Stellantis Loses Lawsuit Against Supplier Over Pricing Dispute

Stellantis has suffered a legal setback after a federal judge dismissed its lawsuit against Illinois-based engine parts supplier MacLean-Fogg Component Solutions LLC. The automaker accused the supplier of withholding essential parts to force price increases, a move that temporarily shut down production of Chrysler, Dodge, Jeep®, and Ram vehicles. However, the court ruled in favor of MacLean-Fogg, stating that Stellantis failed to establish a binding contract with a specific quantity requirement.

The ruling, handed down by U.S. District Court Judge Judith Levy in Michigan, follows the precedent set by previous legal decisions. Stellantis had argued that MacLean-Fogg’s refusal to ship rings and pinions led to factory shutdowns and significant financial losses. The automaker has been paying an additional $100,000 per week under protest to keep production running. If the decision stands, Stellantis will be unable to recover those payments.

Jonathan Jorissen, an attorney representing MacLean-Fogg, emphasized the significance of the ruling for suppliers in the industry. “It’s very impactful, and the dominoes are starting to fall,” he said. The case is part of a growing trend of pricing disputes in Michigan’s automotive sector, as suppliers seek higher payments to cover rising material costs while automakers resist price hikes.

Stellantis has been particularly aggressive in legal battles with suppliers, including an ongoing case against German fastener manufacturer Kamax, currently being reviewed by the Michigan Court of Appeals. 

“The ruling from the Federal District Court acknowledges this is a state law issue, which is currently pending before the Michigan Court of Appeals,” Tinson said in an email. “FCA remains confident that the state appellate court will rule favorably to FCA’s position.”

At the heart of the lawsuit was whether MacLean-Fogg was legally permitted to stop supplying parts. The judge determined that Stellantis’s agreement with the supplier was a “release-by-release” contract rather than a fixed, long-term obligation. This aligns with a May 2024 ruling in Higuchi Int’l Corp. v. Autoliv ASP Inc., which established that quantity terms in contracts must be “clear and precise.”

While the ruling is a victory for MacLean-Fogg, the legal landscape remains uncertain. The Michigan Court of Appeals is expected to hear the Kamax case later this year, which could further clarify supplier contract law. For now, Stellantis has 30 days to amend its complaint or consider alternative legal strategies.

Source: Automotive News