NJMET Ordered to Pay $3.76 Million Dollars in Damages for Breach of Contract and Fraud

Kristal Snider
ERAI, Inc.

What started as a Federal Aviation Administration (FAA) suspect unapproved part investigation into substandard transistors used in Boeing 737 antiskid/autobrake control units1 and other aviation applications, ended with the test lab tasked with ensuring the parts were in good working condition ordered to pay $3,766,416.00 in damages for breach of contract and fraud for failing to perform the work they were hired to do and falsifying laboratory reports.

Beginning in June 2008 Electrospec, Inc. purchased more than 20,000 pieces of International Rectifier (IR) part number JANTX2N6901 for re-sale to Hydro-Aire Inc., a division of Crane Aerospace. Hydro-Aire brake control products have been selected and specified for the majority of applications in all aerospace market segments (commercial, regional/commuter, business, and military) including the military Unmanned Aircraft Vehicle (UAV) sector.2

Before shipping any of the transistors to Hydro-Aire, Electrospec sent the parts to New Jersey Micro-Electronic Testing Inc. (NJMET) where they were visually inspected as part of NJMET's incoming inspection procedure (QP4010.A10) and tested to ensure the parts were in good working condition. Only parts that passed testing and marked with a green test dot were sent on to Hydro-Aire: 13,265 parts to be exact.

Hydro-Aire performed testing of its own where it was discovered some of the parts were not new and electrical evaluation revealed excessive drain-source current leakage and/or decrease breakdown voltage.3

These findings triggered a formal FAA investigation, the release of Unapproved Parts Notification Number 2012-20111108011 which warned the transistors were not properly tested, could be counterfeit and were most likely reclaimed, refurbished and distributed as new and called into question the validity and reliability of NJMET’s inspection and test procedures.

On March 7, 2014 Electrospec filed a lawsuit against NJMET in Passaic County, New Jersey (docket number PAS-L-914-14) for breach of contract, negligence, consumer fraud, deceit and punitive damages.

Electrospec alleged that, on June 4, 2008, NJMET issued a quotation for testing services which called for NJMET to perform "Group A testing, Subgroups 2 and 3" on part number JANTX2N6901 in accordance with MIL-PRF-19500/570C but that NJMET improperly tested or never performed certain ordered tests ("thermal impedance", "forward voltage" and "forward transconductance"), and that it falsified test reports.

On March 28, 2017 a verdict was finally reached. According to Richard Vrhovc, Electospec's attorney, "the jury awarded Electrospec $3,766,416.99 in damages against NJMET, Inc. for breach of contract AND fraud."

What does this verdict mean for other organizations who, like Electrospec, relied on NJMET to properly screen parts intended for high reliability applications? The "ripple effect" may look more like a tsunami. Only time will tell as details of this case begin to emerge.

1FAA Unapproved Parts Notification No: 2012-2011110801
3Hydo-Aire Component Analysis Report (CAR #11-0095)