| by |
Mike Busch |
An edited version of this article also appears in THE AVIATION CONSUMER.
|
 |
|
|
Complete Coverage from AVweb
(Links to Related Articles) |
|
Primary Coverage
Supplemental Articles
|
|
|
|
|
|
|
Late last year, Mobil Corporation
settled
a class-action lawsuit brought by Cessna T210 owner Malvern Gross
on behalf of owners of Teledyne Continental engines damaged by
the use of Mobil's AV-1 synthetic oil. In the hard-fought and
complex settlement, Mobil agreed to pay for inspection and repair
of TCM 360/470/520/550 engines that used AV-1 oil for more than
150 hours.
It now appears that, in at least some cases, Mobil's AV-1 Program
office in Atlanta (which was set up specifically to deal with
claims under this settlement) is giving owners of AV-1 engines
the run-around in an attempt to minimize its payout under the
settlement.
As this article is being written with only one week remaining
before the March 1st deadline for owners to file claims
with Mobil, only about 500 claims had been filed. Since the plaintiffs
had estimated the total number of claims under the settlement
to be about 2,000 you'd think Mobil would be rejoicing in the
knowledge that they're getting off easy. But at least some of
the folks working in the AV-1 Program office sure aren't acting
that way.
Settlement and Protocol
The keystone of the settlement is a complex 19-page document entitled
"Mobil AV-1 Engine Inspection and Repair
Protocol."
The first section of this document defines "Qualified AV-1
Engines" as TCM 360/470/520/550 engines in which Mobil AV-1
oil was used for more than 150 hours.
The rest of the document describes specific inspection procedures
for determining whether the engine has been damaged, together
with certain repairs that are authorized if the engine flunks
the inspection. Under the settlement, Mobil agreed to pay for
the inspections and the repairs called for by the Protocol. Mobil
also agreed to reimburse owners for certain prior repairs (generally,
cylinder replacement done prior to the settlement) and for loss-of-use.
Any disputes that may arise between claimants and Mobil in the
processing of claims are to be resolved by one six "Special
Masters" appointed by the Court. These Special Masters are
designated A&P/IA mechanics who were jointly agreed upon Mobil
and the plaintiffs, and whose job it is to provide unbiased arbitration
of disputes and to decide what Mobil must pay for and what the
owner must pay for. The Special Masters serve as agents of the
Court, and their decisions are final.
Section Eight
One of the most important and hard-fought parts of the settlement
is embodied in Section VIII of the Protocol. It deals with cases
where the owner's mechanic believes that an inspection or repair
is called for beyond the scope of items specifically addressed
in the Protocol.
During the settlement negotiations, Mobil was adamant that it
would not pay for out-of-protocol inspections or repairs. The
plaintiffs were equally adamant that no formal written protocol,
no matter how complex, could possibly cover all bases. The plaintiffs
insisted that the judgment of the owner's mechanic as to the airworthiness
of the engine was at least as important as any formal written
protocol. The negotiations very nearly broke down over this point.
Ironically, Mal Gross (who brought the lawsuit) was convinced
that the bottom-end damage found in the engine of his T210 would
not have been uncovered under the strict terms of the inspections
called for by the Protocol.
Ultimately, Mobil — who clearly didn't want this case to go to
trial — relented and agreed to Section VIII of the Protocol. This
section provides that an inspecting mechanic who feels that further
inspection or repair is necessary beyond what is called for in
the Protocol may submit a written recommendation to Mobil. Mobil
will then provide a representative who may meet with the mechanic,
inspect the engine, and attempt to reach agreement with the mechanic
on what should be done. If they can't agree, then the claimant
may escalate the recommendation to the Special Master for his
review. The Special Master will then decide whether the recommended
inspection or repair should be paid for by Mobil, the claimant,
or may apportion the cost between the two.
Although Mobil agreed to include Section VIII in the Protocol,
it's starting to look as if the Mobil AV-1 Project office is now
trying to pretend it doesn't exist.
Randy Kerr's Experience
Randy Kerr lives in Salt Lake City where he sells and services
boats. He owns a Cessna 340 twin, N383DQ, powered by a pair of
TCM TSIO-520-N engines. The engines were majored in 1989, run
on Aeroshell 15W-50 for about 200 hours, and then switched to
Mobil AV-1 in early 1990. Shortly after Mobil withdrew AV-1 from
the market in the summer of 1994, the engines were put back on
Aeroshell 15W-50 at about 650 hours. They've now accumulated about
750 hours since overhaul.
