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Yazaki North America, Inc. v. Johnson Controls, Inc.

United States District Court, E.D. Michigan, Southern Division

July 7, 2017

YAZAKI NORTH AMERICA, INC., Plaintiff,
v.
JOHNSON CONTROLS, INC., Defendant.

          OPINION AND ORDER DENYING CROSS MOTIONS FOR SUMMARY JUDGMENT

          DAVID M. LAWSON United States District Judge.

         When defendant Johnson Controls, Inc. discovered information that led it to believe plaintiff Yazaki North America, Inc. had been overcharging it over a four-year period for wire harnesses under an automotive supply contract, Johnson Controls withheld payment of over $600, 000 from later deliveries. This lawsuit followed. The parties filed cross motions for summary judgment, believing that the dispute could be decided as a matter of law. The record, however, suggests that factual disputes remain, which prevent a resolution at this stage of the case. Therefore, both motions for summary judgment will be denied.

         I.

         The complaint states a simple breach of contract claim: Yazaki alleges that it furnished automotive parts to Johnson Controls, for which Johnson Controls failed to pay to the tune of $636, 688.92.

         The parties have stipulated to most of the facts. Johnson Controls supplied seats to automotive manufacturer Fiat Chrysler Automotive, now known as FCA U.S. LLC. Yazaki entered into a contract to furnish wire harnesses to Johnson Controls to be included in the seat assemblies. The specifications for Yazaki's wire harnesses had to be approved by Chrysler. In fact, it appears that Yazaki negotiated the supply contract directly with Chrysler, which directed Johnson Controls to integrate the parts supplied by Yazaki. Chrysler later issued a change order that likely reduced the cost of certain wire harnesses. Yazaki continued to charge Johnson Controls the original contract price.

         The initial supply agreement was dated May 6, 2010. It set out the prices for each of ten wire harnesses to be incorporated into seat assemblies, and it incorporated a lengthy set of terms and conditions drafted by Johnson Controls. Production and deliveries were triggered by separate purchase orders. The agreement identified each wire harness by a Johnson Controls part number and a description that lists certain components. One of the components of four of the harnesses is identified as “STPS, ” which signifies a “seat tracking position sensor.” It appears that a design specification called for wire harnesses with that designation to include a branch that would energize a STPS.

         On June 30, 2010, JCI issued the original purchase order that included wire harnesses at the agreed upon price per unit. Later, however, Chrysler issued an interim approval authorization (IAA) to allow Johnson Controls to build seat assemblies from August 24, 2011 to October 31, 2011 with wire harnesses that did not contain the STPS components. It appears that Chrysler and Yazaki had discussed this change beforehand, as the IAA reads: “THIS IAA IS TO ALLOW JCI TO BUILD JK PASSENGER SEATS WITH MODIFIED WIRE HARNESS WITHOUT STPS BRUNCH. THE RASON [sic] IS THAT WIRE HARNESS SUPPLIER YAZAKI PULLED THE CHANGE AHEAD.”

         In November 2011, Chrysler issued a change notice to the parties that made the removal of the STPS components final. Chrysler's stated reason for the change is somewhat cryptic. It reads: “JK 2012. SEAT BELT AND VARIOUS COST SAVINGS AND NO COST CHANGES ONLY.”

         The change notice lists 11 changes, of which it appears that only changes six and nine are relevant in this case:

6 ELIMINATE THE BRUNCH OF THE WIRE HARNESS THAT IS CONNECTED TO THE STPS CONNECTOR ON PASSENGER SEAT - YAZAKI. - THIS CHANGE IS A RESULT OF THE ELIMINATION OF THE (STPS PASSENGER SEAT) - PER MCM#268984
9 FOR CALL OF DUTY PASSENGER SEATS, ELIMINATE STPS SENSOR TWO STPS BRACKETS AND MODIFY WIRE HARNESS BY ELIMINATINGTHE [sic] STPS BRUNCH. - PER MCM#268984

         It is difficult to determine which parts were affected by the change order. The change order does not specify part numbers. Chrysler's part numbers do not correspond to Johnson Controls's part numbers. The parties submitted a screen shot of what appears to be Chrysler's change notice tracking system that identifies which parts are to be changed using Chrysler's part numbering system, but those part numbers do not correspond to the Johnson Controls part numbers in the 2010 Supply Agreement or 2010 purchase order. The parties stipulate that the Johnson Controls part numbers that were affected were part numbers 2284897 and 2284900, again neither of which were part of the 2010 Supply Agreement or 2010 purchase order. Moreover, Johnson Controls changed its part numbers, but there is nothing in the record to tie the changes to the Supply Agreement or 2010 purchase order.

         The parties agree, however, that from November 2011 through March 2015, Yazaki supplied certain wire harnesses that did not contain STPS branches, and Johnson Controls accepted the product.

         On March 10, 2015, Johnson Controls delivered to Yazaki Purchase Order No. 55013788, Revision 32, dated March 4, 2015, which the parties stipulate decreased the price for certain wire harnesses by $0.9026 per unit. That purchase order contained a revised set of terms and conditions. However, it is not clear from the parties' stipulation, or the 2015 purchase order, which part numbers were subject to the price reduction. The parties stipulated that between November 2011 and March 2015, Yazaki continued to invoice, and Johnson Controls continued to pay, the prices stated in the 2010 purchase order. Johnson Controls contends that this price reduction should have applied to the affected wire harnesses from the time of the change order in 2011. However, the record does not allow the parts to be tracked by part numbers or otherwise, and, based on the parties' stipulation of facts, it is not possible to determine whether there was an overcharge by Yazaki (and Yazaki has not conceded that it overcharged Johnson Controls); and even if there were overcharges, it is impossible to determine the amount of the overcharge based on the parties' stipulation and the attached contract documents.

         The parties do agree on a few more points, however. For one, after Chrysler issued the 2011 IAA, Yazaki continued to manufacture the original wire harnesses using the same part number designated in the 2010 supply agreement, but with the STPS branches removed. Johnson Controls did not issue to Yazaki a new purchase order or any written instruction to reflect a price reduction for the wire harnesses until 2015. They agree that between November 2011 and March 2015 Johnson Controls knew that the Change Notice would result in a reduced cost for the wire harnesses. During that time, Johnson Controls did not request, and Yazaki did not provide, a revised price for the wire harnesses without the STPS branches.

         Also, the parties agree that during that time, Yazaki knew that the STPS branches in the wire harnesses had been removed because of the Change Notice, and knew the cost of the removed STPS branches.

         It was not until March 2015 that Johnson Controls first requested from Yazaki a price adjustment for past deliveries. That request was in the form of a debit against existing and future invoices of approximately $600, 000. Johnson Controls calculated that amount as the actual price difference of $0.9026 per unit, which accounted for the removal of the STPS branches for all wire harnesses supplied by Yazaki to Johnson Controls between November 2011 and March 2015. On April 29, 2015, Johnson ...


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