UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

NORTHERN DIVISION 

HEMLOCK SEMICONDUTOR CORPORATION, 

 Plaintiff, Case No. 15-cv-11236 

v Honorable Thomas L. Ludington 

KYOCERA CORPORATION, 

 

 Defendant. 

__________________________________________/ 

ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS, 

DISMISSING COUNTERCLAIMS, GRANTING PLAINTIFF’S MOTION TO STRIKE 

JAPANESE ANTITRUST DEFENSE, STRIKING JAPANESE ANTITRUST DEFENSE, 

DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION FOR PARTIAL 

JUDGMENT ON THE PLEADINGS, GRANTING PLAINTIFF’S MOTION TO QUASH 

NON-PARTY SUBPOENAS, AND SCHEDULING RULE 16(b) SCHEDULING 

CONFERENCE 

Plaintiff Hemlock Semiconductor (“Hemlock”) and Defendant Kyocera are significant 

participants in the global solar energy industry. Their immediate dispute arises from a series of 

contracts for the sale of quantities of industrial-grade polycrystalline silicon by Hemlock to 

Kyocera. Following changes in global solar market conditions, Kyocera sought to excuse its 

performance under a force majeure provision in the parties’ contracts. In response, Hemlock 

sought adequate assurances that Kyocera would perform its obligations under the agreements. 

When Hemlock concluded that Kyocera had not provided adequate assurances that it would 

perform its contractual commitment, it initiated this suit. 

 Hemlock filed its initial complaint on April 1, 2015, and filed an amended complaint on 

April 29, 2015. ECF No. 4. Now before the Court are three motions filed by Hemlock on August 

3, 2015: (1) Motion to Dismiss Defendant Kyocera Corporation’s Counterclaims, ECF No. 21; 

(2) Motion to Strike Defendant Kyocera Japanese Antitrust Defense, ECF No. 22; and (3) 

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Motion to Quash Non-Party Subpoenas Issued by Defendant Kyocera Corporation, ECF No. 24. 

Hemlock’s motion to dismiss and motion to strike will be granted. Hemlock’s motion to quash 

non-party subpoenas will be provisionally granted. 

 Also before the Court are two motions from Kyocera. ECF Nos. 38 and 45. Kyocera’s 

motion for partial judgment on the pleadings will be denied without prejudice, and Kyocera’s 

motion to compel discovery will be addressed at the Rule 16(b) conference. 

I. 

Hemlock, Plaintiff in this action, is a Michigan corporation involved in the manufacture 

and sale of polycrystalline silicon (“polysilicon”) and photovoltaic solar cells and modules. ECF 

No. 4 at ¶¶ 1, 3, 7. The majority of the common stock of Hemlock is owned by Dow Corning 

Corporation. Shin-Etsu Handotai Co. Ltd. owns a significant minority interest in Hemlock. See 

Joint Venture Partners, HSCPOLY, http://www.hscpoly.com/content/hsc_comp/ownership.aspx. 

Shin-Etsu is described as “the largest chemical company in Japan.” See Top 100 Global 

Innovators, THOMAS REUTERS, top100innovators.stateofinnovation.thomsonreuters.com 

/content/shin-etsu-chemical. Kyocera, Defendant in this action, is a Japanese corporation that 

describes itself as “one of the world’s largest vertically-integrated producers and suppliers of 

solar energy panels.” ECF No. 4 at ¶ 8. 

A.

In considering Hemlock’s motion to dismiss, the Court accepts the facts in a light most 

favorable to the nonmovant, Kyocera. See Lambert v. Hartman, 517 F.3d 443, 439 (6th Cir. 

2008). Beginning in 2005, in the face of a worldwide polysilicon shortage, Hemlock and 

Kyocera entered into four long-term polysilicon supply contracts. The first Long Term Supply 

Agreement (“Agreement I”) is effective from August 30, 2005 to December 31, 2015. The 

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second Long Term Supply Agreement (“Agreement II”) is effective from July 21, 2006 to 

December 31, 2018. The third Long Term Supply Agreement (“Agreement III”) is effective from 

July 18, 2007 to December 31, 2019. Finally, the fourth Long Term Supply Agreement 

(“Agreement IV”) is effective from November 13, 2008 to December 31, 2020. Am. Compl. at 

¶¶ 12-13. The agreements require Kyocera to make large initial payments to assist Hemlock’s 

expansion of its existing polysilicon production facilities in the United States. 

After the parties entered into the agreements, the global solar industry was affected by 

Chinese government intervention. Specifically, the Chinese government provided subsidies to 

Chinese solar-based companies and facilitated large-scale “dumping” of Chinese solar panels 

into the global market in order to increase Chinese market share in the solar industry. In 

response, in 2012 the United States government imposed anti-subsidy and anti-dumping import 

tariffs of 24-36 percent on Chinese solar components. These state actions caused the prices of 

both polysilicon and solar panels to drop precipitously. 

In response to the falling market prices, the parties agreed to short-term contract 

modifications in 2011 and 2012 that lowered the gross price and the advance payment for those 

years. These modifications did not affect any other contract terms or future pricing schedules. 

While the short-term price amendments came to an end, the Chinese market saturation and 

resulting trade war did not. From mid-2014 to early 2015, Kyocera proposed additional price 

modifications, all of which Hemlock rejected. 

B.

After failing to reach a modification agreement, Kyocera sent notice to Hemlock in 

February 2015 that it was exercising a contractually bargained-for right to invoke the force 

majeure provision of Agreement IV. Hemlock refused to recognize Kyocera’s invocation of any 

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force majeure rights, contending that the force majeure provision in Agreement IV did not 

excuse Kyocera from performance because of the changing solar-market conditions. 

Consequently, on February 13, 2015 Kyocera filed suit in Michigan state Court seeking a 

declaration that its contractual performance could be excused by Agreement IV’s force majeure 

clause. 

On June 16, 2015, the Michigan State trial court granted Hemlock’s motion for summary 

disposition, finding that the change in market conditions did not implicate Agreement IV’s force 

majeure clause. On December 3, 2015, the Michigan Court of Appeals affirmed, explaining that 

Kyocera had assumed the market risks that gave rise to the alleged liability and that “the plain 

language of the force majeure clause at issue does not permit relief to plaintiff on the grounds 

that the market for polysilicon has shifted, regardless of the cause of that shift.” Kyocera Corp. 

v. Hemlock Semiconductor, 15-025786-CK *2 (Mich. Ct. App. Dec. 3, 2015), ECF No. 58 Ex. A. 

C.

 On February 26, 2015 Hemlock sent Kyocera a demand for adequate assurances that it 

would perform under Agreements I-III pursuant to MCLA § 440.2609. Compl. ¶ 28. Kyocera 

sent Hemlock a response on March 26, 2015, arguing that Kyocera had no obligation to provide 

written assurances to Hemlock and that MCLA § 440.2609 did not apply to the supply 

agreements. Id. at ¶ 29. Hemlock then initiated the instant suit on April 1, 2015 alleging that 

Kyocera had failed to provide Hemlock with adequate assurances that it would make purchases 

under the supply agreements in 2015. Am. Compl. ¶ 28. Two days later, on April 3, 2015, 

Kyocera filed a complaint against Hemlock in the Civil Division of Tokyo District Court in 

Japan. The Tokyo complaint alleges that Hemlock violated Japanese antitrust law by abusing a 

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superior position of bargaining power in entering into the supply agreements. That case remains 

pending. 

On July 7, 2015 Kyocera filed an answer to Hemlock’s amended complaint, listing 

twenty-five affirmative defenses and seven counterclaims. ECF No. 9. Hemlock responded on 

August 3, 2015 by filing a motion to dismiss Kyocera’s counterclaims, a motion to strike 

Kyocera’s Japanese Antitrust Defense, and a Motion to quash non-party subpoenas. ECF Nos. 

21-22, 24. Subsequently, on September 15, 2015 Kyocera filed a motion for partial judgment on 

the pleadings. ECF No. 38. Finally, on October 8, 2015, Kyocera filed a motion to compel 

discovery. ECF No. 45. Each of these pending motions will be addressed in turn. 

II. 

The Court first addresses Plaintiff Hemlock’s motion to dismiss Defendant Kyocera’s 

seven counterclaims. ECF No. 21. This Court may dismiss a pleading for “failure to state a 

claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A pleading fails to state a 

claim if it does not contain allegations that support recovery under any recognizable legal theory. 

Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009). In considering a Rule 12(b)(6) motion, the Court 

construes the pleading in the non-movant’s favor and accepts the allegations of facts therein as 

true. See Lambert, 517 F.3d at 439. The pleader need not have provided “detailed factual 

allegations” to survive dismissal, but the “obligation to provide the ‘grounds’ of his 

‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of 

the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 

(2007). Furthermore, the legal effects of contractual clauses are questions of law that must be 

reviewed de novo. Quality Products and Concepts Co. v. Nagel Precision, Inc.,666 N.W.2d 362, 

369 (Mich. 2003). In essence, the pleading “must contain sufficient factual matter, accepted as 

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true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678, (quoting 

Twombly, 550 U.S. at 570). 

Kyocera has brought the following seven counterclaims against Hemlock that Hemlock 

now moves to dismiss: (1) Declaratory Judgment of Impracticability/Impossibility; (2) 

Declaratory Judgment of Frustration of Purpose; (3) Declaratory Judgment of Force Majeure for 

Agreement III; (4) Declaratory Judgment that Agreements I-III are Void for Violations of Public 

Policy, Including Illegality; (5) Declaratory Judgment that Agreements I-III are Void for Mutual 

Mistake; (6) Unjust Enrichment; and (7) Breach of Agreements I-III. See ECF No. 9 47-60. 

Five of the seven counterclaims seek declaratory judgments. Under the Declaratory 

Judgment Act, a district courts may “[i]n a case or controversy, within its jurisdiction ... declare 

the rights and other legal relations of any interested party seeking such declaration, whether or 

not further relief is or could be sought.” 28 U.S.C. § 2201(a) (2012). There is no clear rule 

addressing whether a declaratory judgment action meets the Article III case and controversy 

requirement, however, parties involved must have “adverse legal interests,” and there must be an 

actual dispute that relates to the “legal relations[hip]” between them. Medlmmune, Inc. v. 

Genentech, Inc., 549 U.S. 118, 127, 127 (2007). The parties’ dispute must be the kind that 

requires the “specific” and conclusive relief that a declaratory judgment offers. Aetna Life Ins. 

Co. v. Haworth, 300 U.S. 227, 240–41 (1937). The party seeking the declaratory judgment has 

the burden of demonstrating that an actual case or controversy exists. 

A.

Kyocera’s first counterclaim seeks a declaratory judgment that Kyocera is relieved from 

performance under Agreements I-III on a theory of impracticability/impossibility. Answer to 

Am. Compl. ¶¶ 71-81, ECF No. 9. Generally, under Michigan law, “[e]conomic unprofitableness 

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[sic] is not the equivalent to impossibility of performance. Subsequent events which in the nature 

of things do not render performance impossible, but only render it more difficult, burdensome, or 

expensive, will not operate to relieve [a party of its contractual obligations].” Chase, 217 N.W. at 

567. See, also Milligan 295 N.W. at 563, and Sheldon 29 N.W.2d at 835. 

The Sixth Circuit considered a set of claims similar to those now before this Court in 

Karl Wendt Farm Equipment Co., Inc. v. International Harvester Co., 931 F.2d 1112, 1117-18 

(6th Cir. 1991). In holding that impracticability was an “inappropriate defense” in that case, the 

Court explained: 

The fact that [Defendant] experienced a dramatic downturn in the farm equipment 

market and decided to go out of the business does not excuse its unilateral 

termination of its dealership agreements due to impracticability. [Defendant] 

argues that while mere unprofitability should not excuse performance, the 

substantial losses and dramatic market shift in the farm equipment market 

between 1980 and 1985 warrant the special application of the defense in this case. 

[Defendant] cites losses of over $2,000,000.00 per day and a drop in the 

company’s standing on the Fortune 500 list from 27 to 104.... [Defendant] also 

put on evidence that if it had not sold its farm equipment division, it might have 

had to declare bankruptcy. While the facts suggest that [Defendant] suffered 

severely from the downturn in the farm equipment market, neither market shifts 

nor the financial inability of one of the parties changes the basic assumptions of 

the contract such that it may be excused under the doctrine of impracticability. 

Id. 

 Kyocera argues that Karl Wendt is inapplicable here. Specifically, Kyocera claims that 

Karl Wendt was limited to its particular facts and that the Court acknowledged the defense of 

impracticality/impossibility was available in other factual situations. Kyocera also argues that 

Karl Wendt is distinguishable in that it did not involve claims of “illegal or non-routine actions, 

much less concerted, continuous, and illegal series of acts to override free market forces, as was 

alleged here.” ECF No. 34 at 15. 

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 These arguments are without merit. The alleged illegal acts of the Chinese government 

have no bearing on whether Kyocera’s performance has become impossible or impracticable. 

Rather, the alleged illegal acts have simply caused a market shift in pricing, making it 

unprofitable for Kyocera to continue to perform as promised. Regardless of the cause of the 

market shift, Kyocera’s allegations amount only to claims of “economic unprofitableness,” 

which are insufficient to give rise to claims of impossibility or impracticability. See Chase, 217 

N.W. at 567. Kyocera’s first counterclaim will thus be dismissed. 

B. 

Kyocera next seeks a declaratory judgment that it is relieved from performance under 

Agreements I-III on a theory of frustration of purpose. Answer to Am. Compl. ¶¶ 82-92. 

“Frustration of purpose is generally asserted where a change in circumstances makes one party’s 

performance virtually worthless to the other....” Liggett, 676 N.W.2d at 637 (internal citations 

and quotations omitted). Application of the doctrine of frustration is a question of law and not a 

question of fact. See Restatement (Second) of Contracts, 310 (1979); See also Columbian 

National Title Insurance Company v. Township Title Services, Inc., 659 F.Supp. 796 

(D.Kan.1987). 

For a party to avail itself of the defense of frustration of purpose under Michigan law it 

must prove the following conditions: 

(1) the contract must be at least partially executory; (2) the frustrated party’s 

purpose in making the contract must have been known to both parties when the 

contract was made; (3) this purpose must have been basically frustrated by an 

event not reasonably foreseeable at the time the contract was made, the 

occurrence of which has not been due to the fault of the frustrated party and the 

risk of which was not assumed by him. 

Molnar v. Molnar, 313 N.W.2d 171, 173 (Mich. Ct. App. 1981). 

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 The first prong is satisfied, since all three agreements are executory. Under the first 

agreement, the parties are obligated to perform through the 2015 calendar year. Under the 

second and third agreements, the parties are obligated to perform through 2018 and 2019 

respectively. Thus the parties have continuing performance obligations under all three 

agreements at issue. 

 The second prong turns on the primary purpose of the contract. According to the 

Restatement (Second) of Contracts, “It is not enough that he had in mind some specific object 

without which he would not have made the contract. The object must be so completely the basis 

of the contract that, as both parties understand, without it the transaction would make little 

sense.” Restatement (Second) of Contracts § 265. 

In its counterclaim, Kyocera alleges that the purpose of the contract was “to create a 

long-term agreement in which Kyocera would help Hemlock grow its manufacturing capabilities, 

and in which Hemlock would use that expanded production to provide Kyocera with a stable 

supply of polysilicon within a legally functioning market.” ECF No. 9. Although all of the 

nonmovant’s factual allegations must be accepted as true in reviewing a motion to dismiss, legal 

conclusions need not be taken as true. See Lambert, 517 F.3d at 439. To determine the intent of 

the parties, courts must enforce unambiguous contracts according to their terms. See Quality 

Products, 666 N.W.2d at 370-71. “[A]n unambiguous contractual provision is reflective of the 

parties’ intent as a matter of law.” Id. at 375. 

Kyocera’s contention regarding the primary purpose of the agreements goes too far. The 

unambiguous primary purpose of the agreements was for Hemlock to provide Kyocera with a 

stable supply of polysilicon at a predictable price. This is apparent by the preambles of the 

agreements, which provide, “...Buyer desires to purchase and [Hemlock] agrees to sell Products 

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(herein defined) pursuant to the terms and conditions of this Agreement.” See ECF No. 1, 

Exhibit 1 at 1, Exhibit 2 at 1, Exhibit 3 at 1. It is also apparent by the parties’ choice to structure 

their relationship in the form of long-term requirement contracts in order to provide some 

stability in fluctuating markets. Any express or implied understanding that Hemlock would 

expand its production capabilities was collateral to this central purpose. 

 Under the third prong, the primary purpose must have been “basically frustrated by an 

event not reasonably foreseeable at the time the contract was made, the occurrence of which has 

not been due to the fault of the frustrated party and the risk of which was not assumed by him.” 

Molnar, 313 N.W.2d at 173. In general, “[i]t is not enough that the transaction has become less 

profitable for the affected party or even that he will sustain a loss.” Seaboard Lumber Co. v. 

