Hemlock Semiconductor Corporation v. Kyocera Corporation
United States Court of Appeals for the Sixth Circuit
747 Fed. App’x 285 (2018)
- Written by Angela Patrick, JD
Facts
Kyocera Corporation (defendant) contracted with Hemlock Semiconductor Corporation (Hemlock) (plaintiff) to buy polysilicon for 10 years. Kyocera covered the production’s initial setup costs. The contract contained take-or-pay provisions requiring Kyocera to take a particular quantity of polysilicon each year. Even if Kyocera did not take the full quantity each year, Kyocera still had to pay Hemlock the contract price for the listed quantity. This contract contained no makeup rights, nor did it otherwise give Kyocera any future credits for payments made on undelivered polysilicon. When polysilicon prices dropped, Kyocera refused to take or pay for the listed polysilicon quantity at the contract price. Hemlock sued Kyocera in federal court, alleging that Kyocera had repudiated the contract. Kyocera counterclaimed that the contract’s pay option was an unenforceable penalty. The district court granted Hemlock’s motion to dismiss Kyocera’s counterclaim. Kyocera appealed.
Rule of Law
Issue
Holding and Reasoning (Thapar, J.)
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