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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

FEDERAL TRADE COMMISSION, STATE OF NEW YORK, STATE OF CALIFORNIA, STATE OF ILLINOIS, STATE OF NORTH CAROLINA, STATE OF OHIO, COMMONWEALTH OF PENNSYLVANIA, and COMMONWEALTH OF VIRGINIA,

Plaintiffs,

VYERA PHARMACEUTICALS, LLC, 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 director of Phoenixus AG and a former executive of Vyera Pharmaceuticals, LLC,

Defendants.

Case No. 1:20-cv-00706-DLC

ECF Case

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT KEVIN MULLEADY’S MOTION TO DISMISS THE AMENDED COMPLAINT

Kevin J. Arquit Albert Shemmy Mishaan Kenneth R. David KASOWITZ BENSON TORRES LLP 1633 Broadway New York, NY 10023 Telephone: (212) 506-1700 [email protected] [email protected] [email protected]

Counsel to Defendant Kevin Mulleady

Case 1:20-cv-00706-DLC Document 122 Filed 05/22/20 of 25

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TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1

FACTUAL ALLEGATIONS ......................................................................................................... 3

I. Plaintiffs’ Complaint Relies on Impermissible Conclusory Allegations ............................ 3

A. Vyera’s Allegedly Unlawful Restrictive Distribution Agreements ................................ 4

B. Vyera’s Allegedly Unlawful Exclusive Supply Agreements ......................................... 6

C. Vyera’s Allegedly Unlawful Agreements to Preclude Disclosure of Sales Data ........... 7

D. Plaintiffs’ Conclusory and Speculative Allegations Concerning Mr. Mulleady’s “Likely” Similar Anticompetitive Scheme ..................................................................... 7

ARGUMENT .................................................................................................................................. 8

I. Section 13(b) Does Not Authorize This Action .................................................................. 8

A. The FTC has Failed to Plead Facts Necessary to Invoke Its Authority Under Section 13(b) to Bring Claims Against Mr. Mulleady .................................................... 8

B. Plaintiffs Cannot Obtain Equitable Relief From Mr. Mulleady Under the FTC Act Because They Fail to Allege Any Funds Were Unjustly Paid to Him ......................... 10

II. Plaintiffs Have Failed to State Any Sherman Act Claim Against Mr. Mulleady ............. 12

A. Mr. Mulleady Is Not Liable for Vyera’s Alleged Unlawful Conduct .......................... 13

B. Plaintiffs May Not Aggregate Mr. Mulleady’s Lawful Conduct to Create an Antitrust Violation ........................................................................................................ 16

III. Plaintiffs’ State Law Claims Fail ..................................................................................... 17

A. The New York Attorney General Lacks Standing to Sue on Behalf of Unnamed Governmental Entities .................................................................................................. 17

B. The New York Attorney General Cannot Assert a Damages Claim on Behalf of Natural Persons Under the Donnelly Act ..................................................................... 18

C. The New York Attorney General May Only Seek Relief Where the Defendant is Actively Continuing the Alleged Misconduct .............................................................. 18

D. Ohio Law Prohibits the Ohio Attorney General from Bringing Monetary Claims on Behalf of Indirect Purchasers ........................................................................................ 19

CONCLUSION ............................................................................................................................. 20


[Type here]

TABLE OF AUTHORITIES

Page(s)

Cases

A & D Supermarkets, Inc. v. United Food & Commercial Workers, Local Union 880, 732 F. Supp. 770 (N.D. Ohio 1989) .................................................................................14

Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328 (2d Cir. 2006)...............................................................................................10, 15

In re Air Cargo Shipping Servs. Antitrust Litigation, No. 06-MDL-1775, 2010 WL 10947344 (E.D.N.Y. Sept. 22, 2010) ......................................14

Aladdins Lights Inc. v. Eye Lighting Int’l, 96 N.E.3d 864 (Ohio App. Ct. 2017) .......................................................................................19

Aries Ventures Ltd. v. Axa Fin. S.A., 729 F. Supp. 289 (S.D.N.Y. 1990) ............................................................................................9

Armour & Co. v. Celic, 294 F.2d 432 (2d Cir. 1961).....................................................................................................13

Ashcroft v. Iqbal, 556 U.S. 662 (2009) .....................................................................................................10, 14, 15

Campers’ World Int’l, Inc. v. Perry Ellis Int’l, Inc., No. 02-cv-453, 2002 WL 1870243 (S.D.N.Y. Aug. 13, 2002)................................................13

Carpet Group Int’l v. Oriental Rug Importers Ass’n, Inc., 256 F.Supp. 2d 249 (D.N.J. 2003) .....................................................................................12, 13

City of Groton v. Conn. Light & Power Co., 662 F.2d 921 (2d Cir. 1981).....................................................................................................16

Continental Orthopedic Appliances v. Health Ins. Plan of Greater N.Y., Inc., 994 F.Supp. 133 (E.D.N.Y. 1998) ...........................................................................................14

In re Dynamic Random Access Memory (Dram) Antitrust Litig., No. M 02-1486 PJH, 2007 WL 2517851 (N.D. Cal. Aug. 31, 2007) ................................17, 18

Eatoni Ergonomics, Inc. v. Research in Motion Corp., 486 F. App’x 186 (2d Cir. 2012) .............................................................................................16

Egleston v. Valspar Corp., No. 15-cv-4130 (DLC) WL 6508329, at *8 (S.D.N.Y. Oct. 13, 2015) .............................10, 15


[Type here]

In re Elec. Books Antitrust Litig., 859 F. Supp. 2d 671 (S.D.N.Y. 2012)......................................................................................12

Flash Elec’s, Inc. v. Universal Music & Video Distrib. Corp., 312 F.Supp. 2d 379 (E.D.N.Y. 2004) ......................................................................................12

FTC v. Amy Travel Service, Inc., 875 F.2d 564 (7th Cir. 1989) ...................................................................................................11

FTC v. Bronson Partners, LLC, 654 F.3d 359 (2d Cir. 2011)...............................................................................................10, 11

FTC v. Credit Bureau Ctr., LLC, 937 F.3d 764 (7th Cir. 2019), petition for cert. filed, No. 19-825 (U.S. Dec. 19, 2019), and No. 19-914 (U.S. Jan. 20, 2020) ......................................................................11

FTC v. Home Assure, LLC, No. 8:09-cv-547, 2009 WL 1043956 (M.D. Fla. Apr. 16, 2009) ............................................10

