Federal Trade Commission v. Vyera Pharmaceuticals, LLC
1:20-cv-00706
S.D.N.Y.Nov 10, 2021Background
- Trial scheduled for December 14, 2021 in an antitrust action alleging Shkreli and Mulleady orchestrated a scheme at Vyera to block generic competition to the branded drug Daraprim.
- Martin Shkreli: Vyera founder and CEO Oct 2014–Dec 2015; thereafter remained Vyera’s largest shareholder (≈43–49%) and allegedly retained operational control even after later incarceration.
- Kevin Mulleady: Vyera managing director Oct 2014–June 2016 and served as Phoenixus (Vyera’s parent) Chairman until Nov 2020.
- Plaintiffs seek to admit Vyera board documents, testimony of Vyera officers (including depositions and FTC investigational testimony), and written communications between employees and Shkreli/Mulleady.
- Defendants moved to preclude statements by current/former Vyera employees; the court analyzed admissibility under business‑records rule, deposition use, co‑conspirator exception, and party‑opponent/agent statements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Vyera board documents under business‑records exception (Fed. R. Evid. 803(6)) | Board minutes/records are regularly kept business records and thus admissible against all defendants. | Documents are hearsay or prepared for litigation and thus untrustworthy. | Court: Business‑records rule may permit admission; rule favors admitting records with any probative value if foundation is shown and opponent fails to show untrustworthiness. |
| Use of Vyera executives’ depositions against individual defendants (Fed. R. Civ. P. 32(a)(3)) | Depositions of Vyera officers may be used against Shkreli and Mulleady as adverse parties/managing agents. | Defendants seek to limit or preclude use of those depositions against them. | Court: Rule 32(a)(3) permits use against individual defendants if Rule 32(a)(1) requirements are met; rule is construed liberally. |
| Admission of employee statements as co‑conspirator statements (Fed. R. Evid. 801(d)(2)(E)) | Statements made during and in furtherance of the alleged antitrust conspiracy are non‑hearsay and admissible against Shkreli and Mulleady. | Defendants argue lack of conspiracy, lack of membership, or that statements were not in furtherance; also raise withdrawal defense. | Court: Plaintiffs met burden to show conspiracy and defendants’ membership; admissibility of specific statements requires preponderance that each was in furtherance; withdrawal requires affirmative evidence and defendants offered none. |
| Admission of employee statements as agent/employee admissions (Fed. R. Evid. 801(d)(2)(D)) | Investigational testimony and employee statements about matters within the scope of their duties are non‑hearsay admissions against Shkreli/Mulleady. | Defendants contest scope and trustworthiness for certain witnesses (notably Retzlaff and Mithani). | Court: Rule 801(d)(2)(D) applies where statements concern matters within employees’ authority; live testimony from some witnesses reduces dispute; contested investigational testimony may still be admissible depending on foundation and scope. |
Key Cases Cited
- United States v. Kaiser, 609 F.3d 556 (2d Cir. 2010) (business‑records exception favors admission when records have probative value)
- United States v. Gupta, 747 F.3d 111 (2d Cir. 2014) (standards for admitting co‑conspirator statements under Rule 801(d)(2)(E))
- United States v. Leslie, 658 F.3d 140 (2d Cir. 2011) (burden and standards for proving withdrawal from a conspiracy)
- United States v. Berger, 224 F.3d 107 (2d Cir. 2000) (resignation alone does not establish withdrawal from conspiracy)
- United States v. Lauersen, 348 F.3d 329 (2d Cir. 2003) (employee statements admissible for matters within scope of authority)
- United States v. Rioux, 97 F.3d 648 (2d Cir. 1996) (scope‑of‑duties analysis for admissions by employees)
- Pappas v. Middle Earth Condo. Ass'n, 963 F.2d 534 (2d Cir. 1992) (employee statements as admissions by party‑opponent)
- United States v. Agne, 214 F.3d 47 (1st Cir. 2000) (corporate employee testimony admitted against corporate officer)
- Klein v. Tabatchnick, 459 F. Supp. 707 (S.D.N.Y. 1978) (use of deposition of one adverse party against another)