DETROIT -- Johnson Controls Inc. bought most of Delphi Corp.'s battery business in June, but the two sides were in court last week complaining that the other had reneged on parts of the deal.
A federal judge ruled they were both right, and the two sides have begun settlement talks.
The wrangle stems from a disputed provision in the sale agreement that requires Delphi to sell Johnson Controls all the batteries built at two U.S. plants left out of the deal because of union-contract complications.
But Johnson Controls refused to buy "blemished" batteries -- those with minor cosmetic defects -- so Delphi has been selling them to other customers.
That violates a noncompete clause of the deal, Johnson Controls says.
Johnson Controls filed suit Sept. 16 in U.S. District Court in Detroit seeking to stop Delphi's battery sales.
Last week U.S. District Judge George Steeh enjoined Delphi from selling to other customers -- but also ordered Johnson Controls to purchase 1,500 batteries a month from the two Delphi plants.
Steeh said he hoped the order would serve as the basis for the companies to reach an agreement; he gave them 20 days to demand arbitration.
A Delphi spokeswoman had no comment.
A Johnson Controls spokeswoman said: "We're very pleased, and we look forward to working with Delphi to sort it out."
Documents from the $202.5 million deal do not specify how many blemished batteries Johnson Controls was required to buy from the Delphi plants in Fitzgerald, Ga., and New Brunswick, N.J.
John Birmingham Jr., a lawyer for Johnson Controls, said in court that his client didn't know how many blemished batteries Delphi produced when the deal closed in June, calling the number "extraordinary."
A Delphi document said the company sold 8,448 blemished batteries to other buyers after Johnson Controls refused to purchase them in August.
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