SmileDirectClub To Appeal Decision In Align Technology Arbitration
August 24 2023 - 5:25PM
SmileDirectClub (NASDAQ: SDC), the oral care leader and creator of
the first med tech platform for teeth straightening, announced its
intention to appeal a decision regarding an award of $63 million to
be paid to Align Technology following a dispute over the Company’s
exclusive supply agreement with its former strategic partner.
“SmileDirectClub is disappointed with the California trial
court’s recent rulings denying our Petition to Vacate and granting
the Petition to Confirm the Final Award in an arbitration Align
brought against SmileDirectClub for alleged breaches of a Supply
Agreement between the parties that expired in 2019,” said Susan
Greenspon Rammelt, Chief Legal Officer and EVP Business Affairs at
SmileDirectClub. “It remains the Company’s position that Align
procured the Final Award through undue means, denying
SmileDirectClub of a full and fair hearing, and that the arbitrator
exceeded his authority when issuing the award. The Company intends
to appeal this decision.”
By way of background, Align Technology became an investor,
strategic partner, and exclusive third party supplier of aligners
to teledentistry pioneer SmileDirectClub, by purchasing a 19%
ownership stake in the company in 2016. In March of 2019, the
partnership was dissolved when an arbitrator found that Align
violated the terms of its agreement with SmileDirectClub by
attempting to replicate its business model by competing with
SmileDirectClub through its own Invisalign retail concept. Align
was ordered to close its retail locations, return its stake in
SmileDirectClub, and barred from competing against the Company
until August 2020.
Following this decision and after the parties’ Supply Agreement
expired, Align Technology, in August 2020, filed an arbitration
demand against SmileDirectClub alleging that the Company breached
the Supply Agreement, and subsequently, SmileDirectClub filed
counterclaims against Align. On October 27, 2022, an arbitrator
issued an interim award against SmileDirectClub on certain of
Align’s claims, specifically stating that it was not a final award,
and that a final award would be issued after the arbitration’s
second phase and subsequent proceedings on attorneys’ fees,
interest, and costs. In May 2023 the arbitrator issued a Final
Award, awarding Align $63 million in damages, which award was
confirmed by a California trial court on August 23, 2023.
The Company intends to file an appeal within the 60-day time
frame permitted under local law once an actual judgement has been
entered and is considering options for posting a litigation bond
for this award. If SmileDirectClub prevails on appeal, Align will
be liable to SmileDirectClub for all costs that SmileDirectClub
incurs associated with that appeal, including interest expenses on
any bond that SmileDirectClub may have to post.
The Company looks forward to its opportunity to present the
facts of this dispute during the appeals process.
About SmileDirectClub SmileDirectClub,
Inc. (Nasdaq: SDC) (“SmileDirectClub”) is an oral care company and
creator of the first medtech platform for teeth straightening, now
also offered directly via dentist and orthodontists’ offices.
Through our cutting-edge teledentistry technology and vertically
integrated model, we are revolutionising the oral care industry,
from clear aligner therapy to our affordable, premium oral care
product line. SmileDirectClub’s mission is to democratise access to
a smile each and every person loves by making it affordable and
convenient for everyone. SmileDirectClub is headquartered in
Nashville, Tennessee and operates in the U.S., Canada, Australia,
United Kingdom and Ireland.
Contacts:Kim AtkinsonSenior Vice President,
Global Communicationspress@smiledirectclub.com
Jonathan FleetwoodDirector, Investor
Relationsinvestorrelations@smiledirectclub.com
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