Piston Group LLC will maintain its certification as a minority company as its legal battle with the Michigan Minority Supplier Development Council unfolds in court, judges ruled 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-based auto supplier to retain the lucrative certification for the time being .
It is an interim victory for the Piston Group, which said the loss of its minority business venture certification puts the company at risk, particularly during contract negotiations with major customer Stellantis, whose contract with Piston Group depends on this certification.
Thursday’s opinion is the latest development in a bitter dispute that began last March when the board withdrew its certification from the company owned by former Detroit Pistons guard Vinnie Johnson – and the largest auto supplier owned by blacks in the country. The company sued to have it reinstated.
“We are pleased with the notice,” said Mark Zausmer, a Farmington Hills-based attorney representing Piston Group. “Most importantly, it preserves the injunction, and it means our certification remains in effect pending the outcome of the trial. In other words, we are now able to maintain our certification while we prove our case, and that’s all we ever wanted to do.”
The Michigan Minority Supplier Development Council said in a statement to Crain’s that the opinion issued by the court on Thursday “strongly supports” the council’s view that the Piston Group lawsuit is “without merit.”
“The Board finds it regrettable that a company, which for years has benefited from certification and defending minority business rights, 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 larger legal battle in Wayne County Circuit Court over Piston Group certification is expected to take six months to a year before a decision is made.
A central question is what it means to be a minority business enterprise. To be board-certified as such, a business must be 51% majority-owned by a person of color, actively managed in day-to-day operations by a person of color, and operate independently.
The board argued that Piston Group did not qualify because its four divisions — Piston Automotive, Irvin Automotive, the Detroit Thermal Systems joint venture with Valeo and the Airea office furniture unit — are run by white people. The company said it was eligible because its sole owner Johnson is involved in the operations of each division.
The company also said 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% of Piston Group’s sales portfolio, according to the court’s opinion.
“Specifically, Johnson testified that the Piston Companies are in the process of renewing their contracts with Stellantis, which depend on MBE certification,” the court said.
The court upheld the preliminary injunction, imposed in cases where there is a “real and imminent risk of irreparable harm” if the status quo is not preserved – in this case, the danger of loss of business if the certification minority is withdrawn.
However, in its opinion, the court noted that the board’s attempt to withdraw the minority’s certification does not appear to be “illegal, unethical or fraudulent.”
“Although plaintiffs (Piston Group) disagree with the MMSDC’s decision regarding the day-to-day management of the Piston companies, and even if the decision was incorrect, the evidence does not indicate that defendants acted with the intent to cause a breach or termination of plaintiffs’ business relationships or expectations, and there is no indication that defendants did anything illegal, unethical or fraudulent,” the opinion reads.