Jaikins v. Caterpillar

August 2006

Caterpillar Secures Decertification of Nationwide Class Action, Dismissal with Prejudice, and Award of Costs in $200M Lawsuit. The action was aimed at more than 5,500 Caterpillar marine engines used on high-end boats and yachts, and having an average cost of roughly $25,000 per engine. “One of the plaintiffs’ lawyers asserted that the total damages could range between $200 million and $400 million,” recalls Campbell Campbell Edwards & Conroy, adding that “they were excellent attorneys – one of the best known plaintiffs’ firms in Michigan – with a national practice, and [acting] with the assistance of a New York firm known for its mass tort and engineering work.”

At issue were four different models of engine after-coolers installed as original equipment or replacements in Caterpillar marine engines sold and used in the United States. Caterpillar had recognized a failure rate in early models that was unacceptable to its reputation, and had voluntarily come up with a newly designed replacement after-cooler. The company even offered the replacements for relevant products under warranty, as well as those on which warranties had expired.

But the plaintiffs were not satisfied. They alleged that all of the after-coolers, including the replacements would eventually fail due to an inherent design defect, causing Caterpillar’s “repair or replace” warranty to fail in its essential purpose.

Initially, it looked like the plaintiffs had a sympathetic federal court judge. U.S. District Court Judge Arthur J. Tarnow certified the class in 2007, paving the way for extensive discovery proceedings.

But less than two years later, Campbell Campbell Edwards & Conroy persuaded the judge that the dispute over each allegedly defective engine was different and would require such an individualized showing that a class proceeding and remedy was not appropriate.

“There were multiple engines and after-cooler models at issue, some had failed but most had not, and there were plaintiffs in basically every state,” Campbell Campbell Edwards & Conroy recalled. Thus, we argued to the judge that “the plaintiffs want to try this like an injury or death case, but it is a contract case about breach of warranty, and you have to decide which state’s law would control in order to go forward with a class action proceeding.”

Campbell Campbell Edwards & Conroy argued that “there was no clear manifestation of a defect constituting a breach of warranty for most of the engines, and mere testimony and allegations about future events was not enough to satisfy the plaintiffs’ legal burden.”

Not long after Campbell Campbell Edwards & Conroy arguments in pre-trial hearings, Judge Tarnow decertified the class and the plaintiffs’ lawyers withdrew from representation, leading to a dismissal with prejudice. A second group later filed a case on the same subject matter in Florida, but the judge there dismissed the action on res judicata principles.