Federal Trade Commission v. Vyera Pharmaceuticals, LLC
- Denise Cote
- 1:20-cv-00706
- U.S. District Court · Southern District of New York
- 12
Federal Trade Commission v. Vyera Pharmaceuticals: Judge Cote issued trial-evidence guidance on employee statements and set deadlines for resolving remaining disputes.
The plaintiffs and the defendants, particularly Martin Shkreli and Kevin Mulleady, were affected because the order set standards and procedures governing the possible use of Vyera employee statements and business documents at trial.
What happened
Federal Trade Commission v. Vyera Pharmaceuticals, LLC concerns evidence the plaintiffs planned to use in an antitrust trial against Vyera, Phoenixus AG, Martin Shkreli, and Kevin Mulleady. The plaintiffs alleged that Shkreli and Mulleady helped orchestrate a scheme to block generic competition with Daraprim.
Shkreli and Mulleady asked the court to prevent the plaintiffs from using statements by current and former Vyera employees. The plaintiffs opposed the requests, arguing that they were premature and relied on incorrect grounds for excluding the evidence.
Judge Denise Cote explained several rules that could allow the evidence, including rules for business records, deposition testimony, statements by alleged co-conspirators, and statements by employees or agents. She also ordered the parties to identify specific objections and submit remaining disputes by set deadlines; the opinion did not make a final ruling on every individual statement.
The detailed version
- Federal Trade Commission v. Vyera Pharmaceuticals, LLC · No. 1:20-cv-00706
- Denise Cote
- Nov. 10, 2021
Background
The Federal Trade Commission, New York, California, Ohio, Pennsylvania, Illinois, North Carolina, and Virginia brought this antitrust action against Vyera Pharmaceuticals, LLC, Phoenixus AG, Martin Shkreli, and Kevin Mulleady. Trial was scheduled to begin on December 14, 2021. The plaintiffs intended to prove that Shkreli and Mulleady orchestrated a scheme to impede generic competition with Vyera’s branded drug Daraprim.
Shkreli and Mulleady moved to preclude statements made by current and former Vyera employees. The challenged material included board documents, testimony from Vyera officers, written communications between employees and Shkreli or Mulleady, depositions, and testimony given during the Federal Trade Commission’s investigation.
Evidentiary standards
The court described several possible bases for admitting the evidence:
- Vyera board documents could qualify as business records under Federal Rule of Evidence 803(6), if they were made and kept in the regular course of business, properly authenticated, and not shown to be untrustworthy. - Depositions of Vyera executives could potentially be used against Shkreli and Mulleady under Federal Rule of Civil Procedure 32(a)(3), if the requirements of Rule 32(a)(1) were met. Those requirements include that the opposing party was present or represented at the deposition, or had reasonable notice, and that the testimony would be admissible if the witness testified at trial. - Depositions could also potentially be admitted when a witness was more than 100 miles from the trial location, subject to the other requirements of Rule 32. - Statements by Vyera employees could qualify as statements of co-conspirators under Federal Rule of Evidence 801(d)(2)(E), which treats a statement as not hearsay when it was made during and in furtherance of a conspiracy by a member of that conspiracy. - Statements by Vyera employees could also qualify under Rule 801(d)(2)(D), which covers statements by a party’s employee or agent concerning matters within the scope of the employment relationship and made while that relationship existed.
Conspiracy and withdrawal
Based on the evidence submitted with the pretrial order, the court found that the plaintiffs had carried their burden to establish the existence of a conspiracy to violate the antitrust laws and Shkreli’s and Mulleady’s membership in it. A particular statement still had to be shown, by a greater-than-50-percent evidentiary standard, to have been made during and in furtherance of the conspiracy.
The court stated that such statements would be admissible against Shkreli and Mulleady unless they established that they withdrew from the conspiracy and effectively communicated that withdrawal. The defendants had the burden of proving withdrawal. The court explained that merely leaving a management or executive position, resigning from the enterprise, or being incarcerated did not establish withdrawal.
Employee testimony
The plaintiffs sought to use investigative testimony from six Vyera employees: Michael Smith, Anne Kirby, Akeel Mithani, Kevin Mulleady, Nicholas Pelliccione, and Nancy Retzlaff. The court noted that the defendants did not appear to oppose Smith’s testimony and that the plaintiffs intended to call Kirby, Mulleady, and Pelliccione as trial witnesses, allowing the defendants to question them about their investigative testimony.
The court stated that, based on the pretrial evidence, statements by all six employees appeared likely to be admissible against both individual defendants when the statements concerned matters within the employees’ duties at Vyera. The court emphasized that admissibility depended on the relationship between each statement and the employee’s duties, not on the employee’s seniority.
Action taken
Judge Denise Cote directed Shkreli and Mulleady to identify by November 24, 2021, any employee statement they believed was inadmissible hearsay and to explain why. The parties were then required to confer and bring up to ten remaining examples of disputed statements to the court by December 1, 2021. Each side could submit a memorandum of no more than five pages addressing those disputes. The opinion provided evidentiary guidance and a process for resolving specific objections; it did not expressly grant or deny the motions as to every challenged statement.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.