2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 1 of 11 Pg ID 21665
`2:12-md—02311—MOB—MKM DOC # 1257-2 Filed O3/14/16 Pg 1 Of 11
`Pg ID 21665
`
`P
`
`Joseph E. Papelian
`Deputy General Counsel — Litigation
`Telephone: 248-813-2535
`Facsimile: 248-813-3251
`
`May 5, 2011
`
`Jessica L. Lefort, Esq.
`National Criminal Enforcement Section
`Antitrust Division
`
`U.S. Department of Justice
`450 5th Street, N.W. - Suite 11300
`Washington, D.C. 20530
`
`Re:
`
`Grand Jury Subpoena No. 10-1-067
`Delphi File No. 2010-000292
`
`Dear Ms. Lefort:
`
`David Sherbin and I appreciate meeting with you and Kevin Wang yesterday about Delphi's
`status and our document production in response to a Grand Jury Subpoena (“Subpoena")
`served on Delphi on May 11, 2010. This letter is a follow-up to our meeting.
`
`Immediately after being served with the Subpoena, I took steps to place a hold on documents
`that might be responsive to the Subpoena and to preserve electronic data.
`In my initial call
`with Mr. Schmoll on May 14, 2010, he said Delphi was not a "target" of the investigation, but
`was a “subject.” We also discussed limitations to the Subpoena that were memorialized in
`my May 17, 2010 letter to Mr. Schmoll and subsequent written communications. The next
`day, I issued a Document Search Memo for the collection of documents responsive to the
`Subpoena.
`
`It was
`But even with the limitations, the scope of documents to be collected was very broad.
`necessary we retain contract attorneys to assist in our review of the many thousands of
`documents collected. To date we have spent about $500K in creating and maintaining a
`copy of the Company's backup tape of May 2010 (when Delphi was served with the
`Subpoena) and for the initial review conducted by contract attorneys. We have made four
`productions to the Department of Justice with the most recent included with my cover letter of
`March 18, 2011.
`
`As a courtesy, I routinely sent an email to Mr. Schmoll with a copy of my production letters.
`did so on March 18, 2011, but my email was returned as undelivered.
`I promptly called Mr.
`SchmoII’s number, but got a recording that his number was disconnected. On March 21,
`
`I
`
`World Headquarters and Customer Center 5725 Delphi Drive Troy, Michigan 48098-2815 USA
`
`

`
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 2 of 11 Pg ID 21666
`2:12-md-02311-MOB-MKM DOC # 1257-2 Filed O3/14/16 Pg 2 Of 11
`Pg ID 21666
`
`Jessica L. Lefort, Esq.
`Page 2 of 3
`May 5, 2011
`
`I explained I had sent Delphi's fourth
`2011, I spoke with Kathryn Hellings of your office.
`production to Mr. Schmoll with my letter of March 18, 2011, and she told me Mr. Schmoll had
`retired in December 2010. Later, on March 21, 2011, we spoke and you told me that you had
`taken over the investigation as it related to Delphi.
`
`In my discussions with Mr. Schmoll, I told him I doubted Delphi was involved in any illicit
`price-fixing arrangement, in part because of the limited success Delphi has achieved in
`obtaining business with Japanese companies notwithstanding our belief that our products
`were competitive in price and quality.
`In addition, we have reviewed thousands of documents
`collected in response to the Subpoena and discovered no document that suggested Delphi
`was involved in a price-fixing scheme.
`
`In April 2011, after you assumed responsibility for this matter, you agreed to meet with us to
`discuss Delphi's status and our document production. That meeting occurred yesterday.
`
`In addition to reviewing the infonnation noted above, I summarized a meeting I had with two
`Delphi employees of our electrical wiring business on March 5, 2010 - two months before
`Delphi was served with the Subpoena. They contacted me seeking legal advice on how to
`approach Toyota in addressing what they believed were unfair trade practices by Yazaki,
`Sumitomo and Furukawa in limiting Delphi's access to bid on Toyota wiring business. They
`provided me a document titled Unfair trade practices by Yazaki, Sumitomo and Furukawa.
`On March 24, 2010 I sent a follow-up email to one of the Delphi employees with whom I had
`met asking if he needed my assistance in preparing a draft letter to Toyota, as we had
`discussed at our meeting on March 5, 2010. On March 31, 2010 I had a file opened on our
`Legal Staff database. At our meeting yesterday, I provided you with a copy of the printout
`from our database showing a file was created on March 31, 2010, a copy of the document I
`received from the two Delphi employees on March 5, 2010, and my follow-up email of March
`24, 2010 to one of the Delphi employees with whom I had met on March 5, 2010. These
`documents were Bates numbered DEL-0055401 — DEL-0055405; another copy is enclosed.
