In a court opinion that borrowed at length from the infamous “My father made him an offer he couldn’t refuse” scene from The Godfather, Warner’s client AirBoss Flexible Products prevailed in a high-profile supply chain dispute.
Last July, we reported on the Michigan Supreme Court’s groundbreaking decision in MSSC, Inc. v. AirBoss Flexible Prods. Co. We were pleased to share that the court had ruled in favor of our client, AirBoss, in clarifying that not all automotive suppliers were bound to long-term requirements contracts. Instead, Michigan’s Supreme Court clarified that many suppliers were free to stop accepting customer releases unless their contracts had a proper quantity term or requirements obligation that specifically prevented the seller from doing so.
The Supreme Court ruled that AirBoss was one of those suppliers and that, contrary to the lower court rulings, AirBoss and MSSC did not enter into a requirements contract, but rather had a release-by-release arrangement, whereby AirBoss should have been able to stop accepting MSSC’s releases in early 2020 unless MSSC agreed to AirBoss’s requested pricing adjustments. The question remained, however, whether the Supreme Court’s 2023 decision entitled AirBoss to recover the difference between the prices it had been forced to accept in the interim and the prices it had wanted to start charging back in 2020.
This question went to trial in November and the Oakland County Circuit Court issued its opinion on Dec. 13, 2024. (Oak. Cty. Cir. Ct. Case No. 20-179620-CB.) The court again ruled in favor of AirBoss, awarding it all the relief requested. The opinion — including its references to The Godfather and the ancient Greek King Pyrrhus — can be viewed here.
The trial court explained that although AirBoss had been successful in its appeal at the Supreme Court, AirBoss had been forced to supply its customer MSSC at below-cost prices as a result of the earlier “erroneously issued court orders” from the trial court and Court of Appeals. AirBoss had filed counterclaims back in 2020 for unjust enrichment and quantum meruit to recover the differences in prices between what it had been paid by MSSC under the since-overturned orders and the prices AirBoss had wanted to charge.
MSSC raised a series of arguments at trial, including that AirBoss had entered into new contracts by shipping against MSSC’s releases while AirBoss’ appeal was pending; that AirBoss had not adequately documented its 2020 request for a price increase; and that the Supreme Court’s opinion should only apply prospectively to other cases but not this one. The trial court soundly rejected each of these arguments at trial, calling them “a bit rich” and accusing MSSC of residing “in a parallel universe.” The court ultimately agreed with AirBoss that having been erroneously forced to supply at lower prices than AirBoss desired was “the very definition of unjust enrichment.” AirBoss was awarded a judgment totaling the full gap between its desired prices and those it had been paid — approximately $3.5 million — plus interest accrued since 2020. Any other result, the court explained, would have been a “subversion of justice.”
The Oakland County Circuit Court’s opinion caps a long-running supply chain showdown but also serves as a reminder of some important legal principles for suppliers. AirBoss was victorious, in part, because it staked out its legal positions clearly and early — it was AirBoss’ 2019, pre-litigation letters that formed the basis of the judgment over five years later. AirBoss was also careful to reserve its rights and act under protest when necessary. This allowed the trial court to conclude that “MSSC ran the risk it would lose, and it knew exactly how much it was placing in jeopardy if it lost.”
In response to the trial court’s opinion, Chris Figel, AirBoss’ executive vice president and general counsel, commented that the company is “very happy with this result and Warner’s excellent work on our behalf in this matter.”
