Caterpillar Faces Class Action
marine engine manufacturer reworks the design of an essential
component of its cooling system eight times in 10 years,
is this merely an exercise in “quality improvement” or
does it mean the component, in this case the aftercooler,
question is central to a class action lawsuit filed in January against
marine engine giant Caterpillar on behalf of owners of 1996 and newer
C-12 and 3196 engines. Included are an unspecified number of other
Caterpillar turbocharged marine diesel engine models. Over the years,
these units have been equipped with eight different aftercooler designs
all of which, the plaintiffs say, crack, leak water and cause corrosion
of internal engine parts.
Over 7,000 of the engines in question have been produced
since 1996 and lawyers say damages could exceed $100 million,
potentially making this one of the largest class action lawsuits
involving a recreational boating product.
Turbochargers compress air to increase efficiency and power
output. Aftercoolers are radiators between the turbocharger
and the engine that act to reduce the temperature of the compressed
air to prevent premature fuel ignition. Records show that Caterpillar
developed designs for the components and contracted with at
least one aftercooler manufacturer to produce them to their
The lawsuit also alleges that Caterpillar failed to live
up to its warranty obligations for engines equipped with the
aftercoolers and that the warranty itself fails to protect
consumers who own the engines.
“This case is not just about [one boat owner], but
rather about thousands of individuals who have been harmed
by the actions of Caterpillar, thousands of individuals who
can best be represented through the class action,” plaintiff’s
attorney David H. Fink told the court.
Caterpillar denies that the aftercoolers are defective and
said it intends to appeal the decision of the U.S. District
judge in Michigan who certified the class action.
“We contest the allegations in this case and we have
requested an appeal of the [class] certification decision,” said
Anne Leanos, a spokesperson for Caterpillar. “We will
continue to defend the case vigorously.”
The lawsuit was filed by BoatU.S. member and Detroit construction
company owner James Jaikins, who states that a defective aftercooler
on his C-12 engine caused his 2003 Riviera 48 motoryacht to
break down in the Atlantic Ocean about 200 miles off Florida.
The company contends that Jaikins cannot represent owners
of engines equipped with aftercooler versions different from
the ones installed on his boat. One of the requirements of
a class action is that the plaintiff must show his claims are
typical of the claims of the entire class.
for the boat owner counter that the aftercoolers on Jaikins’s engines are part of an ongoing effort by
Caterpillar to correct an endemic flaw. In other words, Jaikins’s
engine breakdowns are part of a repair continuum, rather than
unique to him.
Caterpillar gave Jaikins one 3196 engine and two C-12 models
at no cost, he contends that all three contain defective
aftercoolers and he has no guarantee that failures of the
same type won’t
states that his engines are not working properly now and,
even if they were, Fink says the boat owner “is
tremendously out-of-pocket for a lot of other damages and issues.”
Caterpillar’s attorneys blame the failures on the boat
owner, saying he overloaded his engines. In a statement to
the court, they argued that Jaikins was operating his “engines
at a significantly overloaded condition. And by doing that,
he has been damaging the engines and causing wear on the parts.”
Attorneys for Caterpillar acknowledge in court documents
that their marine engines have been fitted with eight different
aftercooler designs. But, the company denies any of these have
Caterpillar changed the design of the aftercooler eight times
since 1996, John A.K. Grunert, the engine maker’s
attorney, told the court the changes were “merely improvements
in the aftercooler[s] because Caterpillar was dissatisfied
with their useful lives.” The design changes were “quality
improvements,” he said.
documents show that the first aftercooler iteration (part
138-2571) was in production from September 1996 to May 1998.
Two versions of the second aftercooler (part 161-9898-1 and
part 161-9898-2) were in production from May 1998 to May
2001. The third aftercooler (part 210-5631) was in production
from May 2001 to January 2002. The aftercooler currently
in use (part 216-5147) has had four versions to date. This
is the model installed on Jaikins’s engines.
The manufacturer of one of the aftercooler iterations disagreed
with Caterpillar regarding its adequacy for its intended use,
according to court documents.
