A federal judge granted preliminary approval for Navistar International Corp.’s $135 million class action settlement with owners of heavy-duty trucks with faulty emissions technology.
U.S. District Judge Joan Gottschall’s ruling gives more than 4,600 owners three options. They can choose a $2,500 cash payout, $10,000 off a new Navistar truck, or recovery of up to $15,000 for repairs made to 2011-2014 trucks equipped with MaxxForce engines.
Payouts could begin in about a year if the judge gives final approval after a hearing this November.
Navistar took a $159 million charge against second-quarter earnings to cover the financial awards.
The Lisle, Ill.-based truck maker earlier this decade used exhaust gas recirculation, or EGR, to control nitrous oxide emissions from its International brand of heavy-duty trucks equipped with 11- and 13-liter engines. The technology failed to meet 2010 federal emissions standards. Navistar later switched to selective catalytic reduction used by competitors.
The MaxxForce engines cost Navistar more than $2 billion in warranty claims, repurchases and disposal of damaged trucks. As costs soared and losses climbed, Navistar lost half its market share.
The company is on the rebound. Before the one-time charge, second-quarter profits rose 57 percent to $105 million, beating analysts’ estimates.
PAYOUTS IN 2020
The preliminary approval clears the way for a notice and claim form to be sent to owners by U.S. mail and email. Customers can update their contact information at attorneys Lieff Cabraser Heimann & Bernstein’s website.
A final approval hearing is scheduled for Nov. 13. Owners who decline to join the class action can challenge the settlement at the hearing. Opting out preserves an owner’s right to sue Navistar separately. Navistar won most of the suits filed against it before agreeing to the settlement.
The class action settlement excludes individuals who sued Navistar separately, regardless of whether they won or lost. They cannot file a claim under the settlement, said Jonathan Selbin, an attorney with Lieff Cabraser Heimann & Bernstein.
If the settlement gets final approval, claims can be filed for six months. Payouts would begin in May 2020.