F.T.C. v. LeanSpa, LLC, 920 F. Supp. 2d 270 (D. Conn. 2013) ......................................................................................11

FTC v. Shire ViroPharma, Inc., 917 F.3d 147 (3d Cir. 2019).................................................................................................8, 10

GVF Cannery, Inc. v. Cal. Tomato Growers Ass’n, Inc., 511 F.Supp. 711 (N.D. Cal. 1981) ...........................................................................................14

Harlem River Consumers Co-op., Inc. v. Associated Grocers of Harlem, Inc., 408 F. Supp. 1251 (S.D.N.Y. 1976)...........................................................................................9

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) .................................................................................................................19

Johnson v. Microsoft Corp., 834 N.E.2d 791 (Ohio 2005)....................................................................................................19

Kokesh v. SEC, 137 S. Ct. 1635 (2017) .............................................................................................................11

Meghrig v. KFC W. Inc., 516 U.S. 479 (1996) .................................................................................................................11

Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960) .................................................................................................................11

Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co., Ltd., 467 F. Supp. 841 (N.D. Cal. 1979), aff’d sub nom. Murphy Tugboat Co. v. Crowley, 658 F.2d 1256 (9th Cir. 1981) ............................................................................13, 14


[Type here]

Mylan Pharm. v. Celgene Corp., No. 14-cv-2094, 2014 WL 12810322 (D.N.J. Dec. 23, 2014).................................................12

New York v. Cedar Park Concrete Corp., 665 F.Supp. 238 (S.D.N.Y. 1987) ...........................................................................................14

New York v. Feldman, 210 F.Supp. 2d 294 (S.D.N.Y. 2002).......................................................................................18

In re Plavix Indirect Purchaser Antitrust Litig., No. 1:06-cv-226, 2011 WL 335034 (S.D. Ohio Jan. 31, 2011) ...............................................10

Porter v. Warner Holding Co., 328 U.S. 395 (1946) .................................................................................................................11

Rella v. N. Atl. Marine, Ltd., No. 02–cv–8573, 2004 WL 1418021 (S.D.N.Y. June 23, 2004) .............................................16

Siegler v. Sorrento Therapeutics, Inc., No. 3:18-cv-01681, 2019 WL 581719 (S.D. Cal. Feb. 13, 2019)......................................14, 15

Six W. Retail Acquisition, Inc. v. Sony Theatre Mgmt. Corp., No. 97-cv-5499, 2000 WL 264295 (S.D.N.Y. Mar. 9, 2000) ..................................................14

State v. Carvel Corp., No. 42126/79, 1979 WL 3896 (N.Y. Sup. Ct. Dec. 24, 1979) ................................................19

In re TFT–LCD (Flat Panel) Antitrust Litig., No. M 07-1827, 2011 WL 5573930 (N.D. Cal. Nov 16, 2011) ...............................................18

U.S. v. Apple, Inc., 791 F.3d 290 (2d Cir. 2015).....................................................................................................12

U.S. v. U.S. Gypsum Co., 438 U.S. 422 (1978) .................................................................................................................15

Statutes

15 U.S.C. § 53(b) .............................................................................................................................8

N.Y. Gen. Bus. Law § 342-b .........................................................................................................17


Defendant Kevin Mulleady, by and through his attorneys Kasowitz Benson Torres LLP,

submits this Memorandum of Law in Support of his Motion to Dismiss Plaintiffs’ claims.1

INTRODUCTION

In this action, the Federal Trade Commission and certain state Attorneys General have

brought unprecedented and unwarranted claims against Kevin Mulleady, a former chief

executive officer of Vyera Pharmaceuticals, LLC and current director of Phoenixus AG, for

agreements Vyera entered into that, Plaintiffs allege, unlawfully precluded generic competition

for the drug Daraprim. After a five-year investigation involving Civil Investigative Demands,

the production of hundreds of thousands of pages of documents from Defendants and third

parties, and testimony from dozens of witnesses, Plaintiffs have not alleged a legally cognizable

claim against Mr. Mulleady (or any Defendant), and their Complaint should be dismissed with

prejudice.

Indeed, despite their lengthy and exhaustive investigations, Plaintiffs cannot and do not

allege any facts showing how Mr. Mulleady himself purportedly “executed an elaborate, multi-

part scheme to block generic entry.” (Compl. ¶ 3.) Plaintiffs instead attempt to manufacture a

theory of liability against Mr. Mulleady by impermissibly interweaving factual allegations

concerning his legitimate business conduct with baseless conclusory allegations of

anticompetitive conduct and intent, often directed at “Defendants” as an undifferentiated whole.

Plaintiffs simultaneously gloss over gaping holes in their allegations, and ignore that Mr.

Mulleady was neither in a position of power at, nor employed by, Vyera when most of the

allegedly unlawful conduct occurred. The fact is that there are no well-pleaded factual

1 Capitalized terms not expressly defined herein shall have the same meaning ascribed to them in the Memorandum of Law In Support of Defendants Vyera Pharmaceuticals, LLC and Phoenixus AG’s Motion to Dismiss (the “Vyera Memorandum” or “Vyera Mem.”).


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allegations in the Complaint that support Plaintiffs’ assertion of liability on the part of Mr.

Mulleady, and their claims against him should be dismissed in their entirety.

As further detailed below, Plaintiffs’ claims should be dismissed for several reasons.2

First, the FTC’s claims should be dismissed because it lacks authority to bring them under

Section 13(b) of the FTC Act where, as here, it has not and cannot allege that Mr. Mulleady “is

violating” or “is about to violate” the law. Plaintiffs rely on mere speculation that Mr. Mulleady

“could” or is “likely” to violate the law in the future. Such conjecture is not sufficient for the

FTC to bring its claims under Section 13(b).

Second, the FTC may not seek equitable monetary relief from Mr. Mulleady because it

failed to allege that he obtained any unjust gain from the allegedly unlawful agreements.

Because the Second Circuit limits any monetary recovery under Section 13(b) to a defendant’s

unjust gain, the FTC’s claims should be dismissed to the extent that they seek monetary relief

from Mr. Mulleady.

