DETROIT — Piston Group LLC will maintain its certification as a minority business as its legal fight with the Michigan Minority Supplier Development Council plays out in court, judges decided Thursday.
The Michigan Court of Appeals issued an opinion blocking the minority council’s attempt to appeal a preliminary injunction granted to Piston Group in June that allowed the Southfield, Mich.-based automotive supplier to keep the lucrative certification for now.
It’s an interim win for the Piston Group, which said losing its minority business enterprise certification puts the company at risk, especially during contract negotiations with major customer Stellantis, whose contract with Piston Group is contingent on that certification.
Thursday’s opinion is the latest development in a bitter dispute that began last March when the council stripped its certification from the company owned by former Detroit Pistons guard Vinnie Johnson — and the largest Black-owned automotive supplier in the country. The company sued to have it reinstated.
“We are pleased with the opinion,” said Mark Zausmer, a Farmington Hills-based attorney representing Piston Group. “Most importantly, it preserves the injunction, and that means that our certification remains in effect pending the outcome of the trial. In other words, we now are able to maintain our certification while we prove our case, and that’s all we’ve ever wanted to do.”
The Michigan Minority Supplier Development Council said in a statement to Crain’s Detroit Business, an affiliate of Automotive News, that the opinion issued by the court Thursday “strongly supports” the council’s view that Piston Group’s lawsuit is “without merit.”
“The Council believes it is unfortunate that a corporation, that for years benefited from minority business certification and advocacy, has chosen to engage in costly litigation rather than comply with the rules established by the national organization (National Minority Supplier Development Council) for all (Minority Business Enterprises),” council spokesman Michael Layne said in an email.
The broader legal battle in Wayne County Circuit Court over Piston Group’s certification is likely to take six months to a year before a decision is made.
A central issue is what it means to be a minority business enterprise. To be certified by the council as such, a company must be 51 percent majority-owned by a person of color, actively managed in the day-to-day operations by a person of color and operate independently.
The council has argued that Piston Group does not qualify because its four divisions — Piston Automotive, Irvin Automotive, the Detroit Thermal Systems joint venture with Valeo and office furniture unit Airea — are run by white people. The company has said it does qualify because its sole owner Johnson is involved in the operations of each division.
The company has also said that losing its minority certification would jeopardize its business as its customers increasingly prioritize diversity and purchasing from minority-owned suppliers.
Ford Motor Co. and Stellantis NV account for 75 percent of Piston Group’s sales portfolio, according to the opinion from the court.
“Most notably, Johnson attested that the Piston Companies are in the process of renewing their contracts with Stellantis, which are contingent on MBE certification,” the court said.
The court upheld the preliminary injunction, imposed in cases where there is “real and imminent danger of irreparable injury” if the status quo is not preserved — in this case, the danger of lost business if the minority certification is taken away.
However, in its opinion, the court did note that the council’s attempt to strip away the minority certification does not appear to be “illegal, unethical or fraudulent.”
“Although plaintiffs (Piston Group) disagree with the MMSDC’s determination regarding the day-to-day management of the Piston Companies, and even if the determination was incorrect, the evidence does not indicate that defendants acted with the intent to cause a breach or termination of plaintiffs’ business relationships or expectancies, and nothing indicates that defendants did something illegal, unethical, or fraudulent,” the opinion said.
