Dec. 28, 2001 – Detroit, MI – A federal district court judgment entered a judgment of $2.86 million against International Rectifier Inc. (IRF) in a civil suit brought against the semiconductor manufacturer by sales firm Multimore Sales Inc., Novi, MI.
The judgment followed a jury verdict and, adding in costs and attorneys’ fees, could approach $3.5 million.
According to attorneys for Multimore, the sales company proved it had reached an oral agreement with IRF on Sept. 17, 1997, under which Multimore served as an IRF representative, selling the company’s electronic semiconductor products to auto industry users and other manufacturers in this market.
Acting as an independent product sales representative, Multimore introduced new customers and opportunities to its principal, IRF, including Aisin Dana, Delco/Delphi, Jabil, Kelsey, Saturn, TRW, Ford Visteon, Whirlpool, and Yazaki. An original 1994 written contract, as renewed by IRF and Multimore at the end of 1995, governed the parties’ business relationship until the 1997 oral agreement became operative. The plaintiff claimed the oral contract was breached in May 1999, when IRF decided to sell direct to customers and stopped paying sales commissions to Multimore.
The oral agreement included two key components:
1. IRF owed Multimore $2.5 million in “investment payback” for various expenses incurred by Multimore on behalf of its principal from 1994 to 1998, and
2. IRF owed Multimore “life of the part” commissions for all electronic components procured under the oral contract after January 4, 1998.
Lead counsel for the plaintiff was Rodger D. Young of Young & Associates, P.C., Southfield, MI. Representing the defendant were Raymond J. Carey of Foley & Lardner, Detroit and Chicago, and S. Allen Earley of S. Allen Earley Associates, Detroit.
Multimore attorney Rodger D. Young said, “This case represents another milestone along the rocky path which exists between sales representative and their principals. The automotive industry is putting increased pressure on suppliers for cost reduction, which can erroneously be perceived as a requirement to eliminate sales representatives without incurring post-termination liabilities. Quite simply, suppliers need to be more sensitive to these liabilities in assessing whether or not to terminate a sales representative.”