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053019 Navistar_LT_Farm_1920.jpg Photo: Navistar

Navistar to settle $135M defective engine class action suits

The settlement agreement is still subject to approval by the Illinois court.

Navistar came to a $135 million agreement with truck owners who claimed in U.S. class action suits that certain MaxxForce Advanced EGR (exhaust gas recirculation) engines are defective and that Navistar failed to disclose or correct the alleged defect, according to the Form 8-K filed by the United States Security and Exchange Commission (SEC). Navistar makes International trucks.

Per the agreement, owners can choose between drawing compensation from an $85 million cash fund or taking a share of rebates worth $50 million. There will also be a “waterfall” fund capped at $35 million if one of the two funds are oversubscribed, according to the Form 8-K. “The Settlement Agreement states that Navistar denies all claims in the U.S. Class Actions, denies wrongdoing, liability or damage of any kind, and denies that it acted improperly or wrongfully in any way," according to an SEC statement. 

The class action suit includes all fleets and people who owned or leased a 2011-14 model year International vehicle equipped with a MaxxForce 11-liter or 13-liter engine certified to meet EPA 2010 emissions standards without SCR technology, provided that vehicle was purchased or leased in the U.S., including its territories.

Unable to resolve satisfactorily some thorny technical and regulatory challenges with the MaxxForce Advanced EGR engines, Navistar announced in July 2012 that it was giving up on EGR technology for its heavy-duty engines and was switching to the selective catalytic reduction (SCR) technology used by all of its competitors to meet the EPA regulations.

Navistar has been working on a financial turnaround and revamped its products in recent years. 

In addition to the $135 million, Navistar set aside an extra $24 million in its fiscal second quarter financial statements to include payments to those truck owners who weren’t included in the class action suits.  

 

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