Since a 2001 Porsche Boxster S resides in the “Legal Files” garage, this letter from noted Porsche authority Pete Zimmermann caught my attention:
Dear Legal Files:
It appears that Porsche has a problem. A really big problem. All because of a bearing, to be exact, an IMS (Intermediate Shaft) bearing. That bearing is an internal engine part, and it fails. Repair cost can range between $3,000 and $20,000-plus.
Unlike past engineering mistakes, Porsche ignored the IMS bearing problem for far too long. Too many engines have failed, or cost owners dearly. Porsche did eventually acknowledge the problem, but not before a class-action lawsuit, covering cars built between 1/1/2001 and 12/31/2005, was filed.
It appears that, for whatever reason, Porsche underestimated the severity of the IMS bearing problem, or underestimated the resources, disappointment and resolve of the owners of failed models. It’s been said that perception is everything. Reputation is also everything. The two are now on a collision course; where the pieces fall is anybody’s guess. That said, the ball is in Porsche’s court.
Zimmermann obviously has strong feelings about the subject, but there is no question that he knows a lot about Porsches. Zimmermann was the longtime owner of the Red Line Porsche repair shop in California and is the author of The Used 911 Story.
Zimmermann explains that the crankshaft drives the intermediate shaft, which in turn drives the camshafts via timing chains. Several of the recent water-cooled Porsches used a ball-bearing-style bearing, which has been the problem. When the IMS bearing fails, it can be disastrous. As the bearing falls apart, metal bits travel throughout the engine. As it continues to fail, the cam timing can go off and allow the pistons to hit the open valves. In either case, the fix is often a replacement engine.
The lawsuit, “Eisen v. Porsche Cars North America Inc.,” was filed by Glendale, CA, attorney Stephen M. Harris. It became a class action covering the IMS bearing claims of all owners of certain Porsches — most 2001–05 Boxsters and most 2001–05 911s other than the Turbos, GT2s and GT3s. The class action covers a total of 57,929 Porsches.
Harris explained to “Legal Files” that the IMS bearing in these cars was simply “not robust enough.” He said the failure rate for the IMS bearing was “around 10%.” He also pointed out that Porsche repaired approximately 3,100 of these cars at a cost of over $20 million. The lawsuit was filed to pursue the claims of the remaining affected owners.
Since the settlement was reached, more than 3,000 claims have been processed. Settlement payments are currently in the $3.4 million range.
The thrust of the settlement was essentially to lengthen the warranty period on the IMS bearing. Porsche new-car warranties are typically four years/50,000 miles, whichever comes first. In addition, used cars purchased through the Porsche Approved Certified Pre-Owned Program were given additional warranties. Basically, the settlement extends the warranty on the IMS bearing to 10 years/130,000 miles.
Complete information can be obtained by visiting the settlement website, www.imsporschesettlement.com. But generally, the compensation varies depending upon the owner’s status and the miles driven, with no compensation for cars more than 10 years old.
For cars purchased new, 100% reimbursement is afforded to cars with up to 50,000 miles, matching the original warranty. At 50,001 miles, the compensation reduces to 90%, declining 10% for each 10,000 miles until settling at 40% for miles between 100,000 and 130,000. No compensation is allowed for failures after 130,000 miles.
The compensation is the applicable percentage of your out-of-pocket costs for the repair of damage following an IMS bearing failure. There is no compensation without a failure, and no compensation is paid to those who replaced the bearings before they failed.
Used cars purchased under the Porsche Approved Certified Pre-Owned Program are treated a little differently. The compensation stays at 100% until 100,000 miles, then falls to 25%. Owners who bought their used cars from other sources don’t fare as well. Their reimbursement percentage is 25% at all mileage ranges up to 130,000.
What are class members’ choices?
If you owned one of the covered vehicles, you would have been sent a notice that explained your alternatives. First off, you were given the choice whether to remain a member of the class or to opt out. If you wanted to opt out, you had to affirmatively say so.
