FOR IMMEDIATE RELEASE: (Davis, California; October 23, 2014) Judge Troy L. Nunley has awarded Sierra Railroad Company (“Sierra”) an additional $13.1 million in punitive damages in Sierra's dispute with Patriot Rail Company LLC (“Patriot”). These damages were awarded due to Patriot's willful misappropriation of Sierra's trade secrets and are in addition to the $39.6 million awarded to Sierra by the jury in May 2014, for a total award to Sierra of $52.7 million.
In March, a 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. The jury awarded Sierra $22.2 million in compensatory damages. The jury also found Patriot’s behavior to be “malicious, oppressive or fraudulent” and, on May 1, awarded Sierra an additional $17.4 million in punitive damages, for a total jury award of $39.6 million.
Judge Nunley stated in his October 23 ruling that he "wholeheartedly agrees" with the jury's finding that Patriot’s conduct was willful and malicious, that "Patriot's actions were done purposefully", and that "Patriot repeatedly misled Sierra", justifying an award to Sierra of an additional $13.1 million in punitive damages.
“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.” “Judge Nunley’s damages award to Sierra, along with the jury’s verdicts, underscore that Sierra was at all times the wronged party in this situation, and that Patriot’s lawsuit against us was nothing more than a predatory tactic.”
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.
“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. “It took us more than 5 years, but Judge Nunley’s ruling further vindicates Sierra and confirms the severity of Patriot’s unlawful actions.”
Mr. Nilsson said that Sierra’s recovery of its substantial costs and attorneys’ fees remains to be determined.
“We want to thank our attorneys from Orrick; Judge Nunley’s ruling and the jury’s earlier verdicts are critical steps toward our being made whole again, enabling us to repay our debts and to propel Sierra Energy’s FastOx™ gasification technology forward as a way to cleanly create energy from waste,” says Hart. “We believe the court has sent a clear signal to companies such as Patriot that fraud and the theft of trade secrets will not go unpunished.”
Sierra Railroad Company is represented by McGregor W. Scott and Michael C. Weed of Orrick Herrington & Sutcliffe LLP. For more information, visit www.SierraRailroad.com.
About Sierra Energy Sierra Energy is a waste gasification and renewable energy company commercializing its FastOx gasifier, derived from the steel-making blast furnace. This efficient and scalable gasifier transforms nearly any form of waste into clean renewable energy. For more information, visit www.SierraEnergyCorp.com.