Rosen sues Lear for reneging on deal.

Byline: SHERRI BURI McDONALD The Register-Guard

Rosen Products LLC, a Eugene-based maker of in-car video entertainment systems, is suing a Michigan-based company for breach of contract.

Rosen on Wednesday filed the lawsuit in Lane County Circuit Court against Lear Corp., a worldwide supplier of car interiors based in Southfield, Mich. Rosen is asking for at least $6.6 million in damages.

The lawsuit comes as Rosen heads toward shutting its west Eugene factory by September. Earlier this month, Rosen shocked the community by saying it would shut the factory and sell off its divisions. The move will eliminate about 225 jobs at Rosen.

In the lawsuit, Rosen alleged that Lear reneged on agreements to fund the development of and later buy two separate video systems from Rosen.

One is the CruiseCam, a seat-mounted camera that can videotape activity inside police cars. The other is an entertainment system for a class of General Motors vans called G-Vans.

A spokesperson for Lear Corp. was unavailable for comment on Thursday. Rosen Products did not return a call from The Register- Guard.

It's the second time in recent months that Rosen has sued a company for breach of contract. In October, Rosen sued Mercedes-Benz USA and its German parent, DaimlerChrysler AG, alleging at least $6 million in damages. The sides settled out of court earlier this year, with Mercedes-Benz agreeing to pay Rosen $3.5 million.

It's unclear whether the case against Lear might also end in settlement.

"There are a lot of different things that can happen," Rosen's attorney, William Gary, said.

In addition to the car video systems, Rosen makes flat-panel display screens and other accessories for airplanes.

In its lawsuit, Rosen provide the following information about its dispute with Lear over the CruiseCam:

Lear agreed to pay for all of Rosen's costs to develop the video device, such as engineering, tooling and product testing costs. But so far, Lear has paid $743,000 for development costs, leaving an unpaid balance of $1.59 million, Rosen said.

By April 2001, Lear hadn't ordered any CruiseCam units, but said it wanted plenty on hand to launch the product on July 31, 2001. Rosen refused to pay to procure materials for the units without a firm commitment from Lear that it would order the systems or cover the procurement costs.

On April 5, 2001, Lear sent Rosen a letter agreeing to pay up to $5 million for VCRs, wireless microphones, cameras and display panel components to assemble the CruiseCam systems.

Rosen then procured materials and launched full-scale production.

Lear issued purchase orders to Rosen for 207 CruiseCam systems at $2,100 per system. Rosen shipped the systems in the second half of 2001. Rosen billed Lear $434,700, but Lear hasn't paid $112,118 of that, Rosen said. Rosen said it is also owed $3.03 million for buying materials for the CruiseCam and $116,600 for storing those materials.

Last November, Lear directed Rosen to stop making and shipping the systems.

Rosen also said it had an agreement with Lear to supply rear-seat video entertainment systems for G-Vans. Rosen contends that Lear agreed to pay for all product development costs, and that Rosen is still owed $341,028.

Lear sent Rosen purchase orders to buy the entertainment systems on a 13-week rolling production schedule for all of 2001. In late October 2001, Lear told Rosen that General Motors would be canceling the G-Van program, but that Rosen should continuing making and shipping the systems according to purchasing schedule.

Rosen sent Lear 6,000 of the systems and additional components. Rosen alleged that Lear owes Rosen $1.2 million for material procurement costs and $211,544 for G-Van entertainment systems that were delivered but never paid for.