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Navistar Hit With $30.8 Million Judgment in ProStar/MaxxForce Lawsuit

August 14, 2017

By Deborah Lockridge

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A jury has awarded $30.8 million to Milan Supply Chain Solutions in its suit against Navistar Inc. Photo courtesy Milan Supply Chain Solutions
A jury has awarded $30.8 million to Milan Supply Chain Solutions in its suit against Navistar Inc. Photo courtesy Milan Supply Chain Solutions

Navistar Inc. disputes allegations that it didn’t thoroughly test its MaxxForce EGR engines — allegations that surfaced in a lawsuit where a jury last week awarded $30.8 million in damages — including testimony about the engine program by former executive Jim Hebe that the company "did not test s**t".

The Tennessee jury found that Navistar committed fraud and violated the Tennessee Consumer Practice Act in connection with the sale of 243 Navistar International ProStars with MaxxForce engines to Milan Supply Chain Solutions. It awarded $10.8 million in actual damages and $20 million in punitive damages.

Tennessee-based Milan alleged that Navistar misled them, saying the truck maker failed to disclose that the MaxxForce 13L engine, which used exhaust gas recirculation to meet 2010 emissions standards rather than the selective catalytic reduction being used by other truck and engine makers, was launched with “serious known defects.”

Milan also alleged that Navistar, while touting the quality of its testing program, knew that the testing had serious flaws, was incomplete at launch, and put the trucks into customers’ hands knowing that the customers would end up becoming the de facto test fleet for Navistar’s new 2010 year model engine.

In a statement, Navistar said it is disappointed in the jury’s verdict and is evaluating its options to challenge it, noting it has successfully defended similar claims in several jurisdictions, including dismissal of claims of fraud in courts in Texas, Wisconsin, Michigan, Indiana, Alabama, and Illinois.

"At the time of the product launch, we were confident, based on this testing, that the product would perform." – Navistar

“Navistar tested the MaxxForce 13 engine consistent with industry standards,” the company said in a statement. “They were tested for 12 million miles prior to launch under rigorous conditions, in test cells and on the road. At the time of the product launch, we were confident, based on this testing, that the product would perform. All products undergo continuous improvement throughout their lifecycle. When some parts unexpectedly failed, we fixed them under warranty for our customers, including Milan Supply. We've invested a significant amount of resources standing behind our products and supporting our customers.”

Indeed, those warranty claims have dogged Navistar, being a key factor in many quarters of disappointing financial results.

EGR vs. SCR

Milan purchased the MaxxForce-powered ProStars in 2011 and 2012. The MaxxForce engine used Navistar’s go-it-alone strategy of “advanced exhaust gas recirculation” to meet EPA 2010 emissions regulations, which it used hoping to avoid the use of selective catalytic reduction (SCR) adopted by other truck and engine makers. However, Navistar was never able to get EPA approval for the MaxxForce engine after the expiration of its emissions credits, at which point it switched emissions-control technologies to SCR.

Since that time, Navistar has overhauled its management team and product lineup, moving to engines supplied by Cummins and a new Navistar A26 engine just going into production developed based on proven engine technology from new partner Volkswagen.

What would eventually turn out to be an ill-fated decision by Navistar to use Advanced EGR instead of SCR led to numerous quality problems with the engine, which resulted in hundreds of millions of dollars of warranty costs to Navistar and losses on the resale market for trucking companies like Milan.

During the trial, numerous executives testified either live or by deposition, including the aforementioned comment from Jim Hebe, former senior vice president of North American sales, who said Navistar never tested the final version of the engine before selling it to customers.

In an email to current CEO Troy Clarke, Navistar’s current Senior Vice President of Engineering Dennis Mooney quoted former Vice President of Quality Tom Cellitti (who was in charge of testing the Maxxforce engine) as saying over and over again prior to the launch to customers, “we have no field testing,” because the company only tested engineering development trucks rather than validation trucks. 

In the same email, according to plaintiff’s attorneys, Mooney admitted that customers ended up uncovering problems that Navistar would have uncovered with the Maxxforce had it been able to do more testing.  

In another email exchange between Mooney and Clarke revealed at the trial, Mooney said the management had told the board of directors in 2013 that the “physics of the EGR strategy is (sic) not sound.” None of these things were ever revealed to the public prior to trial, according to attorneys.

Navistar's MaxxForce engine
Navistar's MaxxForce engine

The jury also heard evidence that Navistar knew when it launched the engine that critical engine components had serious quality problems and a shortened life span. For instance, the EGR cooler allegedly had a life span of less than 20% of the design requirement based upon testing done before the sale of the engines to the public, according to the attorneys.

While the attorneys for the plaintiffs charged that none of this information was disclosed to customers, Jack Allen, the former chief operating officer and president of truck operations, testified for Navistar that in his opinion it was “normal business practice” for companies to not disclose to customers in advance of a sale about known defects in the products or to disclose to customers that they were buying a product that had not been fully validated or tested by the manufacturer.  

“The jury seemed shocked to hear this testimony about the corporate culture and philosophy of Navistar from one of the company’s top executives,” said Clay Miller of the Dallas law firm Miller Weisbrod, lead trial attorney for Milan, referring to Allen's testimony. Miller said he believed this played a key factor in the punitive award.

