J.S.T. Corporation v. Robert Bosch LLC et al

Filing 271

MEMORANDUM AND ORDER DISMISSING MOTION TO STRIKE AND STAYING DEFENDANTS COUNTERCLAIMS (DOC. 177). Signed by District Judge Avern Cohn. (Attachments: # 1 Exhibit A) (MVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
J.S.T. CORPORATION,
Plaintiff,
v.

Case No. 15-13842

ROBERT BOSCH LLC,
f/k/a ROBERT BOSCH
CORPORATION,
ROBERT BOSCH GMBH, and
BOSCH AUTOMOTIVE PRODUCTS
(SUZHOU) CO., LTD.,
Defendants.
___________________________________/

HON. AVERN COHN

MEMORANDUM AND ORDER DISMISSING MOTION TO STRIKE AND STAYING
DEFENDANT’S COUNTERCLAIMS (DOC. 177)
I.

INTRODUCTION

This is a misappropriation of trade secrets case. Plaintiff, J.S.T. Corporation
(“JST”), is suing Defendants, Robert Bosch LLC, Robert Bosch GmbH, and Bosch
Automotive Products Co., Ltd. (collectively, “Bosch”) for misappropriation of its trade
secrets.1
In 2005, General Motors Company solicited bids for its “Global A program,” which
sought sourcing for its vehicles’ body control modules (“BCM”). Bosch submitted the
winning bid, which contemplated JST as the provider of certain BCM components.
Pursuant to their business arrangement, JST was to provide Bosch with BCM
components, which were jointly developed by JST and Bosch, for a three-year period.

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JST has also filed copyright claims that have since been stayed by the Court pending
disposition of the trade secret claims (Doc. 190).

At the end of the three-year period, Bosch had the option to seek alternative sourcing
for the BCM components furnished by JST.
Near the end of the three-year period, JST told Bosch there had to be a price
increase if Bosch desired to continue using JST as a supplier. Bosch solicited Foxconn
Technology Group (“Foxconn”) as an alternative supplier and there was no pause in the
delivery of BCMs to General Motors with Foxconn as the supplier.
After Bosch began using Foxconn as a supplier, JST filed this lawsuit. Bosch
counterclaimed, saying that JST caused the switch to Foxconn as a result of fraudulent
statements made during price negotiations. Bosch’s counterclaim is based on fraud,
promissory estoppel, and unjust enrichment (Doc. 166). Now before the Court is JST’s
motion to dismiss Bosch’s counterclaim and strike related defenses. (Doc. 177). For the
reasons that follow, the motion to dismiss is STAYED and the motion to strike is
DENIED.
II.

BACKGROUND

JST is in the business of manufacturing electrical connectors that are used to join
electrical terminals in the creation of electrical circuits. A header is part of the electrical
connector that is used in a body control module (BCM), which is a small computer
system that controls electronic processes (e.g., power locking, power windows) inside
the body of an automobile.
The JST’s product that is the subject of the current lawsuit is the HIT2 header.
Bosch purchased the HIT2 header from JST and assembled it into a BCM that Bosch
then sold to non-party General Motors. As part of the BCM development and bidding
process, JST provided Bosch with technical drawings and three-dimensional computer

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models of the HIT2 header (“JST designs”), subject to a non-disclosure agreement.
(Doc. 177-1). According to JST, these designs contained protectable trade secrets.
JST says Bosch gave the JST designs to third-party manufacturers in an effort to
solicit bids to reproduce the HIT2 header. The winner, Foxconn, used the JST designs
to manufacture similar, replacement headers and sell them to Bosch at a lower price.
In May of 2015, Bosch sued JST seeking an injunction because “JST suddenly,
unexpectedly, and unlawfully announced that it would be stopping the supply of
Connectors to Bosch.” (Case 15-11832, Doc. 5). In its complaint, Bosch recognized
that the reason JST stopped supply of the connectors was because “JST disputes
Bosch’s right to certify a different supplier for different connector parts at plants not
subject to the parties’ supply agreements” and “claims that Bosch disclosed JST’s
confidential information to other supplier.” Id. The Court ordered JST to continue
supplying Bosch with connectors (Case 15-11832, Doc. 20). Shortly after the injunction
was issued, the parties entered into a settlement agreement. (Case 15-11832, Doc. 20);
(Doc. 1, Ex. A).
According to paragraph 8 of the parties’ settlement agreement, JST reserved its
right to assert claims relating to the misappropriation of trade secrets, which are the
subject matter of the present lawsuit. However, Bosch made no such reservation. The
relevant paragraph states:
Bosch [and its affiliates] . . . release and discharge JST . . . from all claims
related to the Global A Program that Bosch asserted against JST in the
Litigation. This release is intended to be limited in character and does not
include claims that Bosch may have against JST in the event JST
breaches this Agreement or claims that Bosch may have against JST
and/or its affiliates concerning programs other than the Global A Program.

