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ARMAMENT SYSTEMS AND PROCEDURES, INC. v. WALGREEN CO.

United States District Court, N.D. Illinois, Eastern Division


August 6, 2004.

ARMAMENT SYSTEMS AND PROCEDURES, INC., Plaintiff,
v.
WALGREEN CO., Defendant.

The opinion of the court was delivered by: PAUL PLUNKETT, Senior District Judge

MEMORANDUM OPINION AND ORDER

In Count II of the amended complaint, plaintiff charges Walgreen with patent infringement for its sale of LED flashlights called "Blue Claw Mighty Lights." Alco, who supplied the Blue Claw lights to Walgreen, has intervened in this case. Alco contends that correspondence between it and plaintiff establishes that the parties settled their dispute over the Blue Claw Mighty Lights, and asks the Court to enforce their agreement.

Background

  On April 3, 2004, Alco offered to settle Count II by, among other things, paying plaintiff $100,000.00, if plaintiff would agree to license Alco to sell its remaining inventory of Blue Claw Mighty Lights. (See Alco Mot. Enforce Settlement Agreement, Ex. A, 4/3/04 Letter to Pildes from Schulte.) On April 6, 2004, plaintiff's counsel rejected the offer, saying: "The impediment to settlement is not the monetary provisions of [your] offer. ASP does not, and will not, agree to license Alco to sell Alco's remaining Blue Claw Mighty Light inventory." (Id., Ex. B, 4/6/04 Letter to Schulte from Pildes.)

  After receiving the April 6 letter, Alco told plaintiff's counsel that it would destroy its remaining inventory if plaintiff agreed to accept payment of only $45,000.00. (Id., Ex. C, 6/17/04 Schulte Aff. ΒΆΒΆ 6-7)

  On April 13, 2004, plaintiff's counsel rejected Alco's April 6 offer, saying: "ASP will accept $89,397.18 plus $5,000.00 for attorneys' fees. ASP will not entertain a lesser amount." (Id., Ex. D, 4/13/04 Letter to Schulte from Pildes.)

  On May 7, 2004, Alco again wrote to plaintiff's counsel. The letter starts by saying: "We ask that you consider the following for settlement purposes only." (Id., Ex. E, 5/7/04 Letter to Pildes from Schulte.) It proceeds to outline eight terms, including Alco's agreement to pay plaintiff $89,397.18 plus $5,000.00 for attorney fees, and to destroy its entire inventory of Blue Claw Mighty Lights. (Id.) The letter concludes by saying: "Michael, this offer, for settlement purposes only, will expire at the end of the business day on Wednesday May 12, 2004." (Id.)

  On May 7, 2004, plaintiff's counsel sent a response to Alco, which said: "ASP will not settle this matter for any amount of compensatory damages less than five ($5.00) dollars per light. Alco sold 111,555 infringing lights. Accordingly, ASP will not settle the case for less than $555,775 compensatory damages, plus other terms and conditions previously discussed, including attorneys' fees." (Id., Ex. F, 5/7/04 Letter to Schulte from Pildes.)

  Alco contends that these letters evidence a binding settlement agreement, which it asks the Court to enforce. Discussion

  Settlement agreements are a species of contract and, as such, are governed by ordinary contract principles. City of Chicago Heights v. Crotty, 679 N.E.2d 412, 413 (Ill.App. Ct. 1997). As with other contracts, "[a] settlement agreement is binding only if there is an offer, an acceptance, and a meeting of the minds as to the terms of the settlement." Magee v. Garreau, 774 N.E.2d 441, 446 (Ill.App. Ct. 2002). Alco says that its May 7, 2004 letter to plaintiff's counsel constituted its acceptance of plaintiff's counter-offer to settle the case on the terms the parties had previously discussed plus $89,397.18 in compensatory damages.

  That interpretation, however, is at odds with the plain language of the letter. The letter says a settlement offer that will expire if not accepted by plaintiff within five days. (Alco Mot. Enforce, Ex. E, 5/7/04 Letter to Pildes from Schulte.) If Alco had, indeed, believed it was accepting an offer made by plaintiff, it would not have put an expiration date in the letter.

  Moreover, even if the correspondence did evidence agreement on some of the provisions of the settlement, it does not suggest that the parties agreed on all of them. Of the eight terms that Alco contends are included in the settlement only three of them, compensatory damages, attorney fees and destruction of inventory, were addressed by plaintiff. There is, for example, nothing in any of plaintiff's letters to suggest that it agreed not to take any action against Alco or its customers for prior sales of Blue Claw Mighty Lights, the last term in Alco's May 7, 2004 letter. (Id.) Because the correspondence does not clearly evidence both parties' agreement to all of the terms of the purported settlement, it does not constitute a contract. See Pritchett v. Asbestos Claims Mgmt. Corp., 773 N.E.2d 1277, 1282 (Ill.App. Ct. 2002) ("A meeting of the minds between the parties will occur where there has been assent to the same things in the same sense on all essential terms and conditions,")*fn1

  Conclusion

  For the reasons stated above, intervenor Alco's motion to enforce the settlement agreement is denied.


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