If you opted out, you would not be eligible to participate in the settlement. However, that left you free to pursue all of your legal claims on your own, in any way that you desired.
If you did not affirmatively opt out, you automatically remained a member of the class. That means that your legal claims were settled along with those of all class members. You can receive the compensation provided in the settlement, but nothing more. You are no longer able to sue Porsche.
Class members who had suffered an IMS bearing failure on or before July 17, 2013, were required to file a claim by October 15, 2013. If you were in that group and did not file the claim, then you missed the boat. You can’t file a claim now, and you can’t sue by yourself.
Class members who had not yet suffered an IMS bearing failure did not have to file anything. Rather, they simply wait and see what happens. If a failure occurs within the 10-year/130,000-mile time frame, they can file a claim when the failure occurs.
If you own one of these cars — especially one that was not covered by the class action — you should pay attention and develop your own strategy.
As Harris points out, the failure rate is about 10%. That means that about 90% of these cars will never experience an IMS bearing failure. You can choose to play those odds and just do nothing. However, if you end up in the 10% group, the repair could be a $20,000-plus engine replacement, which could exceed the value of your car.
Zimmermann recommends prophylactic measures. Shorten your oil change intervals to 5,000 miles or one year, whichever comes first. Change the oil filter at each oil change. And, each time, have the old filter cut open and examined for metal fragments. If any are found, change the IMS bearing right away. The same thing can be done with a laboratory examination of the used oil.
If the time comes to replace the clutch, or to rebuild the automatic transmission, much of the IMS bearing replacement work will be done. That is the time to finish the job. The most popular fix is to install a ceramic IMS bearing manufactured by LN Engineering. The parts cost is about $700, and the additional labor is about that much again. The ceramic bearings seem to do the trick, but Zimmermann points out that we don’t have enough data about their durability. If the tranny comes out again, he recommends replacing the ceramic bearing as well just to be safe.
Zimmermann points out that there are two troublesome groups: One is the cars manufactured before 2001, which were not included in the class action. Owners of those cars are on their own.
The other is the mid-2005 through 2009 group. Porsche modified the IMS bearing in mid-2005, which is why those cars were not included in the class action. The modifications seem to have done the trick, but we haven’t had enough time yet to know for sure. If your car is in that model range, it would be prudent to take the strategic steps described above.
In 2009, Porsche eliminated the IMS and its bearings altogether, so cars built after that move are not affected at all.
Is it a good deal?
Class actions are often criticized on the basis that they do more for the lawyers than the class members. In fact, the lawyers here are requesting compensation of just under $1 million.
However, the system seems to have worked pretty well here. Porsche was unwilling to fix all failures, and an affected owner would have been hard-pressed to incur the substantial litigation expenses — lawyers as well as expert witnesses — needed to prove liability. The class action was the only economical way to resolve all of these claims.
Some have criticized the mileage proration, but that has to be viewed as a compromise. All failures that occurred within the warranty period are 100% covered. The settlement extends the warranty period considerably, albeit on a prorated basis. That should be seen as a reasonable compromise.
Many have criticized the lack of any compensation for those who solved the problem by replacing the IMS bearing before it could fail. Their claims are sympathetic, but we have to bear in mind that this is a warranty issue. If the IMS bearing was replaced as “preventive maintenance,” the damage was avoided and no warranty issue arose. That makes it hard to force compensation from the manufacturer. Keep in mind that the failure rate has been about 10%. That means that about 90% of the preventive-maintenance IMS bearing replacements were unnecessary.
One last angle — Harris points out that the lawsuit caused 57,929 notices to be sent to Porsche owners, many of whom knew nothing about the IMS bearing risks. Making them aware of the potential problem, and affording them the opportunity to deal with it as they saw fit, carried substantial added value.
“Legal Files” would rate the settlement as a pretty good deal. It’s not perfect, but it is a reasonable resolution, strikes a pretty fair balance, and lets us move on. That’s about all you can ever expect from a settlement of any legal claim. ♦
John Draneas is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.