Third, Plaintiffs fail to state a claim against Mr. Mulleady because all of the claims

against him are derivative of Vyera’s liability, and as established in the Vyera Memorandum,

Plaintiffs fail to state any claims against Vyera. Similarly, Mr. Mulleady cannot be liable for

Vyera’s allegedly unlawful agreements because he was not involved with most of them, and

none of the agreements with which he was involved are inherently unlawful. Corporate directors

and officers are generally not liable for the acts of the corporation, and in the antitrust context,

directors and officers are only liable for inherently unlawful corporate conduct—such as per se

violations of the antitrust laws—in which they actively participated or authorized. Plaintiffs

2 Mr. Mulleady hereby incorporates by reference and adopts the Vyera Memorandum in its entirety, and submits this memorandum of law to set forth certain additional arguments that primarily relate to him.


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have failed to allege any per se violations, and thus Mr. Mulleady cannot be liable for Vyera’s

conduct.

Finally, the claims of the state Attorneys General should be dismissed because they all

rely on the same conduct as the Sherman Act claims, and thus fail for the same reasons as those

claims. Further, certain claims of the state Attorneys General should be dismissed because, as

set forth below, Plaintiffs either fail to allege certain requisite facts, such as any continuing

violations of law, or they are precluded from seeking such relief.

FACTUAL ALLEGATIONS

I. Plaintiffs’ Complaint Relies on Impermissible Conclusory Allegations

The crux of Plaintiffs’ claims against Mr. Mulleady is that he is liable for various

agreements that Vyera entered into, which Plaintiffs contend unlawfully restrained trade.

Nowhere, however, do Plaintiffs allege that Mr. Mulleady entered into any such agreements or

contracts for himself, or that he personally had any power—let alone monopoly power—in the

relevant market. Rather, all of his alleged conduct derives from his role as an employee or

director of Vyera.

Plaintiffs allege that when Mr. Mulleady joined Vyera in 2015, he “held the position of

managing director and chief of staff to [then-CEO] Martin Shkreli.” (Compl. ¶ 51.) Mr.

Mulleady allegedly remained in that role until 2016, when “Vyera terminated [his] employment.”

(Id.) Plaintiffs further allege that in June 2017, Mr. Mulleady was elected as a member of the

Phoenixus board of directors, a position he continues to hold today. (Compl. ¶¶ 41, 52.) As

Plaintiffs allege, more than a year after his termination, Mr. Mulleady returned to Vyera in

September 2017 as interim CEO, and became permanent CEO in November 2017, remaining in

this role until March 2019. (Compl. ¶¶ 41, 51-52.) Mr. Mulleady has been and remains a

shareholder of Phoenixus. (Compl. ¶ 53.)


4

As discussed in the Vyera Memorandum, Plaintiffs base their claims on distinct

categories of agreements that Vyera entered into: (i) agreements to restrict the distribution of

Daraprim; (ii) agreements for exclusive supply of Daraprim’s API, pyrimethamine; and (iii)

agreements to prohibit the disclosure of Vyera’s sales information. (Vyera Mem. at 6-8.)

Plaintiffs allege that while at Vyera, and—remarkably—even after he was terminated, Mr.

Mulleady was responsible for all of these allegedly improper agreements. (See, e.g., Compl. ¶

52.) Notwithstanding Plaintiffs’ five-year investigation, however, most of their allegations

concerning Mr. Mulleady are vague, conclusory, or untethered to the allegedly unlawful conduct

on which Plaintiffs base their claims.3 Even where their allegations are factual, and not

conclusory or speculative, Plaintiffs merely allege lawful acts that are not independently anti-

competitive.

A. Vyera’s Allegedly Unlawful Restrictive Distribution Agreements

Although Plaintiffs claim that Mr. Mulleady “directed Vyera’s campaign to prevent

generic competition [by] . . . restricting [Daraprim’s] distribution and resale to potential generic

competitors” (Compl. ¶ 52), they fail to allege facts showing that Mr. Mulleady established

Vyera’s restricted distribution. In fact, Plaintiffs concede that “Vyera started with the restricted

distribution system it inherited from Impax” in 2015, and that thereafter “Defendants tightened

the resale restrictions by signing agreements with the distributors, hospitals, and pharmacies that

purchased Daraprim barring resale of the drug to generic companies.” (Compl. ¶ 99.) Plaintiffs

fail to allege, however, that Mr. Mulleady negotiated or executed any of those restricted

distribution agreements. (Compl. ¶¶ 100-122.)

3 Indeed, Plaintiffs regularly refer to “Defendants” as an undifferentiated whole and fail to specify how or if Mr. Mulleady participated in the alleged conduct. (See, e.g., Compl. ¶¶ 2, 4-8, 16-23, 95, 99, 123-24, 137, 148, 190-92, 219, 221, 238-39, 261-62, 273, 277-78, 280-84, 288-89, 291.)


5

For several reasons, Plaintiffs’ failure to connect Mr. Mulleady to any allegedly unlawful

restrictive distribution agreements is unsurprising. For example, from 2015 to early 2016—the

period during which Plaintiffs allege Vyera obtained Daraprim, and entered into many of the

restrictive distribution agreements—Mr. Mulleady did not even hold a senior decision-making

position at Vyera, and Plaintiffs do not (because they cannot) make any specific allegations

concerning Mr. Mulleady’s conduct with respect to such agreements. (Compl. ¶ 51.)

Plaintiffs’ own allegations confirm that nearly all of the purportedly unlawful restrictive

distributions agreements at issue were negotiated and/or executed without involvement by Mr.

Mulleady, either before he became CEO, or during the period from 2016-2017 in which

Plaintiffs’ expressly concede (as they must) that Mr. Mulleady was not employed by Vyera or

Phoenixus. (See, e.g., Compl. ¶¶ 47, 102-103, 105, 107, 109.) Although numerous other

employees at Vyera over the years—including during the tenure of four other CEOs—negotiated

and/or executed the allegedly unlawful distribution agreements (as well as other allegedly

unlawful agreements), only Mr. Mulleady (and Mr. Shkreli) have been sued here.

At most, Plaintiffs have alleged that one of the restrictive distribution agreements at

issue—the Optime agreement—was entered into while Mr. Mulleady was Vyera’s CEO (and a

Phoenixus board member). But there are no facts alleged concerning Mr. Mulleady’s role with

respect to that agreement; the only connection alleged is that he was CEO (and a Phoenixus

board member) at the time of its execution in May 2018.4 (See Compl. ¶ 117.)

