Four companies pay $39 million to settle California whistleblower case involving water supply system parts

A state whistleblower claim brought under California’s False Claims Act settled for $39 million last month, bringing to almost $60 million the total recovery that California water districts and municipalities, including the cities of San Francisco and Los Angeles, have recovered because of excessive lead levels in water valves and fittings manufactured by James Jones Company LLC.  The settlement resolves allegations brought to light more than a decade ago that James Jones and some of its parent companies, at various times including Mueller Co. Ltd., Tyco International and Watts Water Technologies, ignored the advice of its own engineers and manufactured valves and fittings containing more lead than permitted by industry standards, customer specifications and its own catalogs and marketing materials, in search of extra profits.

This most recent settlement comes as a result of mediation between the four companies and 54 water utilities and municipalities, including the cities of San Diego, Oceanside and Corona.  The proceeds of the settlement with Los Angeles, which occurred in 2001, were used to replace lead-containing parts with lead-free or low-lead parts.  Over the course of lengthy litigation, the California Court of Appeals held that misstatements in catalogs can form the basis of a California False Claims Act action, and that passive beneficiaries of fraud who fail to disclose the existence of false claims after becoming aware of them are also liable.

Lead can leach from exposed lead-containing surfaces into the water supply, and is absorbed by the body upon ingestion.  Long-term chronic exposure can cause significant health problems, including cognitive and developmental defects, reproductive effects, and even death.  There is no known safe exposure level.

For more information, please see:  http://www.sanjoseca.gov/clerk/Agenda/20091103/20091103_0204.pdf