After more than five years of litigation, a California federal jury has awarded Sierra Railroad Company (“Sierra”) $39.6 million in compensatory and punitive damages in a service contract dispute with Patriot Rail Corporation (“Patriot”). A California jury found that Patriot breached its non-disclosure agreement with Sierra, committed fraud, willfully and maliciously engaged in the theft of Sierra’s trade secrets, and interfered with Sierra’s rail service contract at McClellan Business Park in Sacramento, California.
Sierra was originally introduced to Patriot when discussing the potential sale of Sierra’s rail operations in order to fund Sierra’s construction of a demonstration project for its renewable waste-to-energy company, Sierra Energy.
Patriot, after taking over the rail contract, tried to obtain a court order in 2009 forcing Sierra to sell after prolonged negotiations, as well as requesting reimbursement for monetary damages.
The jury found Patriot’s lawsuit to be baseless and awarded Sierra $22.2 million in compensatory damages. The jury also found Patriot’s behavior to be “malicious, oppressive or fraudulent” and awarded Sierra an additional $17.4 million in punitive damages, for a total award of $39.6 million.
“Patriot stole our operation at McClellan and nearly bankrupted our company,” says Michael Hart, President and Chief Executive Officer of Sierra. “Being falsely accused of fraud for five years in federal court has deeply impacted not just Sierra, but our other businesses as well, such as Sierra Northern Railway, the Sierra Railroad Dinner Train, the Sacramento RiverTrain, the Skunk Train, and Sierra Energy. We’ve lost millions in revenue and lost opportunities.”
In 2012, SteelRiver Infrastructure Partners acquired Patriot Rail Corp. with full knowledge of the pending lawsuit and, a year later, changed Patriot’s name to Patriot Rail Company, LLC. Because of this change, Patriot stated that they don’t feel they should be held liable for punitive damages and will likely appeal.
“Neither Patriot Rail Company, LLC nor its new owners made any effort after the 2012 sale to dismiss Patriot’s baseless lawsuit against Sierra, to return the stolen McClellan operation to Sierra, or to otherwise compensate Sierra for Patriot’s illegal actions,” says Sierra’s General Counsel, Torgny Nilsson. “Judge Troy L. Nunley correctly found that the sale and name-change did not alter Patriot’s liability for the damages awarded by the jury.”
“This verdict is a critical step toward our being made whole again, enabling us to repay our debts and to propel Sierra Energy’s FastOxâ„¢ gasification technology forward as a way to cleanly create energy from waste,” says Hart. “We want to thank the jury for taking time out of their lives to hear the case and for sending a clear signal to companies such as Patriot that fraud and the theft of trade secrets will not go unpunished.”
About Sierra Railroad Company
Sierra Railroad Company is a privately owned rail operator with a freight, an entertainment and a renewable energy division. For more information, visit www.SierraRailroad.com.
SOURCE Sierra Railroad Company