4 The other factual allegations in the Complaint—as opposed to conclusory statements—concerning Mr. Mulleady’s conduct do not support Plaintiffs’ claims, and are not independently anti-competitive or inherently unlawful. (See e.g., Compl. ¶¶ 98, 130-32, 254.) For example, Plaintiffs allege that Mr. Mulleady ordered an audit of Daraprim to identify to whom bottles were being sold (Compl. ¶ 130), and repurchased bottles from a purchaser (Compl. ¶¶ 130-32, 254), but such conduct does not violate state or federal antitrust law and is not otherwise wrongful. Nor do those allegations make Mr. Mulleady responsible for the allegedly unlawful agreements entered into by others at Vyera. Moreover, Plaintiffs mischaracterize an e-mail Mr. Mulleady sent to allege that prior to Vyera acquiring Daraprim, Mr. Mulleady “made clear that setting up a . . . restricted distribution system for Daraprim would be Vyera’s ‘#1 priority’ and ‘exceptionally time sensitive’” while “urg[ing] Vyera employees to


6

Moreover, Plaintiffs allege that Vyera effectively precluded Optime from indirectly

selling Daraprim to “any other person or entity for any reason unless approved in writing by

Vyera or its designee,” including generic companies. (Compl. ¶ 117 (emphasis added).)

However, by its terms, the Optime agreement expressly authorizes the resale of Daraprim to

generic companies upon written approval by Vyera. Plaintiffs do not allege that resale approval

was ever requested, or that Mr. Mulleady (or anyone at Vyera) ever withheld such approval. Nor

is there any allegation in the Complaint to support such a conclusion.

B. Vyera’s Allegedly Unlawful Exclusive Supply Agreements

Plaintiffs also allege that Mr. Mulleady “directed Vyera’s campaign to prevent generic

competition [by] . . . paying an API supplier not to supply potential generic competitors.”

(Compl. ¶ 52.) Plaintiffs do not base this allegation against Mr. Mulleady on Vyera’s supply

agreement with Fukuzyu, however—nor can they, as Mr. Mulleady is not alleged to have been

involved with this agreement. Indeed, Plaintiffs do not allege that Mr. Mulleady participated in,

authorized, or had any role in the supply agreement with Fukuzyu.

Instead, Plaintiffs base their claims against Mr. Mulleady concerning Vyera’s supply

agreements on its agreement with RL Fine, which he negotiated and executed while acting as

CEO of Vyera. (Compl. ¶¶ 159-175.) RL Fine, however, was not approved by the FDA to sell

pyrimethamine in the United States and never sought approval to do so, and Vyera terminated

the RL Fine agreement in October 2019. (Compl. ¶¶ 160, 169, 172.)

‘all work extra long hours to get this done.’” (Compl. ¶ 98). In addition to the fact that the allegation misconstrues the referenced e-mail, it also does not allege any facts connecting Mr. Mulleady to the actual agreements subsequently entered into by Vyera after it acquired Daraprim. Similarly, although Plaintiffs allege that Mr. Mulleady had discussions with a generic company in 2018 concerning “drop[ping] its effort to develop a competing generic product” and “partner” with Vyera, Plaintiffs do not allege that any such agreement was entered. (See Compl. ¶¶ 255-56.) Nor do they allege how such discussions about a mere potential business relationship supports any of their claims or is otherwise unlawful, nor could they.


7

C. Vyera’s Allegedly Unlawful Agreements to Preclude Disclosure of Sales Data

Plaintiffs allege that Mr. Mulleady “directed Vyera’s campaign to prevent generic

competition [by] . . . entering agreements to pay two of Vyera’s major distributors not to sell

their Daraprim sales information to data-reporting companies.” (Compl. ¶ 52.) They fail to

allege, however, how Mr. Mulleady is responsible or liable for these “data-blocking”

agreements, but rather merely assert that they were executed by Vyera during the time that he

was CEO, or while he was a board member at Phoenixus.5 (See Compl. ¶¶ 176-190.) As

explained in the Vyera Memorandum, Plaintiffs do not allege how these agreements—which

protected Vyera’s confidential sales information—were anti-competitive, especially considering

that it is typically viewed as anti-competitive to share such information with a competitor.

(Vyera Mem. at Argument § III.A.3.)

D. Plaintiffs’ Conclusory and Speculative Allegations Concerning Mr. Mulleady’s “Likely” Similar Anticompetitive Scheme

Without alleging any facts to support their baseless conjecture, Plaintiffs speculate that

Mr. Mulleady “is and has been actively looking for other drugs,” in connection with which

Vyera (or some unidentified company) “could replicate the [alleged] Daraprim anticompetitive

scheme.” (Compl. ¶ 294 (emphasis added).) Based solely on this rank and unsupported

speculation, Plaintiffs assert that without an injunction, Mr. Mulleady is “likely to direct or

participate” in such an alleged scheme with “another product.” (Id.) After five years of

investigation, however, Plaintiffs fail to allege any facts concerning these imagined schemes.

They do not identify (much less adequately allege), among other things, any steps Mr. Mulleady

has taken (or plans to take) to implement any such scheme, any of the drugs to be targeted in

5 Notwithstanding their exhaustive investigation, Plaintiffs allege nothing about Mr. Mulleady’s involvement in these “data blocking” agreements—one of which it appears that he executed on behalf of Vyera—presumably because Plaintiffs recognize there was nothing inherently wrongful or improper about such agreements.


8

such a scheme, or any of the peripheral players (such as API manufacturers or distributors) that

are to be involved. Nor do Plaintiffs even attempt to allege exactly what scheme Mr. Mulleady

would implement, or which laws it would violate (if any), and why.

These allegations—along with the concession that a generic competitor entered the

market earlier this year (Compl. ¶ 218)—confirm that even assuming, arguendo, that Mr.

Mulleady violated antitrust laws in the past (which he did not), he is not currently violating any

such laws. Although Plaintiffs speculate that Mr. Mulleady is “likely” to violate such laws in the

future, the Complaint is devoid of any factual basis for this conjecture.

ARGUMENT

I. Section 13(b) Does Not Authorize This Action

A. The FTC has Failed to Plead Facts Necessary to Invoke Its Authority Under Section 13(b) to Bring Claims Against Mr. Mulleady

The FTC brings it claims pursuant to Section 13(b) of the FTC Act which, as the Vyera

Memorandum demonstrates, limits the FTC’s ability to file suit in federal court to instances in

which a defendant “is violating, or is about to violate, any provision of law enforced by the

Federal Trade Commission.” 15 U.S.C. § 53(b); accord FTC v. Shire ViroPharma, Inc., 917

F.3d 147, 156 (3d Cir. 2019). (Vyera Mem. at Argument § I.) Here—as demonstrated in the

Vyera Memorandum—the Complaint simply fails to allege that Vyera is violating, or is about to

violate, the law, and thus the FTC is not authorized to bring its claims against Vyera or Mr.

