Federal Trade Commission v. Vyera Pharmaceuticals, LLC

Background

The Federal Trade Commission and the States of New York, California, Ohio, Illinois, North Carolina, and the Commonwealths of Pennsylvania and Virginia brought an antitrust action against Vyera Pharmaceuticals, LLC, Phoenixus AG, Martin Shkreli, and Kevin Mulleady. The plaintiffs alleged that the defendants used a scheme involving Daraprim’s distribution system to block or delay competition from generic pharmaceuticals. The defendants disputed, among other things, whether their conduct delayed generic competition and whether the plaintiffs had defined the relevant market properly.

Trial was scheduled to begin on December 14, 2021. The defendants designated portions of Rule 30(b)(6) depositions from ten third-party corporate witnesses as trial testimony. Rule 30(b)(6) allows a party to depose a corporation through witnesses designated to testify about information known or reasonably available to the organization. The challenged testimony included discussions about production of generic pyrimethamine, Daraprim’s active pharmaceutical ingredient, and whether compounded pyrimethamine could serve as an alternative to FDA-approved pyrimethamine.

Issue

The plaintiffs moved to preclude the designated deposition testimony to the extent it was not based on the witnesses’ personal knowledge. The issue was whether third-party corporate representatives’ Rule 30(b)(6) deposition testimony could be used at trial without evidence that the individual witnesses personally knew the facts they described.

Court’s Analysis

The court explained that deposition testimony may be used against a party at trial only if it would be admissible under the Federal Rules of Evidence as though the deponent were present and testifying. Under Evidence Rule 602, a witness may testify about a matter only when there is enough evidence to support a finding that the witness has personal knowledge of it.

The court held that this personal-knowledge requirement applies to Rule 30(b)(6) testimony from a corporate representative of a nonparty corporation. A witness’s status as the corporation’s designated representative does not by itself establish personal knowledge of the events or processes described. The defendants, as the parties offering the testimony, had the burden of showing that each challenged portion was based on the witness’s personal knowledge rather than on the witness’s corporate preparation.

The court rejected the defendants’ argument that a witness’s review of the deposition topics and preparation to testify about them established competence to testify at trial. It also explained that other admissible evidence could support admission only if it showed that the witness had been personally involved in the relevant events or otherwise had personal knowledge. Other evidence confirming the facts, without establishing the witness’s personal knowledge, was insufficient. The court further rejected the argument that admissibility should be presumed because the defendants had not instructed the witnesses during the depositions to rely only on personal knowledge.

Disposition

The court granted the plaintiffs’ October 20, 2021 motion to preclude the Rule 30(b)(6) testimony proffered by the defendants as not based on personal knowledge, without prejudice to the defendants making a further showing. By November 19, the defendants had to identify to the plaintiffs the basis for contending that challenged testimony from the ten witnesses was based on personal knowledge. The parties then had to confer and provide the court, by December 2, with no more than ten examples of any continuing dispute.

The order addressed the admissibility of proposed trial evidence and did not decide the underlying antitrust claims.