Tennessee Supreme Court overturns $31M verdict in Navistar MaxxForce lawsuit

Navistar is officially off the hook for nearly $31 million after the Tennessee Supreme Court ruled it is not liable in a lawsuit dealing with its MaxxForce engines.

On Aug. 2, the Tennessee Supreme Court affirmed a state court of appeals decision overturning a district court’s ruling awarding Milan Supply Chain Solutions nearly $31 million. The lower court found Navistar liable for more than 200 faulty trucks with MaxxForce engines sold to Milan. However, an appellate panel reversed that decision last August.

Faulty MaxxForce engines sold to Milan

From July 2011 to March 2013, Milan purchased 243 International ProStar trucks with model years ranging from 2012 to 2014. Those trucks were purchased from Navistar through Volunteer International. At the time of purchase, Navistar guaranteed the trucks were void of defects.

Despite assurances of trucks being in perfect working order, trucks purchased by Milan began experiencing issues not long afterward. Specifically, the trucks experienced issues with the exhaust gas recirculation system, EGR coolers, EGR valves and other engine components. Even after several repairs by Volunteer International, the trucks continued to be defective.

The lawsuit alleges that MaxxForce engines never reached the EPA 2010 emissions 0.2g NOx standards threshold. Furthermore, the lawsuit claims that Navistar knew that the engines were never going to meet those requirements using EGR-only technology. Volunteer International salespersons told Milan other false claims, including that changes to EGR technology would eliminate high breakdown rates.

Milan ended up taking the trucks in for repairs for engine problems on “hundreds of separate occasions,” according to the complaint. Issues around the truck were exacerbated due to the unavailability of parts, delaying repairs and keeping the trucks inoperable.

According to the lawsuit, Milan was forced to sell 25 of the 2012 trucks with MaxxForce engines.

Milan also claims several other financial losses, including loss of profits, downtime expenses/losses, diminished resale value of trucks and towing expenses. Allegations include breach of warranty, breach of contract, fraud, negligent/intentional misrepresentation and violating the Tennessee Consumer Protection Act.

In August 2017, a jury found Navistar committed fraud and violated the Consumer Protection Act. Milan was awarded $10.8 million in actual damages, including more than $8.2 million in damages for diminished value and more than $2.5 million in lost profits. Additionally, the jury awarded the trucking company $20 million in punitive damages.

Large verdict overturned

Navistar filed an appeal. In August 2019, the court of appeals in Jackson, Tenn., returned a jury judgment of $30.8 million to Milan.

The decision was based on the definition of a “good,” which the court deemed does not apply to the trucks in this case. The ruling came less than three months after Navistar was slammed with a $135 million verdict for a similar case in Illinois involving MaxxForce engines.

Essentially, the case came down to the Tennessee Consumer Protection Act, which the jury found Navistar had violated. More specifically, Navistar was found to violate a provision that considers acts to be unfair and deceptive if goods are represented in a particular standard, quality or grade when the good is in fact not.

Navistar argued that trucks with MaxxForce engines sold to Milan are not considered “goods,” which TCPA defines as “any tangible chattels leased, bought, or otherwise obtained for use by an individual primarily for personal, family, or household purposes or a franchise, distributorship agreement, or similar business opportunity.”

Since Milan is not an individual, only the second factor would apply. However, the appellate panel found that it does not.

“The second categorical definition of goods is also not satisfied, as the trucks at issue are clearly not a ‘franchise, distributorship agreement, or similar business opportunity,’” the court stated.

Consequently, the appellate court reversed the monetary judgment against Navistar and Volunteer International. The court affirmed a lower court’s ruling awarding Volunteer attorney’s fees for the circuit court case. However, fees incurred during the appeals process was not awarded.

Two years later, the Tennessee Supreme Court agreed with the court of appeals’ interpretation of how “goods” are defined. The ruling clears Navistar of any liability for its MaxxForce engines sold to Milan. LL