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Dashboard Insights

Timely Analysis of Emerging Legal and Business Developments for the Automotive Industry

USEPA’s PCB Bulk Product Waste Reinterpretation – 40 CFR Part 761

By Foley & Lardner on Posted in Environmental Regulation

The following post is provided by our guest author, Graham Crockford from TRC Environmental Corporation. 

PCBs were domestically manufactured from 1929 until their manufacture was banned in the United States in 1979. Due to their non-flammability, chemical stability, high boiling point, and electrical insulating properties, PCBs were used in hundreds of industrial and commercial applications resulting in legacy PCB issues at older manufacturing facilities. Some applications included electrical, heat transfer, sealing vacuum furnaces, hydraulic equipment (e.g., stamping presses); as well as plasticizers in paints, plastics, and rubber products. 

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Supplier Relationships: Where Breakdowns Occur

By Jeffrey A. Soble on Posted in Business Litigation; Contracts

Supplier relationships do not break down overnight. Often the reasons or causes for the breakdowns are not those in the moment, but those that companies do not prepare for. A breakdown with the supplier relationship is often tied to a mistake that takes place days, months or even years before. These mistakes take many forms, but usually fall into one of four categories: (1) pre-contract Mistakes, (2) contracting mistakes, (3) relationship mistakes, and (4) termination mistakes. 

One of the most common pre-contracting mistakes is an inadequate request for quotation or other bid document. Documents soliciting bids should provide the detail necessary for a supplier:

  • The format should be consistent, clear, and easy to understand.
  • All the requirements and qualifications necessary should be set forth. 
  • The buyer should include the terms and conditions according to which the RFQ will be awarded and pursuant to which the supplier will be bound. 

Another common pre-contracting mistake is failing to conduct adequate diligence on any potential supplier. A wealth of public information is available on suppliers. Some of the more common resources include:Continue reading this entry

Updated Security Requirements for CY2012 Toxic Release Inventory Reporting

By Foley & Lardner on Posted in Environmental Regulation

The following post is provided by our guest author, Karen Lutz from TRC Environmental Corporation. 

This year, USEPA has made a change in the Toxic Release Inventory (TRI) reporting process, merging their reporting/certification systems. As part of this process, they have added several new steps that previously approved Certifying Officials will need to conduct in order to be able to certify reports for this year.  

Background:

Section 313 of the Emergency Planning and Community Right to Know Act (EPCRA) of 1986 was enacted to facilitate emergency planning, to minimize the effects of potential toxic chemical accidents, and to provide the public with information on releases of toxic chemicals in their communities. Each year by July 1, regulated companies are required to provide information for the prior calendar year on disposal or other releases and other waste management activities related to the list of regulated chemicals.

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PARTS Act Could Limit Automotive Design Patent Enforceability to 2.5 Years

By John C. Geis on Posted in Design Patent; Intellectual Property

On April 23, 2013, H.R. 1663[1] “Promoting Automotive Repair, Trade, and Sales Act of 2013’’ or the ‘‘PARTS Act’’, was referred to the House Judiciary Committee. Similar bill H.R. 3889[2] died in committee last year. The proposed bill is intended to reduce the cost of replacement parts to collision shops by limiting the period of time in which a design patent covering an original equipment automotive part could be enforced. The proposed bill would amend 35 USC § 271(j)(1) to provide:

(j)(1) With respect to a design patent that claims a component part of a motor vehicle as originally manufactured–

(A) it shall not be an act of infringement of such design patent to make or offer to sell within the United States, or import into the United States, any article of manufacture that is similar or the same in appearance to the component part that is claimed in such design patent if the purpose of such article of manufacture is for the repair of a motor vehicle so as to restore such vehicle to its appearance as originally manufactured; andContinue reading this entry

U.S. to Cut Automotive Tariffs as Japan Enters TPP Talks

By Christopher Swift on Posted in Free Trade Agreements; Imports/Exports

On April 24, 2013, Acting U.S. Trade Representative (“USTR”) Demetrios Marantis formally notified Congress that the United States plans to include Japan in Trans-Pacific Partnership (“TTP”) negotiations. Coming just three days after the TTP parties accepted Japan’s entry bid, and less than a month since Japanese Prime Minister Shinzo Abe’s announcement that Japan would apply to join the talks, the move clears the way for new trade proposals that carry significant consequences for the U.S. automotive sector.

Chief among these changes is a plan to scrap U.S. tariffs on imported Japanese automobiles. Conceived during more than a year of negotiations and memorialized in an April 12, 2013 agreement between Washington and Tokyo, the measure would gradually reduce existing import duties of 2.5 percent on cars and 25 percent on truck over several years before eliminating them entirely. The result would be a loss of longstanding trade protections for U.S. automakers and corresponding benefits for Japanese competitors selling cars and trucks within the domestic automobile market.

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The “Olympics of Restructuring”: Kevyn Orr Named Detroit’s EFM

By Tamar N. Dolcourt on Posted in Bankruptcy; Restructuring

Kevyn Orr, a University of Michigan Law School graduate and former partner at the law firm Jones Day, has been selected by Governor Rick Snyder as Detroit’s Emergency Financial Manager (EFM). As EFM, Orr will be responsible for overhauling Detroit’s finances and city services, including negotiating with creditors and unions to restructure the city’s obligations and reduce its budget deficits and long-term debt. While Orr has stated he hopes to avoid a Chapter 9 bankruptcy filing, he has described this assignment as the “Olympics of Restructuring.”

