According to the complaint, Hanna Cylinder supplied custom cylinders for use in John Deere agricultural products for over 20 years. John Deere would supply Hanna with six month forecasts of orders, allowing Hanna to acquire materials in advance. John Deere would then inform Hanna when the order was “firm,” at which point the company could trigger the order anytime within the next two weeks. Once the order was triggered, Hanna had three days to ship the cylinders.
The idea was for Hanna’s cylinders to go directly into John 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 just-in-time 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.
The company allegedly knew it was going to replace Hanna for over a year, but continued to supply 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 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 John Deere product line and incurred significant expense when it moved from Illinois to Wisconsin in 2013 to make sure there were no disruptions to John Deere’s supply.
The lawsuit alleges John Deere engaged in breach of contract 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.
A John Deere representative did not immediately respond to a request for comment.