Mulleady considering his liability is premised on Vyera’s conduct. (Vyera Mem. at Argument §

I.)

Moreover, assuming arguendo that Plaintiffs had adequately alleged an ongoing or

imminent violation of the law as to Vyera (which they have not), the Complaint contains no


9

allegations concerning an ongoing or imminent violation of the law as to Mr. Mulleady.6 Indeed,

as Plaintiffs conceded in the Complaint, Mr. Mulleady is no longer CEO of Vyera, and is

therefore not involved in the company’s day-to-day affairs. (See Compl. ¶ 52.) Plaintiffs do not

allege—because they cannot—that Mr. Mulleady controls Vyera or Phoenixus. Nor is Mr.

Mulleady’s status as a current member of the Phoenixus board sufficient to meet the requisite

showing that Mr. Mulleady is in control of Vyera, or is engaged in any ongoing or impending

illegal conduct—even assuming, falsely, that such conduct were occurring. It is well-established

that “an individual director has no power to act on his own on behalf of the corporation.”

Harlem River Consumers Co-op., Inc. v. Associated Grocers of Harlem, Inc., 408 F. Supp. 1251,

1270 (S.D.N.Y. 1976) (citing Restatement (Second) Agency, § 14C); accord Aries Ventures Ltd.

v. Axa Fin. S.A., 729 F. Supp. 289, 295 (S.D.N.Y. 1990) (“[A]n individual director has no power

to act on behalf of the corporation, absent board authorization to do so.”).

Instead, Plaintiffs claim, in wholly conclusory fashion, that “[Mr.] Mulleady is and has

been actively looking for other drugs with which Vyera or a new company could replicate the

Daraprim anticompetitive scheme [and] [a]bsent relief, Mulleady is likely to direct or participate

in a similar anticompetitive scheme with another product.” (Compl. ¶ 294.) Plaintiffs, however,

allege no facts to support their speculation beyond ipse dixit. They make no attempt to identify

any (i) steps Mr. Mulleady has taken or is taking, much less “actively;” (ii) drugs or API being

“look[ed] for;” (iii) steps taken by Vyera or any other corporate entity in connection with this

purported “scheme;” or (iv) specifics of how such a “replicated” scheme would operate, or who

it would involve. (See supra at 7-8.)

6 The most recent factual allegations concerning Mr. Mulleady date to December 2019, and do not relate to an ongoing or imminent violation of law. (Compl. ¶ 44.)


10

Such conclusory and factually bereft allegations are insufficient to support a claim,

including under Section 13(b).7 In Shire, both the District Court and Third Circuit concluded

that “vague allegations” that a defendant was “‘about to violate’ [a] law enforced by the FTC”

are insufficient to withstand a motion to dismiss a Section 13(b) claim brought by the FTC.

Shire ViroPharma, 917 F.3d at 160-61. Here, as in Shire, Plaintiffs’ speculative conclusion that

Mr. Mulleady “could replicate the Daraprim anticompetitive scheme” with another, unidentified

product, through unidentified and unalleged means, involving unknown individuals and entities,

are insufficient. See FTC v. Home Assure, LLC, No. 8:09-cv-547, 2009 WL 1043956, at *20

(M.D. Fla. Apr. 16, 2009) (denying FTC’s request for injunctive relief under Section 13(b) and

noting that the alleged future violations must “rise above a speculative level”); accord In re

Plavix Indirect Purchaser Antitrust Litig., No. 1:06-cv-226, 2011 WL 335034, at *4 (S.D. Ohio

Jan. 31, 2011) (“[M]ere[] speculat[ion] that Defendants’ previous behavior . . . leads to the

assumption that Defendants will engage in [similar behavior in the future]” is insufficient to

survive a motion to dismiss).

B. Plaintiffs Cannot Obtain Equitable Relief From Mr. Mulleady Under the FTC Act Because They Fail to Allege Any Funds Were Unjustly Paid to Him

The FTC’s request for monetary relief from Mr. Mulleady is also impermissible because

Plaintiffs do not allege that any funds from the unlawful conduct were unjustly paid to him. The

Second Circuit held in FTC v. Bronson Partners, LLC that a court may only award remedies

under Section 13(b) that were “uniquely available in equity courts at the time of the divided

7 See Egleston v. Valspar Corp., No. 15-cv-4130 (DLC), WL 6508329, at *8 (S.D.N.Y. Oct. 13, 2015) (“A complaint must do more than offer ‘naked assertions devoid of further factual enhancement.’”) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006) (“[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to [defeat] a motion to dismiss.”).


11

bench.”8 654 F.3d 359, 367 (2d Cir. 2011). Indeed, the Bronson court noted that the Second

Circuit has “taken a somewhat narrow[] view of the ancillary remedies available to the district

court when proceeding under Section 13(b),” and held that such relief must be “measured by a

defendant’s unjust gain, rather than by a plaintiff's loss.” Id. at 368 (citation and internal

quotation omitted). Therefore, the FTC must allege that Mr. Mulleady received some unjust gain

from the unlawful conduct in order to obtain the equitable monetary relief sought, but they have

failed to do so. See id.

The Complaint lacks a single allegation that Mr. Mulleady obtained any money or assets

from the allegedly unlawful conduct, let alone any allegation that he received an unjust payment.

As a result, Plaintiffs’ request for money damages from Mr. Mulleady is not equitable and thus

not permitted under the FTC Act. See F.T.C. v. LeanSpa, LLC, 920 F. Supp. 2d 270, 280 (D.

Conn. 2013) (dismissing FTC Act claims because “the Amended Complaint does not allege any

facts regarding how [defendant] was unjustly enriched”). The FTC’s claims against Mr.

Mulleady should be dismissed to the extent that they seek equitable monetary relief.

