Icon International, Inc. v. Elevation Health LLC

Background

The case concerns two shipments of iHealth COVID-19 Antigen Rapid Test Kits. Elevation paid Gypset for the first shipment but refused to pay Icon for the second. Elevation later claimed that it properly rejected both shipments because they were late, had short expiration dates, lacked proper chain-of-custody documentation, or were delivered without authorization. Elevation also brought fraud and civil-conspiracy claims against Icon and the third-party defendants.

Before the scheduled trial, the parties filed two motions in limine. Elevation sought to exclude an April 25, 2022 email from an Elevation managing member to an Icon employee. The email proposed finding a compromise and splitting losses on the products. Icon and certain third-party defendants sought to exclude testimony from Evan Phelps, an attorney designated by Elevation as an expert on Food and Drug Administration regulations.

Phelps’s Proposed Expert Testimony

Phelps’s report relied mainly on a December 22, 2021 Food and Drug Administration authorization letter concerning the tests and a distributor agreement between iHealth and Icon effective February 1, 2022. He proposed to testify that Icon and Gypset were not authorized to distribute or possess the test kits before February 1, 2022; that statements suggesting otherwise were inconsistent with lawful distribution; and that Elevation should not have distributed potentially counterfeit tests without confirming their authenticity.

The court granted the motion to exclude Phelps’s testimony. It explained that expert testimony may not give legal conclusions or take over the judge’s role of explaining the law and the jury’s role of applying the law to the facts. Phelps’s proposed opinions expressly addressed whether Icon and Gypset acted lawfully and whether their conduct was legally prohibited. The court also concluded that deciding what the two documents showed about authorization dates did not require knowledge beyond an ordinary juror’s understanding.

April 25, 2022 Email

The court treated the April 25, 2022 email as an offer to compromise under Federal Rule of Evidence 408. Although the lawsuit had not yet been filed, the parties’ lawyers had exchanged letters, Elevation had reserved the right to pursue legal remedies, and Icon had said it was prepared to bring an action. The email therefore generally could not be used to prove or disprove the validity or amount of a disputed claim, or to impeach a witness through a prior inconsistent statement.

The court rejected Icon’s proposed use of the email to attack the sender’s credibility because Rule 408 expressly bars using compromise evidence for that impeachment purpose. But the court noted that Rule 408 allows settlement evidence for another purpose. Icon might use the email to challenge Elevation’s affirmative defense that it properly rejected the shipments, although the court said some proposed uses could overlap with the parties’ contract claims and therefore might be impermissible.

Because the email might be admissible for at least one permissible purpose and was not clearly inadmissible on every possible ground, the court denied without prejudice Elevation’s motion to exclude it. The court also noted that rulings on motions in limine may change as the trial develops.

Disposition

The motion to exclude Phelps’s testimony was GRANTED. Elevation’s motion to exclude the April 25, 2022 email was DENIED without prejudice. The clerk was directed to terminate docket entries 151 and 158.