Trinity Industries, Inc. (NYSE:TRN) today announced that the United
States District Court for the Eastern District of Texas, Marshall
Division, has entered judgment in the federal False Claims Act (the
“Act”) case filed against the Company by Joshua Harman involving the ET
Plus® System (“ET Plus”). Trinity Highway Products, LLC manufactures the
ET Plus pursuant to exclusive licensing granted by the Texas A&M
University System. The judgment was expected after post-verdict,
court-ordered mediation failed to resolve the numerous legal issues
involved.
In October 2014, a jury awarded $175.0 million in damages in this case
which alleged certain violations of the Act. Under the Act, the award is
automatically trebled to $525.0 million. In addition, the District Court
imposed civil penalties in the amount of $138.4 million and awarded
attorney’s fees, expenses and costs to the relator in the amount of
$19.0 million. The amount of the total judgment is $682.4 million. To
appeal the case, the Company may be required to post a supersedeas bond
that could equal the amount of the judgment entered plus interest, which
the Company expects to obtain on an unsecured basis.
The Company believes the evidence clearly shows that no fraud was
committed. Trinity also believes that the trial court made significant
errors in applying the federal law to Mr. Harman’s allegations and,
therefore, the judgment is erroneous and should be reversed in its
entirety. Trinity intends to file certain post-judgment motions and,
depending upon the District Court’s rulings on those motions, to appeal
to the United States Court of Appeals for the Fifth Circuit.
The Federal Highway Administration (“FHWA”) has repeatedly confirmed
that the ET Plus is fully compliant with all applicable federal safety
regulations—and that the ET Plus is and has always been eligible for
reimbursement under the Federal-aid highway program.
In a Mandamus Order preceding the second trial in this case, the Fifth
Circuit made clear that it had concerns with the trial court
proceedings, and that the Company has a “strong” legal argument that it
has made no false claims to the United States government, based on
previous statements by the FHWA that the ET Plus is compliant with
federal safety standards and therefore fully eligible, in the past,
present and future, for federal reimbursement claims.
After the trial, in December 2014 and January 2015, the ET Plus was
again tested and again passed the applicable safety standard, the
National Cooperative Highway Research Program Report 350 testing
criteria, in eight additional independent crash tests by the Southwest
Research Institute. The FHWA, in consultation with its independent
consulting expert, confirmed that the ET Plus passed the Report 350
criteria for all eight crash tests. The ET Plus has been successfully
crash tested more times than any other highway product of its kind.
Trinity takes all allegations concerning the ET Plus seriously and is
committed to roadway safety and will continue to defend its position and
protect its reputation. The Company is proud of its employees, the
market-leading products it manufactures, and the professional and
ethical manner in which it has and will continue to conduct its business.
Information from the FHWA pertaining to the ET Plus® System may be found
at: http://www.fhwa.dot.gov/guardrailsafety/.
For general information pertaining to purpose, function, and
crashworthiness of guardrails reference the FHWA document entitled
“Guardrail 101,” found at: http://www.fhwa.dot.gov/guardrailsafety/guardrail101.pdf.
For additional facts and product information related to the ET Plus®
System, you can refer to www.etplusfacts.com.
Trinity Industries, Inc., headquartered in Dallas, Texas, is a
diversified industrial company that owns market-leading businesses,
which provide products and services to the energy, transportation,
chemical, and construction sectors. Trinity reports its financial
results in five principal business segments: the Rail Group, the Railcar
Leasing and Management Services Group, the Inland Barge Group, the
Construction Products Group, and the Energy Equipment Group. For more
information, visit: www.trin.net.
Trinity Highway Products, LLC is a subsidiary of Trinity Industries, Inc.
Some statements in this release, which are not historical facts, are
“forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
statements about Trinity's estimates, expectations, beliefs, intentions
or strategies for the future, and the assumptions underlying these
forward-looking statements. Trinity uses the words “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,”
“will,” “should,” “guidance” and similar expressions to identify these
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from
historical experience or our present expectations. For a discussion of
such risks and uncertainties, which could cause actual results to differ
from those contained in the forward-looking statements, see “Risk
Factors” and “Forward-Looking Statements” in the Company's Annual Report
on Form 10-K for the most recent fiscal year.
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