Federal Trade Commission v. Vyera Pharmaceuticals, LLC
- Denise Cote
- 1:20-cv-00706
- U.S. District Court · Southern District of New York
- 7
In Federal Trade Commission v. Vyera Pharmaceuticals, Judge Cote excluded the defendants’ expert testimony about their ability to pay potential relief.
The ruling affects Vyera Pharmaceuticals, LLC, Phoenixus AG, Martin Shkreli, and Kevin Mulleady by excluding the trial testimony of their expert, Justin McLean. It also governs the Federal Trade Commission and the seven state plaintiffs’ use of that evidence at trial.
What happened
In Federal Trade Commission v. Vyera Pharmaceuticals, LLC, the Federal Trade Commission and seven states asked the court to exclude Justin McLean’s expert testimony at the upcoming antitrust trial. McLean planned to testify that Vyera Pharmaceuticals, LLC, and Phoenixus AG might lack enough liquid assets to pay the $53.1 million to $64.6 million judgment the plaintiffs sought in the first quarter of 2022.
The court found the testimony unhelpful because any monetary relief would be based on the defendants’ unlawful profits, not simply their financial condition during one quarter. The court also said McLean did not address how much Vyera could pay, that his testimony was premature and only marginally relevant even if ability to pay mattered, and that some opinions about monetizing a ketamine asset were not included in his expert report.
The court granted the plaintiffs’ motion to exclude McLean’s testimony. Judge Denise Cote’s ruling addressed the testimony’s admissibility and did not decide whether the defendants were liable in the antitrust trial.
The detailed version
- Federal Trade Commission v. Vyera Pharmaceuticals, LLC · No. 1:20-cv-00706
- Denise Cote
- Nov. 15, 2021
Background
The Federal Trade Commission and seven states moved to exclude the trial testimony of Justin McLean, an expert offered by Vyera Pharmaceuticals, LLC, Phoenixus AG, Martin Shkreli, and Kevin Mulleady. McLean, the managing principal of Analysis Group, Inc., described his expertise as including damages estimation, applied finance theory, and valuation.
McLean’s affidavit served as his direct trial testimony. He stated that the corporate defendants did not expect to have enough liquid assets, or assets that could become liquid in time, to pay the plaintiffs’ requested judgment of $53.1 million to $64.6 million during the first quarter of 2022. He also stated that requiring payment during that period might compromise the companies’ ability to continue operating as ongoing businesses.
Court’s Analysis
The court held that the testimony was inadmissible for several reasons. First, it was not helpful to the factfinder. If the defendants were found liable, the plaintiffs could seek disgorgement under the state-law claims. Disgorgement is a monetary remedy tied to a wrongdoer’s net unlawful profits. The court explained that the plaintiffs first had to provide a reasonable estimate of those profits, after which the defendants could challenge the estimate’s accuracy.
The defendants did not contest the accuracy of the plaintiffs’ calculation of Vyera’s net profits, although they did challenge the reliability of some assumptions underlying that calculation. The court concluded that McLean’s testimony did not address the relevant issue. He discussed the defendants’ financial condition and ability to pay the requested judgment during one quarter, but did not state how much Vyera could pay during that quarter or at another time.
The court further explained that, even if ability to pay could be considered when setting a payment schedule, that inquiry would not be limited to the first quarter of 2022. McLean’s testimony was therefore premature and of limited relevance. The court also ruled that the testimony had to be excluded to the extent it offered opinions not described in McLean’s expert report, including opinions about monetizing a ketamine asset.
Disposition
Judge Denise Cote granted the plaintiffs’ October 20, 2021 motion to exclude Justin McLean’s testimony. The opinion ruled on the admissibility of proposed expert evidence; it did not determine liability or the amount of any final relief.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.