U.S., 41 Fed.Cl. 401, 417 (Fed.Cl.1998). “The frustration must be so severe that it is not fairly to 

be regarded as within the risks that he assumed under the contract.” Id. (quoting Restatement 

(second) of Contracts § 265 (1981)). “[A] lack of profit is generally insufficient to frustrate the 

purpose of a contract.” Seaboard Lumber, 41 Fed.Cl at 418. 

 Regardless of any changes in the polysilicon market and regardless of the cause of those 

changes, Hemlock is still able to provide Kyocera with a stable supply of polysilicon at a 

predictable price. There is no allegation that Hemlock can no longer provide polysilicon to 

Kyocera, and there is no allegation that there is no longer an existing market for solar products. 

Kyocera simply claims that it can no longer act profitably in the international solar market if it 

must honor its supply agreements with Hemlock. A party’s claim that it is unable to conduct 

business profitably is insufficient to state a claim of frustration of purpose.1

 As a matter of law, 

the primary purpose of the agreements between Hemlock and Kyocera has not been frustrated. 

 

1

 It is unclear whether the defense of frustration of purpose can even justify rescission of a contract under Michigan 

law. See Liggett, 676 N.W.2d at 637; See also Klein Steel Services Inc. v. Sirius Protection, LLC, 2014 WL 1685912 

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 Kyocera argues that the illegal actions of a third party, the Chinese government, in 

manipulating the solar markets were unforeseeable. However, because the Chinese 

Government’s actions did not have an effect on the principal purpose of the agreement – 

Hemlock providing Kyocera with a stable supply of polysilicon at a predictable price – whether 

those acts were foreseeable is not material. Under the doctrine of frustration of purpose, 

foreseeability is only relevant to the extent that it relates to an action that frustrates the primary 

purpose of a contract. See Molnar, 313 N.W.2d at 173. 

 Kyocera also argues that it should not have to bear the entire risk of harm resulting from 

China’s illegal disruption of the solar market. ECF No. 34 at 11. However, Kyocera concedes 

that the agreements were initiated “[t]o combat the instability in the solar market.” ECF No. 34 at 

3. In setting forth long-term price and quantity schedules, both parties accepted a risk that future 

market developments would work against them. Hemlock accepted the risk that polysilicon 

prices would increase, requiring them to sell to Kyocera at below market prices. Kyocera 

accepted the risk that prices would decrease, requiring them to buy from Hemlock at above 

market prices. More likely than not one party to the contract would profit and one would lose 

based on changes in the market price. In this circumstance Kyocera ended up on the losing end 

of the equation. 

C.

 In its third counterclaim, Kyocera seeks a declaratory judgment that the force majeure 

provision of Agreement III excuses its performance. Answer to Am. Compl. ¶¶ 93-107. The 

effect of a force majeure clause is to excuse performance in the event an unforeseen 

 (E.D. Mich. 2014). Federal courts in Michigan have dismissed claims for rescission on this ground. See, e.g. Klein 

Steel Services, WL 1685912 at *4. A party can, however, seek restitution under a theory of frustration of purpose if 

that party has conferred any benefits on the opposing party through partial performance. See Jabero v. Harajli, 2004 

WL 1335896 at *3 (Mich.Ct.App. 2004). 

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circumstance occurs.” Melford Olsen Honey, Inc. v. Adee, 452 F.3d 956, 963 (8th Cir.2006). 

“The performance to be excused is determined by the language of the clause.” Id. The 

“bargained for” force majeure clause found in Agreement III provides: 

HSC shall not be liable for delays or failures in performance of an order or default 

in the delivery arising out of or resulting from causes beyond its control. Such 

causes include, but are not limited to, acts of God, acts of Buyer, acts of the 

Government or the public enemy, fire, flood, epidemics, quarantine restrictions, 

strikes, freight embargoes, severe weather, equipment breakage or default of 

suppliers due to any of such causes. In the event of any such delay of HSC’s 

performance, Buyer shall honor its obligations hereunder as soon as HSC is able 

to perform. 

If HSC fails to deliver or Buyer fails to Purchase Product...and such failure 

occurs as the result of a Force Majeure Event, HSC may deliver and Buyer may 

purchase the deficient Product, (at the prevailing contract price which was in 

effect during the Force Majeure Event), within a reasonable time after resolution 

of the Force Majeure Event, (determined by mutual agreement of the parties). 

The term of this Agreement may be extended for a period not to exceed one (1) 

year so as to complete the purchase and delivery of deficient Product. HSC will 

provide Buyer notice of the deficient Product delivery schedule for the deficient 

Product prior to delivery as well as notice of its request to extend the Terms of the 

Agreement. 

In addition, if due to force majeure or any other cause, HSC is unable to produce 

sufficient goods to meet all demands from customers and internal uses, HSC shall 

have the right to allocate production among its customers and plants in any 

manner which HSC may determine to be equitable. 

See Exhibit 3 § 19, ECF No. 28. 

 Force majeure is not a contract defense under Michigan Law, but it can be a bargainedfor contract provision or protection. See Hemlock Semiconductor Corp. v. Deutsche Solar 

GmbH, 2015 WL 4476327 (E.D. Mich. 2015). Numerous courts have refused to apply 

contractual force majeure clauses where “governmental action affects the profitability of a 

contract, but does not preclude a party’s performance.” United Sugars Corp. v. U.S. Sugar Co., 

Inc., 2015 WL 1529861 (D.C. Minn. 2015). See also Seaboard Lumber Co. v. United States, 308 

F.3d 1283, 1293–94 (Fed.Cir.2002) (declining to apply the force majeure clause because the risk 

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that market price will make performance unprofitable is inherent in fixed-price contracts); In re 

Millers Cove Energy Co., 62 F.3d 155, 159 (6th Cir.1995) (holding that “lack of economic 

feasibility” does not exclude contract performance under contract’s force majeure clause absent 

specific language to that effect); Langham–Hill Petroleum, Inc. v. S. Fuels Co., 813 F.2d 1327, 

1330 (4th Cir.1987) (rejecting application of force majeure clause where foreign government 

acted to cause a collapse in world oil prices, making the contract unprofitable for one party); N. 

Ind. Pub. Serv. Co. v. Carbon Cnty. Coal Co., 799 F.2d 265, 274–76 (7th Cir.1986) (holding that 

the government’s denial of a party’s request to pass increased coal prices along to its customers 

did not excuse that party from a long-term contract to buy coal even though performance created 

economic hardship); B.F. Goodrich Co. v. Vinyltech Corp., 711 F.Supp. 1513, 1519 

(D.Ariz.1989) (rejecting the argument that an unexpected drop in market price was within the 

scope of the contract’s force majeure clause). 

The most analogous case to the present case is Langham-Hills. There, following the 

collapse of the world crude oil market because of Saudi Arabian attempts to acquire market 

share, Southern Fuels attempted to invoke a force majeure clause in its fixed price petroleum 

supply contract with Langham-Hills. Langham Hills, 813 F.2d at 1329. Langham-Hills then 

brought suit against Southern Fuels in federal district court for breach of contract. Id. Declining 

to find a contractual force-majeure clause applicable, the district court granted Langham-Hills 

motion for summary judgment. The Fourth Circuit Court of Appeals affirmed, citing “the law of 

contracts and the realities of the business world.” Id. The Fourth Circuit explained that “[i]f 

fixed-price contracts can be avoided due to fluctuations in price, then the entire purpose of fixedprice contracts, which is to protect both the buyer and the seller from the risks of the market, is 

defeated.” Id. at 1330. The Court then quoted the Seventh Circuit: 

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[the defendant] committed itself to paying a price at or above a fixed minimum 

and to taking a fixed quantity at that price. It was willing to make this 

commitment to secure an assured supply of [the product], but the risk it took was 

that the market price of [the product or substitutes] would fall. A force majeure 

clause is not intended to buffer a party against the normal risks of a contract. The 

normal risk of a fixed price contract is that the market price will change. If it rises, 

the buyer gains at the expense of the seller (except insofar as escalator provisions 

give the seller some protection); if it falls, as here, the seller gains at the expense 

of the buyer. The whole purpose of a fixed price contract is to allocate risks in this 

way. A force majeure clause interpreted to excuse the buyer from the 

consequences of the risk he expressly assumed would nullify a central term of the 

contract. 

