1 2 2

- 728 Federal Trade Commission
, et al. v. Shkreli

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT ’ S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “ SUMMARY ORDER ” ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the 1 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 2 23 rd day of January , two thousand twenty

- four

. 3 4 PRESENT: 5 BARRINGTON D. PARKER, 6 MYRNA PÉREZ, 7 SARAH A. L. MERRIAM, 8 Circuit Judges. 9

_____________________________________ 10 11 Federal Trade Commission, State of New York, 12 State of California, State of Ohio, Commonwealth 13 of Pennsylvania, State of Illinois, State of North 14 Carolina, Commonwealth of Virginia
, 15 16 Plaintiff s

- Appellees
, 17 18

v. No

. 2 2

- 728 19 20 Martin Shkreli, individually, as an owner and 21 former director of Phoenixus AG and as a former 22 executive of Vyera Pharmaceuticals, LLC, 23 24 Defendant

- Appellant
, 25 26 Vyera Pharmaceuticals, LLC, Phoenixus AG, 27 Kevin Mulleady, individually, as an owner and 28 director of Phoenixus AG and as a former 29 executive of Vyera Pharmaceuticals, LLC, 302 Defendants. 1

_______________________________________ 2

FOR PLAINTIFF

- APPELLEE 3 FEDERAL TRADE COMMISSION : B RADLEY D. G ROSSMAN , Attorney
, Federal 4 Trade Commission
, Washington
, D.C

. 5 6 FOR STATE PLAINTIFF S

- APPELLEES : P HILIP J. L EVITZ , Assistant Solicitor General
, for 7 Letitia James, Attorney General for the State of 8 New York, for the State Appellees. 9 10 FOR DEFENDANT

- APPE LLANT : K IMO S. P ELUSO ( Noam Biale, on the brief )
, 11 Sher Tremonte LLP
, New York
, NY. 12 13 Ap peal from a judgment of the United States District Court for the Southern District of 14

New York ( Cote
, J .). 15

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND 16

DECREED that the February 4, 2022, judgment of the district court is AFFIRMED

. 17

Plaintiffs

- Appellees Federal Trade Commission (“FTC”) ; the commonwealths of 18
Pennsylvania and Virginia ; and the s tates of California, Illinois, New York, North Carolina, and 19

Ohio filed suit against Defendant

- Appellant Martin Shkreli and other s in the United States 20

District Court for the Southern District of New York

. Plaintiffs

- Appellees alleg ed violations of 21

federal and state antitrust law s for conduct involving the distribution of Daraprim, a brand

- name 22
drug used to treat a parasitic infection called toxoplasmosis

. Shkreli’s co

- defendants settled 23

before trial

. 24
Following a seven

- day bench trial, t he district court found that Plaintiffs

- Appellees 25

carried their burden of establish ing that Shkreli committed antitrust violations. Th e district court 26

issued a final judgment that, among other things : (1) ordered disgorgement against Shkreli 27
jointly and severally with defendant Vyera ; and (2) enter ed a permanent injunction imposing a 28
lifetime ban on Shkreli from the pharmaceutical industry. This appeal followed. 293 For the reasons set forth below, we affirm

. We assume the parties ’ familiarity with the 1
underlying facts, the procedural history of the case, and the issues on appeal, which we reference 2
only as necessary to explain our decision. 3

I. Disgorgement 4
Shkreli argues for the first time on appeal that the district court erred by relying on 5

federal law remedies in imposing joint and several disgorgement on him under New York law. 6
Though Shkreli does not dispute that New York law allows for disgorgement relief, he contends 7

that New York law precludes disgorgement on a joint and several basis

. Shkreli never made this 8
argument to the district court, and he proffer s no reason now for his failure to raise the arguments 9

the re

. Additionally
, in the district court, Shkreli himself relied exclusively on federal equity 10
jurisprudence in contending that he should not be ordered to disgorge profits