8 The ability of the FTC to obtain monetary relief under Section 13(b), and the viability of FTC v. Bronson Partners, LLC, 654 F.3d 359 (2d Cir. 2011), have been called into question by the Supreme Court’s recent decision in Kokesh v. SEC, 137 S. Ct. 1635 (2017) and by the Seventh Circuit’s decision in FTC v. Credit Bureau Ctr., LLC, 937 F.3d 764 (7th Cir. 2019), petition for cert. filed, No. 19-825, (U.S. Dec. 19, 2019), and No. 19-914 (U.S. Jan. 20, 2020). Under the Supreme Court’s reasoning in Kokesh, the equitable monetary relief the FTC seeks here would amount to a “penalty” that was not traditionally available in courts of equity, and thus not available under Section 13(b). 137 S. Ct. at 1642-44. Similarly, in Credit Bureau, the Seventh Circuit, applying the Supreme Court’s decision in Meghrig v. KFC W. Inc., 516 U.S. 479 (1996), carefully analyzed the text of Section 13(b) and determined that equitable monetary relief was not available under that provision. Meghrig narrowed the scope of two other Supreme Court cases—Porter v. Warner Holding Co., 328 U.S. 395 (1946) and Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960)—both of which had previously been interpreted as an implied basis for a monetary remedy under Section 13(b). Credit Bureau, 937 F.3d at 779-82. The Second Circuit in Bronson primarily relied on Porter and Mitchell for its decision permitting monetary relief under Section 13(b), and also cited the Seventh Circuit’s decision in FTC v. Amy Travel Service, Inc., 875 F.2d 564 (7th Cir. 1989), which was expressly overturned in Credit Bureau. Bronson, 654 F.3d at 365-66; Credit Bureau, 937 F.3d at 785-86. In light of this authority, the viability of Bronson is in serious question, but has not been squarely addressed by the Second Circuit or Supreme Court at this point. Given the reasoning of Kokesh and Credit Bureau, the FTC’s authority to seek a monetary remedy in this action is also in serious question, and Mr. Mulleady reserves the right to challenge Plaintiffs’ attempt to seek such relief from him at the appropriate time. (See Vyera Mem. at 20 n.7.)


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II. Plaintiffs Have Failed to State Any Sherman Act Claim Against Mr. Mulleady

Plaintiffs have failed to allege a claim against Mr. Mulleady under either Section 1 or

Section 2 of the Sherman Act, whether his alleged conduct is assessed personally or derivatively

of Vyera’s conduct. The Complaint contains no allegations that Mr. Mulleady personally

entered into an unlawful anticompetitive agreement in violation of Section 1, nor identifies any

alleged co-conspirator with the requisite unity of purpose. See Mylan Pharm. v. Celgene Corp.,

No. 14-cv-2094, 2014 WL 12810322, at *8 (D.N.J. Dec. 23, 2014) (dismissing Section 1 claims

where the complaint failed “to assert non-conclusory allegations of an unlawful agreement

between Celgene and its distributors or competitors that would give rise to § 1 liability”).9

(Vyera Mem. at Argument § III.B.) Nor does the Complaint allege that Mr. Mulleady himself

possesses the necessary monopoly power for a Section 2 claim. See, e.g., Flash Elec’s, Inc. v.

Universal Music & Video Distrib. Corp., 312 F.Supp. 2d 379, 396-97 (E.D.N.Y. 2004)

(dismissing Section 2 claims against defendants, none of which “individually” was alleged “to

have monopoly power in the relevant market”); Carpet Group Int’l v. Oriental Rug Importers

Ass’n, Inc., 256 F.Supp. 2d 249, 284-85 (D.N.J. 2003) (granting summary judgment to individual

defendant where plaintiffs did “not contend that [the individual defendant], separate from [the

corporate defendant], possesses market power”). Thus, there is no basis for either Section 1 or

Section 2 liability as to Mr. Mulleady individually.

9 See also U.S. v. Apple, Inc., 791 F.3d 290, 313, 315 (2d Cir. 2015) (holding that to prove a Sherman Act Section 1 violation, a plaintiff must show first that there were “concerted action[s] between at least two legally distinct economic entities” that evince “a conscious commitment to a common scheme designed to achieve an unlawful objective”) (internal quotation omitted); In re Elec. Books Antitrust Litig., 859 F. Supp. 2d 671, 681 (S.D.N.Y. 2012) (“Overall, ‘[c]ircumstances must reveal a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement.’”).


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A. Mr. Mulleady Is Not Liable for Vyera’s Alleged Unlawful Conduct

Unable to allege any unlawful conduct personally, Plaintiffs’ claims against Mr.

Mulleady are based on Vyera’s allegedly unlawful agreements. (Compl. ¶ 52.) As established in

the Vyera Memorandum, Plaintiffs have failed to plead any claims against Vyera. (Vyera Mem.

at Argument § III.) Accordingly, given that the claims against Mr. Mulleady are derivative of

those against Vyera, Plaintiffs have also failed to plead any claims against Mr. Mulleady.

However, even if Plaintiffs sufficiently alleged claims against Vyera—and they have not—

Plaintiffs have still failed to allege that Mr. Mulleady may be liable for Vyera’s conduct, and the

claims against him should still be dismissed.

“A corporate officer is not personally liable for torts committed by others on behalf of the

corporation solely by virtue of his or her status as a corporate officer.” Campers’ World Int’l,

Inc. v. Perry Ellis Int'l, Inc., No. 02-cv-453, 2002 WL 1870243, at *5 (S.D.N.Y. Aug. 13, 2002).

“Personal liability must be founded upon specific acts by the individual director or

officer.” Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co., Ltd., 467 F. Supp. 841,

852 (N.D. Cal. 1979), aff’d sub nom. Murphy Tugboat Co. v. Crowley, 658 F.2d 1256 (9th Cir.

1981); see also Armour & Co. v. Celic, 294 F.2d 432, 439 (2d Cir. 1961) (“The ordinary doctrine

is that a director, merely by reason of his office, is not personally liable for the torts of his

corporation; he must be shown to have personally voted for or otherwise participated in them.”).

Indeed, in the antitrust context, Plaintiffs must allege that the officer “participat[ed] in

inherently wrongful conduct.” Murphy Tugboat, 467 F. Supp. at 853. In Murphy Tugboat, the

district court rejected a claim that the CEO of the defendant corporation was personally liable for

corporate acts that violated the Sherman Act even though the CEO had participated in or ratified

the corporation’s unlawful conduct. Id. at 851-54. The Murphy Tugboat court also clarified that

an officer or director’s conduct “cannot be said to be inherently wrongful” where “[i]t violates no


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per se prohibition [and] is supported by legitimate business considerations.” Id. at 853

(emphasis added). Thus, “[i]n the absence of evidence of knowing approval of inherently

wrongful acts, [an individual] cannot be held personally liable for the corporate defendants’

violation.” Id. at 853-54.

Several courts have dismissed claims against individual defendants at the pleading stage,

applying the “inherently wrongful conduct” standard.10 See, e.g., GVF Cannery, Inc. v. Cal.

