A Tennessee judge has upheld a jury’s decision reached in August to order Navistar to pay a trucking company more than $30 million for knowingly selling the company trucks with defective MaxxForce engines. Navistar plans to appeal the decision.
In September 2015, Millan Supply Chain Solutions of Milan, Tenn., filed a complaint against Navistar and Volunteer International, a truck dealership. According to court documents, Milan hauls reefer and dry van freight across 48 states.
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 in perfect working order, trucks purchased by Milan began experiencing issues not long afterwards. Specifically, the trucks experienced issues with the exhaust gas recirculation (EGR) system, EGR coolers, EGR valves and other engine components. Even after several repairs by Volunteer International, the trucks continued to be defective.
Court documents note that Navistar marketed its MaxxForce 13-litre engine by highlighting its unique EGR system that was certified under the EPA 2010 emissions standards. The lawsuit states that Navistar attempted “to distinguish themselves from competitors by becoming the only heavy-duty truck manufacturer in North America to rely entirely on EGR to meet the EPA 2010 emissions standards.” Other manufacturers used a combination of EGR and selective catalytic reduction.
However, the lawsuit alleges that Navistar 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.” Issues around the truck were exacerbated due to the unavailability of parts, delaying repairs and keeping the trucks inoperable.
The lawsuit claims that Navistar was well aware of potential issues with MaxxForce engines. This claim is supported by the fact that industry standards require manufacturers to conduct “extensive testing for years before public distribution in order to work out any issues with design, material defects and/or workmanship,” the complaint says. In July 2012, Navistar discontinued 11-liter and 13-liter engines with EGR-only systems.
According to the lawsuit, Milan was forced to sell 25 of the 2012 trucks. 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.
According to a news release from Miller Weisbrod, Milan’s attorneys, several Navistar executives testified. One former senior vice president of North American sales said that Navistar “did not test s#@t.” Emails from the current senior vice president of engineering to the current CEO quote a former vice president of quality responsible for testing MaxxForce engines stating repeatedly that “we have no field testing.”
On Aug. 10, 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.
Attorneys for Navistar tried to get the judge to disapprove and vacate the jury’s verdict. After reviewing the verdict, the judge pointed out the “shocking” testimony heard by jurors. The judge also referred back to testimony where Navistar was essentially “bragging” about its work with the military and “what kind of money they generated for various things.” Regarding the reprehensibility of Navistar’s conduct, the judge called it “egregious and reprehensible,” further confirming punitive damages in favor of Milan.
In addition to actual damages and punitive damages, the court added more than $1 million in attorneys’ fees to the award since Navistar was found to violate the Tennessee Consumer Protection Act.
Navistar spokeswoman Lyndi McMillan gave Land Line the following statement:
“We're disappointed in the jury's verdict and we will be filing an appeal. We have successfully defended similar claims regarding our MaxxForce 13 engines in several other jurisdictions, including dismissal of claims of fraud in courts in Texas, Wisconsin, Michigan, Indiana, Alabama and Illinois. Navistar respectfully disagrees with judge’s characterizations of Navistar’s conduct and the plaintiff’s characterization of its employees. Navistar has and will continue to defend our products, our reputation in the market, and the integrity of our employees.”
Copyright © OOIDA