WASHINGTON—U.S. District Judge Rodney Gilstrap ordered Trinity Industries and the plaintiff who won his case in federal court earlier this month to try one last time to settle their differences.
Gilstrap ordered both the company and plaintiff Josh Harman to mediation led by Duke University professor Francis McGovern, He set a Dec. 31 deadline for an agreement.
If no agreement is reached, the judge will have to decide how much Trinity will be ordered to pay — and likely a host of other questions expected to be raised by competing motions from the parties.
A jury found Oct. 13 that Trinity had violated the False Claims Act because it failed to tell the Federal Highway Administration of money-saving changes it had made to guardrails in 2005. Those guardrail systems are in use on highways across the country, including in Texas. State highway departments have paid $175 million in federal dollars for them since 2005.
The company believes the jury was wrong and has vowed to appeal.
Jeff Eller, a spokesman for Trinity, said the company will comply with the judge’s order, but continues to feel the verdict was wrong as a matter of law.
“Trinity continues to believe that the jury decision cannot and will not withstand legal scrutiny. We intend to follow the court instructions and attend mediation,” Eller said.
An attorney for Josh Harman, the competitor to Trinity who brought the suit on behalf of the federal government, said the mediation could touch on any part of the case. Both sides are likely to file a storm of post-trial motions, and the mediation likely is the judge trying to give a settlement one more chance.
Beyond the question of whether the jury was right in nits verdict, other complicated issues remain in dispute as well. For instance: If no settlement is reached, how much will the judge order the company to pay?
The jury determined that the fraud cost the government $175 million. But that figure, thanks to language in the False Claims Act, would ordinarily be tripled when damages are calculated. In addition, as much as $200 million in additional fines, and attorneys’ fees, could be added as well. That latter total could come down to how many technical violations of the False Claim Act were contained in each of the many invoices the company sent over the years.
Trinity Industries had 2013 revenues of $4.4 billion and is best known for making rail cars. Its highway product subsidiary makes guardrails that are in use across the country. Several states have suspended use of the guardrails, due to Harman’s suit. Following a demand for more testing, the company suspended sales of the units pending test results.