Id. (quoting N. Ind. Pub. Serv., 799 F.2d at 275). See also In re Millers Cove Energy Co., Inc.,

62 F.3d 155, 158 (6th Cir. 1995) (adopting the Fourth Circuit’s reasoning in Langham-Hill). 

 The “bargained for” force majeure provision in Agreement III does not excuse Kyocera 

from performing under the circumstances alleged. First, by its express terms the protections of 

the force majeure clause as written was to protect Hemlock from unanticipated events, not 

Kyocera. See Exhibit 3 § 19, ECF No. 28 (“[Hemlock] shall not be liable for delays or failures 

in performance of an order or default in the delivery arising out of or resulting from causes 

beyond its control”). Second, the contractual provision only addresses events that give rise to an 

actual, physical inability to perform, not those that only make performance inconvenient. Id. 

Third, the force majeure provision does not allow a total rescission of the contract or excuse 

from performance, but merely provides for a delay in performance. Id. (“In the event of any 

such delay of HSC’s performance, Buyer shall honor its obligations hereunder as soon as 

[Hemlock] is able to perform”). Accordingly, Kyocera’s claim that an unfavorable market 

fluctuation warrants excuse of performance under Agreement III’s force majeure clause is 

without merit as a matter of law and will be dismissed. 

D. 

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 In its fourth counterclaim, Kyocera seeks a declaratory judgment that Agreements I-III 

are void for violations of public policy, including illegality. See Answer to Am. Compl. ¶¶ 108-

115. Specifically, Kyocera argues that the Agreements violate Article 19 of Japanese 

Antimonopoly Law and Article 90 of the Japanese Civil Code, which prohibits contract 

provisions that are against the public order and morals. Hemlock moves to dismiss this 

counterclaim on the grounds that Kyocera has failed to plead any facts in support of its Japanese 

antitrust claim and Kyocera has not alleged that the Supply Agreements violate antitrust law on 

their face. In the alternative, Hemlock argues the claim should be dismissed in consideration of 

principles of international comity. 

 In its response to Hemlock’s motion to dismiss, Kyocera asserts that its counterclaim for 

declaratory judgment under Japanese antitrust laws should not be dismissed because its Tokyo 

district court complaint has been incorporated into its answer and counterclaims. Kyocera 

further argues that its Japanese antitrust claim will be decided by a Japanese court, and so this 

Court will not need to consider any complex factual issues related to the claims. Kyocera 

concludes that comity considerations weigh in favor of allowing the Japanese court to determine 

if Hemlocks’ agreements violate Japanese law before this Court determines if that illegality bars 

enforcement. Kyocera in effect argues that this Court should apply the doctrine of abstention, 

staying consideration of the present matter until the Tokyo courts have decided the Japanese 

antitrust issue. Kyocera then seeks to apply the principal of collateral estoppel to the Tokyo 

judgment in this Court. 

Hemlock argues that Kyocera has failed to state a claim upon which relief may be 

granted. To raise a claim under Federal Rule of Civil Procedure 8(a), a pleading must contain “a 

short and plain statement of the claim showing that the pleader is entitled to relief”. Id. A 

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pleading fails to state a claim if it does not contain allegations that support recovery under any 

recognizable legal theory. Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009). The “obligation to 

provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, 

and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 555 (2007). In essence, the pleading “must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 

678, (quoting Twombly, 550 U.S. at 570). 

 Kyocera does not identify any legal theory or claim beyond a conclusory assertion that 

the Agreements violate Japanese Antitrust law. Kyocera states only that “the contracts are 

invalid because the contract clauses of the trading establish contract terms unilaterally 

disadvantageous to Kyocera and are against the public order and morals... in Japan.” Answer to 

Am. Compl. ¶ 111. Kyocera then claims that it is “entitled to a declaration that the Agreements 

are void because, among other things, they are illegal under Japanese law, and it is not liable for 

delays in performance of its obligations under the agreements.” Id. at ¶ 115. Kyocera has not 

provided this Court with a recitation of the elements of the cause of action, much less any 

explanation as to how the facts support such a theory of recovery. Because Kyocera has not 

provided any explanation as to how the Supply Agreements violate the public order and morals 

in Japan, Kyocera has not stated a claim upon which relief may be granted under Japanese 

antitrust law. See Oparaugo v. Watts, 884 A.2d 63, 72 (D.C. 2005) (holding that the district court 

acted properly in refusing a plaintiff’s request to apply foreign law where the plaintiff failed to 

provide any information regarding the elements of the foreign law or any information as to how 

the foreign law should be applied in assessing the sufficiency of his complaint). 

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 Furthermore, in its response to Hemlock’s motion for summary judgment, Kyocera states 

that “[t]he antitrust issues underlying Kyocera’s claim will be decided by the Japanese Court. 

Kyocera is not asking this Court to consider any complex factual issues related to Kyocera’s 

antitrust claims.” Resp. to Mot. to Dismiss Counterclaims 27. Accordingly, despite styling its 

counterclaim as a motion for declaratory judgment, Kyocera does not appear to seek a 

declaration about the parties’ rights or a decision concerning Kyocera’s legal claim. Instead, it 

apparently seeks a declaratory judgment that any decision by the Tokyo district court in its favor 

has collateral estoppel effect. Kyocera has not only failed to state a claim upon which relief may 

be granted, but Kyocera has also failed to state a demand for the relief it actually seeks or any 

allegations in support of that relief. See Fed. R. Civ. P. 8(a)(3). 

Kyocera’s claim that the antitrust issue will be decided by a Japanese court is problematic 

for an additional reason: the Supply Agreements contain both a forum selection clause and a 

choice-of-law provision that preclude this Court from recognizing any decision by a Japanese 

Court. The choice of forum provision states that the parties “submit to the exclusive jurisdiction 

and venue of the U.S. District Court for the Eastern District of Michigan for all disputes arising, 

directly or indirectly, under [the Supply Agreements].” Agreements I-III ¶ 21. The choice-oflaw provision provides that the Supply Agreements “shall be governed and controlled in all 

respects by the laws of the State of Michigan, USA... and all disputes, including interpretation, 

enforceability, validity, and construction, shall be determined under the law of the State of 

Michigan, without regard to any conflict of law provision.” Id. at ¶ 20. Michigan public policy 

“favors the enforcement of contractual forum-selection clauses and choice-of-law provisions.” 

Turcheck v. Amerifund Financial, Inc., 725 N.W.2d 684, 688 (Mich. Ct. App. 2006). Indeed, 

this point will be further discussed below in part III.B. 

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Because Kyocera has not stated a foreign antitrust counter-claim upon which relief may 

be granted and because this Court cannot grant Kyocera the relief it seeks — recognition of a 

Japanese district court judgment — Kyocera’s fourth counterclaim will be dismissed. 

E.

 In its fifth counterclaim, Kyocera claims that Agreements I-III are voidable for mutual 

mistake. See Answer to Am. Compl. ¶¶ 116-22. Kyocera argues that the parties were mutually 

mistaken in assuming that the polysilicon market would continue to legally function. Id. at 118-

19. Hemlock moves to dismiss this counterclaim, arguing that the doctrine of mutual mistake 

relates only to “fact[s] in existence at the time the contract is executed” and not to predictions as 

to occurrences or non-occurrences. 

 As explained by the Michigan Supreme Court, a mutual mistake excusing performance 

must relate to facts in existence at the time the contract is executed. Lenawee Cty. Bd. of Health 

v. Messerly, 331 N.W.2d 203, 207 (Mich. 1982). In other words “the belief which is found to be 

in error may not be, in substance, a prediction as to a future occurrence or non-occurrence.” Id. 

Mistaken expectations alone do not relate to a fact in existence at the time of the agreement. 

Akahoshi v. S. Waste Servs., 181 F. Supp. 2d 711, 714 (E.D. Mich. 2001). “Moreover, rescission 

of a contract for mutual mistake is not available where the party seeking rescission has assumed 

the risk of loss in connection with the mistake.” Id. 

 Kyocera’s claim of mutual mistake amounts to an assertion that it was mistaken in its 

failure to anticipate future market disruptions. This allegation does not raise a claim of mutual 

mistake for two reasons. First, mistaken expectations about market behavior do not relate to a 

fact in existence at the time the Supply Agreements were executed. Second, in entering into the 

long-term supply agreements, Kyocera accepted the risk that the market prices for polysilicon 

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would decrease, thereby rendering its performance unprofitable. See Seaboard Lumber, 308 F.3d 

1293–94 (holding that the risk that market price will make performance unprofitable is inherent 

in fixed-price contracts); Langham Hills, 813 F.2d at 1330 (holding that the entire purpose of 

fixed-price contracts is to protect both the buyer and the seller from the risks of the market). 

Because Kyocera has failed to state a claim of mutual mistake, its fifth counterclaim will be 

dismissed. 

F.

