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Caterpillar reaches $60 million settlement in class action over alleged engine defects

By Jessica Karmasek | Jul 14, 2016

CAMDEN, N.J. (Legal Newsline) - A settlement has been reached in a class action lawsuit alleging Caterpillar Inc. engines equipped with exhaust emission control systems failed to work reliably, costing owners thousands.

Judge Jerome Simandle of the U.S. District Court for the District of New Jersey, who is overseeing the case, recently signed an order preliminarily approving a settlement worth $60 million.

The plaintiffs argued the engines with the CAT Regeneration System, or CRS, failed, causing the company’s ACERT C13 and C15 on-highway diesel engines to lose horsepower and shut down, requiring Caterpillar-authorized dealer technicians to repair the engines. The plaintiffs alleged they could not effectively do so.

The ACERT engines were introduced as Caterpillar’s alternative to exhaust-gas recirculation, or EGR, to meet 2004 emissions standards.

The settlement offers payments to current and former owners and lessees of vehicles with EPA 2007 Compliant Caterpillar On Highway C13 and C15 engines manufactured in 2006, 2007, 2008 and 2009.

Specifically, class members who experienced no CRS-related repairs are eligible to receive, but not guaranteed, $500 for each subject engine.

Class members who experienced one to five qualified CRS-related repairs are eligible to receive, but not guaranteed, $5,000 per subject engine.

Those class members who experienced six or more qualified CRS-related repairs are eligible to receive, but not guaranteed, $10,000 per subject engine.

Each eligible class member also has the option -- instead of seeking a payment as set forth above -- to seek to claim losses up to a maximum of $15,000, experienced as a consequence of qualified CRS-related repairs. These losses can include but will not be limited to towing charges, rental charges and hotel charges. Proofs can include receipts, invoices, bills, etc.

All class members must file a claim in order to receive a payment.

Caterpillar has said the settlement is in the “best interest” of all parties and in the public interest.

“Because the settlement eliminates many of the individualized issues and manageability challenges that a trial of class claims would entail, Caterpillar does not oppose certification of the settlement class,” the company wrote in a recent brief.

“Caterpillar would like to afford closure and compensation to its loyal customers who submit approved claims.”

Still, the company denies the allegations in the lawsuit, saying it designed the engines at issue to meet the “stringent” soot and NOX emission-control regulations for heavy duty diesel engines.

“After extensive research Caterpillar settled on a technology called the Caterpillar Regeneration System (‘CRS’), which utilized an aftertreatment regeneration device (‘ARD’) to vaporize soot captured in the Diesel Particulate Filter (‘DPF’) from the exhaust gas,” the company wrote in its brief. “Caterpillar’s goal was to produce an emission control system that would meet the EPA emission standards and at the same time protect the complex engine parts from contamination.”

The company continued, “Caterpillar’s engines are well designed and it honored its warranty commitments to plaintiffs and to the putative class when issues arose. The EPA thoroughly reviewed the engineering of the engines and certified the design of the engines’ emissions systems. Caterpillar remains convinced of its position on the merits.”

But, simply put, further litigation would be too risky and costly for both sides, Caterpillar said.

“Caterpillar thus endorses the settlement class as a realistic resolution of this class action,” its brief states.

According to the settlement information website, class counsel plans to request up to nearly 34 percent of the value of the settlement fund for attorneys’ fees plus reimbursement of reasonable expenses, or $20.4 million.

However, the court will decide the amount of fees and expenses to award.

Class counsel includes attorneys with New Jersey law firms Shepherd Finkelman Miller & Shah LLP and Carella Byrne Cecchi Olstein Brody & Agnello PC, Illinois firm Quantum Legal LLC and prominent plaintiffs firm Cohen Milstein Sellers & Toll PLLC.

Aug. 6 is the deadline to exclude yourself from the settlement; Aug. 21 is the deadline to object to the settlement. The fairness hearing is set for 10 a.m. Sept. 20.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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