Bloomberg News

Trinity Gets Tight Timeline in $1 Billion Guardrail Suit

July 14, 2014

Trinity Industries Inc. (TRN:US) will have 13 hours this week to fight allegations its highway guardrail systems are a deadly hazard that spear cars on impact, with as much as $1 billion at stake for the company.

U.S. District Judge Rodney Gilstrap in Marshall, Texas, said he’s giving the same amount of time to a self-described safety expert who claimed the company’s guardrails contributed to about 20 deaths to present evidence to a jury over the safety of the system.

Joshua Harman, 45, of Swords Creek, Virginia, sued Trinity, one of the biggest guardrail makers in the U.S., alleging it changed the design of one of its products without telling federal authorities. Trinity modified what’s called an energy-absorbing end terminal, a steel mechanism mounted on the end of a guardrail, Harman claimed. Instead of acting like a shock absorber when hit by a car, the revised version locks up and behaves more like a giant shiv, according to Harman.

Trinity said the allegations are “false and misleading” and has said in company filings that it doesn’t believe it’ll lose. The company, which has a $6.9 billion market capitalization, maintains “a high degree of confidence in the performance and integrity” of its product, Jack Todd, a company spokesman, said in an e-mailed statement.

The legal battle was the subject of a Bloomberg News investigation of the guardrail system and Harman’s claims.

Time Limitations

Given the time limitations imposed by the judge, the trial could end within a week, according to Boies, Schiller & Flexner LLP lawyer Nicholas Gravante Jr., whose firm represents Harman in the latest of several lawsuits between the two sides.

Trinity in 2011 sued Harman -- who once ran now-stalled companies that made and installed guardrail systems, mostly in Virginia -- for patent infringement relating to its end terminal. The lawsuit was resolved with a confidential settlement. Trinity had also sued Harman twice for defamation, stemming partly from a public website Harman owns and updates with photos from hundreds of crash sites involving allegedly defective Trinity terminals. Trinity voluntarily dropped both suits.

There are at least nine personal-injury and wrongful-death lawsuits pending against the company.

Harman’s lawsuit seeks damages pegged to triple the cost of recalling and replacing all of the allegedly faulty units currently on U.S. roads, which Trinity’s lawyer estimated at $1 billion. The company’s net profit has more than quintupled since 2010, to $375.5 million last year.

False Claims

Harman stands to gain as much as a third of any judgment.

The rest would go to the federal government, which helps state transportation departments purchase approved highway products, including Trinity’s end terminal. The lawsuit claims that Trinity submitted false claims for payment to the government by passing off the secretly modified product as eligible for federal money.

Last month, the Federal Highway Administration issued an internal memo stating that, based on information provided to it by Trinity, the end terminal “continues to be eligible for federal-aid reimbursement.”

Separately, a coalition of state highway departments will start a performance review of all end terminals as early as this summer, prompted after an informal poll of state transportation officials turned up complaints about models including Trinity’s.

The case is Joshua Harman, on behalf of the U.S. v. Trinity Industries Inc., 2:12-cv-00089, U.S. District Court, Eastern District of Texas (Marshall).

To contact the reporter on this story: Patrick G. Lee in New York at plee315@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Joe Schneider, Peter Blumberg


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • TRN
    (Trinity Industries Inc)
    • $31.63 USD
    • -4.45
    • -14.07%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus