured it uniformly met industry standards. As a result of the adverse jury finding on liability, Plaintiffs claimed that JM Eagle faced “potentially billions of dollars in damages.”

During the subsequent damages trial, five exemplar Plaintiffs sought to prove damages. For this phase of the case, JM Eagle retained Paul, Weiss, Rifkind, Wharton & Garrison LLP, who in turn retained Compass Lexecon and our President Professor Daniel R. Fischel to provide expert testimony on damages and rebut Plaintiffs’ expert’s opinions. A 22-day damages trial before Judge George H. Wu in the Central District of California was held and the jury was told and instructed about the adverse liability finding against JM Eagle.
Professor Fischel testified that the damages model advanced by Plaintiffs’ expert was fatally flawed for several reasons, including that it was based on a framework divorced from actual market conditions and that it relied on unrepresentative data, causing it to overstate substantially the expected number of pipe failures. As a result, Professor Fischel concluded that Plaintiffs’ expert’s damages model failed to show the existence of any damages because it was so lacking in credibility.

After closing arguments and instructions, the jury deliberated for a week until the judge determined they were deadlocked and declared a mistrial. As a result, the exemplar Plaintiffs were awarded no damages. The jury’s refusal to award any damages was described in the press as “surprising” and a huge victory for JM Eagle, particularly in light of the jury’s awareness of the adverse liability finding in the earlier trial.

Professor Fischel was supported by Dr. Todd Kendall and Dr. Colleen Loughlin in Compass Lexecon’s Chicago office. JM Eagle was successfully represented in the damages trial by David M. Bernick, Jaren Janghorbani, and Erin J. Morgan of Paul, Weiss, Rifkind, Wharton & Garrison LLP.