Expiration of Long Term Agreement – no obligation to ship after expiration
Our client was a party to a long-term supply agreement with an automotive first-tier supplier. The agreement expired on December 1, 2004, but the supplier failed to renew it despite repeated requests by our client. Yet, after the agreement expired, the supplier continued to request that our client ship parts at the prices set forth in the expired agreement. Our client indicated that it was willing to continue to supply parts, but since the contract had expired, it was no longer willing to do so at the price that was previously agreed-upon. As a result, the supplier filed suit, and without giving our client any prior notice, obtained a temporary restraining order requiring our client to continue to ship parts at the old price. Within 24 hours, our firm successfully persuaded the court to set aside the temporary restraining order. The supplier then capitulated to our client’s demands and signed a new supply agreement with favorable terms for our client.
Breach of Royalty Agreement/Outsourcing of Technology
Our client, a large automotive supplier, was sued for approximately $3 million in royalties allegedly owing for certain technology under a royalty agreement. The technology had previously been outsourced to one of our client’s suppliers, who assumed responsibility to pay the royalty on our client’s behalf. The supplier stopped paying the royalty when it learned that the plaintiff-inventor may have misrepresented its rights in the technology. During the lawsuit, we discovered that the supplier had secretly made payments to a former employee of our client at a time he was employed by our client. The plaintiff and former employee denied that the payments were improper. They repeatedly swore that the monies were payment for unrelated consulting services performed on nights and weekends, and billed on an hourly basis. However, at trial, we demonstrated that the plaintiff and former employee lied about their relationship. We established that nearly every payment the plaintiff made to the former employee was equal to 50 percent of each royalty payment paid by our client – not for hourly services. During the plaintiff’s case-in-chief, we asked the Court to dismiss the case based on this perjured testimony. The Court granted the motion, dismissing plaintiff’s case and awarding to our client its costs and attorneys’ fees necessitated by the fraud. The Court also referred the matter to the Prosecuting Attorney’s office for investigation of criminal perjury charges. To read the Court’s opinion, please click here.
Supply and Asset Purchase Agreement – misrepresentations over equipment
Our client agreed to purchase all of the equipment from several manufacturing facilities owned by a large Tier-1 automotive supplier and to consolidate all of the equipment into one plant. As part of the transaction, our client also agreed to supply parts made on the equipment for a period of 10 years. After installing the equipment at significant time and expense, our client discovered that the seller vastly overstated the capabilities of the manufacturing process. Our client declared the seller to be in breach of the various agreements and invoked a liquidated damages provision. The supplier filed suit and sought a preliminary injunction to force our client to continue to supply parts made on the equipment. At an evidentiary hearing in which the court heard witness testimony, we successfully defended the motion for an injunction. We then persuaded the court to dismiss the case because the Tier-1 supplier had not complied with the alternative dispute resolution provision in the parties’ contract. As part of the alternative dispute resolution process, the parties reached a new agreement, with an estimated value added to our client of several millions of dollars.
Termination of letter agreement/subsequent purchase orders
Our client developed a marketing system to help new car dealers sell vehicle accessories to consumers. One OEM signed a letter committing that its dealers would purchase specific minimum quantities of the marketing system. It later issued a purchase order containing standard terms and conditions, including a provision purportedly giving the OEM the right to cancel the program at its “convenience,” and requiring the OEM to pay only for “completed goods” upon cancellation. After the OEM’s dealers did not purchase the minimum requirements set forth in the letter, the OEM cancelled the parties’ contract “for convenience,” and insisted it would only pay our client a nominal amount for unordered items, since it claimed none of the marketing materials were fully “completed.” We argued that the OEM’s standard purchase order terms and conditions did not apply, and that it was required to pay lost profits for all unordered goods, whether “completed” or not. We obtained a very favorable settlement for approximately the full amount of lost profits our client would have realized had the dealers purchased all of the required merchandise.
Litigation Regarding the Production of Parts Under Every Available Legal Theory
Our client was sued by a tier-1 automotive supplier under a variety of legal theories (e.g., breach of contract; breach of express warranty; breach of implied warranty; negligence and fraud) for problems associated with the production of parts for a Ford Motor Company product. All of the varied legal theories against our client were dismissed pre-trial, and the only remaining theory to be tried before the jury was the tier-1 automotive supplier’s claim for breach of contract, and our client’s counterclaim for breach of contract. The jury dismissed the tier-1 automotive supplier’s claim, and awarded our client hundreds of thousands of dollars.