Incodel Mich. v. Blue Tech. Glob.

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INCODEL MICHIGAN, LLC, Plaintiff/Counter-Defendant, v. BLUE TECH GLOBAL, LLC, Defendant/Counter-Plaintiff.

No. 21-12208

United States District Court, E.D. Michigan, Southern Division

March 8, 2024

Anthony P. Patti Magistrate Judge

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT (ECF NO. 57) AND PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT (ECF NO. 58)

SHALINA D. KUMAR UNITED STATES DISTRICT JUDGE

I. Introduction

This dispute involves two companies-plaintiff Incodel Michigan, LLC (Incodel) and defendant Bluetech Global, LLC (BTG)-in the business of supplying Ford Motor Company (Ford) with electrical automotive parts called wiring harnesses (“harnesses”). Incodel and BTG worked together to supply harnesses to Ford under related contracts that were intended to protect them from the risks of sharing assets, profits, and business opportunities. The contracts ultimately failed in this objective and, as a result, Incodel sued BTG, alleging a variety of contract, business tort, and intellectual property claims, and BTG countersued Incodel for breach of two separate contracts and unjust enrichment. ECF No. 41; ECF No. 52.

The parties filed cross motions for partial summary judgment. ECF Nos. 57, 58. The motions are fully briefed and do not need a hearing for decision. ECF Nos. 57-58, 62-63, 69-70; see E.D. Mich. LR 7.1(f)(2). For the reasons below, the Court grants in part and denies in part each motion.

II. Background

Incodel and BTG formally began their relationship by entering a Nondisclosure and Limited Noncompete Agreement (“NDA”) executed in summer of 2019. ECF No. 58-2. Under the NDA, “one party may disclose (the ‘Disclosing Party') Confidential information to the other (the ‘Receiving Party')”, but the Receiving Party may not use any confidential information provided by the Disclosing Party on its own behalf. ECF No. 58-2, PageID.1316.

The parties entered the NDA to pursue significant business supplying Ford with certain harnesses. At the time, Ford urgently needed to find a new supplier for over 600 harnesses that a company called PKC had previously supplied to Ford. ECF No. 58-4, PageID.1347; ECF No. 58-5, PageID.1354, 1356-57. Ford had a list of the over 600 harnesses (the “PKC list”) that detailed the volume of each harness it needed. ECF No. 586. The PKC list included harnesses for a Ford vehicle platform called “P558” as well as for other vehicle platforms. Id.

By the time the parties entered the NDA, Incodel had already been a “Tier 1” supplier to Ford-that is, Incodel had already supplied various parts directly to Ford-for about three years. ECF No. 58-7, PageID.1374-77. At the same time, BTG had had no business with Ford, which had never heard of BTG. ECF No. 58-8, PageID.1390; ECF No. 57-4, PageID.1137.

On June 24, 2019, four days after BTG executed the NDA, a BTG design engineer emailed Ford that “Incodel is in the process of taking over the Ford Service Wire Harness business from PKC Group. BTG is working with Incodel in regard to wiring.” ECF No. 58-9. Then, on July 1, 2019 a Ford representative issued a letter stating that Ford was “transferring manufacturing from PKC to Incodel” for “harness supply to Ford.” ECF No. 58-10. According to the Ford representative, the PKC harness business transferred to Incodel included approximately 700 different harnesses. ECF No. 58-5, PageID.1354, 1356.

Soon after, in August 2019 Incodel and BTG entered the Strategic Alliance Agreement (“SAA”) to supply Ford with “Products,” which the SAA broadly defined as “P558 wiring harnesses and related items and any other electrical components added to this definition by mutual written approval.” ECF No. 58-11, PageID.1408. Under the SAA, BTG's primary role was to provide engineering support. See id.; ECF No. 58-8, PageID.1401. As relevant here, the SAA contains the following key provisions:

• BTG would be “entitled to compensation of 40% of the Profit from the sale of Product.” ECF No. 58-11, PageID.1412.

• Incodel has “the sole right to change, modify or discontinue sales of any of the Products” with “no obligation or liability to BTG.” Id.

• Until two years after the SAA's termination, BTG would not promote or sell to Ford “either for its own account or as agent or BTG for another,” “any product that is directly competitive to the Products.” Id.

• Neither party has authority or may hold itself out as having authority to make any contract or representation on behalf of the other party. Id. at PageID.1411.

To avoid confusion as to “what [the parties] [we]re as a group,” the parties executed an addendum to the SAA. See ECF No. 57-12; ECF No. 57-4, PageID.1136-37; ECF No. 64-3. Under the addendum, Incodel allowed BTG to use Incodel.com email addresses. See ECF No. 57-4, PageID.1136; ECF No. 64-3. Consistent with BTG's engineering support role under the SAA, the addendum expressly limited BTG's use of Incodel.com email addresses to only engineering-related communications. ECF No. 58-11, PageID.1408; ECF No. 64-3.

