AirBoss II:  Michigan Court Awards Automotive Supplier $3.5 Million Based On “Unjust Enrichment”

On December 13, 2024, an Oakland County, Michigan trial court awarded AirBoss Flexible Products Co. nearly $3.5 million dollars on an unjust enrichment counterclaim asserted against MSSC, Inc., a tier one U.S. automotive supplier.[1]  The ruling is the latest in a protracted battle between the two companies, which reached its well-known apex in July 2023 when the Michigan Supreme Court reversed a Court of Appeals opinion holding that blanket purchase orders lacking a written quantity term were unenforceable under the UCC Statute of Frauds.[2]

AirBoss, a supplier of rubber-based products, entered into a contract whereby it would provide MSSC, a supplier of parts for vehicle suspension systems, with components for ultimate use by an OEM.[3]  The agreement between AirBoss and MSSC was set forth in a blanket purchase order that specified the parts to be supplied and the prices, but not the quantity.[4]  The purchase order stated, “If this order is identified as a ‘blanket order’, [MSSC] shall issue a ‘Vendor Release and Shipping Schedule’ to [AirBoss] for specific part revisions, quantities, and delivery dates for Products. . . .”  MSSC would therefore place orders for specific quantities of products through periodic releases as is common in the automotive industry.[5]

In mid-2019, AirBoss determined that it was experiencing financial losses on several of the parts it supplied MSSC and requested price increases.[6]  MSSC did not respond, so AirBoss sent a notice that it was rejecting any future releases unless the parties reached an agreement on revised pricing.[7]  MSSC, in turn, stated it would not agree and that it expected AirBoss to meet its contractual obligations.[8]  AirBoss promptly notified MSSC that it was terminating their agreement and would stop supplying parts after the current release was filled.[9]

Shortly thereafter, in February 2020, MSSC sued AirBoss in Michigan for anticipatory breach of contract and moved for an injunction requiring specific performance by AirBoss.[10]  The Oakland County Circuit Court granted the injunction and summary disposition in favor of MSSC on the grounds that the term “blanket order” expressed a quantity term sufficient to create an enforceable requirements contract under the Statute of Frauds in Michigan’s Uniform Commercial Code.[11]   The Court of Appeals affirmed.[12]   

The Michigan Supreme Court, however, reversed the decisions in July 2023.[13]  The Court held that the blanket purchase order did not contain a quantity term and therefore could not satisfy the Statute of Frauds so as to create an enforceable requirements contract.[14]  MSSC and AirBoss instead had a “release-by-release” business arrangement whereby AirBoss was bound by the terms of the blanket purchase order only to the extent that MSSC issued releases for specific quantities of products and AirBoss accepted those releases.[15]  That being so, AirBoss was within its rights to reject future releases when MSSC would not agree to revised pricing.  The case was then remanded to the trial court.[16]

Upon return to the Oakland County Circuit Court, only a counterclaim by AirBoss for unjust enrichment remained for adjudication.[17]  AirBoss asserted that MSSC was unjustly enriched because the lower courts had erroneously ordered it to supply MSSC with parts at a substantial loss.[18]  AirBoss sought as damages the difference in sales at prices it wanted to charge MSSC and those ordered by the lower courts—a total of $3,483,899.85.[19]  

MSSC argued that AirBoss could not recover damages under an unjust enrichment theory because the sales were governed by contracts between the parties—i.e., individual releases under the blanket purchase order.[20]  The Oakland County Circuit Court dismissed this argument because the releases were not entered voluntarily but rather through coercion of its “predecessor” court and the Michigan Court of Appeals.[21]  The court equated the decision of AirBoss to enter the releases to that of Johnny Fontane in The Godfather:

MICHAEL

Well, when Johnny was first starting out, he was signed to this personal service contract with a big band leader.  And as his career got better and better, he wanted to get out of it.  Now, Johnny is my father’s godson.  And my father went to see this band leader, and he offered him $10,000 to let Johnny go.  But the band leader said no.  So the next day, my father went to see him; only this time with Luca Brasi.  And within an hour, he signed a release, for a certified check for $1,000.

