Caterpillar to Pay $60 Million to Settle Engine Defect Claims

Daniel Acker/Bloomberg News

Caterpillar Inc. has agreed to pay $60 million to settle claims about defects in its C13 and C15 engines, which were taken off the market after widespread reports by fleets of shutdowns and sudden loss of horsepower.

Caterpillar, which made the engines to meet 2007 emissions regulations, announced the settlement with plaintiffs representing truck and bus companies. The plaintiffs brought the suit in U.S. District Court in New Jersey.

The issues with the engines’ emissions control system, known as the CAT Regeneration System, include whether they could be repaired. Litigation has been in progress for at least five years. The agreement covers engines made between 2006 and 2009.

"Caterpillar thus endorses the settlement class as a realistic resolution of this class action," the company said in its motion to approve the settlement. "Given the uncertainties and costs of continuing litigation, the proposed settlement is the best way to end the uncertainty and delay, and most importantly, will ensure fair compensation to Caterpillar customers who may not have received expected value from their product."

The settlement offers a range of compensation. The maximum is estimated at $10,000 for those who had to have the engines repaired six or more times. Those with one to five repairs stand to receive $5,000. The minimum is $500 for those who didn't have the engines repaired but suffered lost residual value.

The actual amount of the settlements in each of three categories depends on how many plaintiffs accept the settlement, according to a statement.

Fleet owners or those involved in leasing transactions have the option not to accept the settlement and seek to continue their cases with the potential to receive a maximum of $15,000 if one or more repairs was made. Those who choose not to accept the settlement must opt out by Aug. 6, and those who choose to object to it face an Aug. 21 deadline to take that step.