`
`In addition, I provided you with a copy of documents we received in response to the
`Subpoena from one of the Delphi employees with whom I met on March 5, 2010. These
`documents were Bates numbers DEL-0055406 — DEL-0055408. The handwritten notes on
`
`the bottom of document Bates numbered DEL-0055407 were made by the Delphi employee
`during our meeting of March 5, 2010; the ‘‘privileged'’ notations at top of the document were
`made by this employee recently when he produced this document in response to the
`Subpoena. Another copy of these documents is enclosed.
`
`At our meeting yesterday you directed that Delphi suspend its document production, but the
`Subpoena would remain in effect. You also noted that so far you had not found any
`incriminating documents relating to Delphi.
`In light of ourfindings, and the results of your
`review so far, we asked you revise De|phi’s designation from a “subject" to a witness.
`
`

`
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 3 of 11 Pg ID 21667
`2:12-md-02311-MOB-MKM DOC # 1257-2 Filed O3/14/16 Pg 3 Of 11
`Pg ID 21667
`
`Jessica L. Lefort, Esq.
`Page 3 of 3
`May 5, 2011
`
`In our telephone conversation today, you reaffirmed your direction we should suspend our
`document production, but the Subpoena would remain in force and that we should maintain
`the documents we have collected. You explained the Anti-Trust Division has a policy not to
`change a company’s designation while an investigation remains active, and thus Delphi's
`status as a ‘subject" would continue notwithstanding the evidence so far showing no
`complicity by Delphi in a price-fixing scheme and our cooperation.
`
`I will remain your point of contact for Delphi. Thank you again for meeting with us and for
`your professionalism.
`
`Very truly yours,
`
`/7
`
`«~\
`
`1 { 7
`
`Joseph E. Papelian
`kw
`
`Enclosures
`
`c: David M. Sherbin
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 4 of 11 Pg ID 21668
`2:12-md—O2311—MC)B—MKM DOC # 1257-2 Filed 03/14/16 Pg 4 Of 11
`Pg ID 21668
`
`Pending Legal Matter
`
`Page 1 of3
`
`l‘.lin<,: l.egal 1\latter
`
`Matter Information Section
`
`201 0-ll()()l 29
`
`Unfair Ctimpctitiun — Ya/aki, Sumitnmo & Furukawa
`
`Litigation
`Advice
`
`Open
`Delphi E/EA
`
`Joseph E. Papelian
`Litigation Group
`
`(Tonntr):
`2nd Division:
`VDSR #:
`
`Mex icn
`
`Non-Legal?:
`
`NO
`
`New Suit Letter?:
`
`('omnIcnt Section
`
`()3/3l/I0 - JEP requested physical file created. (AMH)
`
`Summary Section
`
`()3-3 l -20l0
`
`N/A
`NO
`
`Date Closed:
`Retention Date:
`Release Date:
`Reserve Amount:
`
`Damages Against:
`Sedgwick N.l.S.M.: N/A
`Monthly Report?: YES
`
`i-ile \umln-rt
`hie \:nm-:
`
`Case Caption:
`.‘~.ection:
`
`Hatter hue;
`Sub Matter:
`Status:
`Dix iVitIl\‘.
`FAA Lotus Notes#:
`CISCO/Plant:
`
`Eng. Location:
`Counter Party:
`Co—Party:
`Short Desc:
`
`\tt_\/|’u\‘alt‘u:il'.
`Reader Choice:
`
`Merged Case?:
`
`Merged File
`Information:
`
`4th Comments
`(Continued):
`More Comments
`(Continued):
`Comments
`(Continued):
`Comments:
`
`Date Opened:
`Review Date:
`Due Date:
`Reserve Date:
`
`Damages For:
`lnsured?:
`
`C F0 Report?:
`Sub Category:
`Case Status:
`
`Case Summary:
`Quarter Review:
`
`Court Name:
`
`Trial Date:
`
`('ourt Section
`
`http://usk0ka95.delc0elect.com/Apps/USAPP/usapp334.nsf/defaultview/886CD23830BEEEA7852576F7...