Kyocera next alleges that the large advanced payments it has paid to Hemlock constitute 

unjust enrichment and violate Japanese antitrust law. See Answer to Am. Compl. ¶¶ 123-28. 

Hemlock argues this counterclaim should be dismissed because the advanced payments were 

expressly agreed to by the parties. 

Unjust enrichment is a common law remedy whereby the law implies a contract in order 

to prevent unjust enrichment, specifically when one party inequitably receives and retains a 

benefit from another. See Martin v. East Lansing School Dist., 483 N.W.2d 656 (Mich. Ct. App. 

1992). To proceed on such a claim, a plaintiff must establish (1) the receipt of a benefit by 

defendant from plaintiff, and (2) an inequity resulting to plaintiff because of the retention of the 

benefit by defendant. Barber v. SMH (US), Inc., 509 N.W.2d 791 (Mich. Ct. App. 1993). 

“However, a contract will be implied only if there is no express contract covering the same 

subject matter.” Belle Isle Grill Corp. v. Detroit, 666 N.W.2d 271 (Mich. Ct. App. 2003). In 

other words, the law will not imply a contract where there is an express contract between the 

same parties on the same subject matter. Morris Pumps v. Centerline Piping, Inc., 729 N.W.2d 

898 (Mich. Ct. App. 2006) (quoting 42 CJS IMPLIED AND CONSTRUCTIVE CONTRACTS § 34, p. 

33). 

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Here, Agreement I contains an advance payment clause, expressly providing: 

Non-Refundable Advance Payment. Buyer agrees to make a non-refundable, 

unconditional, irrevocable advance payment in the amount of $36,120,000.00 (the 

“Advance Payment”). Fifty percent (50%) of the Advance Payment shall be due 

on or before October 3, 2005 and the remaining fifty percent (50%) shall be due 

on or before October 2, 2006. Notwithstanding anything herein to the contrary, 

Buyer expressly acknowledges its understanding and agrees that, once this 

Agreement is executed, there are no circumstances or occurrences that will 

require [Hemolock] to refund to Buyer all or any portion of the Advance payment. 

The Advance Payment shall be applied as a credit against the price of the 

Products that Buyer is required to purchase under this Agreement at the times and 

amounts shown [in the schedules]. 

Agreement I ¶ 2. Agreement II contains the same clause, but requires a $48,000,000.00 advance 

payment to be paid in installments on or before October 4, 2006, October 4, 2007, and October 4, 

2008. Agreement II ¶ 2. 

Agreement III contains a similar clause, requiring a $84,915,000.00 advance payment to 

be paid in installments on or before October 4, 2007, October 4, 2008, and October 4, 2009. 

Agreement III ¶ 2. The clause differs from the previous two advance payment clauses in that it 

allows Kyocera to recover a portion of the advance payment if it sustains loss, damage, or injury 

resulting from Hemlock’s failure to perform, specifically in situations involving a delay in 

Hemlock’s completion of its expanded manufacturing facility. Id. at ¶¶ 2, 9, 15. Agreement III 

limits any such liability to the “remaining net balance of the advanced payment”, and provides 

that, “[e]xcept for situations involving a delay in completion of the manufacturing facility... 

[Hemlock] shall not be liable for any loss, damage, or injury resulting from delay in delivery of 

the products, or for any failure to perform which is due to circumstances beyond its control.” Id. 

¶ 15 (original in all-caps). 

Because the Supply Agreements expressly contemplate and govern Kyocera’s nonrefundable advance payments to Hemlock, Kyocera cannot recover its advance payments by 

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implied contract. See Belle Isle, 666 N.W.2d at 281 (concluding that a plaintiff could not recover 

costs of improvement by implied contract where his lease expressly provided for capital 

improvements in lieu of rent). See also Liggett Restaurant Group, Inc. v. City of Pontiac, 676 

N.W.2d 633, 639 (Mich. Ct. App. 2003) (holding that the trial court properly dismissed the 

plaintiff’s unjust enrichment claim where there was an express provision in the parties’ contract 

contemplating the subject matter of the dispute); Fodale v. Waste Mgmt. of Mich., Inc., 718 

N.W.2d 827, 841 (2006) (holding that a plaintiff was foreclosed from bringing an unjust 

enrichment claim where an express contract governed the parties’ loan). 

Kyocera argues that, despite the existence of express contracts governing the advance 

payments, it may still proceed on its unjust enrichment counterclaim because the Supply 

Agreements are invalid or unenforceable. In H.J. Tucker and Associates, Inc. v. Allied Chucker 

and Engineering Co., the Michigan Court of Appeals held that a party could proceed on its 

unjust enrichment claim where an express oral contract existed, but where there was a material 

question as to the scope of the oral contract or whether the contract was still in force. 595 

N.W.2d 176 (Mich. Ct. App. 1999). The court explained that the plaintiff could have recovered 

under its breach of contract claim for the period of time that the contract was in force, and could 

recover under its unjust enrichment claim for the period of time the contract was allegedly not 

effective. Id. In the alternative, the court explained, the trial court could find that recovery 

under unjust enrichment doctrine was appropriate if it found there was no contract between the 

parties due to the dispute regarding material contract terms. 

Unlike in H. J. Tucker, here the Supply Agreements are express written agreements. 

Neither the scope nor the terms of the agreement are in dispute. Instead, Kyocera argues only 

that the Supply Agreements are not enforceable contracts due to violations of Japanese antitrust 

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law and mutual mistake. However, because Kyocera cannot proceed on either theory as a matter 

law, See I.D. and I.E. supra, Kyocera cannot, as a matter of law, argue that the express contracts 

are unenforceable under either theory. 

Kyocera argues that it should be allowed to proceed on its unjust enrichment 

counterclaim because it is not in pari delicto with Hemlock. Kyocera argues that if the Supply 

Agreements are found to be illegal agreements under Japanese antitrust law, this Court should 

not simply leave the parties as it finds them (the proper course of action when the Court is asked 

to aid either party to an illegal agreement. Jones v. Chennault, 35 N.W. 2d 256, 267 (Mich. 

1948)). Instead, Kyocera argues, because any illegality under Japanese antitrust law would be 

the result of Hemlock’s abuse of its superior bargaining power, the parties are not in pari delicto

because Kyocera’s payments were a product of that abuse. Id. 

On the present facts, the argument is academic. Because Kyocera has failed to properly 

plead any claims under Japanese antitrust law, Kyocera cannot allege in this action that the 

Supply Agreements are unenforceable under Japanese antitrust law. 

Finally, Kyocera argues that Hemlock will be unjustly enriched if it is allowed to retain 

the advance payments because Kyocera only committed to the advance payment arrangement 

based on Hemlock’s promise that it would use the payments to expand its polysilicon production 

facilities. However, because express written agreements exist between the parties, Kyocera 

cannot challenge the fairness of the contract terms it agreed to or its performance under the 

express contract terms on a quantum meruit theory of unjust enrichment. If Kyocera seeks to 

challenge the fairness of the express contract terms, it must do so under claims of 

unconscionability, duress or fraud. Kyocera may only challenge Hemlock’s performance under 

the express contract terms by asserting a breach of contract claim. 

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G.

In its seventh counterclaim Kyocera alleges that Hemlock has breached the ¶ 9 of the 

Supply Agreements by failing to maintain expanded manufacturing facilities. See Answer to Am. 

Compl. ¶¶ 129-134. Hemlock moves to dismiss that counterclaim, arguing that Kyocera has not 

alleged the breach of any express provision of the Supply Agreements. 

 To state a breach of contract claim under Michigan law, a plaintiff must plead “(1) that 

there was a contract, (2) that the other party breached the contract and, (3) that the party asserting 

breach of contract suffered damages as a result of the breach.” Dunn v. Bennett, 846 N.W.2d 75 

(Mich.Ct.App.2013). The first prong requires an express promise, as “Michigan does not 

recognize a cause of action for breach of the implied covenant of good faith and fair dealing.” 

Fodale, 718 N.W.2d at 841. 

 The disputed provision of the Supply Agreements, ¶ 9, provides: “Buyer acknowledges 

that [Hemlock] will be expanding its manufacturing facilities... in order to produce the Products 

to be supplied under this Agreement.” Agreements I-III ¶ 9. That paragraph further provides: 

“Buyer acknowledges the possibility of delays in completing the manufacturing facility and 

expressly agrees that, so long as production of Product commences by [June 30, 2008/June 30, 

2009/June 30, 2010], [Hemlock] SHALL HAVE NO LIABILITY TO BUYER FOR ANY 

SUCH DELAY.” Id. (emphasis in originals). 