KAY

How’d he do that?

MICHAEL

My father made him an offer he couldn’t refuse.

KAY

What was that?

MICHAEL

Lucas Brasi held a gun to his head, and my father assured him that either his brains – or his signature – would be on the contract.

The court then stated that “MSSC is decidedly not a mobster, and Judge Alexander and the Court of Appeals are the furthest things from gunmen.”  But the court nevertheless recognized “the cold hard reality that the Supreme Court found that there was no contract and no obligation to sell parts under the releases” and that AirBoss only supplied MSSC at the prices in the blanket purchase order “under pain of contempt of court.”[22] 

MSSC further argued that it would be inequitable to apply the Michigan Supreme Court decision retroactively.[23]  The court found this claim baseless, stating that, “perhaps there is a parallel universe, but traditionally when a party in Michigan wins a lawsuit, they actually win the lawsuit and are awarded the relief requested.”[24]  Thus, AirBoss, in a reversal of fortunes, was awarded full damages.[25] 

The AirBoss saga is a cautionary tale about the dangers of a buyer misunderstanding a release-by-release business arrangement with its supplier to be a requirements contract.  A supplier in such an arrangement is entitled to stop accepting release orders and demand a price increase.  A buyer that stands its ground and seeks court intervention on the mistaken belief it has a requirements contract would be throwing good money after bad.  The courts will eventually find in favor of a supplier if a buyer has imposed contract terms at odds with UCC. In fact, AirBoss may encourage a supplier that is a party to an unfavorable long-term agreement to test the waters by demanding a price increase.  It would therefore be prudent for buyers to conduct audits of their “requirements contracts” to confirm they include a quantity term sufficient to satisfy the Statute of Frauds, and any other requirements under the applicable governing law. 


[1] MSSC, Inc. v. AirBoss Flexible Products Co., No. 20-179620-CB, at *16 (Mich. Cir. Ct., Dec. 13, 2024).

[2] MSSC, Inc. v. AirBoss Flexible Products Co., 511 Mich. 176, 180, 999 N.W.2d 335 (Mich. 2023).

[3] MSSC, Inc. v. AirBoss Flexible Products Co., 338 Mich. App. 187, 979 N.W.2d 718 (Mich. Ct. App. 2021).

[4] MSSC, Inc. v. AirBoss Flexible Products Co., No. 20-179620-CB, 2020 WL 10964218, at *1-3 (Mich. Cir. Ct., July 17, 2020).

[5] Id. at *3.

[6] Id.

[7] Id.

[8] Id. at *1.

[9] Id.

[10] Id.

[11] Id. at *6.

[12] MSSC, Inc. v. AirBoss Flexible Products Co., 338 Mich. App. 187, 979 N.W.2d 718 (Mich. Ct. App. 2021).

[13] MSSC, Inc. v. AirBoss Flexible Products Co., 511 Mich. 176, 180, 999 N.W.2d 335 (Mich. 2023).

[14] Id. at 198.

[15] Id.

[16] Id. at 180.

[17] MSSC, Inc. v. AirBoss Flexible Products Co., No. 20-179620-CB, at 3 (Mich. Cir. Ct., Dec. 13, 2024).

[18] Id.

[19] Id. at 3-4.

[20] Id. at 9.

[21] Id. at 9-10.

[22] Id. .

[23] Id. at 14.

[24] Id. at 14-15.

[25] Id. at 16.

Bipartisan Push to Strengthen American Supply Chains

Members of the Senate Commerce Committee have demonstrated an early bipartisan interest in continuing to promote U.S. supply chain resilience, highlighting an avenue for bipartisanship in the Trump Administration’s foreign policy agenda.

Sen. Marsha Blackburn (R-Tennessee) has partnered with Democratic colleagues as an original cosponsor on the reintroduction of two pieces of legislation aimed at coordinating the U.S. government’s focus on supply chain resilience: the Strengthening Support for American Manufacturing Act (S. 99); and, the Promoting Resilient Supply Chains Act(S. 257).

