PHILADELPHIA — A federal judge has granted preliminary approval of a settlement in a class action lawsuit over alleged warranty violations.
The lawsuit was initially filed in May 2017 and was amended in July 2017 to include McGowen Enterprises Inc. as the sole defendant.
The plaintiffs in the lawsuit allege that MEI violated the Magnuson-Moss Warranty Act by allegedly including an illegal tying provision in a written warranty. The case was filed in the U.S. District Court for the Eastern District of Pennsylvania.
The settlement provides class members with both injunctive and monetary relief, and MEI agreed that it will not void any class members' warranty for failing to comply with the provision. It also agreed to not include the provision in any future warranties.
Attorneys would receive up to $290,000 in fees and costs.
MEI agreed to pay each class member $30 if the class member can submit proof of one professional oil change—with any brand of motor oil—done on a vehicle that was purchased from MEI during the relevant time period.
The settlement meets the requirements for preliminary approval because it appears to be "fair, reasonable and adequate," according to the court order.
The class in the suit is all consumers in the United States who, between May 5, 2013 and Jan. 8, 2017, purchased a vehicle from Car Sense Inc., which is now MEI, and accepted the lifetime engine guarantee offered by the company.
Alison N. Leary and Timothy M. Leary claimed in their lawsuit that the warranties stated that Car Sense would cover the engine in the vehicles from oil-related mechanical failure or abnormal wear for 10 years or 300,000 miles, whichever occurred first, so long as consumers changed the motor oil in the vehicles every four months or 4,000 miles.
When the Learys took the vehicle to get an oil change, they allegedly were informed that in order to not void their warranty, they needed to have their oil changed with Castrol Motor Oil, which was approximately $40 more than an oil change with a comparable non-Castrol synthetic product.
The Learys claimed that the defendant's actions created an illegal tying arrangement by requiring them and other class members to change the motor oil every four months or 4,000 miles with only Castrol products.
U.S. District Court Judge Berle M. Schiller issued the preliminary order on April 17.