Tomato Growers Ass’n, Inc., 511 F.Supp. 711, 716-17 (N.D. Cal. 1981) (dismissing Section 1

and 2 claims against individual officers and directors because plaintiff did not allege “any

inherently wrongful conduct by the individual defendants,” and holding that “[e]ven if the

Sherman Act claims against the association were adequate, . . . the liability of officers and

directors is limited to participation in ‘inherently wrongful conduct’”); A & D Supermarkets, Inc.

v. United Food & Commercial Workers, Local Union 880, 732 F. Supp. 770, 779 (N.D. Ohio

1989) (dismissing Section 1 claim because “where a claim for individual liability is based on an

officer or agent’s approval or ratification of acts or conduct, such acts or conduct must be

inherently unlawful”); cf. Siegler v. Sorrento Therapeutics, Inc., No. 3:18-cv-01681, 2019 WL

581719, at *13 (S.D. Cal. Feb. 13, 2019) (applying Murphy Tugboat and dismissing Section 14

Clayton Act claim, holding that “in order for personal liability to lie, the officers and directors at

issue must have engaged in ‘inherently wrongful conduct’”).

10 Although some cases in this circuit have denied motions to dismiss claims against individual officers and directors without reference to the Murphy Tugboat standard, those cases involved alleged conduct that satisfied the inherently unlawful standard and/or relied on conclusory allegations subsequently held to be insufficient in Iqbal, 556 U.S. at 678. See, e.g., Six W. Retail Acquisition, Inc. v. Sony Theatre Mgmt. Corp., No. 97-cv-5499, 2000 WL 264295, at *35 (S.D.N.Y. Mar. 9, 2000) (declining to dismiss per se block-booking claims); New York v. Cedar Park Concrete Corp., 665 F.Supp. 238, 248 (S.D.N.Y. 1987) (declining to dismiss per se bid-rigging claims); In re Air Cargo Shipping Servs. Antitrust Litigation, No. 06-MDL-1775, 2010 WL 10947344, at *11 (E.D.N.Y. Sept. 22, 2010) (declining to dismiss per se price-fixing claims); Continental Orthopedic Appliances v. Health Ins. Plan of Greater N.Y., Inc., 994 F.Supp. 133, 135, 42 (E.D.N.Y. 1998) (declining to dismiss per se bid rigging and price fixing claims).


15

Plaintiffs fail to allege that any Defendant—and certainly not Mr. Mulleady—was

engaged in any inherently unlawful conduct. The Complaint does not allege any per se

violations of the Sherman Act. Indeed, this is not a case in which Plaintiffs allege the kind of

clear-cut wrongdoing that should have been understood as anti-competitive and wrongful by lay

officers at the time they formulated corporate strategy.11 None of Mr. Mulleady’s alleged

conduct, even assumed to be true, amounts to inherently unlawful activity. Therefore, Plaintiffs’

allegations are facially devoid of the type of clearly unlawful conduct that could support liability

for individual corporate officers such as Mr. Mulleady.

The reluctance of courts to impose individual liability absent allegations of inherently

wrongful conduct is not surprising. Were it otherwise, executives would face antitrust exposure

even when pursuing their corporation’s legitimate objectives through ordinary and commonplace

means. Cf. U.S. v. U.S. Gypsum Co., 438 U.S. 422, 441 (1978) (recognizing, in the criminal

context, “the distinct possibility of overdeterrence” that would arise if “salutary and

procompetitive conduct lying close to the borderline of impermissible conduct [were to] be

shunned by businessmen who chose to be excessively cautious in the face of uncertainty

regarding possible exposure . . . for even a good-faith error of judgment”). Indeed, the principle

that individual liability requires more than conduct lying close to the border of impermissibility

comports with long-established law concerning director and officer liability. See Rella v. N. Atl.

Marine, Ltd., No. 02–cv–8573, 2004 WL 1418021, at *9 (S.D.N.Y. June 23, 2004) (“In general,

11 Even if Plaintiffs had alleged inherently unlawful activity, they do not allege facts establishing that Mr. Mulleady was involved with or responsible for many of the agreements at issue, but rather rely on impermissible conclusory and unsupported allegations that he “directed” Vyera’s alleged campaign. (See supra at 4-6.) See Achtman, 464 F.3d at 337 (“[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to [defeat] a motion to dismiss.”) (second alteration in original) (internal quotation omitted); Egleston, 2015 WL 6508329, at *8 (“A complaint must do more than offer ‘naked assertions devoid of further factual enhancement.’”) (quoting Iqbal, 556 U.S. at 678).


16

absent bad faith or fraud, corporate officers and directors acting within the scope of their

employment cannot be held personally liable for breaches of contract or tortious acts committed

by their corporations.” (citations omitted)).

B. Plaintiffs May Not Aggregate Mr. Mulleady’s Lawful Conduct to Create an Antitrust Violation

As established by the Vyera Memorandum, Plaintiffs cannot state a claim against Mr.

Mulleady (or any Defendant) by alleging multiple lawful acts taken by Mr. Mulleady in the

ordinary course of Vyera’s business and asking the Court to combine them to concoct an

antitrust claim. See Eatoni Ergonomics, Inc. v. Research in Motion Corp., 486 F. App’x 186,

191 (2d Cir. 2012) (“Because the[] alleged instances of misconduct are not independently anti-

competitive, we conclude that they are not cumulatively anti-competitive either.”); see also City

of Groton v. Conn. Light & Power Co., 662 F.2d 921, 928-29 (2d Cir. 1981) (“[W]e reject the

notion that if there is a fraction of validity to each of the basic claims and the sum of the fractions

is one or more, the plaintiffs have proved a violation of section 1 or section 2 . . . .”).

Accordingly, Plaintiffs have failed to allege any actionable claim against Mr. Mulleady

under either Section 1 or Section 2 of the Sherman Act. As a result, for the reasons discussed

herein, and in the Vyera Memorandum and the Memorandum of Law in Support of Defendant

Martin Shkreli’s Motion to Dismiss (“Shkreli Memorandum” or “Shkreli Mem.”),12 Plaintiffs

have also failed to allege an actionable claim against Mr. Mulleady under the various state laws

on which they base their claims. (Vyera Mem. at Argument § II; Shkreli Mem. at § IV.C.)

12 Mr. Mulleady hereby incorporates by reference and adopts § IV.C of the Shkreli Memorandum.


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III. Plaintiffs’ State Law Claims Fail

Plaintiffs’ state law claims fail for the reasons set forth in the Vyera Memorandum and

Shkreli Memorandum, and as set forth below. (See Vyera Mem. at Argument § II; Shkreli Mem.

at § IV.C.)