Within days of the November 28 final settlement of the class-action
suit, Kerr filed a claim form with the Mobil AV-1 Project office.
On December 6th, he received a letter confirming that his engines
were both "Qualified AV-1 Engines" and that his mechanic,
George Grupe, Director of Maintenance for Keystone Aviation in
Salt Lake City, was authorized to proceed with the first two steps
of the Protocol: a propeller inspection and a top-end inspection.
Keystone pulled the props and governors from Kerr's engines and
found them to be heavily contaminated with sludge. Grupe was alarmed
to find that the sludge had broken up into small, hard pieces
that he believed could migrate through the oil system and clog
critical oil passages. Grupe recommended to Kerr that the engines
be removed, inspected, and cleaned. On December 8th, Kerr phoned
his Mobil AV-1 Program representative Danny Branham, described
what was found and what his mechanic recommended, and asked that
Mobil send a representative to look at the engine and discuss
the matter with Grupe. Branham refused.
Unsafe Condition
On December 11th, Grupe phoned Branham and followed up by FAX,
describing the sludge and his concerns about contamination of
the oil system. Grupe stated in his letter that some of the pieces
of sludge "are large enough to block oil galleys and oil
cooler core tubes, which obviously would lead to internal engine
disintegration," and further stated that he "would not
return this aircraft to service without a thorough investigation
as to the extent of existing or potential damage created by this
problem." In the same letter, Grupe reported the results
of the compression and crankcase pressure tests, including the
fact that the #5 cylinder on the right engine showed compression
of 51/80.
Branham requested that Grupe send pictures of the sludge that
was found. Grupe indicated that he'd have to hire a professional
photographer, and requested that Mobil send a representative instead.
Branham denied this request, so Grupe hired a photographer and
had the photographs made.
On December 18th, Grupe sent the photographs to Branham, together
with another letter emphasizing how serious he believed the sludge
problem to be in Kerr's engines. He also advised Mobil that he
had contact the Salt Lake FSDO and asked them to review the situation,
and that he was preparing an FAA Malfunction/Defect Report "in
order to alert the industry to the hazard associated with this
unsafe condition."
The next day, Kerr telephoned Branham to again ask for authorization
to remove and disassemble the engines, as Grupe insisted was necessary,
and also to send the props and governors out to be de-sludged.
Branham refused, and Kerr asked that Branham put the reasons for
his refusal in writing. Branham wrote Kerr on December 21st, denying
the request to remove and disassemble the engines, but authorizing
the props and governors to be sent out for de-sludging (but no
other repairs).
First Look Inside
In the meantime, Grupe and Kerr decided to pull the #5 cylinder
on the right engine, despite the fact that Mobil did not authorize
this. Grupe found that the cylinder was worn to service limits,
the choke was gone, the oil control ring was heavily fouled with
sludge, and the connecting rod bearing exhibited abnormal wear
and pitting. In addition, a large piece of sludge was found about
ready to separate from the inside of the piston and fall into
the oil pan; Grupe estimated it was large enough to cover approximately
20% of the oil pickup screen.
Grupe decided to have another set of eyes look at this, so he
called in Bob Despain of Precision Air Power (a Salt Lake City
overhaul shop) to have a look. Despain concluded that the rod
bearings had the appearance of an engine "at TBO", the
rocker arms were worn and unserviceable, the cylinder bore was
worn to service limits, the choke was gone, the oil control ring
was collapsed from sludge, and the inside of the piston was coated
with heavy sludge. All this information was sent to Mobil's Branham
on January 4th, and also to the local FSDO.
On January 13th, Branham sent a letter authorizing (after the
fact) removal and inspection of the #5 cylinder on the right engine.
The letter specifically disallowed removal of any of the other
11 cylinders, and again refused Grupe's request to remove and
disassemble the engines. The letter further stated that Mobil
had forwarded the sludge samples, photographs, letters, and reports
to Mobil's expert consulting engineer, Les Waters, and that it
was Waters' opinion that "the engine components do not show
any undue wear that is caused by AV-1." Mobil once again
declined to send a representative to Salt Lake City.
