LONDON, UK / ACCESSWIRE / October 3, 2017 / Pro-Trader Daily looks at the latest corporate events and news making the headlines for Trinity Industries, Inc. (NYSE: TRN) ("Trinity"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=TRN. The Company announced on September 30, 2017, that the Federal appeals court overturned the $663.4 million judgment against the Company. This implies that Trinity would not be liable to pay the $663 million judgment that was awarded by the Texas Jury in a whistle-blower lawsuit in 2014. The lawsuit claimed that Trinity defrauded the US government with a faulty highway guardrail safety system. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Lawsuit Against Trinity

A whistleblower lawsuit accused Trinity of defrauding the US government through the sale of defective guardrails. Joshua Harman, who had once been a competitor to Trinity, filed the lawsuit on behalf of the Federal Highway Administration.

Trinity had made some design changes to its ET-Plus guardrails in 2005, which could cause vehicles to be speared when struck, and thus causing serious injuries or even death to occupants. The Company was accused of fraud for failing to tell regulators about changes it made to the guardrails, which plaintiffs believed were unsafe when hit by cars at certain angles.

Harman put forward the argument that Trinity's ET Plus System, which was meant to turn the end of a guardrail into a de facto shock absorber, was instead locking up when hit, spearing cars and their occupants. However, safety concern was not his only claim. The main argument of his whistle-blower suit was that Trinity deliberately made false certifications of US approval of the new guardrail design to its customers and state departments of transportation and concealed modifications from the Federal Highway Administration. These, he believed, resulted in improper claims for federal-aid reimbursement.

This whistle-blower action is among the multiple claims filed over the guardrail. There have been numerous lawsuits regarding arguing injuries caused by the product, class actions alleging deceptive practices, and investor suits.

Fraud Award was Fixed at $663 million

In 2014, the Texas Jury declared Trinity liable for defrauding the Federal Highway Administration. The Jury awarded $175 million in damages, which was tripled to $525 million under the federal False Claims Act.

Moreover, US District Judge Rodney Gilstrap in Marshall, Texas sustained the verdict and added $138.4 million in civil penalties, i.e. $8,250 for each of 16,771 alleged false certifications to obtain payments. Gilstrap set Harman's share at $199 million, which is 30% of the total judgment.

Consequently, the jury verdict initiated a flurry of states removing Trinity's ET Plus guardrail from their qualified-products list. In fact, the US Justice Department also commenced a criminal investigation, which has since been abandoned.

Counter Appeal by Trinity

On the other hand, Trinity appealed, denying any fraud and disputing the damages.

The Company highlighted in its court papers that it had modified the guardrail in 2005, decreasing the width of the guide channels from five inches to four inches. This modification was not significant and thus did not require any notification.

After the Texas verdict, Federal Highway Administration ordered a review of the ET Plus System. They found that the system passed all crash tests and is eligible for federal-aid reimbursement.

The New Judgment

The panel of judges on the 5th US Circuit Court of Appeals in New Orleans overturned the 2014 jury verdict against Trinity Industries. The appellate jury emphasized that although it is unfortunate that guardrails cannot protect from all collisions at all angles and all speeds by all vehicles, the US government has never declared the Trinity design unsafe. Moreover, the federal government paid to get the guardrails installed throughout the country and even refused to remove them.

As per the new judgment, the finding that Trinity had defrauded the government could not stand, and thus the Company was entitled to prevail as a matter of law.

Comments from Circuit Judge Patrick Higginbotham

Circuit Judge Patrick Higginbotham stated in a unanimous 42-page decision reversing the jury's findings:

"When the government, at appropriate levels, repeatedly concludes that it has not been defrauded, it is not forgiving a found fraud -- rather it is concluding that there was no fraud at all."

Trinity Pleased by the New Verdict

Jeff Eller, a spokesman from Trinity announced that the Company was pleased with the court's new verdict. He reaffirmed that the federal government has consistently confirmed that the ET Plus System meets all federal safety performance standards.

He also mentioned that this ruling upholds Trinity's enduring belief that the ET Plus System is safe and that no fraud was committed.

Competitor Joshua Harman on the New Judgment

Karen Dyer, an attorney for Boies Schiller Flexner LLP, which represented Harman, stated that jury had appropriately assessed the evidence in this case and reached the right verdict. Therefore, he was disappointed with this new decision of the appellate court and is assessing options for the future course of action.

Last Close Stock Review

At the closing bell, on Monday, October 02, 2017, Trinity Industries' stock surged 10.69%, ending the trading session at $35.31. A total volume of 8.72 million shares have exchanged hands, which was higher than the 3-month average volume of 1.05 million shares. The Company's stock price soared 24.59% in the last three months, 33.70% in the past six months, and 46.03% in the previous twelve months. Moreover, the stock rallied 27.20% since the start of the year. The stock is trading at a PE ratio of 21.78 and has a dividend yield of 1.47%. The stock currently has a market cap of $5.26 billion.

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