SEC sues Navistar in attempt to make it release allegedly improperly redacted, withheld documents

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Commercial Carrier Journal (CCJ) / March 18, 2015

The Securities and Exchange Commission filed in December a lawsuit against Navistar International Corp. claiming the truck and engine maker improperly redacted and withheld documents the Commission attempted to subpoena.

The subpoenas are part of an SEC investigation into whether Navistar violated federal securities laws “by making false or misleading statements or material omissions” regarding its ability to obtain EPA emissions certification on its MaxxForce engine line, according to court documents filed in January.

Though Navistar has released thousands of documents so far, it has either redacted or withheld thousands of others, the SEC claims in its filings. Navistar says the documents fall under attorney-client privilege and therefore are protected from subpoena.

The SEC, however, says many of the documents are not protected by attorney-client privilege and therefore should be produced.

Its lawsuit against the company asks the U.S. District Court in Illinois that’s handling the case to conduct an in-camera (private) review of the documents to determine whether Navistar’s claims are valid.

If invalid, the SEC says, the court should order Navistar to produce the documents unredacted.

Navistar has been facing legal heat in recent years over its 2010-2012 attempts to meet federal emissions standards via EGR only. All other truck makers opted to use the SCR exhaust aftertreatment-based method.

In addition to the SEC investigation, the company has been sued by dozens of trucking companies alleging it knew that its 2008-2013 model MaxxForce engines had defects. Those defects, the lawsuits allege, were concealed from buyers. Navistar, meanwhile, marketed the engines as more reliable than competitors, the lawsuits claim. A federal judge consolidated all of those lawsuits in December.

Navistar has also been sued by investors who claim Navistar and former executives Dan Ustian (former CEO) and Andrew Cederoth (former CFO) artificially inflated stock prices by withholding information from shareholders and misleading them as to the company’s financial outlook. Those suits were filed in spring 2013.

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Court consolidates suits against Navistar’s MaxxForce engines, transfers them to Illinois

Commercial Carrier Journal (CCJ) / December 22, 2015

Per a request made in October, Navistar International has been granted its motion to consolidate the more than two dozen lawsuits against it and its EGR-only engines, and proceedings in the bundled suits has been transferred to the Northern District of Illinois.

Fourteen lawsuits were consolidated under the ruling, made Dec. 17 by a five-judge panel on multidistrict litigation.

All 14 suits, the panel rules, involve “common questions of fact” and that the Illinois district “will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.”

The suits against Navistar allege that the truck and engine maker knew that its 2008-2013 model MaxxForce engines had defects, yet the company concealed those defects form buyers and knowingly sold and marketed the products as otherwise, the suits allege.

In a filing Oct. 3, Navistar asked the court to consolidate the suits and transfer them to Illinois, where Navistar is located. The company said then that it was facing 15 lawsuits in eight federal districts and 11 suits in state courts. It also said it had received notices of intent to sue from 21 other parties.

The consolidation order issued last week only mentions the 15 federal suits.

The one case not consolidated with the other — a suit brought by Alabama-based Ross Neely Systems — has “reached an advanced state,” the court concludes, and the trial is scheduled to begin in February. Its inclusion in the centralization of the cases “will unnecessarily delay the resolution of that action,” the panel wrote in its order.

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Lawsuits allege Navistar execs violated SEC, state laws

Commercial Carrier Journal (CCJ) / April 9, 2015

The recent lawsuits brought against truck and engine manufacturer Navistar International Corp. allege that former Navistar CEO Dan Ustian and current CFO Andrew Cederoth violated provisions of the Securities Exchange Act of 1934, along with a few state laws, says a report on CCJ sister site Successful Dealer, who spoke with attorney Willie Briscoe — one of the attorneys bringing claims against the company.

As reported Monday, the multiple class action suits brought against Navistar are on behalf of shareholders who bought Navistar common stock between Nov. 3, 2010, and Aug. 1, 2012.

One case in particular is being filed on behalf of Construction Workers Pension Trust Fund Lake-County and Vicinity — and others like them — who bought 6,709 shares of Navistar stock in the time period for $246,000 and sold them for $165,000 when the company’s stock tanked in the wake of discontinuing its MaxxForce 15 engine and dropping EGR-based emissions tech in favor of SCR engines equipped with Cummins aftertreatment systems.

According to the lawsuits, Ustian and Cederoth both sold their personal shares of the company’s stock when it was at record highs. Ustian sold 55,000 shares for nearly $3.9 million, and Cederoth sold 9,500 shares for $642,962.

As Monday’s report notes, the lawsuits allege Navistar artificially inflated its stock price by withholding information from shareholders — such as that its engines were not meeting EPA standards — and misleading shareholders as to where the company was headed financially.