Judge restores Piston Group's minority certification temporarily
Piston Group LLC has had its status as a minority business temporarily restored under a court ruling Monday.
Wayne County Circuit Court Judge David Groner ordered the Michigan Minority Supplier Development Council to reinstate the Black-owned auto supplier's status amid pending litigation.
In his order, Groner noted the potential loss of business opportunities for Piston Group and the Southfield-based company's fear of "damage to their corporate goodwill, particularly if their decertification turns out to have been unwarranted."
"And while, at least in general, such harm can be compensated with money damages, Plaintiffs correctly note that the Courts of this state have recognize loss of goodwill as the kind of irreparable harm that will support preliminary injunctive relief ..." Groner continued, "and that a money judgment will not constitute an adequate remedy at law, where, as here, the potential damages would vastly exceed the defendants' ability to satisfy a money judgment."
The ruling follows a lawsuit the Piston Group, owned by former Detroit Pistons star Vinnie Johnson, filed last month seeking the restoration of its status with the MMSDC. In February, the council revoked the minority business certification of Piston Group’s four subsidiaries: Piston Automotive, Irvin Automotive Products, Detroit Thermal Systems and AIREA. The certification aids the group as its units bid on automotive supply contracts.
“We are delighted by the court’s decision today in favor of Johnson, which restores for the time being the Piston Group’s rightful designation as a certified minority-business enterprise," said Piston Group attorney Cinnamon Plonka. "We will continue efforts to vindicate Mr. Johnson and establish to the court that Vinnie Johnson owns, controls and manages Piston Group, satisfying the necessary criteria to be certified as a MBE.
"The Piston Group is a minority-controlled business under every applicable standard," Plonka continued. "The Piston Group’s board of directors is 75% minority. Furthermore, he has employed many minorities in the highest executive positions at his companies over the years. These have included African American, Asian American and Indian American men and women. Regardless of the racial makeup of his executive team, his companies have never been decertified until the MMSDC’s incorrect use of arbitrary and incorrect standards to judge the Piston Companies."
MMSDC responded to the judge's decision in a statement Monday evening.
"The Piston Group and its four subsidiaries simply do not have enough day-to-day involvement of minority persons in their senior management to meet minority business enterprise status under the MMSDC’s standards," the council wrote. "The MMSDC requires that Piston Group complies with (National Minority Supplier Development Council) standards as is the case with any other company that seeks to benefit from MBE certification. The Piston Group has presented a lot of misinformation, some quite egregious, in their court filings and public statements. We have not yet had an opportunity to respond. We look forward to presenting all the relevant facts and circumstances at the appropriate time to the court and a jury, if the case proceeds that far.”
Johnson founded, owns and operates the company and also serves as CEO and chairman of the board of directors.
According to the MMSDC website, to be certified, companies must be controlled by U.S. citizens, be at least 51% minority-owned, operated and controlled, be a for-profit enterprise in the U.S. or its trust territories, and have minorities perform the management and daily operations.
The company has said that while the subsidiaries’ CEOs are White, Johnson is the one who has "ultimate authority for all decisions within each Piston Group company."
In its lawsuit filed in May, Piston Group alleges that the actions against it by the MMSDC and its president Michelle Robinson "were 'vindictive, willful, wanton, or malicious' and have negatively affected the holding company’s business relationships.” In the lawsuit, Robinson is accused of threatening Johnson with decertification on multiple occasions after the company rejected a request for a $300,000 donation and declined to sponsor a 2019 golf outing.
In his order, Groner said he was struck by the fact that MMSDC had repeatedly granted Piston Group certification status in prior years, and that there was “only a single change in the ownership and management structure of the Plaintiff entities since that time,” which was the departure of Piston Group's chief operating and financial officer, Amit Singhi, in March 2020.
Groner said it is difficult to see how Signhi’s departure would justify the change in the member entities’ minority business enterprise status. He also said MMSDC has provided few specifics regarding how the council defines day-to-day operations.
In its statement Monday, MMSDC said the subsidiaries of Piston Group and its presidents, "some with as little as $10,000 signing authority," answer to Piston Group’s COO/CFO and that the last time the companies were certified, the position was held by a person of color.
It also said that Robinson does not vote on certification matters and that the council takes issue with the suggestion that its decision to decertify the Piston Group may have been arbitrary.
"It was not," the organization wrote. "It was well considered, and only came after Piston Group’s repeated failure to comply with MMSDC standards. In fact, Piston Group compliance has been a recurring topic for decades. This time, the only difference is that Piston Group ultimately failed to take the required steps to maintain certification.”