The Strengthening Support for American Manufacturing Act would require the Secretary of Commerce and the National Academy of Public Administration to produce a report on the effectiveness and management of the Department of Commerce’s various manufacturing support programs. Notably, the report is tasked with identifying relevant offices and bureaus within the Department of Commerce with responsibilities related to critical supply chain resilience, and manufacturing and industrial innovation, and make recommendations on improving their efficiency by identifying gaps and duplicative duties between offices.

Sen. Gary Peters (D-Michigan), who introduced the Strengthening Support for American Manufacturing Act, explains the legislation is intended to streamline various manufacturing programs offered by the federal government. Specifically, in a press release associated with the bill, Sen. Peters highlights a 2017 report released by the Government Accountability Office that identified 58 manufacturing related programs across 11 different federal agencies that serve US manufacturing, several of which are managed by the Department of Commerce.

The Promoting Resilient Supply Chains Act (the “PRSCA”) would establish a Supply Chain Resilience Working Group (the “Working Group”) comprised of federal agencies – including the Departments of Commerce, State, Defense, Agriculture, and Health and Human Services, among others. Moreover, under the PRSCA, the Assistant Secretary of Commerce for Industry and Analysis would be required to designate “critical industries,” “critical supply chains,” and “critical goods,” and the Working Group would be charged with mapping, monitoring, and modeling U.S. capacity to mitigate vulnerabilities in these areas.

Notably, during the Commerce Committee’s January 29, 2025, hearing to consider the nomination of Howard Lutnick to become Secretary of Commerce, Sen. Lisa Blunt Rochester (D-Delaware), the author of the PRSCA, asked Mr. Lutnick whether the Department of Commerce would maintain the agency’s supply chain mapping initiatives under his direction. Mr. Lutnick replied in the affirmative.

In discussing the merits of the PRSCA, Sen. Blackburn stated: “To achieve a strong, resilient, supply chain, we must have a coordinated, national strategy that decreases dependence on our adversaries, like Communist China, and leverages American ingenuity.” This claim is particularly relevant in the PRSCA’s promise to design and implement an “early warning supply chain disruption system” that would employ artificial intelligence and quantum computing to identify and mitigate potential supply chain shocks. As a crisis response measure, the platform would locate alternative sourcing options for supply chains under imminent threat and press private sector to shift their supply chains toward “countries that are allies or key international partners” of the United States. Secretary of State Marco Rubio has emphasized that the Trump Administration’s foreign policy program will prioritize “relocating [U.S.] critical supply chains closer to the Western Hemisphere,” namely in Latin American countries, as a means to enhance “neighbors’ economic growth and safeguard Americans’ own economic security.”

Sen. Blackburn’s willingness to support these Democratic pieces of legislation reflects an increasing bipartisan sense that the impacts of recent geopolitical conflicts, natural disasters, and the COVID-19 pandemic highlighted the fragility of U.S. supply chains. Additionally, the PRSCA has been endorsed by the private sector, including the Information Technology Industry Council, the National Association of Electrical Distributor, the National Association of Wholesaler-Distributors, and the Supply Chain Resiliency Consumer Brands Association.

It remains uncertain whether either the PRSCA or Strengthening Support for American Manufacturing Act can advance this Congress as standalone bills, as the Trump Administration’s tariff and foreign assistance actions deepen partisan trends. Still, the bills’ emphasis on government efficiency, prioritizing American manufacturing, and near-shoring may be able to leverage Trump Administration “America First” and “Department of Government Efficiency” themes to ride momentum into FY 2026 annual appropriations legislation under a national security title. Accordingly, importers interested in the U.S. market would likely benefit from reviewing their supply chains with a long view that seeks to leverage opportunities to reinvest in American manufacturing and looks to near shore material supply chains, particularly in the Western Hemisphere – where the Trump Administration has underscored its interests in boxing out Chinese investment.