Milan and its attorneys also criticized Navistar, saying the company refused to work with the fleet to address issues and instead went the litigation route.

Navistar said it “strongly disagrees with plaintiff counsel's characterizations of Navistar's conduct. Navistar has and will continue to defend our products, our reputation in the market, and the integrity of our employees.”

Comments

  1. 1. Steve Mehal [ August 15, 2017 @ 03:39AM ]

    I bought a beautiful new International ProStar with a maxxforce engine in 2011 and from day one gave me nothing but problems. Its first maiden run with the loaded trailer started out as a disaster. As I was pulling a hill and the engine was torqued it tore out quite a few wires because they were wired too tight. Plus a turbo clamp blew off the engine. In the two-and-a-half years I own that truck 6 EGR coolers were installed at the cost of being off work for two weeks for each incident. In those two and a half years I lost over $100,000 in revenue. We maxed out every credit card we had just to live. Being an owner operator with one truck it just about put us into bankruptcy and we are still recovering to this day. No attorney wants to take this on because only one truck was involved so I guess I'm screwed! Thanks International.......

  2. 2. Brian Cunningham [ August 15, 2017 @ 07:04PM ]

    I Have A 2013 Prostar With a Maxxforce 13 it has had 7 egr coolers, 2sets of injectors egr valves 2 or more fuel pumps, used oil 5 gallons in 15000 miles before they overhauled it at 262000 miles ,no such thing as a quick fix, turbocharger, also it would die while shifting going down road, not to mention exhaust & anti-freeze fumes in the cab

  3. 3. Mike [ August 16, 2017 @ 03:19AM ]

    Take a stroll through any International dealer and see what is in the bays getting in framed and other major engine repairs. Talk to the guys that have to work on them. The MaxForce was never ready for prime time, not even close. Maybe the reason they abandoned the motor?

  4. 4. Tedexd [ August 16, 2017 @ 09:32PM ]

    Being an owner operator is much more of a gamble today than in the past. Considering the way tractors a built today. Tractors in the past were built to last. It seems todays tractors are built to fail. 300 thousand miles and out. expect to dump at least 20 thousand in repairs the first year after the warranty is done.

  5. 5. Ali sheikh [ September 11, 2017 @ 08:14AM ]

    I bought a beautiful new International ProStar with a maxxforce engine in 2012 and from first week gave me a problems. Beginning with PDF replace ,coolant, water pump, turbo and engine light its on i spend about $50.000 on it so fare I don't know how much more should I spent before runing out of business ! Thanks International for screwed my life and family.

  6. 6. Marvin wright [ October 01, 2017 @ 10:03PM ]

    Bought 3 2012 prostar maxxforce 13 in 2014.
    From day one in and out of shops all over Texas. Repair bills of 8500.00 dollars and tow bills of 1200-1500.00 these trucks have put us almost out of business. I keep thinking it will get better only to get another breakdown every other week. We have been screwed by international and the westrux dealer in fontana ca. Please don't ever buy a international again. Look and talk to other ownerop and companies before you buy one. They will all tell you they have been screwed. Also international will never help you or cover anything under warranty.
    INTERNATIONAL AND WESTRUX SUCKS!!!!!

  7. 7. Bruce [ October 23, 2017 @ 09:25PM ]

    The shame of it is that Navistar and Corporate American does not care who it harms. They think if they can defend a few cases with high priced lawyers that it make them right. In reality, Navistar does not give a crap about the individual independent owner operator that they put the screws to. Why would Navistar resell these same Maxxforce prostar Junk trucks to the consumers at their Navistar Used Truck Centers even at the present right now. They do not care who they screw. Just as long as corporate dicks like Clark make their quarterly bonuses.

  8. 8. Raymond Scott [ October 27, 2017 @ 11:41PM ]

    Let's be honest here and give credit where credit is due. Once upon a time here in the Ohio Valley, if you seen a log truck or a coal truck it was an International. Now you see a Peterbilt or Freightliner. It is a shame that corporate America has come to a point where they have no care for their consumers. If Navistar International would spend more time and resources trying to make things right with their customers, instead of fighting their customers with lawyers, then they could gain the respect of their customers again. Then they could be the same respectful viable company like they use to be before all the corporate types have hurt this company. I have a nightmare truck from International. But even to this day when I see a nice looking, long hood International truck, I get that deep old feeling in my stomach. It is a shame that modern day Navistar does not try to make right with their customers. They use lawyers to push their position. Instead try to gain the respect of old school truckers like myself again, that when they see a nice looking International truck it makes their heart flutter. What has this industry came to?

  9. 9. Raymond Scott [ October 28, 2017 @ 08:41AM ]

    Do not take my comment the wrong way. An International truck today is just as good a truck as any other brand on the road. All brands of trucks have had their issues over the last 10 years. Someday Navistar will past these bumps in the road and reclaim their lost customer confidence with a few folks like me. If I had the resources I would trade up and buy a new 2018 9900i or a Workstar series truck. I still got confidence in the truck.

 

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