Opinion ID: 2980882
Heading Depth: 3
Heading Rank: 2

Heading: Range of Motion of the Pacifica Seat Recliners

Text: The design drawings for the recliner systems manufactured by Keiper called for a 38degree range of movement, with the rear stop being at 56 degrees rearward of vertical and the full-forward stop at 18 degrees rearward of vertical, plus or minus two degrees at either end. (R. 70-4, Eupizi Depo. at 18). Intier engineer Corey Webber testified that “the recliners met the technical design specs.” (R. 70-3, Webber Depo. at 153). 4 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. Intier engineer Frank Eupizi testified that the full-forward position of the Pacifica seat was such that the occupant could be seated normally, in contrast to other vehicles in which the full-forward position is at or forward of vertical, so that the seat’s occupant would be “hunched forward” were the seat fully inclined forward. (R. 70-4, Eupizi Depo. 32). Eupizi further testified that, other than the Pacifica, he knew of no other production vehicle made between 2000 and 2009 that had a forward stop at or near the 18-degree forward of vertical position. (Id.). Eupizi also testified that Chrysler determined the shipping position of the seats after assembly by Intier, that the position specified was “seatbacks full up,” and that shipping with the seats in the full-forward position is “typical” in the industry. (R. 70-4, Eupizi Depo. 2324). Rodney Dalgord, another Intier engineer, also testified that the seats were shipped in the 18-degree position. (R. 70-6, Dalgord Depo. at 28). B. Seat Malfunctions and Warranty Returns In April 2005, some Chrysler Pacifica owners began returning their vehicles due to malfunctioning front-seat- recliner motors. (R. 64-6 at 2, Keiper 7-Step Corrective Action Plan). Between April 2005 and June 2006, approximately forty of the motors were returned to Keiper. (Id.) Most returns comprised just the motors themselves, but some also included the seat assemblies. (R. 64-5, Brassat Depo. at 125, 131-32). Keiper’s Director of Engineering, Dirk Brassat, testified that, where the returns included the full assembly, he observed that the seats were all in the full-forward stop position. (Id.). 5 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. Keiper conducted an investigation into the motor failures, which revealed that gears in the motors had jammed. (R. 64-6, Keiper 7-Step Corrective Action Plan Form, at 2-3). Under “Investigation of the Cause,” Keiper’s report states, in part: • All motors operate after disassembly, freeing of any jammed gears, and reassembly without replacing the gearbox cover, and without replacing gears. Thus, the problem is in the gearbox. • Seat backs were reported by the dealers to have been locked in “upright” to “normal” position when the affected vehicles were brought in. This may be at or near the full forward stop. (Id. at 3) (emphasis added). The report further states: “Keiper has not found a violation of any existing specification or a deviation from normal manufacturing processes that would prompt containment activity.” (Id.). Under “Root Cause,” the report states that, where larger gears were installed in the production motors, the motors “survived 2 to 3 times the number of test cycles as motors of current production.” (Id.). The report concludes by noting that the permanent design change with the larger gears had been approved by both Keiper and Intier, which would “improve the capability of the motor and thus reduce warranty occurrences.” (Id. at 4) (emphasis added). In August 2005, after conducting additional tests, Keiper updated its analysis and identified the cause of the motor failures as the design position of the forward stop for the Pacifica recliner. (R. 70-5, Brassat Aff. ¶ 7). Keiper recommended to Intier that the fullforward stop position of the seats for the Pacifica be moved forward, outside the range of the 6 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. common seating position. (R. 70-3, Webber Depo. at 151, 154; R. 70-11, Brassat Depo. 109-10). Based on the Pacifica returns, Chrysler began debiting Intier for their costs, which Intier, in turn, debited Keiper as set-offs against amounts owed for the purchase of the Recliner Systems.2 In late 2006, Intier prepared a “Corrective Action Process Issue Detail” report regarding the seat-back-recliner systems. (R. 70-16). This report states: “The supplier, Keiper, did not find violation of any existing specification or a deviation from normal manufacturing processes that would prompt containment.” (Id. at 3). In a section titled “Root Cause Analysis,” the report states that “Keiper found that the current revision 10 level motor design was within all specifications, but could be made more robust with design improvements.” (Id. at 4). In the following section, however, the report states that the “component or process is non-conforming to the specifications.” (Id.). Finally, in the section titled “Lessons Learned,” this report states: This motor design was used on multiple car lines without field issues and met all established specifications. The unique Pacifica seating environment contributes to a higher than desired mortality. DaimlerChrysler and the suppliers should jointly identify special vehicle environments that demand additional robustness. (Id. at 6) (emphasis added). 2 The parties apparently differ as to how much money Intier has debited and/or otherwise withheld from Keiper, but the district court noted that the amount is in the $1 million range or higher. (R. 73 at 8). 