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Rail News: Short Lines & Regionals

Federal jury directs Patriot Rail to compensate Sierra Railroad for violating nondisclosure pact


Patriot Rail Co. L.L.C. on Friday announced a California federal jury returned verdicts directing the company to pay damages to Sierra Railroad Co. as a result of an alleged violation of a nondisclosure agreement by its predecessor company, Patriot Rail Corp., over six years ago.

Sierra Railroad claimed that Patriot Rail Corp. won a contract to manage rail service at a business park that Sierra had previously served after misusing Sierra's confidential information in its bid. Sierra also accused Patriot Rail Corp. of engaging in practices that undervalued the railroad in an attempt to buy its remaining assets at a cheaper price.

Although a final judgment still is pending in the case, the jury returned verdicts requiring Patriot Rail Co. L.L.C. to pay $38.5 million in compensatory and punitive damages. Although Patriot Rail Co. L.L.C. is a successor company, the court ruled it is subject to punitive damages. The company believes the verdicts were legally flawed on a number of grounds, and will evaluate and fully pursue all appropriate avenues of appeal and legal redress once the judgment is final, Patriot Rail Co. L.L.C. officials said in a press release.

"The recent jury verdicts against Patriot Rail do not reflect on the current ownership of new Patriot, its management principles or business practices," said Patriot Rail Co. L.L.C. President and Chief Executive Officer John Fenton. "Patriot Rail will continue to provide outstanding services to its customers and devote its energies to day-to-day safe and efficient rail operations."

Patriot Rail Co. L.L.C. operates short lines and rail-car repair facilities in 14 states.

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