As previously reported, Michigan and federal courts are split on the enforceability of some supply chain contracts in the wake of the Michigan Supreme Court’s landmark 2023 decision in AirBoss, where Warner represented the prevailing party. Clarity on this issue appears to be imminent, as just yesterday the Michigan Supreme Court agreed to consider Kamax’s appeal in FCA US, LLC v. Kamax Inc., et al.
As we explained in an earlier alert, Kamax argues that Stellantis’ purchase orders for “approximately 65-100% of [Stellantis’] requirements” is not an enforceable requirements contract. The Michigan Court of Appeals disagreed, holding that it is enforceable. But federal courts have ruled differently. For example, in FCA US, LLC v. MacLean-Fogg Component Solutions LLC, et al, the federal district court held that this language did not create an enforceable requirements contract.
The Michigan Supreme Court’s order granting leave to appeal the Kamax decision signals that at least four justices on the high court might see problems with the Court of Appeals’ analysis. Its anticipated opinion in Kamax promises to resolve the conflict between the state and federal courts on this issue, since both justice systems will be bound by the Michigan Supreme Court’s pronouncement of Michigan contract law.
Whatever the court’s ruling, it will have a significant and wide-ranging effect on all suppliers, as Stellantis is far from the only supply chain participant with terms implicated by the issues in Kamax. We intend to post an update with a link to the live video stream as soon as oral argument is scheduled.
In the meantime, suppliers’ contractual rights continue to be murky. Suppliers with questions about these and other recent developments in supply contract law should reach out to Adam Ratliff, Michael Brady, Amber Krupp or a member of Warner’s Automotive Industry Group. For insights on the Michigan Supreme Court and its appellate process, reach out to Gaëtan Gerville-Réache or a member of Warner’s Appellate and Supreme Court Practice Group.