Kyocera argues that ¶ 9 amounts to an express promise by Hemlock to maintain 

expanded manufacturing capacities. Kyocera cites Sexton v. Panel Processing, Inc., for the 

proposition that a promise is defined as “a manifestation of intention to act or refrain from acting 

in a specified way, so made as to justify a promise in understanding that a commitment has been 

made.” 912 F. Supp. 2d 475, 478 (E.D. Mich. 2013) aff’d 754 F.3d 332, 334 (6th Cir), cert. 

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Denied, 135 S. Ct. 677 (2014). Kyocera argues that the language of ¶ 9 stating that Hemlock 

“will be expanding” is a manifestation of intention to act. Kyocera concludes that, viewing the 

facts in a light most favorable to Kyocera, ¶ 9 supports Kyocera’s allegation of an express 

contract term and a subsequent breach. As a result of this alleged breach, Kyocera claims that it 

has suffered damages because it has not received what it bargained for in exchange for its 

advance payments. 

Hemlock, in contrast, argues that ¶ 9 is not an express promise, but merely serves as an 

acknowledgment by Kyocera that Hemlock would be expending substantial capital 

improvements to expand its manufacturing capacity. Hemlock argues that the purpose of that 

acknowledgment was that Hemlock would eventually credit Kyocera’s advance payments 

against Kyocera’s take-or-pay obligations. Hemlock further argues that, because no provision in 

the agreement requires Hemlock to maintain expanded manufacturing facilities, Kyocera’s 

breach of contract claim should be dismissed. 

Viewing the facts in a light most favorable to Kyosera and assuming that ¶ 9 amounts to 

an express promise by Hemlock to expand its manufacturing facilities, there is nothing in the 

Supply Agreements that supports Kyocera’s allegation that Hemlock agreed to maintain

expanded manufacturing facilities. At most, the provision could amount to a promise by 

Hemlock to expand its manufacturing facilities to meet Kyocera’s product demands under the 

Supply Agreements. Accordingly, Kyocera’s claim will be dismissed to the extent that it 

suggests that Hemlock breached the Supply Agreements by failing to maintain expanded 

facilities. 

Turning to Hemlock’s alleged promise to expand, Kyocera admits in its answer that 

Hemlock’s expanded production facility in Tennessee was completed, but notes that it was 

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permanently closed in December 2014. Answer to Am. Compl. ¶ 20. Kyocera also alleges that 

Hemlock did not expand other facilities to the extent contemplated by the parties. Id. at ¶ 133. In 

this way, Kyocera argues, Hemlock has breached a promise to perform. 

It is not enough for Kyocera to allege that Hemlock breached a promise to perform. 

Under Michigan law, Kyocera must also allege that it “suffered damages as a result of the 

breach.” Dunn, 846 N.W.2d at 275. Kyocera makes no allegation that Hemlock has been unable 

to meet its obligation to fulfill Kyocera’s demands for polysilicon under the Supply Agreements 

— indeed, the basis of this lawsuit is Kyocera’s suggestions that it no longer has any demand 

whatsoever for Hemlock’s polysilicon at the agreed upon prices. Kyocera thus does not allege 

damages in the form of Hemlock’s failure to meet its product demands. 

Kyocera does allege that it was damaged by not receiving what it bargained for in 

exchange for its advance payments. Kyocera argues that because it agreed to the advanced 

payments for the purpose of allowing Hemlock to expand its manufacturing facilities, it has been 

injured as a result of Hemlock’s failure to sufficiently expand its facilities. However, by the very 

terms of the advanced payment provision, Kyocera agreed “to make a non-refundable, 

unconditional, irrevocable advance payment” and expressly acknowledged its understanding and 

agreed that, “once this Agreement is executed, there are no circumstances or occurrences that 

will require [Hemolock] to refund to [Kyocera] all or any portion of the Advance Payment.” 

Agreements I-III ¶ 2. Nothing in the Supply Agreements suggests that the advanced payments 

were in consideration for the expanded facilities. Instead, all three contracts are clear that the 

advanced payments were “non-refundable, unconditional, [and] irrevocable.” Id. at ¶ 9. The 

Supply Agreements further explain that the only circumstance or occurrence requiring Hemlock 

to refund a portion of the advance payment is if, as a result of Hemlock’s delay in completing its 

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expanded manufacturing facility, Kyocera suffered loss, damage or injury resulting from (1) 

Hemlock’s delay in delivery or (2) Hemlock’s “failure to perform which is due to circumstances 

beyond its control.” Id. at ¶ 15. Because Kyocera has not pled any loss, damage, or injury in 

either form, it has not stated an injury under the Supply Agreements or under Michigan law. At 

the time of the agreements, Kyocera agreed to the non-refundable, unconditional, and irrevocable 

advanced payments. It cannot now, with the benefit of hindsight, recast the nature of those 

advanced payments. 

Furthermore, Kyocera’s advanced payments to Hemlock are to be “applied as a credit 

against the price of the Products that Buyer is required to purchase under this Agreement at the 

times and amounts shown [in the schedules].” Accordingly, any damages that Kyocera suffers 

relating to the advanced payment is a result of its decision to cease performance under the agreed 

upon terms of the Supply Agreements. If Kyocera continued to perform as promised, then the 

advance payments would continue to be credited against Kyocera’s subsequent purchases. 

In conclusion, even assuming that Hemlock promised to expand its manufacturing 

facilities, Kyocera has not pled any actionable damages resulting from any breach of that 

promise. Kyocera’s seventh counterclaim will thus be dismissed. 

III. 

Also before the Court is Hemlock’s Motion to strike Kyocera’s tenth affirmative defense, 

relating to violations of Japanese antitrust law. Mot. to Strike, ECF No. 24. Hemlock argues that 

Supreme Court precedent, as well as this Court’s recent decision in Hemlock Semiconductor 

Corp. v. Deutsche Solar GmbH, 2015 WL 4476327 (E.D.Mich. May 7, 2015) support its motion. 

In response Kyocera argues that this case is distinguishable from Deutsche Solar because 

Kyocera is not asking the Court to adjudicate any foreign antitrust claim, but is instead asking 

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the Court to “respect a Japanese court’s adjudication of a pending Japanese antitrust claim.” 

Resp. to Mot. to Strike 1, ECF No. 33. 

A “court may strike from a pleading an insufficient defense or any redundant, immaterial, 

impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). A defense is insufficient “if as a matter 

of law, the defense cannot succeed under any circumstances.” Hahn v. Best Recovery Servs., 

LLC, 2010 WL 4483375, *2 (E.D. Mich. Nov.1, 2010) (internal quotation marks and citations 

omitted). A Rule 12(f) motion is also proper “if it aids in eliminating spurious issues before trial, 

thereby streamlining the litigation.” Id. (internal quotation marks and citation omitted). 

“Generally, however, a Rule 12(f) motion should not be granted if the insufficiency of the 

defense is not clearly apparent, or if it raises factual issues that should be determined on a 

hearing on the merits.” Id. (internal quotation marks and citation omitted). Motions seeking to 

strike an affirmative defense are disfavored and should be used sparingly. As observed by the 

Sixth Circuit, a motion to strike “is a drastic remedy to be resorted to only when required for 

purposes of justice. The motion to strike should be granted only when the pleading to be stricken 

has no possible relation to the controversy.” Brown & Williamson Tobacco Corp. v. United 

States, 201 F.2d 819, 822 (6th Cir. 1953) (internal quotation marks and citations omitted). 

A. 

 The Supreme Court has twice addressed the question of when a contract’s illegality under 

antitrust laws and regulations can serve as an affirmative defense in a contract-enforcement 

action. See Kelly v. Kosuga, 358 U.S. 516 (1959), and Kaiser Steel Corp. v. Mullins, 455 U.S. 72 

(1982). Under those opinions, a party can usually raise a claim of illegality under antitrust law in 

a contract dispute only where a provision is patently illegal and not severable from the sued-upon 

provision. See Hemlock Semiconductor Corp. v. Deutsche Solar GmbH, 2015 WL 4476327 (May 

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7, 2015). Here, there is no patent illegality in the supply agreements. Rather, Kyocera argues that 

the Supply Agreements violate Japanese antitrust law if Hemlock abused a position of bargaining 

power in arriving at the agreements. 

i. 

