Federal Trade Commission v. Vyera Pharmaceuticals, LLC

Background

The States of California, Ohio, Illinois, and the Commonwealth of Pennsylvania—the “Moving States”—sought approximately $2.2 million in attorney’s fees under Section 16 of the Clayton Act. Their request followed a non-jury trial in which the court found Martin Shkreli individually liable for violations of Sections 1 and 2 of the Sherman Act, Section 5(a) of the Federal Trade Commission Act, and the plaintiff States’ antitrust laws. The court entered an injunction permanently banning Shkreli from participating in the pharmaceutical industry. The final judgment allowed the States to seek attorney’s fees.

The Moving States filed their fee motion under Section 16 and Federal Rule of Civil Procedure 54. They calculated their request using the “lodestar” method, which generally multiplies a reasonable hourly rate by the number of reasonably expended hours. Their revised request totaled $2,208,565.03. Shkreli did not challenge the hourly rates, but he challenged the number of hours and whether the States were entitled to fees at all.

Entitlement to Fees

The court held that the Moving States were entitled to seek fees under Section 16. That provision allows a substantially prevailing plaintiff in an action under the section to recover the cost of suit, including a reasonable attorney’s fee. The court concluded that the States substantially prevailed because they obtained a final judgment and injunction that changed the legal relationship between the States and Shkreli.

The court rejected Shkreli’s argument that the States could not recover fees because their proposed conclusions of law and the earlier trial opinion did not refer to Section 16. The amended complaint had sought injunctive relief under that provision, and the injunction itself referred to Section 16. The court also rejected Shkreli’s argument that the legal standard used to enter the injunction differed from the standard required by Section 16.

Reasonableness of the Request

The court explained that only reasonable attorney’s fees may be awarded and that unnecessary, excessive, or duplicative hours should be excluded. The Moving States agreed that they could not recover for work duplicating work performed by the Federal Trade Commission or New York, which had handled most of the investigation and initiated the lawsuit.

The court stated that a State that joined the case could still recover for work related to deciding to join, monitoring the case, deciding whether to join particular court applications, and participating in the case’s resolution. The court assumed that this type of work represented approximately 50 hours per Moving State. The States could also seek compensation for specific tasks assigned to them, such as handling discovery materials from their jurisdictions, taking or defending a deposition, or preparing a filing for the plaintiffs.

The declarations did not identify specific assigned tasks, and the time records did not provide enough context to evaluate whether the recorded work was compensable. The court therefore allowed the Moving States to supplement their request with declarations describing the specific tasks and a revised lodestar calculation.

Disposition

Judge Denise Cote granted in part the Moving States’ motion for attorney’s fees. The order gave them an opportunity to submit additional information and did not determine a final fee award.