Forced Labor Update & Analysis – Fresh Names for the UFLPA Entity List

I. Background

The Uyghur Forced Labor Prevention Act[1] (“UFLPA”) was enacted to address alleged forced labor and human rights abuses in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China. The Act relies on a rebuttable presumption that goods were made with forced labor if mined, produced, or manufactured, wholly or in part, in the XUAR or produced by one of 144 organizations currently named to the UFLPA Entity List. As such, these commodities are prohibited from entering the United States pursuant to Section 307 of the Tariff Act of 1930. The UFLPA was signed into law on December 23, 2021 and implemented on June 21, 2022 without regulatory guidance. U.S. Customs and Border Protection (“CBP”) enforces the Act and the multi-agency Forced Labor Enforcement Task Force (“FLETF”) directs its implementation.

II. Enforcement Update

Since June 2022, CBP has detained over 12,500 shipments valued at $3.68 billion, impacting significant quantities and varieties of goods imported from China as well as Malaysia, Vietnam, Thailand, and others. The four most heavily impacted commercial industries are electronics, automotive/aerospace, apparel/textiles, and industrial/manufacturing materials. These sweeping enforcement measures have required companies to examine their global supply chains and operating policies to remediate exposure to UFLPA enforcement.

III. Regulatory Update

On January 15, 2025, the FLETF designated an additional 37 China-based companies to the UFLPA Entity List, increasing the number of organizations subject to the rebuttable presumption to 144. The Department of Homeland Security (“DHS”) leads the planning and strategy of the FLETF, and recently stated in a press release that: “These actions are part of the FLETF’s commitment to eliminating forced labor in U.S. supply chains and holding accountable those responsible for human rights abuses against Uyghurs and other religious and ethnic minority groups in the Xinjiang Uyghur Autonomous Region (XUAR).”[2] The companies newly named to the Entity List are from the following sectors: cotton (26 companies), silicon and/or solar (six companies), mining (five companies).

This latest tranche of UFLPA updates have targeted mining giant Zijin Mining Group and subsidiaries.  The import prohibition against goods containing the critical materials these companies produce (including copper, lithium, molybdenum, and tungsten) will impact global supply chains in the electronics, automotive, aerospace, solar, and telecommunications industries. The Zijin Mining Group corporate family has been subject to significant scrutiny over the past four years.  It was specifically identified in the January 19, 2024 letter from former Congressman Mike Gallagher to DHS urging increased UFLPA enforcement. Zijin Mining Group is the parent company of more than 10 domestic mining companies; all of its subsidiaries and international affiliates may be considered for future designation to the UFLPA Entity List. NGOs, civil society organizations, and related media have a long history reporting links between the Zijin Mining Group and human rights violations dating back to at least 2009.

The entities added from China’s cotton industry are part of one principal entity, Huafu Fashion Co., Ltd (“Huafu”). In May 2019, the Wall Street Journal reported that several western retail brands used gray yarn made by Huafu in their supply chains, prompting at least one brand to implement a new policy prohibiting the purchase of “yarn from the Xinjiang region.” The Washington, DC-based Center for Strategic and International Studies (CSIS) also published a report detailing Huafu’s apparent cooperation with forced labor programs in Xinjiang. The FLETF’s designation of Huafu and its subsidiaries likely reflects considerable momentum from these reputable reporting sources and confirmation that global textile brands’ dependence on Chinese cotton represents a continuing concern for the industry.

The inclusion of several silicon and solar energy companies to the UFLPA Entity List was predictable as approximately 50% of the global supply of polysilicon, the essential material in solar panel manufacture, is produced in the Xinjiang region. In 2021, Horizon Advisory (a risk consultancy specializing in Chinese-language research) produced a report alleging that many of the world’s largest solar manufacturing companies depend on forced labor. Since the Horizon Advisory report, the FLETF has steadily added most of its identified solar manufacturers to the Entity List. Of the entities named in this round of additions, Donghai JA Solar Technology Co., Ltd. is one of the world’s largest producers of solar energy products.