In a memo
the aftercooler manufacturer sent to Caterpillar that was
filed with the court, they said they were “not
convinced that this new aftercooler is going to work,” Fink
told the court. There were multiple concerns. Reading from
the document, he told the court, “The change to the containment
unit [i.e., the aftercooler’s shell] may have a negative
effect with respect to vibration and would induce stress.” The
document refers to “inadequate evaluation” and
states, “In addition, we are concerned with the evidence
we have seen that indicates the tubes on some of the failed
units were not receiving sufficient water during operation,” Fink
told the court.
truth is that those first three iterations of aftercoolers
did not have the durability or robustness that Caterpillar
“There were more of them failing at an earlier time
than Caterpillar liked,” Grunert told the court, “and
so Caterpillar wanted to improve them, but they were not defective
across the board.”
aftercooler problem has been “dock
talk” for years and a hot topic on Web sites like boatdiesel.com.
Jaikins and dozens of other boat owners — including 21
who reported similar failures to BoatU.S. — say that
the aftercoolers cause engines to lose power, overheat, emit
clouds of heavy soot and, in Jaikins’ case, spray hot
engine oil inside the boat.
“The whole engine is a catastrophic bomb,” Jaikins
In addition to the C-12 and 3196 models named in the lawsuit,
BoatU.S. records include reports of aftercooler and related
failures from owners of 1996 and newer Caterpillar 3116, 3126
and 3208 engines.
Boat owners also say the devices cannot withstand the vibration
that occurs when these particular Caterpillar engines are operating.
Some, including Jaikins, say the vibration is strong enough
to cause engine mounting bolts to shear.
records show that Caterpillar’s response to
consumer complaints ranged from blaming breakdowns on owner
misuse or inadequate maintenance to providing replacement engines
at reduced or no cost.
according to court documents, the company has handled at
least 4,400 warranty claims related to aftercoolers on an
estimated 4,600 model 3196 engines built since 1996. Another
Caterpillar document describes “concern that
failure rate is near 80% to 90% on about 4,000 engines” and
recommends, “Rework entire field population.”
argues the high number of warranty claims is a result of
Caterpillar asking dealers to invite owners to bring their
yachts in for inspection “even if they weren’t
plaintiffs call a “secret warranty” campaign,
Caterpillar calls a “product support program.”
When questioned by the judge, however, Grunert said that
letters were never sent directly to owners.
“Caterpillar routinely issues letters to the dealers
because it’s only the dealer who knows who the owners
are,” Grunert said. “Caterpillar’s contracts
with its dealers require them to disseminate these types of
obtained copies of one service bulletin and a “product
support” letter sent to Caterpillar dealers describing
necessary repairs to correct aftercooler problems. It does
not include instructions for dealers to actively contact engine
laws require boat manufacturers to make a “reasonable
effort” to maintain records of first owners, but there
is no requirement to track subsequent owners. Initiating a
safety defect recall campaign involving a diesel engine would
require proof that the power plant contains a defect that creates
a “substantial risk of personal injury,” which
is generally defined as a defect that occurs without warning
and causes traumatic injury, property damage or fatality.
related to the class action show that no other lawsuits have
been filed against Caterpillar. The company has, however,
reached “pre-suit” settlements
in 13 instances to head off court cases. At least nine of
these settlements were secret or confidential. Settlements
where the records are open include engine replacements costing
boat owners anywhere from $12,000 to $25,000 per engine.
The engines retail for $50,000 to $60,000 each.
Owners of 1996 and newer Caterpillar 3196 and C-12 engines,
or other models equipped with the specified aftercoolers, are
automatically included in the class action. That means that
the owners will share equally in whatever settlement might
be reached if the case goes to trial.
Participation in the class action means that plaintiffs are
not permitted to file individual lawsuits if they are dissatisfied
with the outcome of the case. Engine owners who do not want
to participate must opt out of the class in writing.
information about the lawsuit, engine owners can contact
plaintiffs’ attorney H. Nathan Fink, Fink & Moss
PC, 40900 Woodward Ave., Ste. 111, Bloomfield Hills, MI 48304,
Caterpillar owners who have had problems with their engines
should report their experiences to the BoatU.S. Consumer Protection
Copyright BoatU.S. Magazine, May 2007