A recent case from the Southern District of New York, In re Elysium Health-ChromaDex Litigation, No. 17-cv-7394(LJL), 2022 WL 1156181 (S.D.N.Y. April 19, 2022), highlights the risks facing parties that seize opportunities to settle when there is heightened uncertainty in litigation—for example, when a decision on summary judgment is forthcoming. A party that prematurely settles a dispute will not be able to renege on an otherwise valid settlement even absent an executed document. Further, settlement agreements are simply contracts, and no matter the magnitude of a dispute nor the apparent sophistication of the parties, familiar principles of contract law will determine the enforceability of such agreements.

Background

Plaintiff ChromaDex is a nutraceutical company that manufactures and sells chemical compounds to wholesalers. Defendant Elysium Health was one of ChromaDex’s customers and used a compound from ChromaDex in its primary product, a dietary supplement.

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