Judge orders mediation in Trinity Industries lawsuit

• Trinity Industries (TRN -2.5%) and a whistle-blower have been ordered to enter mediation after the company lost a $175M verdict for defrauding the U.S. government.
• If the mediation fails, the case likely would pick up where it left off, and the case could drag on if the company appeals; TRN has disputed the verdict.
• UBS analyst Eric Crawford says TRN could withstand a large judgment related to the ET-Plus guardrail system because most of its profits are tied to its railroad business, but investors would not want to see a protracted legal battle.

Comments

[SpoiledRottenBrat]

On Oct. 20, a jury found that Trinity had defrauded the federal government when it kept the changes secret for years. The Federal Highway Administration subsequently ordered the company to conduct new crash tests.

“The Federal Highway Administration has now received Trinity’s ET-Plus test plan,” Neil Gaffney, an agency spokesman, said today. “The F.H.W.A. will expeditiously, but carefully, review the plan.”

The highway administration had defended the guardrail unit for more than two years, even after it learned in 2012 that Trinity had failed to report the design change, explaining that it reviewed crash tests from 2005 and 2010 that helped it determine that the guardrails remained eligible for federal funds.

[trin]

The litigator, gov't., Trinity, engineering safety testing, provable accidents, guardrail
modifications if necessary, arbitration, and appeals could take year/s.

[brrw]

I think UBS analyst Eric Crawford was misquoted, misspoke, or is wrong. Trinity (TRN) may well be able to pay even a tripled judgment without going bankrupt or becoming financially crippled. However, the reasoning given in the statement attributed to Mr. Crawford is inaccurate ...... in fact, Trinity will be able to endure the pay-out because it is, overall, a sufficiently-large judgment debtor and, in the overall, will be able to fund and pay the judgment. That is, of course, if it is confirmed on appeal, which seems very far from a certainty.