The District of Columbia Circuit addressed an affirmative antitrust defense that did not 

allege patent antitrust illegality in National Souvenir Center, Inc. v. Historic Figures, Inc., 728 

F.2d 503 (D.C. Cir. 1984). National Souvenir arose out of “a series of pre-trial rulings by the 

district court in three consolidated anti-trust cases involving wax museums[.]” Id. at 506. After a 

wax museum in Washington D.C. began franchising museums throughout the United States, the 

franchisees sued, claiming that the agreements violated the Sherman Act because they 

impermissibly tied a certain supplier’s figures to the museum franchise. Id. The franchisor and 

owners responded by asserting a breach of contract counterclaim, to which the franchises 

defended by alleging that the agreements were illegal tying agreements under the Sherman Act. 

In dismissing the defense, the district court concluded that the defense could not be sustained 

under Kaiser Steel because “the promise being sued on is not itself illegal under the antitrust 

laws, [and so] Kaiser did not require recognition of the defense.” Id. at 508 (quoting opinion 

below) (internal quotation marks omitted). 

In reviewing the district court opinion, the District of Colombia Circuit Court noted that 

“Kosuga was generally viewed as permitting antitrust defenses only in a very narrow class of 

contract suits, courts being understandably hesitant to interpose complex antitrust issues in a 

simple suit for breach of contract.” Id. The circuit court then read Kosuga to limit antitrust 

defenses to situations where “the requested enforcement was of agreements not to compete or 

other direct market restrictions, that made ‘the court . . . a party to an anticompetitive scheme.’” 

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Id. (quoting Mullins v. Kaiser Steel Corp., 642 F.2d 1302 (D.C. Cir. 1980)). The circuit court 

noted that the Supreme Court in Kaiser Steel “opened the window only a notch to antitrust 

defenses, i.e., it refused to enforce a promise to pay that was itself a mechanism to police 

anticompetitive conduct.” Id. In distilling the two cases, the circuit court determined the relevant 

inquiries are (1) whether the agreement to be enforced is facially illegal under federal antitrust 

laws (the Kosuga question) and (2) whether the agreement to be enforced is itself a mechanism 

to enforce a collateral agreement or provision that facially violates federal antitrust laws. 

In the case before it, the District of Columbia Circuit determined that “the promises to 

pay franchise fees in this case do not appear on their face to be primarily means to enforce the 

allegedly illegal tie-ins between the wax figures and start-up services.” Id. Rather, they appeared 

to be merely consideration for goods and services, or nothing more than an inoffensive market 

transaction. Id. Importantly, the court held: 

To transform the contracts here into illegal tie-ins would require complex proof of 

monopoly power in the tying market and leverage of that power in the tied 

market. Even then, their vice would extend only to the amount that the agreed 

prices exceeded the fair value of the goods and services received and consumed—

the portion of the prices that could be traced to the illegal practice. The 

complexity of proof and speculative nature of appellants’ defenses seem to us to 

place them outside of the [Kaiser Steel] exception and clearly within the ambit of 

disfavor for such defenses articulated in Kosuga. 

Id. at 515-16. Stated differently, not only was the promise the court was asked to enforce not 

patently illegal, but fulfilling the promise did not force the franchisees to comply with another 

portion of the agreement that was patently illegal. Any illegality under a collateral provision of 

the agreement would only arise under the presence of specific market conditions external to the 

agreement and upon which the agreement does not rely. 

ii. 

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Here, Kyocera does not challenge any specific provision of the Supply Agreements as 

patently illegal under Japanese Antitrust law. Instead, Kyocera argues that the Supply 

Agreements are wholly invalid and unenforceable under Japanese Antitrust law because 

“Hemlock abused its superior bargaining position to obtain punitive terms from Kyocera in 

violation of Japan’s Anti-Monopoly Act (“AMA”). Resp. to Mot. to Strike 5. Kyocera argues 

that, although Hemlock’s market dominance is probative, it is not required under Japanese 

antitrust law, and that Kyocera’s claim does not need to allege any market-control thresholds or 

any particular market share. Id. at 6. 

Kyocera makes no allegation that the Supply Agreements either (1) facially violate 

Japanese Antitrust law or (2) serve as a mechanism to facially violate Japanese Antitrust law. As 

such, Kyocera’s claim of wholesale unenforceability under a broad and amorphous provision of 

Japanese antitrust law is not a defense in this breach of contract case. 

Kyocera attempts to distinguish this case from Kaiser Steel and Kosuga by arguing that 

those cases involved situations where one party had already received the property of another and 

the complaining party sought to avoid paying for the delivered goods. In contrast, Kyocera 

argues that there are no delivered goods in the present case and that it is being forced to pay for 

goods that it has not received. First, the decision to cease acceptance of goods under the Supply 

Agreements is Kyocera’s. If Kyocera honored the terms and schedules that it agreed to in the 

Supply Agreements, then its advance payments would continue to be credited against its future 

purchases. Second, and more importantly, this is not a material distinction and has no bearing on 

the question of whether it is appropriate for this Court to entertain a foreign anti-trust defense as 

part of a Michigan breach of contract case. 

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Kyocera also argues that, like in Kaiser Steel ̧ the Supply Agreements require Kyocera to 

pay a penalty if it selects any supplier other than Hemlock. Kyocera cites to no provision of the 

Supply Agreements supporting such an argument, and there is in fact no provision of the Supply 

Agreements requiring Kyocera to pay a penalty if it uses polysilicon suppliers other than 

Hemlock. Furthermore, Kyocera provides no explanation as to how any such provision would 

violate Japanese antitrust law — the law that Kyocera attempts to raise in its defense. The fact 

that such conduct was found to facially violate United States antitrust law in Kaiser Steel is 

irrelevant where Kyocera has not pled as a defense any violations of United States antitrust law. 

B. 

Kyocera also attempts to distinguish this case from Deutsche Solar by arguing that this 

Court should not in fact adjudicate any Japanese antitrust issues. Id. at 7. Kyocera instead 

argues that this Court should apply the doctrine of abstention and, if and when the Japanese court 

issues a final and valid judgment on the antitrust issue, review the Japanese court’s findings and 

determine whether the decision renders Hemlock’s contract unenforceable in the United States. 

Id. 

Abstention from the exercise of federal jurisdiction is a “narrow exception to the duty of 

a District Court to adjudicate a controversy properly before it.” Colorado River Water 

Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). It is “the exception, not the rule.” 

Id. Colorado River instructed courts to consider several factors in determining whether to abstain 

in favor of a parallel proceeding in the courts of another sovereign, the most important factor 

being whether there exists a “clear federal policy evinc[ing] ... the avoidance of piecemeal 

adjudication.” Id. Additional factors include how far the parallel proceeding has advanced in the 

other sovereign’s courts, the number of defendants and complexity of the proceeding, the 

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convenience of the parties, and whether a sovereign government is participating in the suit. See 

Answers in Genesis of Kentucky, Inc. v. Creation Ministries Intern., Ltd., 556 F.3d 459, 467 (6th 

Cir. 2009). 

As to breach of contract cases, there is no clear federal policy evincing the avoidance of 

piecemeal adjudication. There is, however, a clear federal policy in favor of enforcing bargained 

for forum selection clauses. E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 991-92 

(9th Cir. 2006). American courts will generally only recognize foreign judgments that are both 

final and valid. See Pilkington Bros. P.L.C. v. AFG Industries Inc., 581 F.Supp. 1039, 1045 (D. 

Del. 1984). Even where a party obtains a final and valid foreign judgment, a court may refuse to 

recognize the judgment “where the proceeding in the foreign court was contrary to an agreement 

between the parties under which the dispute in question was to be determined otherwise than by 

proceedings in that foreign court.” 2005 Recognition Act § 4(c)(5); 1962 Recognition Act § 

4(b)(5). In Bremen v. Zapata Off-Shore Co., the United States Supreme Court held that, where a 

choice of forum was made “in an arm’s-length negotiation by experienced and sophisticated 

businessmen... absent some compelling and countervailing reason it should be honored by the 

parties and enforced by the courts.” 407 U.S. 1, 11 (1972). In order to overcome this 

presumption a party must show that the provision in question was affected by “fraud, undue 

influence, or overweening bargaining power.” Id. at 12. The Court concluded that, “in the light 

of present-day commercial realities and expanding international trade we conclude that the forum 

clause should control absent a strong showing that it should be set aside.” Id. at 15. Circuit 

Courts have applied this Bremen test to choice of law provisions as well as choice of forum 

provisions. See Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285, 1292 (11th Cir. 

1998). 

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 The Supply Agreements contain a choice of forum provision stating that the parties 

“submit to the exclusive jurisdiction and venue of the U.S. District Court for the Eastern District 

of Michigan for all disputes arising, directly or indirectly, under [the Supply Agreements].” 