7 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. On February 19, 2008, Keiper, Chrysler, and Intier representatives met regarding the recliner-motor warranty issues. (Doc. 70-12, Meeting Minutes). The minutes of this meeting state: A review of the past month’s returns was undertaken. Along with 5 returned motors, two sets of Recliner assemblies were returned. KEIPER points out that both Recliner sets were stopped in the full forward position when removed from the vehicle. Both Intier and Chrysler accepted such as fact. KEIPER stated, based on extensive investigation that had been undertaken from 2004, that the position of the full forward stop is the root cause for the stalled motor returns. Both Intier and Chrysler representatives agreed that there was no reason not to believe that the forward stop is a contributor. (Id. at 2) (emphasis added). These minutes also state that Chrysler opined during this meeting that it was possible that Intier had shipped the Pacifica seats in the full-forward position and that the seats had remained that way until the vehicle was driven by a customer. (Id. at 3). Chrysler speculated that “the above-mentioned forward loading of the seat may induce ‘pre-damage’, hence affecting the life cycle of the motor.” (Id.). The minutes further state: Chrysler further stated that the motor issue on the recliner is “so similar” to the motorized gear failure on the CS seat back lumbar, with the lumbar motor shipped against a hard stop resulting in motor gears binding, motor stall. The team investigating the lumbar motor issue noted the ‘delivery’ condition. The team made a change to revise the process to ship with the lumbar system slightly forward of the “full off” condition. Per Chrysler, the effect of the shipping in a full off position was not fully known, but the change was judged directionally correct and simple to implement. (Intier implemented the process change in summer 2007 to help rectify this issue.) This was new information not previously provided to KEIPER. 8 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. (Id.). Finally, these minutes reflect a discussion regarding the target market of the Pacifica (“less than 95 percentile male”) and that certain customers experienced “visibility issues” which resulted in the “seat back being stored in the full forward stop (drivable position),” and that this “condition at a seat system level was not anticipated and hence, not reflected in the specification.” (Id.). On March 5, 2008, a Chrysler engineer and warranty executive stated in an email: At this point, I think there is agreement that the warranty failures were caused by an unexpected “hard stop” condition in the full up position. However, the argument is now about who is “at fault” for the unexpected failures. Is Chrysler’s “PF” to blame? Is Chrysler/Intier to blame for designing the recliner with the “up” stop only 4 degrees forward of design? Is Keiper at fault for not knowing about this design failure in their DFMEA and then giving direction on where to position the “up” stop? (R. 70-15 at 2) (emphasis added). C. Litigation Ensues Keiper filed suit in the Eastern District of Michigan on May 13, 2008, alleging claims for breach of contract and declaratory judgment based on Intier’s refusal to pay amounts owed for its purchase of the Recliner Systems. (R. 1). In its Answer and Affirmative Defenses, Intier admits that its contractual relationship with Keiper is “governed by Intier purchase orders and Magna’s terms and conditions.” (R. 5, ¶ 23). Intier filed its first motion for summary judgment on July 31, 2009. (R. 42). In response, Keiper argued that Intier had failed to support by affidavit its assertion that the 9 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. copy of the 1998 Terms and Conditions attached to its motion was, in fact, the terms and conditions actually found on the reverse side of the September 2004 purchase order. (R. 45, Plaintiff’s Brief in Opposition to Defendant’s Motion for Summary Judgment, at 18). Intier then attached to its reply brief a declaration so attesting. (R. 47). On October 26, 2009, the district court entered an order requiring Intier to file a “legible” copy of the 1998 Terms and Conditions, apparently finding the existing copy difficult to read. (R. 58). Intier complied. (R. 60). On November 4, 2009, the district court held a telephonic status conference. (Docket Minute Entry 11/4/09). Noting that several issues required additional briefing, the district court directed Intier to withdraw its pending motion for summary judgment and file a new motion covering all issues identified during the hearing.3 Again Intier complied, withdrawing the pending motion (R. 63) and filing a revised motion for summary judgment. (R. 64). D. The District Court’s Opinion On March 22, 2010, the district court issued an Opinion and Order Granting Defendant’s Motion for Summary Judgment. (R. 73). The district court first noted that, although there was some question about whether the claims were governed by Michigan or Ontario law, the parties agreed that there was no material difference between the two for purposes of the issues before the court. (Id. at 13). 3 Because this hearing is memorialized by only a minute entry, the record does not reflect the court’s full discussion. However, Keiper does not dispute Intier’s account of the hearing. 10 No. 10-1486 Keiper, LLC v. Intier Automotive Inc. Next, the district court held that Keiper bore the burden of proof on its breach of contract and declaratory judgment claims, and that this burden included showing that it performed its obligations under its contract with Intier. (Id. at 14). Further, the court held, Keiper bore the burden to “prove that it did not breach its Sellers Warranties, that it was not obligated to indemnify Intier for warranty costs, and that the setoff provisions of its contract with Intier were not triggered.” (Id.). The district court then addressed the warranty of fitness for a particular purpose found in the applicable Terms and Conditions. (Id. at 20). The court held that, because Keiper knew the purpose for which Intier intended to use the Recliner Systems, including the range of motion within which the seats would move in the Pacifica, “it is undisputed that it was obligated to supply Intier with Recliners that would not break when placed at any angle within that specified range of motion.” (Id. at 22). The court further held that there was no evidence supporting Keiper’s alternative theories as to why the motors failed. (Id. at 23). The district court concluded: “Because Keiper breached its warranty of fitness for a particular purpose under both the 1998 and 2005 Terms and Conditions, Intier was entitled to deduct or set-off any amounts it had to pay for the warranty repairs from amounts it owes to Keiper for its Recliners.” (Id. at 25). The court thus found it unnecessary to reach the issue of alleged design defects. (Id. n.4). Keiper timely appealed. (R. 76). 11 No. 10-1486 Keiper, LLC v. Intier Automotive Inc.