Claim at Issue:
This matter involved the purchase of defective piston pins by a railroad. The pins were installed in numerous locomotives resulting in catastrophic engine failures at a total cost to the railroad of $1,765,000.00
Key Legal or Factual Issues:
An outside vendor approached our railroad client seeking to sell an OEM piston pin equivalent and supplied a sample pin for evaluation. According to tests conducted by the railroad's Research and Test Department ("R&T"), the sample pin met and, in some respects, even exceeded OEM specifications. Based upon the testing of the sample pin, The railroad purchased piston pins and installed them in thirty-one locomotives. Within a year, the locomotives began to experience catastrophic engine failures.
KCM helped to identify and secure evidence to support over $1,765,000.00 in direct and consequential damages. The case proceeded through contractually mandated AAA arbitration where KCM asserted an array of claims such as breach of warranty, breach of contract and tort-based claims including fraud and negligence.
KCM worked internally with the railroad's Sourcing, Mechanical and R&T departments to develop both the defendant's liability and to maximize the available set of damages. KCM identified experts internally from R&T and engaged an outside expert. The areas addressed by these experts were products liability, metallurgical engineering and failure analysis.
During litigation the defendant claimed that the railroad should have identified any defects with the pins based on the testing R&T did on the sample pin, and that under the Uniform Commercial Code, The railroad was precluded from any recovery as a result. Working with personnel at The railroad and the engaged experts, we were able to establish that the purchased pins were materially different than the sample pin. We were also able to identify the failure mode of the pins, which was a latent defect that was not discoverable by R&T.
During discovery we also determined that the defendant had begun outsourcing the production of its pins to a third-party, in India, with little to no experience in the rail industry and that the defendant had virtually no quality control to ensure its products were safe for railroad operations. Using the information that we developed through discovery, we were able to obtain a settlement on behalf of the railroad recovering the vast majority of the railroad's damages.