Citing potential layoffs and disruption to the auto industry, a federal judge in Michigan has ruled that a Mexico-based supplier must keep shipping parts to a Daimler Truck North America subsidiary in Detroit.
Judge Jonathan J.C. Grey of the U.S. District Court for the Eastern District of Michigan granted a preliminary injunction to Detroit Diesel Corp. (DDC) on Friday, ordering Martinrea Honsel Mexico SA de CV to restart production and shipments of housing parts needed to make transmissions for heavy-duty trucks.
The order comes after Martinrea International, the parent company of Martin Honsel Mexico, sent a letter to DDC Feb. 10 stating it would stop sending parts after March 7.
“DDC argues that a preliminary injunction serves the public interest because the injunction … avoids widespread layoffs at DDC, Daimler, and DDC’s suppliers; [and] promotes greater certainty in the automotive industry,” Grey wrote in his ruling. “DDC details how a drop in its production capacity may affect the broader public … . Additionally, there would be less fuel-efficient heavy-duty trucks in service, and these trucks are used to: deliver food and medicine; support and maintain electrical, water treatment, and wastewater treatment systems; and transport garbage.”
Related: Daimler Truck subsidiary asks court to force Mexican supplier to ship parts
DDC operates a manufacturing facility in Redford, Michigan, producing heavy-duty engines and chassis components. The plant employs more than 2,600 workers.
DDC’s parent company is Daimler Truck North America, a subsidiary of German multinational corporation Daimler Truck AG. Daimler’s brands include Freightliner, Western Star, Mercedes-Benz, Fuso, BharatBenz and Rizon.
Martinrea Honsel Mexico is an automotive parts supplier with a factory in Queretaro, Mexico. The company is a subsidiary of Martinrea International Inc., a Canadian auto parts manufacturer based in Vaughan, Ontario.
DDC sued Martinrea Honsul in June, alleging Martinrea is in breach of a contract to supply transmission housings DDC uses to manufacture vehicles. The two companies signed a long-term agreement in 2013 and extended the agreement in 2020.
In February, Martinrea International informed DDC it would stop sending parts after March 7, citing a recent court ruling regarding release-by-release contracts.
DDC filed an amended complaint against Martinrea Honsel on March 4, asking the court to order Martinrea Honsel to keep shipping transmission housing parts.
In his ruling, Grey acknowledged a potential conflict in a state court’s interpretation of contract law if Martinrea Honsel appeals the preliminary injunction with the Michigan Supreme Court.
Grey cited several other recent contract law cases, involving auto parts suppliers MacLean-Fogg, ER Wagner Manufacturing Co., Cadillac Rubber and Airboss.
“Given the differences between the DDC-Martinrea contract and the contracts in MacLean-Fogg and Ultra Manufacturing as well as the lack of clarity over whether Cadillac Rubber survives Airboss, it is unclear whether DDC ultimately will succeed on the merits of its claims for injunctive relief,” Grey wrote.
DDC declined to comment on the ruling to FreightWaves. Martinrea International did not immediately respond to a request for comment.
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