On June 9, a Texas federal judge ordered the world’s largest guardrail manufacturer to pay $663 million plus attorney fees. In October 2014, a jury found Trinity Industries guilty of fraud for selling a new guardrail design as government-approved when it was not.
Savings of $2 Per Piece
Trinity’s ET-plus guardrails are to fold-up “accordion-style” upon impact, thus reducing damage to vehicles and death or injury to occupants. A number of years ago, Trinity changed the guardrail’s design without notifying the federal government. It then marketed its product as government-approved when it was not.
The design change saved Trinity about $2.00 per piece.
When Joshua Harman, a competitor, became aware of the fact that Trinity was marketing the guardrails with the new design as government-approved, he filed a federal lawsuit alleging fraud. He also asserted that the altered design included guardrail ends that could potentially impale vehicles or their occupants in crashes.
Trinity has flatly denied this.
From $175 Million to $682 Million
In October 2014, the jury in Marshall, Texas awarded plaintiffs, including Harman and the U.S. government, $175 million. A federal district court judge ordered mediation in the matter, but the two sides failed to agree in mediation. The judge then exercised his authority to triple the award under the Federal False Claims Act, and he added another $138 million in penalties.
As a result, on Tuesday, June 9, the judge ordered Trinity to pay a total of $682 million, including $19 million in attorney fees.
Trinity Industries plans to appeal.
A Trinity spokesperson alleges that the judge made errors in applying various federal laws to the case.
As a result of the judge’s decision, Harman is to receive a whistle-blower fee of $199 million plus the attorney fees. The federal government is to receive the other $464 million, despite that fact that it was not even a party to the original suit that Harman filed.
After the trial concluded, a Texas research lab conducted a series of new guardrail crash tests. In February 2015, federal officials stated that the tests showed that the guardrails featuring the new design did meet federal safety standards. Harman’s attorney says that the key issue is Trinity’s previous claims that the guardrails were government-approved during a period of time when they were not.
In April 2015, federal prosecutors subpoenaed 16-years’ worth of Trinity records pertaining to a series of guardrail designs. Trinity is also a defendant in a number of personal injury and wrongful death lawsuits involving its ET-plus guardrails.