(CN) - A Japanese fiber manufacturer is liable for its part in making defective bulletproof vests sold to U.S. law enforcements agents between 1998 and 2004, a federal judge in Washington, D.C., ruled.
Japanese manufacturer Toyobo Co. produced ballistic Zylon fibers used in bulletproof vests that were sold to law enforcement agencies in the United States by Florida-based Second Chance Body Armor.
The companies allegedly hid knowledge that the Zylon fibers degraded in light, heat and humidity, while Second Chance touted Zylon as the "world's strongest fiber." Second Chance sold more than 66,000 vests to U.S. law enforcement agencies between 1998 and 2004, including 40,000 to the U.S. government, according to the ruling.
In 2003, a police officer in California was killed when two bullets passed through his Zylon vest, prompting Toyobo and Second Chance to issue a safety recall.
A former employee of Second Chance filed a False Claims Act lawsuit on behalf of the government, and the government intervened, adding four Second Chance executives as defendants.
Toyobo and Second Chance were accused of False Claims Act violations, lying, conspiracy to defraud, common law fraud and unjust enrichment. Contract claims took aim at Second Chance only.
Toyobo moved to dismiss, arguing that it could not be held liable under the False Claims Act because it only dealt in manufacturing and not sales. Toyobo tried to pin all liability on Second Chance, saying it continually updated the U.S. company about the degradation problems.
U.S. District Judge Richard Roberts denied Toyobo's motion, finding the company knew about Second Chance's warranty and continued its partnership with Second Chance while concealing evidence and issuing misleading statements about degradation.
When Second Chance pressed Toyobo to fix the Zylon problem, Toyobo gave Second Chance a $6 million "rebate" and hid data showing drops in material strength, the ruling states.
"Toyobo's actions may constitute the underlying fraudulent conduct leading to Second Chance's submission of false claims," Judge Roberts wrote.
The Justice Department sufficiently alleged common law fraud and violations of the False Claims Act, he added.
He said the government can demand refunds for all Zylon vests purchased since 1998.
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