While at Jones Day, Orr was part of the team which led Chrysler through its bankruptcy and subsequent sale to Fiat. As part of that team, Orr faced similar challenges to those he is likely to face as Detroit’s EFM. Chrysler’s emergence from bankruptcy required negotiating significant concessions with bondholders and unions in order to reduce Chrysler’s overall debt. Now, as part of Fiat, Chrysler is experiencing dramatic sales growth and success. Detroit also has significant debt obligations to its bondholders and large legacy liabilities for union retirement and health benefits, which will likely require even more extensive negotiations to resolve.

A complex financial situation is not the only challenge which Orr faces as EFM. The appointment of an EFM in Detroit has been politically sensitive and is still the subject of protests within the city and the state. Orr has already faced the political issues involved in large restructurings during the Chrysler bankruptcy, where he was called to testifying before the House of Representatives regarding the decisions to close multiple dealerships. Everyone in Michigan is hopeful that Orr’s experience from the Chrysler bankruptcy will help the city of Detroit emerge from the Olympics of Restructuring with a gold medal.

Most Favored Nation (“MFN”) Pricing Draws Scrutiny as Potential Anticompetitive Practice

By James T. McKeown on Posted in Antitrust; Distribution & Franchise

An interesting and growing debate in the antitrust arena is whether most favored nation (“MFN”) pricing provisions are pro-competitive or anticompetitive. For many years, MFN provisions have been considered a fairly noncontroversial contract term included by purchasers in an attempt to assure that other buyers do not receive a more favorable price. But not all agree that MFNs result in lower prices, including some economists and, more importantly, the Department of Justice Antitrust Division (“DOJ”). The DOJ not only has expressed potential concerns about MFN clauses but also has filed several antitrust actions alleging that particular MFN clauses violate Sherman Act § 1 and cause anticompetitive effects. The challenge for businesses that prefer to include MFN clauses in their purchase agreements is to recognize when those clauses potentially raise antitrust risk.

The procompetitive benefits of MFN clauses are fairly straightforward. First, the most typical reason for obtaining an MFN clause is to reduce the buyer’s price in the event that the seller agrees to sell to another customer at a price lower than that specified in the contract with the MFN clause. This is usually considered procompetitive because a reduction in the cost of inputs may enable the buyer to lower the price it charges when selling the product downstream. Indeed, if the downstream market is highly competitive, we would expect that competition in the downstream market would cause the MFN beneficiary to pass on most or all of that cost savings to the downstream customers.

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Supreme Court to Consider General Jurisdiction Over Foreign Parent Based on U.S. Subsidiary

By Jason P. Britt on Posted in Imports/Exports

On Monday, April 22, the United States Supreme Court agreed to hear DaimlerChrysler AG v. Bauman, which asks whether a foreign parent corporation can be subject to suit in the United States for wrongs allegedly committed by a foreign subsidiary, based on the foreign parent’s relationship with a separate, non-party U.S. subsidiary. The question presented to the Court involves general personal jurisdiction over the foreign parent in California federal court — in other words, whether the parent must answer lawsuits filed in California federal court, even if the conduct alleged in the lawsuit took place elsewhere. If the Supreme Court affirms the Ninth Circuit’s ruling, global businesses may have to reconsider the contractual and ownership bonds between their networks of parents and subsidiaries, bearing in mind the risks arising in each subsidiary and the potential for those risks to spill over to the parent.  

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California Transparency in Supply Chains Act

By Michael F. Taveira on Posted in Supply Chain

As of last year, the California Transparency in Supply Chains Act requires qualifying businesses to disclose their efforts to eradicate human trafficking and slavery from their direct supply chains.

Which Business Qualify Under the Act
Under the Act, all retail sellers and manufacturers doing business in California with annual worldwide gross receipts exceeding $100 million are required to disclose their efforts to eradicate slavery and human trafficking from their global supply chain.

Who Is a “Retail Seller”?
A business entity with retail trade as its principal business activity code, as reported on the entity’s tax return.

Who Is a “Manufacturer”?
A business entity with manufacturing as its principal business activity code, as reported on the entity’s tax return.

What Does “Doing Business” Mean?
A company is deemed to be “doing business” in California if: (1) the company is organized or commercially domiciled in California; (2) sales in California for the applicable tax year exceed the lesser of $500,000 or 25 percent of the company’s total sales; (3) the real property and the tangible personal property of the company in California exceed the lesser of $50,000 or 25 percent of the company’s total real property and tangible property; or (4) the amount paid in California by the company for compensation exceeds the lesser of $50,000 or 25 percent of the total compensation paid by the company.

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Another Steelmaker Subsidiary Raided in International Antitrust Investigation

By Brandi Walkowiak on Posted in Antitrust

On March 29, 2013, South Korea’s antitrust watchdog, the Supreme Prosecutors’ Office raided the office of POSCO ICT, a subsidiary of POSCO that manages the parent company’s IT network, as part of an ongoing investigation of South Korea’s biggest steelmakers. Approximately 10 investigators conducted the search and seizure, which included collection of e-mail archives, internal reports and transaction documents. A representative for the law enforcement agency indicated that the raid was conducted to secure certain data and that it currently had no plans to raid additional companies.

That said, this raid follows a probe initiated by the Federal Trade Commission (FTC) of several steel producers for alleged price fixing of galvanized sheet iron, color steel sheets, and cold-rolled plates. Last year, the Fair Trade Commission alleged that the steel companies regularly had meetings to collude with each other on prices for these products. The FTC also alleged that Dongbu, the largest supplier, increased it prices first and the others followed and that this price increase indicated a pattern of price fixing. In December 2012, South Korea’s Supreme Prosecutors’ Office fined several of these steel producers, including Posco C&C, Hyundai Hysco, Dongbu, SeAH Steel and Union Steel, a combined fine of $291.7 billion. The FTC had investigated these entities since 2009 and has been investigating the steel industry since as early as 2005.

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