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Earlier this month, we blogged about a lawsuit against Trinity Industries, which makes highway guardrails. The suit alleged that Trinity failed to report a change in the design of its guardrails to the government. This design change, the government said, led to the death of five people and the injuries of even more.
Yesterday, a federal jury in Texas returned its verdict against Trinity: $175 million, which will be tripled under a federal statute to $525 million.
What could have led to such a big verdict?
The problem first came to the government's attention thanks to Joshua Harman, who worked for a competitor. While Harman was engaged in a patent dispute with Trinity over his own company's guardrails, he noticed design changes in Trinity's guardrails that weren't present in the designs submitted to the government.
A guardrail like Trinity's consists of a long metal rail and a rail head (that square part at the front that's painted with black and yellow stripes). When a car hits the rail head, the head is supposed to slide along a track and fall harmlessly out of the way. But Trinity decreased the size of the track from 5 inches to 4 inches, causing the head to jam, and turning it into more of a battering ram, leading to the deaths and injuries. The U.S. government claimed that Trinity never told them about this change like it was required to, and there was a dispute over whether a guardrail tested in 2005 -- which passed safety testing -- was the old design or the new one.
Harman sued Trinity on behalf of the United States under a Civil War-era statute called the False Claims Act. Largely ignored for over 100 years, the False Claims Act received new life in the 1980s, NPR's Planet Money reported earlier this month, when the government realized it was an excellent way to investigate contractor fraud and waste.
The False Claims Act allows ordinary citizens to bring alleged fraud by government contractors to the government's attention, in exchange for a cut of the damage award (between 15 and 25 percent). In addition, as a disincentive to defraud the government, the statute triples the amount of damages awarded to the government. This means that Harman will pocket a fair bit of that $525 million.
Trinity Likely to Appeal
In a statement, Trinity hinted that it will appeal. Throughout the litigation, it's maintained that it did nothing wrong, either because the design change was only cosmetic or because the government tested the new guardrail and determined it was safe (though that was in dispute). It also attacked Harman's credibility, claiming he had an ax to grind because Trinity sued his company for patent infringement (which is when Harman discovered the altered design). Notably, even though it said Harman's motives were suspect, Trinity never said he was incorrect.