Navistar To Settle Class Action For $135 Million Over Defective MaxxForce Engines
Navistar International Corp (NYSE: NAV) has agreed to pay $135 million to truck owners to settle class action complaints over defective MaxxForce engines.
The proposed settlement, which must be approved by the U.S. District Court for the Northern District of Illinois, covers owners of approximately 65,000 heavy-duty trucks sold between 2010 and 2013 with MaxxForce 11- or 13-liter diesel engines equipped with allegedly defective exhaust gas recirculation (EGR) emissions systems.
Navistar said it will record a $159 million charge against second quarter earnings for payouts and pending lawsuits not included in the settlement agreement, said Lyndi McMillan, director of business communication of Navistar, in a statement.
According to the proposed settlement, class members can choose from three options, including: a “no questions asked” cash payment of up to $2,500; a $10,000 rebate on a new truck; or up to $15,000 per truck for owners who paid to have the defective engines repaired, according to Jonathan Selbin of Lieff Cabraser Heimann & Berstein, co-lead counsel for the plaintiffs.
“After years of hard-fought litigation, we believe this settlement represents an outstanding result for class members,” Selbin said in a statement. “We are also pleased Navistar stepped up to take care of its customers.”
If the settlement is approved, class members have six months to make their election and file a claim, Selbin said.
Navistar bet on the use of EGR technology to treat nitrous oxide emissions. The technology never gained the U.S. Environmental Protection Agency’s certification for compliance with the agency’s 2010 emissions standards. Other engine manufacturers used selective catalytic reduction, or SCR, technology to comply with the EPA’s emissions requirements.
Navistar switched over to SCR technology in its Class 8 engines in 2012.
“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 [liter] and 13L EGR engines in the U.S.,” McMillan said.
Image sourced from Pixabay
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