Isolde v. Trinity Industries, Inc.
|Court:||US District Court for the Northern District of Texas|
|Judge:||Hon. Ed Kinkeade|
|Class Period:||02/16/2012 - 04/24/2015|
|Case Contacts:||James A. Harrod, Adam Hollander|
Securities fraud class action filed on behalf of a class of persons and entities who purchased or acquired the securities of Trinity Industries, Inc. between February 16, 2012 and April 24, 2015, inclusive (the "Class Period").
On March 8, 2016, the Honorable Ed Kinkeade appointed BLB&G client the Department of the Treasury of the State of New Jersey and its Division of Investment as co-Lead Plaintiff and BLB&G as co-Lead Counsel for the Class.
Lead Plaintiffs allege that Trinity Industries, Inc. (“Trinity” or the “Company”), along with the Company’s CEO Timothy R. Wallace; its CFO James E. Perry; and the President of wholly-owned subsidiary Trinity Highway Products, Gregory B. Mitchell (collectively, “Defendants”; defrauded investors who purchased shares of Trinity common stock during the Class Period. Lead Plaintiffs allege that Defendants made numerous intentional misrepresentations and omissions of material facts concerning the ET-Plus, a highway safety product that Trinity designs, manufactures, and sells to federal and state transportation departments to be installed on highways and roads throughout the United States. The ET-Plus is a guardrail end terminal and is designed to absorb the impact of a collision and, as such, is a crucial piece of highway-safety equipment.
Because of the key role of the ET-Plus in ensuring and improving highway safety, Trinity was obligated to disclose key design changes to federal regulators in order to sell ET-Plus products to government agencies and to receive payment for the products. However, without notifying regulators or submitting new designs for approval, Trinity made multiple design changes to the ET-Plus that made highway guardrails far less safe, reportedly resulting in more than 40 motorist deaths and numerous serious injuries. In addition, a whistleblower filed suit in federal court against Trinity on behalf of the federal government. After a jury trial on the whistleblower’s claims that Trinity knowingly defrauded the federal government by failing to disclose the design changes to the ET-Plus, the jury unanimously held Trinity liable and imposed liability of more than $660 million.
Lead Plaintiffs’ securities fraud claims on behalf of investors allege that, throughout the Class Period, Defendants intentionally misrepresented and omitted material facts concerning changes to the ET-Plus, the Company’s fraudulent concealment and cover-up of those changes, and the massive liabilities and negative business impact created by Defendants’ actions. Rather than disclose the truth to investors, Defendants made false statements and repeatedly omitted the true facts regarding Trinity’s dangerous changes to the ET-Plus. Moreover, Lead Plaintiffs allege that Defendants made false statements in Trinity’s accounting by failing to properly reserve for and disclose liabilities arising out of Trinity’s misconduct, in violation of Generally Accepted Accounting Principles and SEC disclosure rules. When the truth about the misconduct and the secret changes to the ET-Plus were revealed to the market, investors were shocked, and suffered damages when Trinity’s market capitalization dropped by a total of $2.8 billion dollars.
On August 18, 2016, Defendants moved to dismiss Lead Plaintiffs’ complaint, and Lead Plaintiffs filed their brief opposing the motion to dismiss on October 4, 2016. Defendants filed a reply in further support of their motion on November 18, 2016. The District Court subsequently entered a stay in the case pending Trinity’s appeal to the Fifth Circuit. The stay has been lifted, and lead Plaintiffs are due to file an amended complaint by July 17, 2019.
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