Hemlock Semiconductor Corp. v. Solarworld Indus. Sachsen GMBH

HEMLOCK SEMICONDUCTOR CORPORATION, Plaintiff, v. SOLARWORLD INDUSTRIES SACHSEN GmbH, f/k/a DEUTSCHE SOLAR GmbH,f/k/a DEUTSCHE SOLAR AG, Defendant.

Case No. 13-cv-11037

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN NORTHERN DIVISION

November 2, 2016

Honorable Thomas L. Ludington

OPINION AND ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR ATTORNEYS FEES AND COSTS

On March 7, 2013, Plaintiff Hemlock Semiconductor Corporation ("Hemlock") filed suit against Defendant SolarWorld Industries Sachsen GmbH ("Solarworld"). ECF No. 1. The dispute between the parties arises from a series of large-scale contracts for industrial-grade polycrystalline silicon from Hemlock to SolarWorld. Prior to the close of discovery, the parties contested a number of discovery- and pleading-related motions. On March 16, 2016, Hemlock filed a motion for summary judgment. ECF No. 91. On July 13, 2016, the Court granted summary judgment for Hemlock. ECF No. 120. The Court entered final judgment for Hemlock in the amount of $793,467,822.91. ECF No. 123. On August 9, 2016, Hemlock filed a motion requesting that it be awarded $2,867,892.47 in attorney's fees and $757,451.38 in costs and expenses, for a total of $3,625,343.85. ECF No. 124. SolarWorld does not contest that Hemlock is entitled to some attorney's fees and costs, but argues the Court should award no more than $573,484.00 in attorney's fees and $52,793.00 in costs. For the reasons stated below, Hemlock's motion will be granted in part. Hemlock will be awarded attorney's fees in the amount of $2,815,212.22 and costs in the amount of $757,451.38, for a total of $3,572,663.60.

I.

A.

The underlying facts of the dispute are summarized in the Court's order granting summary judgment. ECF No. 120. The facts outlined in that order will be adopted as if fully restated herein. However, for the sake of clarity, a brief summary of the dispute will be provided. Hemlock is a Michigan corporation that manufactures and sells polycrystalline silicon, which is used to build photovoltaic solar cells and modules. Id. at 2. Defendant SolarWorld¹ is a German limited liability company that produces multicrystalline silicon wafers, which are used to build solar cells and modules. Id.

Beginning in 2005, the parties executed four long-term supply agreements, all containing materially identical terms, which covered delivery periods through 2019. Id. The supply agreements were "take or payment" arrangements wherein SolarWorld agreed to pay for the product regardless of whether SolarWorld needed or accepted the deliveries. Id. at 3. On July 17, 2013, Hemlock sent SolarWorld a notice terminating the contracts because Hemlock had not received the payments that it believed it was owed. Id. at 19. Hemlock further demanded payment of liquidated damages. Id. at 19. This suit followed.

B.

During discovery, a dispute arose regarding discovery requests relating to a number of SolarWorld's affirmative defenses, including the defenses that SolarWorld's nonperformance was excused because the underlying contracts violated European Union antitrust law and becauseChinese producers were illegally dumping solar panels into the market. ECF No. 66 at 2. On September 24, 2014, SolarWorld moved to compel disclosures from Hemlock related to those defenses. ECF No. 30. Hemlock then cross-moved to strike SolarWorld's affirmative defenses that formed the basis for the discovery requests. ECF No. 36. Both parties disputed the merits of both motions, filing briefs with numerous exhibits. See ECF Nos. 37, 39, 46, 53, 55. On February 19, 2015, SolarWorld filed a motion for leave to file an amended answer asserting a counterclaim, which advanced the same arguments SolarWorld was making in its affirmative defenses, requesting over $100 million from Hemlock. ECF No. 56. On May 7, 2015, the Court issued an order which granted in part and denied in part both SolarWorld's motion to compel and Hemlock's motion to strike and denied SolarWorld's motion for leave to file an affirmative defense. ECF No. 66. On May 18, 2015, SolarWorld filed a motion for reconsideration of the Court's order. ECF No. 67. After the parties briefed the issue, the Court denied SolarWorld's motion for reconsideration. ECF No. 86.

On March 16, 2016, Hemlock filed a motion for summary judgment. ECF No. 91. On July 13, 2016, the Court granted that motion in full and directed Hemlock to submit a proposed judgment. ECF No. 120. Thus, Hemlock prevailed in whole on its motion for summary judgment. In the opinion and order granting Hemlock's motion for summary judgment, the Court directed Hemlock to submit a request for attorney's fees, pursuant to language in the supply agreements. The first three supply agreements included the following provision:

Attorney Fees and Costs. In the event of [Hemlock's] enforcement of any term or condition in the Agreement, Buyer [SolarWorld] shall be liable to [Hemlock] for all costs, including attorney fees, incurred by [Hemlock] in enforcing the Agreement and in collecting any sums owed by Buyer [SolarWorld] to [Hemlock].