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(Doc. 1, Ex. A). In filing the counterclaim, Bosch did not assert that JST breached the
settlement agreement.
In October of 2015, JST filed trade secret misappropriation claims. (Doc. 1).
Extended discovery took place. On June 05, 2018 (three years later), Bosch
counterclaimed. (Doc. 166). In its counterclaim Bosch says that JST made fraudulent
statements during price negotiations that wrongfully induced Bosch to switch to
Foxconn as a supplier. Bosch’s counterclaim alleges fraud, promissory estoppel, and
unjust enrichment (Doc. 166).
JST has filed a motion to dismiss the counterclaim and strike the affirmative
defenses that mirror the counterclaim. At oral argument on the motion, neither party
mentioned the possible preclusive effect of the prior settlement agreement. Also, the
Court views as a crucial issue regarding Bosch’s counterclaims the apparent absence of
any injury to Bosch. However, the parties have not focused their arguments on that
issue.
III.

DISCUSSION

A. JST’s 12(f) Motion to Strike
Rule 12 permits a court to strike from a pleading “any redundant, immaterial,
impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). However, “[m]otions to strike
are generally disfavored and ‘should not be granted unless it is clear that the matter to
be stricken could have no possible bearing on the subject matter of the litigation.” San
Diego Unified Port District v. Monsanto Co., 309 F.Supp.3d 854, 861 (S.D.Cal. 2018)
(citations omitted). Courts often require a showing of prejudice before granting a 12(f)

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motion to strike. Id. The decision to strike under Rule 12(f) is within the discretion of the
court. Id.
Here, JST has not shown that it would be prejudiced by the defenses raised in
Bosch’s Answer. The Court will not strike the defenses because, not only is JST not
prejudiced, but also because the defenses are not “redundant, immaterial, impertinent,
or scandalous . . . .” Fed. R. Civ. P. 12(f).2
B. JST’s Motion to Dismiss
The Court took notice of the prior settlement agreement during consideration of
JST’s motion to dismiss. Concerned by the language of the settlement agreement, the
Court sent an email to the parties and inquired as to whether the settlement agreement
can be read to preclude Bosch’s counterclaim. The Court’s inquiry to the parties and
the parties’ responses are attached as Exhibit A.
JST and Bosch had opposing positions regarding the effect of the settlement
agreement and its relevance to this case. (Ex. A). The inconsistencies in the parties’
positions regarding the prior settlement, and the relevant scope of the two lawsuits,
leads the Court to believe that a full exploration of the misappropriation claims will be
helpful in determining whether the settlement agreement bars Bosch from bringing
claims related to the HIT2 connector and/or the Global A program.
Further supporting the Court’s decision to stay consideration of the counterclaim
is the vagueness surrounding Bosch’s alleged injuries. At this point in the case, the

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The Court recognizes that the affirmative defenses appear “redundant” when
contrasted with the counterclaims. However, the counterclaims will be stayed, and
consequently, the counterclaims and defenses will not be alongside each other during
consideration of the misappropriation claims. As such, the Court is not concerned by the
redundancies.
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Court doubts that Bosch has adequately plead a compensable injury.3 Because full
development of JST’s misappropriation claims will aid the Court in understanding the
nature of Bosch’s counterclaims, and whether Bosch has standing to sue, the Court
finds it appropriate to stay the motion and any related proceedings on Bosch’s
counterclaim.
IV.

CONCLUSION

For the reasons stated above, JST’s Motion to Dismiss is STAYED (Doc. 177)
and the accompanying Motion to Strike is DENIED (Doc. 177).

SO ORDERED

s/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: 1/2/2019
Detroit, Michigan

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Bosch says that its “most vital” injury is “having to defend a lawsuit based on JST’s
claims.” (Doc. 189); see also, (Doc. 160) (“The damages are the time and expense that
the engineers had to be dealing with this lawsuit, had to comply with JST’s - - they
forfeited documents.”). However, when evaluating a counterclaim, “standing must be
established independent of the lawsuit filed by the plaintiff.” Walker v. City of Lakewood,
272 F.3d 1114, 1124 (9th Cir. 2001). “Litigation costs are insufficient to establish
standing for purposes of Article III.” San Diego Unified Port District v. Monsanto Co.,
309 F.Supp.3d 854, 861 (S.D.Cal. 2018). A counterclaimant “bears the burden of
establishing” that its injuries are more than “costs incurred solely in connection with this
lawsuit.” Id. Further, there is no injury when the relief requested is largely duplicative of
the affirmative defenses. See, Methelus v. Sch. Bd. of Collier Cty., Fla., 2017 WL
3421470, at *3 (M.D. Fla. Aug. 9, 2017).
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