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  • Writer's pictureShelly Albaum

CDXC Opposes Clawback

Well, this is a stunning turn of events. Here is ChromaDex's opposition to Elysium's ex parte application for a clawback of allegedly privileged materials inadvertently produced:

If you read ChromaDex's brief, you will find twenty pages of legal argument that is so powerful and precise that any attorney would feel some admiration. You will also learn the intricacies of privilege and waiver. I highly recommend it.

But investors mostly don't care about that stuff. What investors will be interested in is this stuff highlighted in yellow:

ChromaDex suspects that Elysium did not appreciate the extent and significance of the numerous damaging messages it produced in these files until after it produced them. The production is a cornucopia of smoking gun communications in which Elysium’s principals discuss—often in colorful and salty language—their conspiracy to drive ChromaDex out of business. The communications also contain relevant messages between Elysium principals that are likely to be personally embarrassing to them. But the salient fact remains: none of the messages involve a lawyer or legal advice, and none of them are privileged. (emphasis added)

As ChromaDex tells the story, these text messages were produced in December, more than a month AFTER ChromaDex submitted its Fifth Amended Complaint, and should have been produced long before that -- in apparent derogation of Elysium's obligations under the Federal Rules.

Elysium’s failure to produce these messages (and its obvious intention never to do so) has materially prejudiced ChromaDex by forestalling its rightful discovery and forcing it to expend enormous amounts of time and money to obtain it. It also raises the serious question of how much other relevant, responsive, and non-privileged material Elysium is improperly withholding

But in any case, no privileged information has yet been identified by either party -- "Elysium's claim of privilege is a mirage; there is nothing to claw back."

Elysium’s claim of privilege is a mirage. Despite repeated requests, Elysium could not identify any specific text messages that it believes are subject to a claim of privilege. Identifying any such messages should be simple; how else would Elysium know that the compiled files “contain privileged material” unless it identified specific messages that it believes are privileged? Elysium did not lodge any purportedly privileged text messages with the Court or provide a privilege log to support its claim, rendering its “blanket claim” for privilege “entirely inadequate.”

The Discovery order, says ChromaDex, does not entitle Elysium the unilateral right to demand the return of non-privileged material, and Elysium's effort to retrieve non-privileged text messages simply because they are in the same electronic file as other, purportedly "privileged" messages is both unreasonable and improper.

In any case, it would be prejudicial to require the return of the non-privileged texts:

Elysium’s demand that ChromaDex return all of the text messages—even those that are not privileged—and await “appropriate replacements” at some uncertain date in the future would severely and unfairly burden ChromaDex’s prosecution of its claims, especially in light of imminent fact depositions and the approaching April 5 discovery cutoff.

In any event, there is no guarantee any “appropriate replacements” would be satisfactory, given that Elysium has refused to promise to re-produce every non-privileged text message currently in ChromaDex’s possession, refused to offer a privilege log, and refused to commit to providing those replacements promptly and by a specified date.

In the nearly two months between the time Elysium produced the text messages and its February 6 letter, counsel for ChromaDex has integrated the relevant and non-privileged text messages such as those described above into its work product. ChromaDex should not be compelled to shoulder the enormously disruptive and unfair burden of removing all references to those non-privileged messages and seek reproduction when Elysium’s claim of privilege is so obviously unsupported and its attempt to claw them back so plainly inadequate

ChromaDex argues that even if there were privileged materials, the privilege would have been waived:

“One of the elements that the [party asserting privilege] must prove is that it has not waived the privilege.” Weil, 647 F.2d at 25 (citations omitted). The “bare assertion that [a disclosing party] did not subjectively intend to waive the privilege is insufficient to make out the necessary element of nonwaiver.” Id. Again, Elysium does not even cite the governing standard under FRE 502(b). Nor does Elysium submit any evidence to meet its burden of showing that the production of the text messages was inadvertent, that it took reasonable steps to prevent the disclosure, or that it promptly took reasonable steps to rectify its error. The declaration of Elysium’s counsel “do[es] not establish or set forth facts showing how [Elysium] reviewed the allegedly privileged documents before producing them to [ChromaDex] or what precautions [it] took to prevent the disclosure of allegedly privileged documents . . . ; thus, [Elysium has] not shown [its] production of any document was ‘inadvertent.’” Callan v. Christian Audigier, Inc., 263 F.R.D. 564, 566 (C.D. Cal. 2009). Elysium has therefore waived its claim of privilege.

Elysium has also waived its right to assert privilege because it surreptitiously withheld entire text messages despite the fact that they were responsive to ChromaDex’s discovery requests and the search terms that Elysium had agreed to use...

ChromaDex also establishes its own good faith and proper approach to actually privileged information:

ChromaDex has no interest in reviewing Elysium’s attorney-client privileged communications. To that end, in December 2018, ChromaDex willingly sequestered and destroyed two documents following a clawback request from Elysium. (Anderson Decl. Exs. M and N.) And only two days ago, on February 14, 2019, ChromaDex affirmatively notified Elysium that it had recently produced an obviously privileged email chain between Elysium and its lawyers, and that ChromaDex (without the necessity of a clawback notice) destroyed all copies of that document in its possession. (Id. Ex. L at 78.) Although Elysium’s counsel appears to be quite careless about protecting Elysium’s privileged material, ChromaDex takes its obligations seriously and has committed to immediately sequestering and destroying any text messages that Elysium specifically identifies that are reasonably subject to a claim of privilege.

And ChromaDex requests attorney fees for having to oppose this motion:

The Ex Parte Submission does not even attempt to meet Elysium’s burden of showing the privilege exists with respect to the text messages or showing why Elysium’s disclosure does not constitute waiver. It is therefore completely meritless under controlling authority and warrants the imposition of attorneys’ fees and costs.

The Court should recognize the Ex Parte Submission for what it is: Elysium’s desperate ploy to enlist this Court in its improper effort to retrieve damaging information from its adversary (and then improperly withhold it again) by misusing the clawback process. The Court should summarily deny it and award ChromaDex the fees and costs it incurred to oppose it....

Here, Elysium has filed a meritless motion on an ex parte basis, forcing ChromaDex to incur substantial fees to oppose it on a drastically shortened timeline. Elysium’s Ex Parte Submission is meritless because it fails to reference the governing standard for its argument, cite controlling authority, or supply any evidence in support of its burdens of proving that any text message is privileged or that Elysium’s conduct does not constitute waiver under FRE 502(b). The court in Callan v. Christian Audigier, Inc., 263 F.R.D. 564, 566 (C.D. Cal. 2009), facing nearly the same circumstances as those present here, granted a request for reasonable attorney’s fees in favor of the party opposing a similarly meritless motion to compel compliance with a protective order. ChromaDex is ready to submit evidence regarding the fees incurred in responding to Elysium’s meritless Application at the Court’s request.


It seems like ChromaDex has both the law and the facts on its side. I find convincing ChromaDex's story that Elysium desperately wants to retrieve this prejudicial material, even though they are unable or unwilling express an adequate legal basis for it.

Some attorneys at Cooley probably had to stay up all night writing this long and powerful brief. We'll see if the Court awards fees and costs, in addition to denying Elysium's application.

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