Going Over Mobil's Head
By now, it was apparent to both Kerr and Grupe that Mobil had
no intention of sending a representative to inspect the engine
and attempt to reach a consensus on what should be done, as provided
for in Section VIII of the Protocol. So on January 16th, Kerr
wrote to Branham to say that he wished to exercise his right to
escalate the matter to a Special Master for resolution. Branham
indicated that Kerr's case would be assigned to Special Master
Brian Kotso in Carefree, Arizona, and that Mobil would send the
entire file on Kerr's claim to Kotso by Federal Express. But a
week passed and this had not been done.
On January 25th, Branham called Kerr and asked if Kerr would agree
to hold off on the Special Master process if Mobil sent their
expert Les Waters to inspect Kerr's engines. Kerr was furious.
From his point of view, Mobil had dragged out the dialog for more
than seven weeks, repeatedly refused to send a representative
each time Kerr and Grupe asked for one, and now proposed to send
Waters who had already made up his mind that Kerr's engines had
not been damaged by AV-1. Kerr was fed up, and told Branham he
insisted that the matter be sent to Special Master Brian Kotso,
who Kerr believed was at least a neutral party.
Two days later, Mobil finally forwarded the Kerr file to Brian
Kotso, accompanied by a letter from Mobil AV-1 Program Director
Ron Richards. In that letter, Richards urged Kotso to rule that
Kerr must pay for any inspection or repair outside the strict
terms of the Protocol, and stressed that Kerr's engines did not
qualify for a teardown inspection under the Protocol. Richards
indicated that the Protocol was the result of a long and difficult
negotiation between Mobil and the plaintiffs, and suggested that
approval of any out-of-protocol inspection or repair would be
a breach of the Special Master's duty to the Court.
Teardown Inspection
On February 1st, a conference call was held between Kotso, Kerr,
Grupe, Branham and Richards. The call resulted in a decision to
pull the engines and send them to Western Skyways in Montrose,
Colorado, for a teardown inspection. The teardown is to be witnessed
by Mobil's expert and a plaintiff expert,
and both will submit reports to Special Master
Kotso indicating what bottom-end damage was found and whether
it was attributable to AV-1. Kotso will then make a decision
on how to apportion financial responsibility between Kerr and
Mobil.
The following day, Kerr wrote to Kotso saying that he wanted to
make sure that the teardown inspection performed by Western Skyways
would include removal and inspection of the other 11 cylinders.
Branham followed up with another letter to Kotso on February 8th,
stating that Mobil would not agree to an inspection of the other
11 cylinders, and that the only cylinder that qualified for inspection
and replacement under the Protocol was the right engine's #5 that
had already been pulled and inspected. Branham's letter once again
stated that Mobil believed Kotso was obligated to stick strictly
with the terms of the Protocol and to deny any recommendation
for out-of-protocol inspection or repair.
On February 14th, another conference call was held between Branham,
Kerr, and Kotso. They agreed to allow Western Skyways to inspect
the remaining 11 cylinders as deemed necessary to determine their
airworthiness. No promises were made about who would pay for any
necessary cylinder repairs-Kotso will review the reports from
the experts representing both sides and make his determination
of how financial responsibility will be apportioned between Mobil
and Kerr.
That's where things stand as this article is being written. The
engines have been removed and shipped to Western Skyways, with
teardown scheduled for February 26th. Kerr has no assurance at
this point that Mobil will pay for anything. Mobil still contends
that it has no obligation to pay for inspection or repair of Kerr's
other 11 cylinders, and the opinion of Mobil's experts with regard
to whether there is any bottom-end damage attributable to AV-1
is already a foregone conclusion.
Kerr has already lost two and a half months and will now clearly
lose one or two more. The engines are going to be torn down, and
realistically Kerr has little choice at this point but to have
Western Skyways overhaul them. Kerr hopes that Kotso will rule
that Mobil should bear partial responsibility, but he's not holding
his breath.
Mobil's Response?
In the interests of journalistic fairness and because of our desire
to tell both sides of the story, we submitted a pre-publication
draft of this article to the Mobil AV-1 Program office in Atlanta,
and asked them for Mobil's response. They forwarded our request
to Los Angeles attorney James W. Hunt of Mendes & Mount, who
represented Mobil in the class action litigation. Hunt sent us
a lengthy, lawyer-like response (which
we've reprinted verbatim at the conclusion of this article) but
asked us to make it clear that the remarks were his alone, not
Mobil's.