Agreements I-III ¶ 21. The Supply Agreements also contain a choice of law provision, providing 

that the Supply Agreements “shall be governed and controlled in all respects by the laws of the 

State of Michigan, USA... and all disputes, including interpretation, enforceability, validity, and 

construction, shall be determined under the law of the State of Michigan, without regard to any 

conflict of law provision.” Id. at ¶ 20. Michigan public policy “favors the enforcement of 

contractual forum-selection clauses and choice-of-law provisions.” Turcheck v. Amerifund 

Financial, Inc., 725 N.W.2d 684, 688 (Mich. Ct. App. 2006). Importantly, Kyocera has not 

challenged the enforceability of either provision in its pleadings or responses. 

 Kyocera’s antitrust defense will be stricken; first, because it does not meet the 

requirements of Kaiser Steele and Kosuga to be proper for this Court’s determination as part of 

this breach of contract action, and second, because even if Kyocera obtained a final judgment 

from the Tokyo District court, the Supply Agreements’ forum selection provision and choice of 

law provision would preclude this Court from recognizing the foreign judgment. 

IV.

 The final substantive motion before the Court at this time is Kyocera’s motion for partial 

judgment on the pleadings. ECF No. 38. Federal Rule of Civil Procedure 12(c) provides that 

“[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for 

judgment on the pleadings.” The standard of review for a motion for judgment on the pleadings 

is the same as that applied to motions to dismiss under Rule 12(b)(6). See, e.g., Lindsay v. Yates, 

498 F.3d 434, 438 (6th Cir.2007); Morgan v. Church's Fried Chicken, 829 F.2d 10, 11 (6th 

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Cir.1987) (noting that where a Rule 12(b)(6) defense of failure to state a claim upon which relief 

can be granted is raised by a Rule 12(c) motion for judgment on the pleadings, the Court must 

apply the standard for a Rule 12(b)(6) motion). Accordingly, “[f]or purposes of a motion for 

judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing 

party must be taken as true, and the motion may be granted only if the moving party is 

nevertheless clearly entitled to judgment.” JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 

581 (6th Cir.2007) (internal citations and quotation marks omitted). 

In its Rule 12(c) motion, Kyocera requests that the Court dismiss Hemlock’s claim for 

accelerated damages. Kyocera argues that the accelerated damages provisions in the Supply 

Agreements do not approximate Hemlock’s actual damages but instead serve as unenforceable 

penalties. Hemlock responds that it is not in fact seeking accelerated termination damages in this 

litigation. Resp. to Mot. for J. on Pleadings, ECF No. 48. 

Because Hemlock is not seeking accelerated damages at this time, and because this 

Court’s jurisdiction extends only to actual cases and controversies, Kyocera’s motion for 

judgment on the pleadings will be denied. If and when Hemlock seeks accelerated damages, 

Kyocera may renew its challenge to the accelerated damage provisions. 

V.

 Also before the Court is Hemlock’s motion to quash non-party subpoenas issued by 

Kyocera. The scope of discovery is governed by Federal Rule 26(b)(1), which as of December 

1, 2015 provides: 

Unless otherwise limited by court order, the scope of discovery is as follows: 

Parties may obtain discovery regarding any nonprivileged matter that is relevant 

to any party’s claim or defense and proportional to the needs of the case, 

considering the importance of the issues at stake in the action, the amount in 

controversy, the parties’ relative access to relevant information, the parties’ 

resources, the importance of the discovery in resolving the issues, and whether the 

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burden or expense of the proposed discovery outweighs its likely benefit. 

Information within this scope of discovery need not be admissible in evidence to 

be discoverable. 

Fed. R. Civ. P. 26(b)(1). The 2015 Committee notes explain that “[t]he parties and the court have 

a collective responsibility to consider the proportionality of all discovery and consider it in 

resolving discovery disputes.” Rule 26(b)(2)(C) provides additional limitations on the scope of 

discovery, explaining that the Court must limit the extent of discovery if it determines that “the 

discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other 

source that is more convenient, less burdensome, or less expensive;”. 

Under Federal Rule 45(d)(3), upon a timely motion, the Court must quash or modify a 

subpoena that “requires disclosure of privileged or other protected matter, if no exception or 

waiver applies” or a subpoena that “subjects a person to an undue burden.” Rule 45(d)(3)(A)(iii)-

(iv). The Court may quash or modify a subpoena that requires disclosing trade secrets or other 

confidential information. Rule 45(d)(3)(B). 

Hemlock moves to quash non-party subpoenas served on the following attorneys in 

companion cases: (1) Daniel Malone, the attorney for Deutsche Solar GmbH in Deutsche Solar 

and attorney for both Green Energy Technology, Inc. and Tatung Co. in Hemlock Semiconductor 

Corporation v. Green Energy Technology Inc., et al., No. 13-020593 (Mich. Cir. Ct. Saginaw 

Cnty. 2013); (2) Larry Elliot, attorney for Deutsche Solar in Deutsche Solar; and (3) David Tsai, 

attorney for both Green Energy and Tatung in Green Energy. Hemlock argues that the 

documents Kyocera seeks are subject to protective orders entered by the Courts in both Deutsche 

Solar and Green Energy, and that Hemlock has a privilege and proprietary interest in the 

documents. Hemlock further argues that the subpoenas should be quashed under Rule 45(d)(3), 

since Hemlock is in possession of all of the documents and depositions sought by Kyocera and 

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because Kyocera has already requested the exact same documents from Hemlock pursuant to 

Rule 34. In opposition to Hemlock’s motion, Kyocera argues that its third-party requests are 

proper because the documents have already been gathered and produced and because Hemlock 

has indicated that it will force Kyocera to engage in motion practice before it will produce the 

materials in question. 

A. 

“[A] party generally has no standing to seek to quash a subpoena directed to a non-party.” 

Systems Products and Solutions, Inc. v. Scramlin, 2014 WL 3894385 *7 (E.D. Mich. August 8, 

2014) (internal quotations and citation omitted). A party establishes standing if it carries its 

burden of persuading the court that it has a claim of personal interest or privilege in the material 

sought by the third-party subpoenas. Id. Here, because the relevant documents relate to lawsuits 

in which Hemlock was a party and are covered by protective orders, Hemlock has shown 

privilege conferring standing. 

B.

 At this time, Kyocera’s non-party subpoenas will be provisionally quashed for two 

reasons: First, because the information it seeks from the non-parties is covered by protective 

orders, thus making it privileged material under Rule 26(b)(1); second, because the subpoenas 

are unreasonably cumulative or duplicative under Rule 26(b)(2)(C) and Kyocera is able to obtain 

the same material directly from Hemlock. If Hemlock makes the discovery process unduly 

expensive, inconvenient or burdensome, then this order will be revisited and Kyocera may be 

allowed to reissue subpoenas to the non-parties. 

VI. 

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The final motion currently before this Court is Kyocera’s motion to compel discovery. 

This motion will be addressed during the Rule 16(b) scheduling conference scheduled below. 

VII. 

 Accordingly, it is ORDERED that Plaintiff Hemlock’s motion to dismiss Defendant 

Kyocera’s counterclaims, ECF No. 21, is GRANTED. 

 It is further ORDERED that Defendant Kyocera’s counterclaims Nos. I-VII are 

DISMISSED. 

 It is further ORDERED that Plaintiff Hemlock’s motion to strike Defendant Kyocera’s 

Japanese antitrust defense, ECF No. 22, is GRANTED. 

 It is further ORDERED that Defendant Kyocera’s Japanese antitrust defense, 

Affirmative Defense No. 10, is STRICKEN. 

 It is further ORDERED that Defendant Kyocera’s motion for partial judgment on the 

pleadings, ECF No. 38, is DENIED without prejudice. 

 It is further ORDERED that Plaintiff Hemlock’s motion to quash non-party subpoenas, 

ECF No. 24, is PROVISIONALLY GRANTED. 

 It is further ORDERED that the non-party subpoenas issued to Attorneys Daniel Malone, 

Larry Elliott, and David Tsai are QUASHED. 

 It is further ORDERED that a Rule 16(b) scheduling conference is SCHEDULED for 

March 9, 2016 at 4:00 PM at the United States Courthouse, 1000 Washington Avenue, Bay 

City, Michigan, 48708. 

s/Thomas L. Ludington 

 THOMAS L. LUDINGTON 

 United States District Judge 

Dated: January 6, 2016 

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PROOF OF SERVICE 

The undersigned certifies that a copy of the foregoing order was served 

upon each attorney or party of record herein by electronic means or first 

class U.S. mail on January 6, 2016. 

 s/Michael A. Sian 

 MICHAEL A. SIAN, Case Manager 

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