A final note, Dr. Laura Murphy, formerly the head of the Forced Labor Project at Sheffield Hallam University, is currently a leading advisor to the U.S. Department of Homeland Security and the FLETF on UFLPA implementation.  In her former role with Sheffield University, Dr. Murphy contributed to articles identifying many of the recent additions to the UFLPA Entity List, including Zijin Mining Group, as proliferators of forced labor in China.


[1] Pub. L. No. 117-78.

[2] U.S. Department of Homeland Security, “DHS Announces Addition of 37 PRC-Based Companies to the UFLPA Entity List,” January 14, 2025, https://www.dhs.gov/archive/news/2025/01/14/dhs-announces-addition-37-prc-based-companies-uflpa-entity-list.

Cross-Post From Capital Thinking Blog – EU Publishes Regulation Banning Products Made With Forced Labour

This is a Cross-Post from the Capital Thinking Blog.  Please contact Wolfgang MaschekThomas DelilleMarion SeranneLudmilla KasulkeD. Michael KayeChristina Economides or Guillermo Giralda Fustes with any questions.

The Forced Labour Regulation (FLR) was published on December 12, 2024, prohibiting products made with forced labor on the EU market.  The ban—which will begin on December 14, 2027—will apply to any global company that sell products in, or export products from, the EU.  Although the prohibition will not enter into force for nearly three years, companies operating in the EU should begin surveying for potential risks in their supply chains and prepare internal compliance programs.  For more information, including a comparison of the FLR to the U.S. Uyghur Forced Labor Prevention, read the full analysis here.

Metal Surcharges Back in Antitrust Crosshairs

On 12 December 2024, the Italian antitrust authority has launched an investigation into suspected cartel activity among low-voltage copper cable manufactures. According to the authority, the manufacturers allegedly agreed to standardize surcharges for metal procurement, evading competitive pricing practices as far back as 2005. Furthermore, since 2008, the manufacturers allegedly implemented a unified system, referred to as the “Sales System”, to adjust prices in response to copper cost fluctuations.

The recent raids in Italy add to a growing list of similar investigations involving standardized surcharges. Surcharges are used across many industries. They are often linked to fluctuating prices on global exchanges, allowing manufacturers to automatically adjust prices in response to cost changes. While surcharges are permitted tools for managing input costs, antitrust laws prohibit companies from collectively fixing or aligning surcharge formulas.

For example, in the Airfreight cartel case, that started in 2006, airlines were accused of coordinating fuel and security surcharges to offset external cost increases. In 2017, the German antitrust authority fined industrial battery manufacturers for coordinating lead surcharges, dating back to 2004. More recently, in 2022, Germany’s competition authority raided cable manufacturers over allegations of coordinated metal surcharge calculations. See our blog. In November 2023, the European Commission sent a statement of objections to manufacturers of automotive starter batteries regarding concerns that between 2004 until 2017 starter batteries manufacturers created, published and agreed to use new indices in their price negotiations with car producers.

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Trump Administration: Major Changes May be Coming in the Federal Government’s Posture Toward Electric Vehicles (EV’s)

Please contact Patricia Doersch, Jennifer Tharp, Jennifer Satterfield, Michael Hawthorne, Kara-Marie Urban, or Ayah Ighneim with any questions.

Automotive manufacturers, regulators and consumers face considerable uncertainty on how the incoming Trump Administration will attempt to reshape the automotive industry when President Donald Trump returns to the White House on January 20, 2025. Significant changes are on the horizon, with President Trump’s major campaign themes, including protectionist trade policies and an “all of the above” energy policy, reflecting a noteworthy shift from President Biden’s globalist and clean energy platform. As in 2017, President Trump’s approach to economic and environmental issues is near certain to create ripple effects throughout the automotive industry.

Changes may be most pronounced on EV policy – a political lightning rod for Republicans in recent years – despite Tesla CEO Elon Musk’s role in the upcoming Trump Administration. Future proposals are likely to further President Trump’s promises to eliminate government incentives for EV manufacturing and purchases, with the aim of tipping the scales back in favor of gas-powered vehicles, and the oil industry.