Hunt's response is interesting, particularly where it discusses
all of the technical information that was uncovered during the
course of the litigation about what sort of engine damage was
and was not suffered by Mobil AV-1 engines. From the outset of
the lawsuit, we've consistently said that we felt the threat of
in-flight failure and the likelihood of bearing damage due to
AV-1 was greatly overblown by the paintiffs (see our prior articles "Mobil AV-1 Under Attack" and
"Mobil AV-1 Class-Action Settlement"),
and Hunt indidates that substantial evidence now exists to demonstrate
this. Unfortunately, none of the information was made public and
available to owners like Kerr or mechanics like Grupe. If it had
been, it's possible that the Kerr claim might have been settled
amicably without the need for costly teardown or escalation to
the Special Master.
Nevertheless, Hunt's closing comments seem to echo Mobil's view
that owners or mechanics who attempt to exercise their rights
under Protocol Section VIII are simply trying to obtain additional
compensation beyond what they deserve.
Our Opinion
After studying the entire file in the Randy Kerr case, we believe
that the posture of the Mobil AV-1 Program office has been unjustified,
and goes way beyond the bounds of prudent cost-control measures.
Mobil seems absolutely determined to stick with the strictest
possible interpretation of the Protocol, and to act as if Section
VIII simply does not exist.
Mobil's representatives seem uninterested in the issues of airworthiness,
safety, and fairness. We're at a loss to understand their unwillingness
to authorize inspection of Kerr's 11 other cylinders after one
has already been clearly shown to have been trashed by AV-1. And
the letters sent by Mobil to Special Master Brian Kotso demanding
that he disallow any out-of-protocol inspection or repair seem
entirely inappropriate — it is the Court's role to instruct the
Special Masters about their duties, not Mobil's.
While Mobil sees Kerr as just another class member, we see him
as a victim. Kerr didn't sue Mobil and had no say regarding the
terms of the settlement. He didn't even use AV-1 — the previous
owner of the airplane did that. Kerr needs the airplane for his
business — which is now entering its high season — and would be
flying it right now if it hadn't been for AV-1. We're not lawyers,
but if Mobil's Hunt is right that Kerr isn't entitled to compensation
from Mobil for whatever it takes to make his airplane airworthy
again, it's a mighty sad comment on the fundamental injustice of class
action suits and their one-size-fits-all solutions.
In fairness to Mobil, we have talked to a number of other owners
who were very pleased at the fair and expeditious manner in which
the Mobil AV-1 Project office handled their claims. But in all
of those cases, the claims were limited to reimbursement for prior
repair or replacement of cylinders, and did not involve prospective
authorization or bottom-end work. Ironically, had Kerr been lucky
enough to have replaced his cylinders and desludged his props
prior to the class action settlement, it seems clear that Mobil
would have reimbursed him without hassle.
We can't help but be struck by the contrast between Mobil's handling
of the AV-1 situation and the way another giant oil company, Chevron,
behaved in the avgas contamination episode of 1994. Chevron owned
up to its mistake and replaced all affected engines on a no-questions-asked
basis. We think Mobil could take a lesson in corporate citizenship
from Chevron.
As I read Mr. Busch's prior articles on Mobil AV 1, I was struck
by the fact that he largely agreed with Mobil's points, but disagreed
in many areas with the attorneys who brought the AV 1 class action.
Mr. Busch's most recent article concerning the Protocol and subsequent
claims handling, however, which he was kind enough to provide
to me in draft form, compels a response.
Mobil's primary and overriding concern in negotiating the Protocol
was aviation safety. In fact, long before the class action was
even filed, Mobil inspected many engines at significant cost.
These inspections showed use of AV 1 in some cases, in some engines,
at most caused a gradual, easily detected and corrected maintenance
problem, but not a safety problem. The class action., which was
filed in April 1995, about 10 months after Mobil voluntarily withdrew
AV 1 from the market, alleged that certain Teledyne Continental
Motors engines were at risk of catastrophic failure and that lives
were at risk. The complaint alleged that virtually every part
of the class representatives' engines showed severe distress from
lubrication deprivation and that they were on the verge of imminent
catastrophic failure.
Mobil's response was swift, decisive and motivated first and foremost
by it's concern for safety. Mobil quickly sought out the most
knowledgeable experts regarding Continental engines and bearings.
