Sierra Railroad Awarded $39 Million in Damages in Trade Secrets Case

05.02.14

A California federal jury has awarded $17.4 million in punitive damages to Sierra Railroad Co., a short-line rail operator in Northern California, in its trade secrets misappropriation case against Patriot Rail Corp. The May 1, 2014 decision follows a March 28, 2014 jury verdict of more than $22 million in compensatory damages to Sierra, bringing the total damages award to more than $39 million. 

Sierra brought claims against Patriot for trade secret misappropriation, breach of contract, and intentional and negligent interference with prospective economic advantage based on Patriot’s actions in wresting a lucrative rail services contract from Sierra in late 2007. The jury found that Patriot misused Sierra’s confidential trade secret information, which it obtained during failed acquisition discussions, in order to submit a bid for a rail contract at McClellan Business Park, a decommissioned military base just outside Sacramento, California. The McClellan rail contract accounted for 40 percent of Sierra’s business. The loss of the McClellan contract along with the costs of this litigation pushed Sierra to the brink financially. 

Patriot, represented by Greenberg Traurig, also brought claims against Sierra for fraud and breach of contract, but the jury found against Patriot on all its claims and for Sierra on all its claims.

The Orrick team was led by white collar and corporate investigations partner McGregor Scott and commercial litigation partner Michael Weed, and included litigation of counsel Jonathan Riddell and associates Katie DeWitt, Cameron Desmond, Stephanie Albrecht, David Spencer, Emmanuel Fua and Nick Horton.