Read the full insight here to learn more about these initiatives.

Where Are My Chips?

Please contact Tim Flamank with any questions.

If you subscribe to the view that Artificial Intelligence (AI) is going to change life as we know it, then you will have a vested interest in the semiconductor industry. Semiconductors, or chips, are the workhorses behind AI and nearly every modern digital technology. Chips are so vital that they have been described as the “oil of the 21st century”, turning companies like Nvidia and TSMC (leaders in advanced chip design and manufacturing respectively) into household names.

It is therefore surprising that the supply chains underpinning this crucial component remain some of the most precarious.

Key risks include:

  • Chip manufacturing remains a highly globalised activity, despite recent initiatives by governments to “onshore” more of the supply chain.
  • Key stages of the production process are geographically concentrated. Localised disruption can therefore have global ramifications for supply, demand and pricing dynamics.
  • Global supply and demand can be volatile. While some companies, like Nvidia, have benefited from strong demand, other parts of the industry have seen oversupply. The long-term growth potential of key demand drivers, such as AI, is still uncertain.
  • Governments employing more muscular trade policies, for example through export controls and sanctions.

It is fair to say that chips increasingly resemble a commodity. As disputes lawyers, we deal in the legal mechanisms and frameworks which have developed to respond to disruptions in similar markets. The purpose of this article is to consider how, from an English law perspective, some of these concepts may apply to contractual arrangements in the chip sector. In so doing, we hope to show the practical value that advanced thinking about potential disruption can bring.

Most people will be familiar with the concept of force majeure. We have written about its potential applicability to chip contracts in the past. Force majeure clauses generally operate to release contractual parties from their obligations upon the occurrence of certain disruptive events, for example extreme weather or war.

Read the full insight here.

Cross-Post from Discourse Magazine:  The Rise and Fall of the WTO

This is a Cross-Post from Discourse Magazine.  Please contact Everett Eissenstat with any questions.

Both U.S. presidential candidates have taken firm stances against free trade.  This bipartisan support marks a significant change in our country’s historical stance on promoting open markets and reductions in tariffs.  For a deeper dive into the transformation of the U.S. ‘s trade policy and potential future of global trade, please read this article from our colleague Everett Eissenstat.

PVH Facing the Risk of Being Placed on China’s Unreliable Entities List

On September 24, 2024, China’s Ministry of Commerce (MOFCOM) announced that the Working Mechanism of the Unreliable Entities List (the “Working Mechanism”) had initiated an investigation of the PVH Group, a global clothing company and owner of brands such as Tommy Hilfinger, Calvin Klein, Warner’s, Olga and True & Co.

The action was taken pursuant to the Provisions on the Unreliable Entities List (UEL), a relatively new law in China that allows the Chinese government to impose countersanctions against foreign entities, including companies, organizations or individuals. The Working Mechanism indicated that PVH Group is being investigated for suspected violation of normal market transaction principles, suspension of normal transactions with Chinese enterprises, organizations or individuals, and adoption of discriminatory measures with respect to products from the Xinjiang Uygur Autonomous Region.

You can read the full insight prepared by D. Michael Kaye, Sarah K. Rathke, Ludmilla L. KasulkeJeremy W. Dutra, and Shawn Harwood here:

U.S. House Of Representatives Passes The BIOSECURE Act During “China Week”

On September 9, 2024, the U.S. House of Representatives commenced “China Week,” during which the House passed 25 bills intended to limit the influence of the Chinese Communist Party in the United States.[1]  Among these was the BIOSECURE Act—a piece of legislation that would prohibit federal funding for equipment or services provided by a “biotechnology company of concern.”[2]  The House voted in favor of the bill by a vote of 306 to 81 on Monday, and it will now move to the Senate.[3] 

A brief history of the BIOSECURE Act, a summary of its provisions, and an analysis of its supply chain implications are described in the following post.

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