Four fleets object to $135M settlement in Navistar engine lawsuit
October 22, 2019
Four large fleets are objecting to a proposed settlement in the Navistar MaxxForce engine lawsuit. They claim the amount is “inadequate and unfair.”
On Oct. 10, Ferguson Enterprises, Southern California Edison C., The Walt Disney Co., and US Foods objected to the proposed $135 million Navistar settlement. In May, attorneys for the class action plaintiffs announced the preliminary agreement.
According to a news release from Lieff Cabraser Heimann & Bernstein, class members will be able to choose from three options, including a “no questions asked” cash payment of $2,500 per Navistar truck; a $10,000 rebate on a new truck; or up to $15,000 per truck in provable out of pocket damages caused by the alleged defect.
However, the above objectors are not content with the agreement. The four companies consider the agreement “inadequate and unfair for failing to compensate class members for any lost truck value.”
In the complaint, plaintiffs emphasized “significant diminished value on the resale market” as a critical component of damages. There are no options for recovering lost resale value in the proposed agreement.
Additionally, the objectors claim that the three payment options that are available “significantly undercut the value of potential claims and discriminate against fleet owners and indirect lessees in favor of the more adequately represented individual truck owners.”
“Given the lack of compensation for lost resale value, combined with the inadequate and inequitable remaining compensation options, objectors urge the court to protect the interests of all class members by instructing the parties to include lost resale value as a covered cost,” the four companies argue. “This proposed modification will fairly and adequately compensate the entire class. Without this change, the proposed settlement requires class members to waive their most significant claims for class vehicles and is thus unfair and should not be approved.”
Proposed class members include anyone that owned or leased a 2011-14 Navistar equipped with a MaxxForce 11- or 13-liter engine. Specifically, engines certified to meet EPA 2010 emissions standards without selective catalytic reduction technology.
In May, Navistar provided Land Line with the following statement:
“Navistar is taking a charge of $159 million in the second quarter to address the costs associated with current period liabilities and future potential settlements of certain litigation related to Model Year 2011-2014 Class 8 trucks sold in the U.S. with the company’s 11 & 13-liter EGR only engines, including U.S. class action lawsuits. This amount also includes additional funds for certain other engine lawsuits that are not included in the settlement agreement. The settlement agreement remains subject to approval by the Court.
“Navistar expects that this preliminary step toward the settlement of these U.S. class action lawsuits will accelerate our efforts to move past the MaxxForce 11L and 13L EGR engines in the U.S.”
The proposed agreement marks the third large payout for Navistar for issues with the MaxxForce engines. In March, an Ohio jury awarded plaintiffs more than $1 million in a lawsuit over the faulty engines.
In December 2017, a Tennessee judge upheld a jury’s decision to order Navistar to pay Milan, Tenn.-based trucking company Milan Supply Chain Solutions $30 million for the purchase of 243 International ProStar trucks. However, an appellate court reversed that decision in August.
In those two lawsuits, trucking companies began experiencing issues shortly after purchasing Navistar trucks. Specifically, the trucks experienced issues with the exhaust gas recirculation system, EGR coolers, EGR valves and other engine components.
According to court documents, Navistar admitted during trial that it installed the MaxxForce engine after knowing about the issues. Navistar also admitted that these problems were not disclosed to customers.
Knowledge of the issue reached the top of the corporate ladder at Navistar. Emails to current Navistar CEO Troy Clarke, who at the time was the senior vice president of strategic initiatives, informed him that the senior vice president of engineering was well aware that the company did not validate the engine. The senior vice president claimed a lack of time for testing.