Supply Agreements I, II, and III at Section 26, ECF No. 94, Exs. 1, 2, 3.

The fourth supply agreement included the following provision:

Attorney Fees and Costs. In the event of [Hemlock's] seeking to enforce any terms or conditions in this Agreement, Buyer [SolarWorld] shall be liable to [Hemlock] for all reasonable costs, including reasonable attorney fees, incurred by [Hemlock] in seeking to enforce the agreement and in seeking to collect any sums owed by Buyer [SolarWorld] to [Hemlock].

Supply Agreement IV at Section 33, ECF No. 94, Ex. 4.

Several weeks after judgment was entered in the amount of $793,467,822.91, Hemlock submitted a motion requesting attorney's fees and costs. That motion is now before the Court.

II.

In its Complaint, Hemlock alleged that the Court had jurisdiction over the breach of contract claims under Michigan law because complete diversity existed between the parties. See Compl. at ¶¶ 4, 26-71. In diversity cases, state law governs the award of attorney's fees. See Auto. Support Grp., LLC v. Hightower, 503 F. App'x 411, 421 n.5 (6th Cir. 2012); Miller v. Alldata Corp., 14 F. App'x 457, 468 (6th Cir. 2001); Poly-Flex Const., Inc. v. Neyer, Tiseo & Hindo, Ltd., 600 F. Supp. 2d 897, 914 (W.D. Mich. 2009). Thus, Michigan law applies to the analysis of Hemlock's request for attorney fees. Under Michigan law, parties can include a contractual provision which requires the breaching party to pay the other side's attorney fees and costs. Papo v. Aglo Restaurants of San Jose, Inc., 149 Mich. App. 285, 299, 386 N.W.2d 177, 183 (1986). However, the award of attorney fees must be reasonable. Id. The burden of proving that requested fees are reasonable rests with the party requesting them. Smith v. Khouri, 481 Mich. 519, 528 (2008).

The process by which reasonable attorney fees are calculated and awarded under Michigan law proceeds in three steps. First, the court must determine the "fee customarily charged in the locality for similar legal services." Id at 530. The market rate must be determinedseparately for each attorney who seeks to recover a reasonable fee. Adair v. Michigan (On Fourth Remand), 301 Mich. App. 547, 556 (2013). "[R]easonable fees are different from the fees paid to the top lawyers by the most well-to-do clients." Smith, 481 Mich. at 533. Further, "the fee applicant must present something more than anecdotal statements to establish the customary fee for the locality." Id. at 532. Typically, Michigan courts rely on "testimony or empirical data found in surveys or other reliable reports," like the State Bar of Michigan's Economics of the Law Practice Surveys. Id. at 531. See also Goodman v. Doe, No. 323615, 2016 WL 3429772, at *11 (Mich. App. June 21, 2016) ("Trial courts routinely consider the data presented in surveys, including the Economics of the Law Practice Surveys."); Van Elslander v. Thomas Sebold & Associates, Inc., 297 Mich. App. 204, 229 (2012).

After determining the market rate for the attorney's work, "the court must determine the reasonable number of hours expended by each attorney." Smith, 481 Mich. at 532 (citing Norman v. Hous. Auth. of City of Montgomery, 836 F.2d 1292, 1301 (11th Cir. 1988) (explaining that excessive, unnecessary, or redundant hours should be excluded from the attorney fees computation). Like when establishing the market rate, the "fee applicant bears the burden of supporting its claimed hours with evidentiary support." Id. at 532. The "itemized bill" is not by itself "sufficient to establish the reasonableness of the fee." Petterman v. Haverhill Farms, Inc., 125 Mich. App. 30, 33, 335 N.W.2d 710, 712 (1983).

Once the court has determined the reasonable hourly rate and the reasonable number of hours billed, the court must multiply the two numbers to create a "baseline figure." Smith, 481 Mich. at 533. At that point, the court "should consider . . . other factors and determine whether they support an increase or decrease in the base number." Id. Those factors are as follows:

(1) the experience, reputation, and ability of the lawyer or lawyers performing the services, (2) the difficulty of the case, i.e., the novelty and difficulty of thequestions involved, and the skill requisite to perform the legal service properly, (3) the amount in question and the results obtained, (4) the expenses incurred, (5) the nature and length of the professional relationship with the client, (6) the likelihood, if apparent to the client, that acceptance of the particular employment will preclude other employment by the lawyer, (7) the time limitations imposed by the client or by the circumstances, and (8) whether the fee is fixed or contingent.

Pirgu v. United Servs. Auto. Ass'n, 499 Mich. 269, 282 (2016).

If the court considers a factor which was not enumerated, the court must expressly indicate that fact and "justify the relevance and use of the new factor." Smith, 481 Mich. at 531 n.15.

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