` ¥
`
`3/3 l/2010
`
`DEL-0055401
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 5 of 11 Pg ID 21669
`2:12-md—O2311—MOB—MKM DOC # 1257-2 Filed O3/14/16 Pg 5 Of 11
`Pg ID 21669
`
`Pending Legal Matter
`County:
`Country:
`
`Stage of Case:
`Classifications:
`Breakdown:
`
`Disposition:
`
`9
`
`State/Province: 0
`Judge;
`
`Docket/Case #:
`
`Page 2 Of}
`
`Disp Date:
`Indemnification:
`
`NO
`
`Disp Amount:
`by Whom:
`
`Delphi Share:
`
`Miscellaneous Section
`
`Occu rence:
`
`Occu rence City:
`
`Occu rence State:
`Allegation:
`Ins. Office:
`Ins. Contact:
`
`Recovery Report‘): NO
`Recovery Schedule:
`
`Recovery Total:
`Write Off:
`
`Recovery Notes:
`Payment Date:
`Payment Comment
`ll’ Tech Class:
`Patent Details:
`Trade Names:
`
`Solicitation #:
`
`Contract Type:
`Agency:
`Sub Agency:
`Intermediary:
`Sub Contractor:
`
`Pl I Engineer:
`Contract
`Comments:
`
`Proposal Date:
`
`Expected
`Performance Start
`Date:
`
`Selected/Rejected
`Date:
`Performance Start
`Date:
`
`Proposed Gov$:
`Actual Gov$:
`Funds Allotedz
`
`Occurence Date:
`
`Occur. Country:
`
`Ins. Phone:
`
`To be Collected:
`Write Off Date:
`
`Collected to Date:
`Write Off Amount:
`
`Check Number:
`
`Check Amount:
`
`(.io\*ernmcnt Contract Section
`
`Contract #:
`
`Contract Status:
`
`Expected Award
`Date:
`
`Expected
`Performace End
`Date:
`
`Contract Award
`Date:
`Performance End
`Date:
`
`Prop DeIphi$:
`Actual De|phi$:
`
`Total Proposed:
`Total Actual:
`
`Date Funds
`Allotedz
`
`http://uskoka95.de1coelect.com/Apps/USAPP/usapp3 34.nsf/defaultview/886CD23830BEEEA7852576F7... 3/31/2010
`
`
`DEL-0055402
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 6 of 11 Pg ID 21670
`2:12-md—O2311—MOB—MKM DOC # 1257-2 Filed O3/14/16 Pg 6 Of 11
`Pg ID 21670
`j
`
`Pending Legal Matter
`Modification #
`Mod Comments:
`
`Modge:
`
`Mod Amount: 3
`
`Page 3 of3
`
`Contact Section
`
`Party:
`Party:
`Party:
`
`Douglas R. Gruher, Managing Director DEEDS NA
`(248) 813-3777
`dnuglas. r.gmhcr@delphi .com
`Hidcnari Nukamura, Business Director (Packard)
`(734) 904-7666
`Hidcnari.Nakamura@de|phi.com
`
`Delphi Counsel:
`Delphi Counsel:
`
`Other Counsel:
`Other Counsel:
`Other Counsel:
`Parties:
`
`Contacts:
`
`Off-Site Storage:
`Attachment]
`Comments:
`Attachment2
`Comments:
`Attached File
`Information:
`
`Physical File
`Location:
`
`http://usk0ka95.delcoe1ect.com/Apps/USAPP/usapp334.nsfldefaultview/886CD23 83 OBE EEA78 52576F7... 3/31/2010
` }
`
`DEL-0055403
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 7 of 11 Pg ID 21671
`2:12-md—O2311—MOB—MKM DOC # 1257-2 Filed O3/14/16 Pg 7 Of 11
`Pg ID 21671
`
`
`‘(Nae M ('u.<«P§'r
`
`»~'a~
`
`If
`
`I
`
`r
`
`it New business competition fairness
`Three parties hold over 90% of Toyota’s business
`Three parties might make mapping Toyota business global as a group against
`Delphi
`The sourcing price information sharing might exist between three parties
`Delphi has limited business opportimities at outside of NA, and therefore they
`could take too aggressive price to attack Delphi, and recover the loss from other
`programs where Delphi does not involve.
`Three parties might desire to restore order — less competition- and remove
`Delphi from the supply base
`TMC engineering would agree with restored order since dealing with fewer
`suppliers is easier for them — Delphi experiences it through next generation
`Corolla sourcing. TMC Engineering General Manger has mentioned TEMA and
`Delphi Sales that no major business would come to Delphi due to use of
`Japanese supplier for major products.
