A Tier 2 automotive injection molder is trying to launch a class-action lawsuit against E.I. DuPont Canada Inc. over supposed price fixing on engineering resins like DuPont Zytel nylon and Delrin acetal.
Axiom Plastics Inc. of Aurora, Ontario, alleges DuPont Canada conspired with authorized Canadian distributors and certain Tier 1 automotive suppliers to fix prices on resins sold to Tier 2 automotive plastics suppliers like Axiom. The claim begins in January 2000.
Axiom's law firm, Sotos LLP of Toronto, filed a statement of claim Dec. 15 in Ontario Superior Court of Justice in Toronto. The court will decide in a certification hearing in a few months whether the action can proceed on behalf of the class. Allegations in the statement of claim have not been proven in court.
``The basic premise of the case is that automotive molders should be free to negotiate resin costs without third-party interference,'' said Sotos lawyer David Sterns in a telephone interview. ``These costs are essential to their survival and ability to compete in the global market.''
The statement of claim alleges DuPont Canada conspired with certain Tier 1 companies to require their Tier 2 suppliers to use DuPont resins at artificially high prices. DuPont Canada would remit money to the Tier 1 firms in return for their participation. As well, Tier 1 participants were supposed to monitor their suppliers' purchase volumes to help detect any resin buying outside DuPont Canada-approved sources.
The statement of claim alleges that Magna International Inc.'s subsidiaries Intier Automotive Inc. and Automa International Corp. were among the Tier 1 conspirators.
DuPont Canada public affairs manager Roger Goodman said his firm rejects the claims completely.
``Quite simply, the claims are baseless. The picture of DuPont that they present is contrary to the facts, and does not reflect the manner in which the company and our employees strive to conduct business. We intend to defend ourselves vigorously.''
Axiom and Intier are no strangers to confrontation. A year ago, Axiom was able to stop Intier from canceling its supply contracts with Axiom. The temporary injunction, issued Feb. 17, 2005, prevented Intier from terminating some 40 supply contracts with Axiom, which represented the bulk of Axiom's business.
Intier wanted Axiom to cut prices on its supply contracts by nearly 32 percent, a cut that Axiom argued would bankrupt it, according to evidence presented at the hearing. Axiom offered a smaller reduction, but Intier responded in the fall of 2004 by saying that it would give 90-day notice to cancel Axiom's contracts.
The court eventually ruled that Intier did not give reasonable notice of the cancellation. Other issues in the terms of the Axiom/Intier contracts were argued but not resolved in the hearing. On June 15, Ontario Divisional Court turned down an appeal request from Intier.
Under the temporary injunction, Axiom continues to mold parts for Intier, at least until a trial resolves the issue. No date has been set for the trial, in which Axiom will bring a C$30 million (US$26.1 million ) action against Intier for the alleged breach of contract.
That dispute between Axiom and Intier turned up evidence that Axiom later would use to launch the class-action claim. Axiom found a distributor willing to sell it resins at substantially lower prices than those set by DuPont Canada's authorized distributors, evidence at the injunction hearing indicated. When Intier found that out, it demanded Axiom stop buying from the lower-price source.
Axiom Plastics is part of Axiom Group Inc. of Aurora. Axiom Plastics operates in a 70,000-square-foot plant in Aurora and a facility in Forenza, Italy. Other companies in the group are Axiom Tooling, aka H&R Tooling, and Axiom Electronics. Axiom Group President Perry Rizzo could not be reached for comment.