ITG Brands, LLC v. Reynolds Am., Inc., C.A. No. 2017-0129-LWW (Del. Ch. Mar. 3, 2025)
In this case, the Delaware Court of Chancery had previously held that, under the parties’ acquisition agreement, the plaintiff-acquirer assumed liability for the defendant-seller’s prior settlement with the state of Florida that required payments relating to the harms of smoking. In this decision, the plaintiff-acquirer argued that its indemnification obligation should be reduced because the defendant-seller saved money in its settlement agreement payments under the agreement’s formula from the plaintiff itself not joining in the settlement agreement. The Court disagreed, however. In rejecting the offset, the Court reasoned that the plaintiff’s breach was not its refusal to join the settlement agreement with the state of Florida, the supposed cause of the defendant’s savings under the settlement agreement. The plaintiff instead breached by failing to make indemnification payments for this assumed liability as required under the parties’ acquisition agreement. Accordingly, the Court held, the appropriate damages measure was the indemnification payment due, without the requested offset.
