CAMDEN – Subaru of America would extend warranties and cover the costs of prior repairs under the proposed settlement of a lawsuit alleging an engine defect in its WRX and STi models.

The settlement would resolve claims that a design flaw can cause catastrophic engine failure in the high-performance cars for model years 2012 through 2017.

Camden-based Subaru denies any wrongdoing under the proposed settlement, according to an attorney for the firm.

Subaru “believes that it can prevail” in court but has decided to settle “given the significant time, expense, and unpredictability of continued litigation,” the lawyer, Casey Watkins of Cherry Hill, said in a Sept. 5 letter to U.S. District Judge Joseph Rodriguez in Camden.

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He said the proposed settlement would provide “significant benefits to Subaru customers.”

Subaru initially faced three proposed class-action lawsuits over alleged flaws in its vehicles.

The suits — brought by Subaru owners in California, Michigan and New Jersey — were consolidated into a single challenge earlier this year.

According to the lawsuits, owners of affected vehicles faced repair bills of several thousand dollars, as well as unsafe driving conditions, due to premature failure of the engine connecting rod and main bearing.

The lawsuits, which alleged Subaru concealed the defect from consumers, cited numerous complaints to the National Highway Traffic Safety Administration.

Under the proposed settlement, Subaru would reimburse eligible customers for “certain prior out-of-pocket repairs and costs.” It also would reimburse “those who sold or traded in a settlement class vehicle with a failed engine.”

The settlement class would be made up of WRX and STi models with EJ-series 2.5-liter turbocharged engines, according to a court filing.

Subaru also would offer a warranty extension for eight years or 100,000 miles, according to the proposed settlement.

“This extended warranty is more than twice the length of Subaru’s new vehicle limited warranty and a significant increase over Subaru’s Powertrain Limited Warranty,” Matthew Schelkopf, a Berwyn, Pa., attorney for the vehicle owners, said in a court filing.

Subaru also is to pay up to $625,000 to attorneys for the vehicle owners and $3,500 each to the three drivers who filed the original lawsuits.

According to Schelkopf’s filing, Subaru will identify class members through its records and contact them by mail, if possible.

The company also would maintain a website with the settlement agreement and a claim form.

Both sides have asked Rodriguez to grant preliminary approval for the settlement. The judge would decide on final approval after a future hearing.

The WRX and STi models represent a shrinking share of Subaru's growing market.

The models' sales fell 9.6 percent for the year through August, compared to an increase of 5.3 percent for all Subaru vehicles. WRX and STi sales dropped by 5.8 percent last year.

Subaru recently reported August was its best-ever sales month, with 64,088 vehicles sold. That included 2,523 WRX and STi vehicles.

Two years ago, Subaru settled a class-action suit alleging excessive oil consumption by multiple models made between 2011 and 2015.

It also denied wrongdoing under that agreement, which extended warranty protections for Forester, Impreza, Crosstrek, Legacy and Outback models made from 2011 through 2015.

Jim Walsh: @jimwalsh_cp; 856-486-2646; jwalsh@gannettnj.com

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