`
`O O O 0
`
`_ ~
`
`4 DCS penetration roadblock
`Delphi experiences hard time to join DCS component development at TMC
`Engineering
`Intellectual Property sharing is more prevalent between TMC and Japan
`suppliers include above three parties
`Packard is aware that core development is key for Toyota participating DCS
`component development however no chance were given by TMC Engineering
`last 30 years
`Packard might block from making components for W/H for Toyota because of
`not only issue of intellectual property but also under unfair trading by three key
`suppliers
`For instance, Sumitomo licensed only Yazaki and Tokai Rika to make 064
`terminals
`
`O O O
`
`4. Toyota designated ssomponent price control
`Toyottfs component set price (Toyota Standard Price) exists in Japan rcgiononly
`not oversea regions
`Japanese suppliers are given an authority by Toyota to sell TSP component to
`third party (such as including Delphi) with handling & profit mark up
`TSP is not accessible to Delphi for quoting on new business
`
`i_:
`
`'4» Ollie!‘ l2~5l.IL‘.S
`
`TMC engineering retirees & Family members work at three suppliers. For
`instance. one Engineering niunager moved to Suniitomu two years ago who has
`no degree of any specialty however he was hired by Sumitomo with position
`Engineering Director.
`DP is #1 ofthe market share in NA, EU, SA and China yet has less than 5% of
`Toyota's worldwide business
`
`u
`
`Q AN) mu; ,v+w~«~
`
`* H rof/‘VA/I
`
`/VIiI<I‘l/fdu’/l
`
`’\
`
`*
`
`r\\,/‘L13
`
`(iKL¢I5"5(
`
`
`
`/73/9;//n
`
`DEL-0055404
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 8 of 11 Pg ID 21672
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed O3/14/16 Pg 8 of 11
`Pg ID 21672
`——
`
`Pagelian, Josegh E
`
`From:
`Sent:
`To:
`Subject:
`
`Doug:
`
`Papelian, Joseph E
`Wednesday, March 24, 2010 3:40 PM
`Gruber, Douglas R
`Unfair Trade Practices
`
`I write as a follow-up to our meeting on March 5, 2010 also attended by Hidenari Nakamura. We discussed
`preparing a draft letter to show to Toyota.
`Is this still an option? Do you need my assistance? Please let me
`know.
`
`Thanks,
`
`Joe
`
`DEL-0055405
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 9 of 11 Pg ID 21673
`2:12-md—O2311—MOB—MKM DOC # 1257-2 Filed O3/14/16 Pg 9 Of 11
`Pg ID 21673
`
`“ nfirr
`
`r
`
`i
`
`Yzki
`
`imi m n Firik
`
`”
`
`0
`
`New business competition fairness
`0
`Three parties hold over 90% of Toyota’s business
`o
`Three parties might make 111apping Toyota business global as a group against
`Delphi
`The sourcing price information sharing might exist between three parties
`o Delphi l1as limited business opportunities at outside ofN A, mid therefore they
`could take too aggressive price to attack Delphi. and recover the loss from other
`programs where Delphi does not involve.
`Three parties might desire to restore order — less competition- and remove
`Delphi fiom the supply base
`TMC engineering would agree with restored order since dealing with fewer
`suppliers is easier for them — Delphi experiences it through next generation
`Corolla sourcing. TMC Engineering General Manger has mentioned TEMA and
`Delphi Sales that no major business would come to Delphi due to use of
`Japancsc supplier for major products.
`
`o
`
`0
`
`o
`
`0
`
`DCS penetration roadblock
`o Delphi experiences hard time to join DCS component development at TMC
`Engineering
`Intellectual Property sharing is more prevalent between TMC and Japan
`suppliers include above three parties
`Packard is aware that core development is key for Toyota participating DC S
`component development however no chance were given by TMC Engineering
`last 30 years
`Packard might block from making components for W/H for Toyota because of
`not only issue of intellectual property but also under unfair trading by three key
`suppliers
`For instance, Sumitomo licensed only Yazaki and Tokai Rika to make 064
`terminals
`
`o
`
`0
`
`Toyota designated component pricc control
`o Toyota’s component set price (Toyota Standard Price) exists in Japan regiononly
`not oversea regions
`Japanese suppliers are given an authority by Toyota to sell TSP component to
`third party (such as including Delphi) with handling & profit mark up
`TSP is not accessible to Delphi for quoting on new business
`
`o
`
`0
`
`Other issues
`
`o
`
`TMC engineering retirees & family members work at three suppliers. For
`instance, one Engineering manager moved to Sumitomo two years ago who has
`no degree of any specialty however he was hired by Sumitomo with position
`Engineering Director.
