Back to all practice areasFor years, direct-to-consumer bioscience company Elysium Health manufactured a dietary anti-aging supplement using ingredients purchased from supplier ChromaDex. The companies’ supply agreement included a most favored nations clause, which Elysium assumed was governing the rates set by ChromaDex. However, a disclosure from a high-ranking ChromaDex employee proved otherwise. After Mark Morris, ChromaDex’s vice president of business development, became aware that his employers were offering more favorable pricing to Elysium’s competitors, he informed his contacts at Elysium. Elysium subsequently withheld payment on a $3 million bill from ChromaDex.
ChromaDex filed suit, alleging that Elysium had misappropriated ChromaDex’s trade secrets and aided and abetted Morris—who, by then, had joined Elysium as chief product officer—in breaching his fiduciary duty. ChromaDex sought approximately $18 million on its trade secret and fiduciary duty claims, a loss that would have put Elysium out of business. Elysium counter-sued, alleging that ChromaDex had committed fraud and breach of contract.
Three different law firms, including an Am Law 5 firm, were engaged to represent Elysium before Cohen Williams took over. The case proceeded to trial in the U.S. District Court for the Central District of California, where we mounted a bold defense that fully dismantled ChromaDex’s strongest arguments.
During discovery, Elysium’s former counsel had inadvertently released, then failed to review, text messages between one Elysium executive and his drug dealer. When opposing counsel deposed the executive and began interrogating him about his drug use, the executive, caught unawares, lied. At trial, the CW team—led by partners Marc Williams, Reuven Cohen, and Brittany Lane—“approached the lies head on,” as coverage from Law.com noted. In his opening statement, Reuven pointed out that ChromaDex’s lawyers had, in the absence of any other leverage, irresponsibly exploited personal information in order to sink a competitor.
Marc took a similar tack during his examinations, painting a highly sympathetic portrait of Morris for the jury. While discovery revealed that Morris and his Elysium contacts had traded countless text messages disparaging ChromaDex, Marc asserted that Morris had every right to be frustrated. Far from engaging in self-serving machinations, Morris was a loyal representative attempting to protect his client from double-dealing.
Furthermore, CW presented evidence that ChromaDex’s pricing practices had long-ranging, strategic aims. Healthspan, one of the companies receiving more favorable pricing, was launched by ChromaDex affiliates—a fact that ChromaDex lawyers sought to cover up—and competed in virtually the same market as Elysium. In his closing argument, Marc walked the jury through complicated mathematical equations and a maze of contractual provisions to establish the connection. In the end, he argued, ChromaDex’s actions were part of a broader plot to put Elysium out of business.
After two days of deliberations, the jury delivered Elysium a resounding defense victory, affirming its right to continue competing in the market. Jurors completely rejected ChromaDex’s trade secrets and fiduciary duty claims, awarding none of the $18 million it sought. They also sided strongly with Morris, who was only ordered to disgorge approximately 2% of the amount requested by ChromaDex. Although Elysium was ordered to pay the $3 million it owed for the products it purchased from ChromaDex, its countersuit yielded an award of $625,000 for ChromaDex’s breach of the pricing provision and $250,000 for ChromaDex’s fraudulent inducement of trademark license. The jury also found ChromaDex liable for over $1 million in punitive damages.
As Reuven noted in a statement to Law.com, “We asked the jurors to take their time and get to the truth, and we’re gratified that they did just that.”