Federal Trade Commission et al v. Vyera Pharmaceuticals, LLC et al

Filing 368

MEMORANDUM OPINION AND ORDER re: 313 MOTION to Stay Discovery. filed by Martin Shkreli. Shkreli's November 25, 2020 motion to stay discovery pending his release from prison is denied. (Signed by Judge Denise L. Cote on 1/8/2021) (jca)

Case 1:20-cv-00706-DLC Document 368 Filed 01/08/21 Page 1 of 5

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
FEDERAL TRADE COMMISSION, STATE OF NEW :
YORK, STATE OF CALIFORNIA, STATE OF
:
OHIO, COMMONWEALTH OF PENNSYLVANIA,
:
STATE OF ILLINOIS, STATE OF NORTH
:
CAROLINA, and COMMONWEALTH OF
:
VIRGINIA,
:
:
Plaintiffs,
:
:
-v:
:
VYERA PHARMACEUTICALS, LLC, AND
:
PHOENIXUS AG, MARTIN SHKRELI,
:
individually, as an owner and former
:
director of Phoenixus AG and a former :
executive of Vyera Pharmaceuticals,
:
LLC, and KEVIN MULLEADY, individually, :
as an owner and former director of
:
Phoenixus AG and a former executive of :
Vyera Pharmaceuticals, LLC,
:
:
Defendants.
:
:
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20cv00706 (DLC)
Memorandum Opinion
and Order

DENISE COTE, District Judge:
Defendant Martin Shkreli has moved to stay discovery until
2023, when he is due to be released from prison.

Shkreli’s

motion is denied.
Background
This action was filed on January 27, 2020.
shortly thereafter.

Discovery began

An Order of June 15 denied the defendants’

motion to stay discovery pending resolution of their motions to
dismiss.

An Opinion of August 18 largely denied their motions

Case 1:20-cv-00706-DLC Document 368 Filed 01/08/21 Page 2 of 5

to dismiss.

See Fed. Trade Comm'n v. Vyera Pharm., LLC, No.

20CV706 (DLC), 2020 WL 4891311, at *14 (S.D.N.Y. Aug. 18, 2020)
(“Vyera”).

This Opinion is incorporated by reference, and

familiarity with it is assumed.
Fact discovery is scheduled to end on February 26, 2021.
Shkreli’s deposition is set to proceed on January 27 and 28,
2021.

His recent request to delay his deposition until late

February was denied.
on August 6.

Expert discovery is scheduled to conclude

The pretrial order in this non-jury trial is due

on October 20.
Shkreli is currently incarcerated at the Allenwood Low
Security Federal Correctional Institution.

He is due to be

released from custody on September 14, 2023.1
On November 25, 2020, Shkreli filed this motion to stay
discovery.

The motion became fully submitted on December 11.
Discussion

Shkreli moves to stay this litigation, and in particular
further discovery, until he is released from prison.

He asserts

difficulty in communicating with his counsel to prepare his
defense to the claims in this litigation while incarcerated.

1

Shkreli’s prison consultant calculates that Shkreli could be
released to a halfway house as early as mid-September 2021 if
Shkreli earns enough credits from participation in certain
programs in prison.

2

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“The power to stay proceedings is incidental to the power
inherent in every court to control the disposition of the causes
on its docket with economy of time and effort for itself, for
counsel, and for litigants.”

Louis Vuitton Malletier S.A. v. LY

USA, Inc., 676 F.3d 83, 96 (2d Cir. 2012) (citation omitted).

A

district court has discretion to stay discovery for “good cause”
pursuant to Rule 26 of the Federal Rules of Civil Procedure.
The party seeking the stay of discovery bears the burden of
demonstrating good cause.
Shkreli has not shown “good cause” for a stay of this
complex litigation.

This action is brought by the federal

government and several States.

The parties and the public have

a significant interest in resolving the issues raised by the
plaintiffs’ claims with due expedition.

The issues principally

arise from events that began years ago, in 2014.

The core of

the allegedly anticompetitive conduct underlying the plaintiffs’
claims appears to remain ongoing.

Should the plaintiffs prevail

in this litigation, the impact on the generic drug market and
consumers of pharmaceuticals would be prompt and significant.
The plaintiffs also seek equitable monetary relief.

The public

interest weighs strongly against any unnecessary delay of this
litigation.
Shkreli has failed to show that he will be unfairly
prejudiced by the litigation proceeding while he is

3

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incarcerated.

This litigation was filed after a lengthy

administrative investigation of Shkreli’s activities.

The

plaintiffs promptly produced the administrative record to the
defendants, and the defendants have had months to examine it.
The protocol for discovery was entered last Spring, and the
parties have relied on it and planned accordingly.
Shkreli’s application is also untimely.

Shkreli’s delay in

bringing a motion based on his alleged lack of communication
with counsel undermines his assertion that the breadth of
discovery in this action requires a stay.
Shkreli has also failed to demonstrate good cause to
support his request for a stay.

Shkreli claims that, because of

his incarceration, he has not had, and will not have, sufficient
access to counsel to prepare for his deposition and participate
in his own defense.

He adds that a failure to stay discovery

would violate his constitutional right to access to courts, and,
as a corollary, his right to counsel.
Shkreli is represented by a team of experienced and able
counsel from two law firms.

Shkreli has at his disposal several

methods for communicating with his attorneys, including sending
and receiving legal mail, the availability of legal visits for

4

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much of the time this litigation has been pending,2 unmonitored
legal calls, and emails and calls over the Bureau of Prison’s
(“BOP”) TRULINCS and TRUFONE systems.3

Shkreli’s prison

consultant acknowledges that the BOP has “done a somewhat
satisfactory job at arranging communication thus far.”
Shkreli’s access to his counsel is at least as good as that
provided to incarcerated defendants facing criminal charges.
CONCLUSION
Shkreli’s November 25, 2020 motion to stay discovery
pending his release from prison is denied.

Dated:

New York, New York
January 8, 2021

2

Despite invitations by the Bureau of Prisons to counsel to
schedule visits to meet with Shkreli, his attorneys have not
done so. While defense counsel quite rightly point to the
ongoing pandemic and the risks to health posed by travel and
prison visits, it nonetheless remains true that counsel have
chosen not to avail themselves of this opportunity.
3

In a letter of September 25, 2020, the plaintiffs represented
that they would not seek from the BOP any further communications
between Shkreli and his attorneys conducted over monitored
lines.
5