`0 DP is #1 of the market share in NA, EU, SA a11d Cl1i11a yet has less than 5% of
`Toyota’s worldwide business
`
`DEL-0055406
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 10 of 11 Pg ID 21674
`2:12-md-02311-MOB-MKM DOC # 1257-2 Filed O3/14/16 Pg 10 Of 11
`Pg ID 21674
`
`
`
`
`~L New business competition fairness
`0 Three parties hold over 90% of Toyota’s business
`o Three parties might make mapping Toyota business global as a group against
`Delphi
`0 The sourcing price information sharing might exist between three parties
`0 Delphi has limited business opportunities at outside of NA, and therefore they
`could take too aggressive price to attack Delphi, and recover the loss from other
`programs where Delphi does not involve.
`o Three parties might desire to restore order — less competition— and remove
`Delphi from the supply base
`TMC engineering would agree with restored order since dealing with fewer
`suppliers is easier for them — Delphi experiences it through next generation
`Corolla sourcing. TMC Engineering General Manger has mentioned TEMA and
`Delphi Sales that no major business would come to Delphi due to use of
`Japanese supplier for major products.
`
`o
`
`0
`
`o
`
`-L DCS penetration roadblock
`o Delphi experiences hard time tojoin DCS component development at TMC
`Engineering
`Intellectual Property sharing is more prevalent between TMC and Japan
`suppliers include above three parties
`Packard is aware that core development is key for Toyota participating DCS
`component development however no chance were given by TMC Engineering
`last 30 years
`Packard might block from making components for W/H for Toyota because of
`not only issue of intellectual property but also under unfair trading by three key
`suppliers
`For instance, Sumitomo licensed only Yazaki and Tokai Rika to make 064
`terminals
`
`0
`
`o
`
`at Toyota designated component price control
`0 Toyota’s component set price (Toyota Standard Price) exists in Japan rcgiononly
`not oversea regions
`Japanese suppliers are given an authority by Toyota to sell TSP component to
`third party (such as including Delphi) with handling & profit mark up
`TSP is not accessible to Delphi for quoting on new business
`
`0
`
`o
`
`-L Other issues
`
`o TMC engineering retirees & family members work at three suppliers. For
`instance, one Engineering manager moved to Surnitomo two years ago who has
`no degree of any specialty however he was hired by Surnitomo with position
`Engineering Director.
`0 DP is #1 of the market share in NA, EU, SA and China yet has less than 5% of
`Toyota’ s worldwide business
`
`éfflazfieoflvw,
`ZIZSQQ/(afar, Awxnwa.
`__ wv,,[_,‘7'
`.,.//~17’ “coo-JLI‘l:~/1.
`—~ A/0”’
`,, M12 Wm
`'00»
`./ gm £.wrraW-
`., am new
`
`§.m1jc-7/4:..(’jo7/.
`I
`i We
`
`F“
`
`DEL-0055407
`
`

`
`DELPHI CONFIDENTIAL
`2:12-md-02311-MOB-MKM Doc # 1257-2 Filed 03/14/16 Pg 11 of 11 Pg ID 21675
`2:12-md-02311-MOB-MKM DOC # 1257-2 Filed O3/14/16 Pg 11 Of 11
`Pg ID 21675
`
`
`.:
`
`,..
`
`0 Unfair practices by YAZ, SEWS, FEC regarding Toyota business.
`0 YAZ, SEWS, FEC compete as a group against DP- information sharing exists.
`0 YAZ, SEWS, FEC desire to restore order — less competition- and remove DP
`from the supply base.
`0 TMC engineering would agree with restored order since dealing with fewer
`suppliers is easier for them.
`0 TMC engineering retirees & family members work at YAZ, SEWS.
`YAZ, SEWS, FEC have over 90% of Toyota’s business.
`DP is #1 of the market share in NA, EU, SA and China yet has less than 5% of
`Toyota’s worldwide business.
`0 DP business is on the path to shrink by 30%.
`0
`Intellectual Property sharing is more prevalent between TMC and YAZ, SEWS,
`FEC.
`
`0 Toyota’s component set pricing (TSP) is set by TMC based on YAZ and SEWS
`prices.
`
`0 TSP is not accessible to DP for quoting on new business.
`0 DP is blocked from making components for W/H for Toyota.
`
`DEL-0055408