The experts included Les Waters, Retired Sr. Vice President for
Aeronautical Engineering at Teledyne Continental Motors with 40
years of engine design and research experience; Paul Eberly, a
former FAA DER and an engineer with 30 years experience at Teledyne
Continental Motors including Chief of Engine Development, Manager
of Engine Development and Director of Engineering; and Lee Swanger,
Ph.D., a materials engineer with extensive bearings industry experience
including 8 years as Director, Research and Development ot Imperial
Clevite, the manufacturer of most of the tri-metal hearings used
in Continental engines.
Soon after the class action commenced, Class Counsel served Mobil
with a "Notice of Peril" which purported to document
34 engines which had been damaged by AV 1. Mobil studied each
of these claims with its consultants and found that the information
provided did not support Class Counsels' claims. Because safety
concerns were alleged, Mobil forwarded the materials to the FAA
and invited their participation in a meeting with consultants
representing both parties. Mobil also requested further information
from Class Counsel regarding the 34 claims. There was no response.
To determine whether there was any merit to the class members'
claims, Mobil paid for disassembly, inspection and overhaul of
10 engines selected by Class counsel. These tear downs and inspections
were attended by consultants from both sides. Eventually, about
20 TCM engines that had once used AV 1, and a number of engines
that had never used AV 1, were torn apart and fully inspected.
In each engine where class members' consultants noted bottom end
wear and other internal signs as evidence of AV 1 damage, Mobil's
consultants found that such parts measured. within service limits
or that the other damage noted was caused by factors other than
AV 1. Indeed, the main bearing in the engine owned by class representative
Gross exhibited mechanical damage resulting from improper assembly
during overhaul. While Mobil's consultants observed some stuck
oil control rings caused by sludge, they found absolutely no evidence
to support the claim that hardened sludge could develop, and block
oil ports and galleys.
After completing the engine examinations, all consultants from
both sides met for extensive discussion. and negotiation. Lawyers
were present as observers, but were not allowed to speak. Class
Counsel and their consultants abandoned their demand that all
engines that once used AV 1 be completely disassembled and inspected.
In arms Iength, open and unrestricted discussions and negotiations,
the consultants laboriously worked through the complex technical
points and eventually agreed to the terms of the Protocol. The
technical merits of all points of view were exhaustively examined
in light of the engine tear downs and with the benefit of the
vast collective experience of the experts. In the end, the consultants
from both sides agreed that the Protocol answered their safety
concerns and provided the safety guarantees that the class members
required and were entitled to. Indeed, the federal judge assigned
to this class action praised the efforts of both sides in reaching
this compromise settlement and even Class Counsel were complimentary
of Mobil and its attorneys for reaching a settlement ". .
. where the case was compromised, but safety wasn't."
Both the class members and Mobil deserve, and have the right to,
fair and evenhanded application of the Protocol — no more, no less.
Unfortunately, in a few cases, individual aircraft owners and
their mechanics, who were unaware of the extensive inspection
program and Protocol negotiations, have raised essentially the
same points that were raised and settled by the class action litigation.
These points were thoroughly discussed by the best experts that
both parties could find, having the benefit of many tear down
examinations of AV 1 engines. While those few claimants and mechanics
may be genuinely motivated by their concern for safety, they should
recognize that their safety concerns, which are not new or unique,
were thoroughly addressed and met in the Protocol to the satisfaction
of both parties' experts, the Class Counsel acting on their behalf
and the federal court judge. Accordingly, it makes no sense to
repeat the process in each case. Yet, that is what is happening
in Mr. Kerr's situation. Perhaps additional information made available
to the general aviation public, mechanics and other interested
parties, may be in order. But any claim that Mobil is not complying
with the Protocol is not accurate. (For instance, section VIII
of the Protocol provides that ". . . Mobil will provide
a representative who may meet with the mechanic . . ."
— this requires Mobil to provide a representative, but not necessarily
to have one travel across the country).
The Protocol is a settlement of a class action lawsuit and a document
negotiated and agreed to by the parties. Thus, in the interest
of justice and fairness, it should be adhered to. Claimants and
mechanics, who may view the Protocol as a means to demand further
compensation from Mobil, deserve the only benefit of the bargain
made in their interest, nothing more and nothing less. In fairness,
Mobil deserves the same consideration.
— James W. Hunt, Mendes & Mount LLP
Email this article