In order to supply harnesses to Ford, the parties had to select a manufacturer. ECF No. 58-11, PageID.1408. They ultimately selected Chongqing Minkang Industrial and Trade Co., LTD (“Minkang”), which entered into a contract (the “MK agreement”) with Incodel to manufacture the harnesses under the SAA. See ECF Nos. 62-3, 62-13. Although BTG's owner, Jun Lan, signed the MK agreement, the only parties to it are Minkang and Incodel. See ECF No. 62-13. Under the MK agreement, Incodel would purchase and store most of the raw materials and tooling to manufacture the harnesses covered by the SAA at Minkang, which in turn would use Incodel's raw materials and tooling to manufacture the harnesses. See id.; see also ECF Nos. 63-13, 58-11. The MK agreement contained an exclusivity, nonsolicit, and noncompete provision prohibiting Minkang from directly or indirectly supplying harnesses to Ford. See ECF No. 62-13.

The parties began supplying harnesses to Ford, focusing at first on the ten harnesses on the PKC list with the largest volumes (the “Top 10 harnesses”). ECF No. 58-15, PageID.1433. Later, in February 2021, the parties also started supplying an additional PKC-listed harness (the “Plus 1 harness”). ECF No. 58-8, PageID.1389; ECF No. 62-20, PageID.1702. The parties deposited their profits under the SAA in a joint bank account that required both parties to approve transfers from it. ECF No. 58-3, PageID.1321. They would withdraw profits from the account only as “advance partial distributions” under subsequent written agreements. See ECF Nos. 58-12, 58-13, 58-14.

BTG also secured valuable harness work without Incodel. Ostensibly on Incodel's behalf but without Incodel's knowledge or involvement, BTG quoted the indirect supply to Ford of other PKC-listed harnesses through a direct supplier called Flex-N-Gate. See ECF No. 58-7, PageID.1384-85; ECF No. 58-4, PageID.1348, 1350. BTG obtained a purchase order from Flex-N-Gate for one of the harnesses, and without disclosing to Incodel the $125,000 value of the purchase order, transferred the purchase order to itself. ECF No. 58-17; see ECF No. 58-4, PageID.1349, 1351; ECF Nos. 64-1, 58-17, 57-14. Again without Incodel's knowledge or involvement, BTG also obtained for itself many purchase orders from another direct supplier, Hearn Industrial Services (“Hearn”), to supply Ford with PKC-listed harnesses. ECF No. 58-3, PageID.1342; see ECF No. 58-7, PageID.1383; ECF No. 58-18; ECF No. 58-8, PageID.1395-96. Facing a 22-week supply delay for certain raw materials and tooling needed to perform some of its work with Hearn, BTG suggested using Incodel's materials at Minkang; subsequently, BTG performed the work without the 22-week delay, and Incodel's materials at Minkang went missing. See ECF Nos. 65-1, 66-1; 65-4; 63-13.

In addition to receiving $125,000 for its work with Flex-N-Gate, BTG received millions in revenue for its work with Hearn, with at least $5 million coming from its work on two PKC-listed harnesses alone. See ECF Nos. 58-17, 58-19, 63-21, 64.

BTG's procurement of harness work without Incodel prompted Incodel to initiate this action on September 20, 2021. ECF No. 1. Incodel brings the following claims: violation of the Federal Defend Trade Secrets Act, 18 U.S.C. § 1839 (Count I); violation of the Michigan Uniform Trade Secrets Act, M.C.L. § 445.1902 (Count II); breach of contract based on the SAA and MK agreement (Count III); tortious interference with a contract (Count IV); tortious interference with a business expectancy (Count V); conversion (Count VI); violation of the Lanham Act, 15 U.S.C. § 1125 (Count VII); trademark infringement (Count VIII); civil conspiracy (Count IX); and breach of the NDA (Count X). ECF No. 41.

In response, BTG filed counterclaims for breach of contract based on the SAA (Count I), unjust enrichment (Count II), and breach of contract based on the NDA (Count III). ECF No. 52.

Both parties now seek summary judgment: BTG seeks summary judgment on all of Incodel's claims, ECF No. 57; Incodel does the same on all of BTG's counterclaims, ECF No. 58. Incodel also seeks summary judgment on whether “Products” under the SAA includes not just the Top 10 and Plus 1 harnesses but, at a minimum, all harnesses on the PKC list. Id.

III. Standard of Review

When a party files a motion for summary judgment, it must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record . . .; or (B) showing that the materials cited do...