Diet supplement manufacturer Elysium Health Inc. was unable to avoid a $2.5 million settlement with Chromadex Inc. despite winning a summary judgment. This surprising turn of events came about after an email confirmation of the settlement deal was enforced, in spite of a district court passing judgment without knowledge of this agreement. The affirmation of the enforceability of the settlement was made by a federal appeals court last Thursday.
Elysium’s agreement to pay Chromadex the settlement amount was deemed enforceable by the district court, despite a later court decision. The agreement was the result of telephonic negotiations and was confirmed via email. Hours after the email confirmation was made, a district court, unaware of the agreement, issued a decision that granted Elysium a summary judgment.
The agreement outlined that Elysium would pay Chromadex $2.5 million to resolve the ongoing litigation in the Southern District of New York district court, as well as another dispute in a Californian federal court. Following the district court’s ruling in Elysium’s favour, Elysium informed Chromadex that no deal had been reached.
However, Chromadex pursued enforcement of the settlement agreement, filing a motion that was ultimately granted by the district court, leading to Elysium’s appeal. The Second Circuit Court determined there had been a meeting of the minds and mutual assent, leading to the formation of a binding settlement agreement.
Elysium and Chromadex’s in-house legal teams had discussed possible settlements in a phone call held on February 2, 2022. The following day, an email from Elysium’s counsel accepted additional terms proposed by Chromadex during the phone conversation. The lawyers representing Elysium Health were from Frankfurt Kurnit Klein & Selz PC, while LTL Attorneys LLP represented Chromadex.
It is essential for legal professionals to note that despite a favorable court ruling, certain agreements reached through negotiation can be legally binding. This situation serves as a potent reminder for legal practitioners in companies and firms alike that every communication matters—especially email confirmations.
The full summary of the case can be accessed on the website of Bloomberg Law here.