Hanna Cylinders Sues Deere for Breach of Contract, Fraud

Wisconsin-based Hanna Cylinders is suing Deere & Company, alleging Deere made false representations about future orders to its now former supplier.

According to the complaint, Hanna Cylinders supplied custom cylinders for use in Deere products for over 20 years.

Deere would supply Hanna with six month forecasts of orders, allowing Hanna to acquire materials in advance. Deere would then inform Hanna when the order was firm, and Hanna would initiate the order. Orders shipped within three days of being initiated.

The idea was for Hanna’s products to go directly into Deere’s production lines, and Hanna faced fees and penalties from Deere if it caused a line-down situation. As a result, Hanna maintained inventory levels to meet the delivery schedule.

Deere notified Hanna in January 2016 it was changing to a different supplier and would not purchase any additional components from the company, according to the lawsuit.

Deere allegedly knew it was going to replace Hanna for over a year but supplied forecasts to keep Hanna from potentially disrupting production. Deere acknowledged the production schedule required Hanna to obtain material and agreed to purchase the inventory, the lawsuit says. Hanna alleges the company didn’t purchase the entire inventory and that it still has $400,000 in materials purchased for Deere orders.

Hanna also said it had invested $700,000 in capital equipment dedicated to the Deere product line and incurred significant expense when it moved from Illinois to Wisconsin in 2013 to make sure there were no disruptions to Deere’s supply.

The lawsuit alleges breach of contract by Deere and fraud or misrepresentation. Hanna is seeking unspecified compensatory and punitive damages.

“Deere’s misrepresentations to Hanna were designed to promote Deere’s business objectives at the expense of Hanna, which Deere knew was incurring significant financial harm based upon Deere’s misrepresentations,” the complaint says.

Source: BizTimes