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Sixth Circuit Narrows Ability to Use Antitrust Violations as an Affirmative Defense

The Sixth Circuit Court of Appeals recently affirmed a trial court's decision to strike an affirmative defense alleging antitrust violations in a breach of contract case. In Hemlock Semiconductor Operators, LLC v. SolarWorld Industries Sachsen GmbH, 2017 U.S. App. LEXIS 15380 (6th Cir. 2017), the parties had entered into long-term supply agreements under which the plaintiff would sell to the defendant set quantities of polysilicon. The parties reached a temporary agreement to lower prices during a single year, but when that year expired, the defendant refused to revert back to the original pricing. The plaintiff sued for breach of contract. In response, the defendant asserted an affirmative defense alleging that the agreements at issue were illegal under antitrust laws and, therefore, the defendant was not responsible for lost profits. The district court struck the affirmative defense, and the Sixth Circuit Court of Appeals affirmed the decision. Specifically, the Court of Appeals cited case law enforcing promises that were legal, even if the promise was part of an agreement containing a separate, illegal provision. The Court of Appeals expressed particular concern regarding defendants' reliance on alleged violations of antitrust laws. "If buyers were allowed to broadly assert antitrust defenses, they would be able to unfairly obtain goods without paying for them. . . . [I]llegality defenses based on antitrust law are disfavored, especially when allowing the defense would 'let the buyer escape from its side of a bargain' after having received a benefit." The case is a reminder that illegality of a contract alone may not be sufficient to prevent enforcement of a contract's terms.

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