Hemlock Semiconductor Corp. v. Deutsche Solar GmbH
116 F. Supp. 3d 818
E.D. Mich.2015Background
- Hemlock (U.S. manufacturer) and Deutsche Solar (German purchaser) entered four long-term supply agreements (2005–2019 ranges) for large quantities of polycrystalline silicon described by Hemlock as "take-or-pay."
- Deutsche Solar stopped purchasing silicon after March 31, 2012 and disputed Hemlock’s invoice for unpaid 2012 amounts; Hemlock sued March 2013 for contract damages.
- Deutsche Solar asserted affirmative defenses including: illegality under EU antitrust law; commercial impracticability, frustration of purpose, force majeure, supervening third-party intervention, and market disruption caused by alleged Chinese dumping.
- Hemlock moved to strike several affirmative defenses; Deutsche Solar moved to compel discovery related to those defenses. Discovery had been largely completed but was temporarily reopened for limited issues.
- The court evaluated interplay of Supreme Court antitrust‑illegality precedent (Kelly v. Kosuga and Kaiser Steel) and related D.C. Circuit authority to decide whether EU‑antitrust‑based illegality and market‑collapse defenses survive.
Issues
| Issue | Plaintiff's Argument (Hemlock) | Defendant's Argument (Deutsche Solar) | Held |
|---|---|---|---|
| Whether an affirmative defense claiming contract illegality under EU antitrust law is permissible | Kosuga bars antitrust‑based illegality defenses because allowing them would amount to enforcing antitrust law; thus strike defense | Kaiser Steel allows illegality defense where enforcement of the sued‑upon promise would itself enforce an antitrust violation; defense should survive | Struck — court concluded Deutsche Solar’s EU‑antitrust theory is contingent and speculative and falls within Kosuga/National Souvenir limitation, so illegality defense (No. 6) stricken |
| Whether defenses based on commercial impracticability and frustration of purpose (market collapse/dumping by China) are legally insufficient | Market price deterioration or financial hardship alone cannot support these doctrines; strike them | Market intervention by a third party (Chinese dumping) could be unforeseeable and may excuse performance; defenses relate to recognized doctrines | Denied as to defenses 12, 13, 15, 16 — court found Michigan recognizes these doctrines in some circumstances and factual issues remain |
| Whether the force majeure affirmative defense is cognizable under Michigan law | Not a recognized defense; strike it | Concedes and withdraws it | Treated as withdrawn — not considered further |
| Whether Deutsche Solar is entitled to Hemlock’s financial statements (2005–2013) in discovery | Financials relevant to damages, prepayments, and Hemlock’s motive to terminate; compel production | Financials untimely and largely unrelated to the agreements; damages quantifiable from contracts and Deutsche Solar’s records | Denied — court refused to compel Hemlock’s general financial statements absent a specific, supported theory showing relevance |
Key Cases Cited
- Kelly v. Kosuga, 358 U.S. 516 (discusses limits on antitrust illegality as an affirmative defense in contract suits)
- Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (permits antitrust illegality defense when enforcing the sued‑upon promise would itself command unlawful conduct)
- Nat’l Souvenir Ctr., Inc. v. Historic Figures, Inc., 728 F.2d 503 (D.C. Cir.) (refuses to extend Kaiser Steel exception to contingent, complex antitrust defenses requiring speculative market‑power proof)
- Brown & Williamson Tobacco Corp. v. United States, 201 F.2d 819 (6th Cir.) (Rule 12(f) motions to strike defenses are drastic and allowed only when defense has no possible relation to controversy)