Last month, FCA US LLC filed suit against Plastic Omnium Auto Inergy (USA) LLC in Oakland County Circuit Court alleging a design defect and asserting claims of breach of contract, breach of warranty and indemnification. While FCA US does not identify the exact damages it seeks in the suit, it does allege that it has incurred “millions of dollars in costs associated with” customer satisfaction campaigns necessitated by the alleged defect. Warner is not involved in the lawsuit and cannot speak to the history of the dispute or the veracity of the claims made. However, the filing itself may be indicative of a larger shift seen in 2025 wherein OEMs are willing to file affirmative lawsuits against their supply base.
Historically, OEMs have been reluctant to sue suppliers, given the potential disruption litigation can cause to ongoing production, the strain it creates on traditionally long-term relationships and the scrutiny into the OEM’s own conduct that litigation can invite. More importantly, though, litigation has rarely been a tool employed by OEMs because their supply agreements permit self-help remedies such as unilateral chargebacks, offsets and debits against a supplier’s open invoices. These contract rights typically allow OEMs to recover money quickly, without the cost, delay or uncertainty of litigation.
Despite these self-help remedies, however, OEMs are increasingly choosing to litigate. In the last six months, for example, six lawsuits have been filed by OEMs against suppliers in the state and federal courts sitting in Michigan. The most common causes of action are, unsurprisingly, breach of contract, breach of warranty and indemnification. Several factors could be driving this recent uptick, including overall financial stress across the supply chain, supplier pushback against unilateral chargebacks or debits and fewer long-term relationships in the industry.
It remains to be seen whether this increase in affirmative suits will continue into 2026. For suppliers, this potential trend raises both legal and strategic implications that warrant close attention. Suppliers should assume that serious quality, delivery and warranty disagreements may end up in court and plan accordingly: preserve documents and communications early; carefully evaluate chargebacks instead of accepting them as inevitable; and understand how contract terms might be interpreted by a judge, not just an OEM buyer.
