Trinity Industries Must Pay $663 Million in Guardrail Defect Case
Trinity Industries Inc., maker of a highway guardrail safety system tied to at least nine deaths, must pay $663 million for defrauding the U.S. government.
The decision by U.S. District Judge Rodney Gilstrap in Marshall, Texas, caps Trinity’s three-year legal battle with a small competitor in a case that raised doubts about highway safety across the country.
Gilstrap on June 9 added a $138 million penalty to a verdict last year in a federal trial. Jurors concluded that Trinity cheated the government by selling its ET-Plus guardrail system without disclosing changes made in 2005. The company has said it plans to appeal.
“We believe the evidence clearly shows that no fraud was committed,” Trinity spokesman Jeff Eller said in an e-mail after the ruling. “The trial court made significant errors in applying the federal law to the plaintiff’s allegations and, therefore, the judgment is erroneous and should be reversed.”
Gilstrap in a related ruling rejected Trinity’s request to throw out the verdict, saying it is supported by “substantial evidence.” His decisions followed by hours the unsuccessful end of settlement talks that he ordered after the October verdict against Trinity.
The rulings come as federal prosecutors in Boston probe the relationship between Dallas-based Trinity and the Federal Highway Administration, which reviews safety tests of highway devices.
FHWA’s sign-off on the ET-Plus has opened up hundreds of millions of dollars in federal taxpayer money to help reimburse states for purchases of the system.
The Texas lawsuit, brought by Joshua Harman, a Trinity competitor based in Bristol, Virginia, resulted in a jury award of $175 million.
Harman, who filed the lawsuit on behalf of the U.S. government, will receive 30% of the award, or $199 million, Gilstrap said. He also will collect $19 million for legal fees and expenses, payable by Trinity, the judge said.
“This is a steppingstone to get the attention of the public and our congressional leaders, that this is serious,” Hardman said in a phone interview. “Everything could be stopped if they did a product recall right now.”
Trinity is defending other lawsuits. They include more than 20 personal-injury cases alleging the ET-Plus is defective, shareholder suits accusing Trinity of inadequate disclosures and claims that the company defrauded states and counties by making the undisclosed changes.