A. The New York Attorney General Lacks Standing to Sue on Behalf of Unnamed Governmental Entities

The New York Attorney General (“NYAG”) vaguely alleges that she brings her claims

“on behalf of the people of the State of New York to protect the state, its general economy, and

its residents.” (Compl. ¶ 17.) It is unclear based on that purposefully vague allegation on whose

behalf exactly the NYAG is suing, but to the extent that the NYAG seeks relief on behalf of

unnamed government entities, those claims should be dismissed.

Under the Donnelly Act, the NYAG may “bring actions on behalf of any political

subdivision or public authority of the state upon the request of such political subdivision or

public authority to recover damages.” N.Y. Gen. Bus. Law § 342-b (emphasis added). Plaintiffs

fail to allege, however, that such a request was made here and, if so, by which entities, and thus

any claim brought by the NYAG on behalf of governmental entities should be dismissed. See In

re Dynamic Random Access Memory (Dram) Antitrust Litig., No. M 02-1486 PJH, 2007 WL

2517851, at *7 (N.D. Cal. Aug. 31, 2007) (dismissing Donnelly Act claims because “while the

Donnelly Act does provide express statutory authority for the State Attorney General to sue on

behalf of ‘any political subdivision or public authority of the state,’ the Donnelly Act

contemplates that these government entities must be specifically identified, and it must

affirmatively be demonstrated that they have ‘requested’ that the Attorney General bring suit on

their behalf”).


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Similarly, New York Executive Law Section 63(12) does not authorize the NYAG to sue

on behalf of unnamed governmental entities. See In re Dram, 2007 WL 2517851, at *12

(dismissing Executive Law claims because that statute “does not vest the State Attorney General

with authority to bring representative claims on behalf of unnamed government entities. Nor do

any other statutes provide such authority.”).

B. The New York Attorney General Cannot Assert a Damages Claim on Behalf of Natural Persons Under the Donnelly Act

The NYAG’s claims seeking to recover damages under the Donnelly Act on behalf of the

residents of New York should be dismissed. Although its allegations are opaque, at a minimum,

the NYAG explicitly contends it “brings this action on behalf of the people of the State of New

York.” (Compl. ¶ 17.) Further, the NYAG seeks “equitable monetary relief . . . [for] violation[s]

of New York’s Donnelly Act.” (Compl., Prayer for Relief at ¶ 17.) The Donnelly Act, however,

does not permit the NYAG to seek damages on behalf of the residents of New York.

As the In re Dram court explained, although the NYAG may file a claim on behalf of the

people of New York, “the [Donnelly] Act specifically limits such claims to those seeking

injunctive relief, or civil penalties under the Act,” and as a result, “plaintiff may not assert a

claim for monetary damages under the Act on behalf of natural persons.” Id. at *8.13

C. The New York Attorney General May Only Seek Relief Where the Defendant is Actively Continuing the Alleged Misconduct

As established in the Vyera Memorandum, New York Executive Law Section 63(12)

authorizes the Attorney General to seek relief only where the defendant is continuing the alleged

13 See also New York v. Feldman, 210 F.Supp. 2d 294, 302 n.4 (S.D.N.Y. 2002) (“The Donnelly Act permits the New York Attorney General to seek injunctive relief and civil penalties ‘in the name and in behalf of the people,’ and to recover damages ‘on behalf of any political subdivision or public authority of the state.’ . . . [T]he [Donnelly] Act does not authorize the Attorney General to recover damages on behalf of the people.”); In re TFT–LCD (Flat Panel) Antitrust Litig., No. M 07-1827, 2011 WL 5573930, at *1 (N.D. Cal. Nov 16, 2011) (“[T]he New York legislature has ‘unambiguously’ restricted the state’s ability to seek such damages to actions ‘on behalf of any political subdivision or public authority of the state.’”).


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misconduct. (Vyera Mem. at Argument § II.B.) As discussed above (supra at 8-10), Plaintiffs

fail to allege that Mr. Mulleady is actively involved in any continuing or imminent misconduct,

warranting dismissal of the Executive Law Claims.

Moreover, New York courts have explained that “regardless of whether [an officer or

director] did or did not participate in the acts complained of,” where the defendant “has not

performed any anti-competitive activities [since] having left the employ of defendant

[corporation], and is unlikely to commit such acts in the immediate future,” a Donnelly Act

claim cannot be sustained. State v. Carvel Corp., No. 42126/79, 1979 WL 3896, at *2 (N.Y.

Sup. Ct. Dec. 24, 1979) (granting summary judgment dismissing Donnelly Act claims and noting

that “[t]he suggestion by plaintiff that at some future time movant may return to Carvel’s employ

is pure speculation and surmise. It is far from the showing necessary to justify the drastic

remedy of injunctive relief.”). Here, Plaintiffs do not allege any facts to support their conclusion

that Mr. Mulleady has undertaken any unlawful conduct since he left Vyera’s employ. To the

contrary, they only speculate that he may do so in the future. (Supra at 7-8.) Such allegations

cannot support a Donnelly Act claim.

D. Ohio Law Prohibits the Ohio Attorney General from Bringing Monetary Claims on Behalf of Indirect Purchasers

To the extent that the Ohio Attorney General is seeking monetary relief on behalf of

indirect purchasers, such claims are barred. The Ohio Supreme Court has adopted the direct-

purchaser requirement in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), and held that “an

indirect purchaser of goods may not assert a Valentine Act claim for violations of Ohio antitrust

law.” Johnson v. Microsoft Corp., 834 N.E.2d 791, 798 (Ohio 2005) (affirming dismissal of

monopolization-based antitrust claims); accord Aladdins Lights Inc. v. Eye Lighting Int’l, 96

N.E.3d 864, 868 (Ohio App. Ct. 2017) (same).


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CONCLUSION

For the foregoing reasons, Defendant Kevin Mulleady respectfully requests that the Court

dismiss the claims against him in Plaintiffs’ Complaint with prejudice.

Dated: May 22, 2020 New York, New York

By: /s Kevin J. Arquit Kevin Arquit

([email protected]) Albert Shemmy Mishaan ([email protected]) Kenneth R. David

([email protected]) Kasowitz Benson Torres LLP 1633 Broadway New York, New York 10019 Tel: (212) 506-1700

Attorneys for Defendant Kevin Mulleady


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