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

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

May 6, 2019

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

          MEMORANDUM OPINION AND ORDER

          JOSEPH M. HOOD SENIOR U.S. DISTRICT JUDGE.

         This matter comes before the Court upon Plaintiff Hitachi Automotive Systems Americas, Inc.'s (“Hitachi”) Motion for Temporary, Preliminary, and Permanent injunctive Relief [DE 3] requesting the Court order TI Automotive Ligonier Corporation (“TI”) to immediately resume production and shipment of certain parts pursuant to revised design specifications. [DE 3-1, at 20-21]. On April 26, 2019, the Court denied Hitachi's Motion [DE 3], insofar as it pertains to the request for a temporary restraining order, set the request for a preliminary injunction for a May 1, 2019 motion hearing, and directed the Parties to file briefs in support of their respective positions. [DE 9]. Having reviewed Hitachi's Motion [DE 3] and the Parties' respective briefs [DE 15; DE 16] and heard the Parties oral arguments during the May 1, 2019 motion hearing, and being otherwise sufficiently advised, the Court will deny Hitachi's Motion for Temporary, Preliminary, and Permanent Injunctive Relief [DE 3].

         FACTUAL AND PROCEDURAL BACKGROUND

         Hitachi Automotive manufactures automotive systems for major automotive manufacturers. [DE 3-1, at 3]. To that end, Hitachi has multiple contracts with TI for the supply of automotive parts. Id. Two of those requirement contracts appear to be relevant to the instant Motion [DE 3].

         On February 26, 2016, the parties entered into Requirements Contract No. B015833 (“Gen-1 Requirements Contract”) where TI agreed to manufacture and supply 100% of Hitachi's requirements for Gen-1 LFY LH Rail parts. [DE 3-1, at 4; DE 3-2, at 2]. Then, on August 4, 2016, the Parties entered into Requirements Contract No. B015894 (“.675T Requirements Contract”) where TI agreed to manufacture and supply 100% of Hitachi's requirements for .675T Bare Fuel Rail parts. [DE 3-1, at 4; DE 3-3 at 2]. Hitachi asserts that both parts are critical components in Hitachi's fuel rail systems.[1]

         A “special note” at the bottom of the contracts expressly limits the requirements contracts to the terms stated in the contracts themselves “and the terms and conditions of purchase set forth in Hitachi Automotive Systems Americas, Inc.'s, Supplier Handbook.” See [DE 3-2; DE 3-3 (emphasis omitted)]. Pursuant to the terms and conditions, time is of the essence, and TI is obligated to manufacture and deliver the parts to Hitachi on the delivery date, in conformity with specific engineering requirements, and for the contractually agreed price certain per part. [DE 3-1, at 5].

         But the present dispute relevant to this Motion [DE 3] is about design changes to the parts that Hitachi claims it is contractually permitted to make. Section 15.9 of the terms and conditions states the following:

These terms may be modified only in writing signed by authorized representatives of buyer and supplier. However, buyer may, at any time, by written change order, make changes in: . . . (B) the drawings, designs or specifications applicable to the goods or services covered by this order. . . . If such changes materially affect the time for performance, the cost of manufacturing the goods, or the costs of furnishing services, buyer will make an equitable adjustment in the purchase price or the delivery schedule or both. Any dispute with respect to an equitable adjustment shall not relieve seller of its obligation to perform in accordance with a written change order.

[DE 3-4, at 11].

         According to Hitachi, in November 2018, General Motors (“GM”) mandated a change in specifications pertaining to the parts at issue through an Engineering Work Order (“EWO”). [DE 3-1, at 6]. To effectuate these mandated changes, Hitachi claims that on December 13, 2018, it notified TI of the requested specification changes. Id. According to Hitachi, the Parties worked together for several months to implement the EWO change and eventually reached a solution to the specification change that was ready to be submitted to GM for testing and approval. Id.

         Subsequently, Hitachi claims that they submitted a request for quotes to TI regarding additional costs for the parts based on the change in specifications.[2] Id. Hitachi claims that TI only responded to the request for quote for the .675T Bare Fuel Rail parts, as evidenced by an email from Scott Hacias, Senior Manager of Business Development at TI, and that the offered quote was 11% higher than the original price per part. [DE 3-1, at 7; DE 3-5, at 4-5]. Also, Hacias's email provided a lead time for the prototype of six to seven weeks and a production lead time of fourteen weeks. [DE 3-5, at 4-5].

         On April 8, 2019, Anne Wells, a Hitachi Procurement Manager, followed-up on the quoted price, stating in part:

GM is pushing hard for a cost breakdown for quotes (see summary below).
The quote is much higher than expected and we need a cost breakdown to better understand the cost drivers so that we can better explain.
It seems they are unwilling to wait until Scott's return next week and have demanded that we escalate which is the cause for this email. If there any way you would have someone that could support us in completing the ...

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