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Hitachi Automotive Systems Americas, Inc. v. Ti Automotive Ligonier Corp.

United States District Court, E.D. Kentucky, Central Division, Lexington

July 27, 2018

HITACHI AUTOMOTIVE SYSTEMS AMERICAS, INC., Plaintiff,
v.
TI AUTOMOTIVE LIGONIER CORPORATION, Defendant.

          MEMORANDUM OPINION & ORDER

          Joseph M. Hood, Senior U.S. District Judge.

         This matter is before the Court upon Plaintiff's Motion for a Preliminary Injunction. [DE 4]. Defendant responded, [DE 13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13], and Plaintiff replied. [DE 15');">15');">15');">15');">15');">15');">15');">15]. The Court held a hearing on Plaintiff's Motion on July 26, 2018. [DE 17]. Upon review of the parties' filings and hearing from the parties at the preliminary injunction hearing, the Court GRANTS Plaintiff's motion.

         I. Background

         Plaintiff Hitachi Automotive Systems Americas, Inc. filed this breach of contract action on July 5 by way of a verified complaint. [DE 1]. Hitachi alleges that Defendant TI Automotive Ligonier Corporation has breached its contract with Hitachi by refusing to ship “damper cover assemblies” (“DCAs”) that Hitachi uses to manufacturer “high pressure pumps.” Hitachi then sells the high-pressure pumps to General Motors, who uses the pumps in some of its vehicles. [DE 1, p. 4, ¶15');">15');">15');">15');">15');">15');">15');">15]. Hitachi alleges that TI has refused to ship thousands of DCAs, which will result in shut down of production for Hitachi and General Motors. [Id. at pp. 3- 6; DE 4, p. 1');">p. 1].

         According to Hitachi, it entered into a requirements contract with Millennium Industries Corporation in October 2014. [DE 1, ¶9]. Under that agreement, Millennium would manufacture and supply Hitachi with all of its requirements for DCAs. [Id. at ¶10]. Defendant TI acquired Millennium in February 2016 thus assuming all rights and obligations under the contract. [Id. at ¶11]. Under the Hitachi Standard Purchase Order Terms and Conditions, time is of the essence for every purchase from TI. [Id. at ¶¶13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13- 15');">15');">15');">15');">15');">15');">15');">15]. Hitachi alleges that “if there is any delay or interruption in Defendant's shipments to Hitachi, then Hitachi's own manufacture and shipment of its High Pressure Pumps will be delayed or interrupted, which will, in turn, cause delay or interruption in GM's production lines.” [Id. at ¶15');">15');">15');">15');">15');">15');">15');">15].

         The agreement calls for the price to be set in the Purchase Orders, and according to Hitachi, the parties agreed to a price of $3.4355 per DCA. [Id. at ¶16; DE 1-3, p. 5; DE 1-2]. The parties reached that price based on a Material Purchase Fluctuation Agreement that “provided for an adjustment in the price of DCAs on a quarterly basis.” [DE 1, ¶22]. Thus, after each quarter, the parties would revise the requirements contract reflecting a surcharge adjustment. [Id.]. The parties have not done so, however, in nearly a year—the last adjustment they agreed to occurred in the third quarter of 2017. [Id.].

         But the parties have continued operating under that agreement. Then, Hitachi issued three purchase orders to TI in June 2018. [Id. at ¶¶24-26]. TI did not ship the DCAs that Hitachi requested. [Id.]. Instead, TI sent Hitachi a letter that it would be ending its agreement with Hitachi and would cease all production of DCAs under the agreement, effective November 1, 2018. [DE 1-5]. In the meantime, if Hitachi wanted its purchase orders filled, TI would supply them only at a price of $5.615');">15');">15');">15');">15');">15');">15');">155 per DCA, rather than $3.4355. [Id.]. Hitachi responded to with a demand letter on June 28, 2018. [DE 1-6]. In a July 3 letter, TI confirmed that it would not ship the DCAs to Hitachi unless Plaintiff agreed to the increased price. [DE 1-7].

         Hitachi claims the DCAs are unique and “there is no substitute supplier.” [DE 1, ¶17]. Hitachi alleges that if it does not receive shipment of the DCAs the production line for the High Pressure Pumps could shut down and, in turn, GM's production line could shut down shortly thereafter. [Id. at ¶35].

         Hitachi filed its verified complaint alleging three counts: Count I: breach of contract; Count II: Declaratory Judgment; and Count III: Specific Performance. [DE 1]. Plaintiff also filed a Motion for Temporary, Preliminary, and Permanent Injunctive Relief asking this Court to issue a temporary restraining order or preliminary injunction requiring TI to resume shipment of DCAs. [DE 4].

         The Court issued a temporary restraining order on July 6, 2018 and set a preliminary injunction hearing for July 12. [DE 8]. Upon agreement of the parties, the Court moved the preliminary injunction hearing to July 26 where the Court heard from both parties. The parties fully briefed the preliminary injunction issue, and the Court heard from the parties at the hearing. [DE 13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13');">13, 15');">15');">15');">15');">15');">15');">15');">15, 17].

         II. Preliminary Injunction Standard

         When a party seeks a preliminary injunction under Rule 65, the Court must consider: (1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by the issuance of the injunction. See Certified Restoration Dry Cleaning Network, LLC v. Tenke Corp., 511 F.3d 535, 542 (6th Cir. 2007). These are “factors to be balanced, not prerequisites that must be met.” Tenke Corp., 511 F.3d at 542. For example, where a party makes “an extremely strong showing of irreparable harm” they are “not required to make as strong a showing of a likelihood of success on the merits.” Stein v. Thomas, 672 Fed.Appx. 565, 569 (6th Cir. 2016).

         Plaintiff “bears the burden of demonstrating his entitlement to a preliminary injunction.” Jackson v. Coyne, NO. 3:17-CV-P174-TBR, 2017 WL 3528605, at *1 (W.D. Ky. Aug 16, 2017). A preliminary injunction is “an extraordinary remedy which should be granted only if the movant carries his or her burden of proving that the circumstances clearly demand it.” Overstreet v. Lexington-Fayette Urban Cty. Gov't, 305 F.3d 566, 573 (6th Cir. 2002).

         III. ...


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