. See Dist. Ct. ECF 11

No. 462 at 4

- 6 ; see also Dist. Ct. ECF No. 860 at 1234

- 35 (Shkreli’s trial counsel arguing “in 12
terms of equitable monetary relief, your Honor, the Liu [ v. SEC , 140 S. Ct. 1936 (2020)
, ] case 13
from the Supreme Court says that disgorgement should not be a joint and several remedy ” )

. 14

Therefore, the circumstances here do not persuade us that we should exercise o ur discretion to 15

addr ess this new argument on appeal

. See Greene v. United States , 13 F.3d 577 , 586 (2d Cir. 16
1994) (“ Entertaining issues raised for the first time on appeal is discretionary with the panel 17
hearing the appeal

. ”) ; see also Doe v. Trump Corp ., 6 F.4th 400, 410 (2d Cir. 2021). Given his 18
strategic decision in the district court, there is no injustice to Shkreli by us declin ing to address 19

his new argument

. 1 20

21

1 E ven if this argument were not waived
, it would still fail. We do not read Shkreli’s principal case, J.P. Morgan Sec

. Inc. v. Vigilant Ins

. Co ., 37 N.Y.3d 552 ( N.Y. 2021)
, to hold that joint and several disgorgement relief is unavailable against codefendants engaged in concerted wrongdoing to wrongfully obtain profits under New York equity jurisprudence.4 II. Permanent Injunction 1

Next, Shkreli provides three un persuasive reason s to disturb the district court’s entry of 2

the permanent injunction in this case

. 3

First, Shkreli contends that the district court abused its discretion by entering an 4
overbroad injunction against him that imposes a lifetime ban from the pharmaceutical industry

. 5
Second, Shkreli argues that the injunction unconstitutionally limits his public speech . Third, 6

Shkreli asserts that the injunction is not specific enough and that it thus violates Federal Rule of 7
Civil Procedure 65(d)

. We address each argument in turn below. 8

F irst, we note that Section 13(b) of the Federal Trade Commission A ct authorizes the 9
FTC to bring actions seeking injuncti ve relief for violations of the Act. See 15 U.S.C. § 53(b)

. 10

Section 13(b) imposes prospective, not retrospective, relief. See AMG Cap

. Mgmt, LLC v. FTC
, 11

141 S. Ct. 1341, 1347

- 48 (2021)

. Upon a proper showing
, a district court may issue a permanent 12
injunction. See i d

. 2 13
In general, a district court has broad discretion in framing an injunction in terms it deems 14
reasonable to prevent wrongful conduct

. S ee Seibert v. Sperry Rand Corp ., 586 F.2d 949, 951 15
(2d Cir. 1978)

. A ppellate review of the terms of the injunction is limited to whether there has 16

been an abuse of that discretion. See SEC v. Posner , 16 F.3d 520, 521

- 22 (2d Cir. 1994)

. A 17

district court has abused its discretion if it : (1) based its ruling on an erroneous view of the law, 18
(2) made a “ clearly erroneous factual finding,” or (3) rendered a decision that “ cannot be located 19
within the range of permissible decisions. ” SEC v. Dorozhko , 574 F.3d 42, 45 (2d Cir. 2009) 20
(internal citations and quotation marks omitted)

. 21

2 The Donnelly Act was modeled on the f ederal Sherman Act of 1890
, and thus should generally be construed considering f ederal precedent

. See People v. Rattenni , 81 N.Y.2d 166, 171 (1993)

.5 We conclude that the district court did not abuse its discretion by imposi ng a lifetime ban 1
from the pharmaceutical industry on Shkreli because an injunction of that scope was within the 2
range of permissible decisions. T he district court found, and Shkreli does not dispute
, that 3
Shkreli’s illegal scheme was “ egregious, deliberate, repetitive, long

- running , and ultimately 4
dangerous

. ” Special App’x at 140. The district court found that Shkreli’s comprehensive and 5
effective scheme led to the price increase of a life

- saving drug, Daraprim, from $17.50 to $750 6
per tablet and successfully blocked the entry of generic drug competition to maintain Daraprim’s 7
inflated price. The district court further found that Shkreli ’s scheme was far

- reaching and was 8
implemented using many means. It pointed to the record demonstrating that Shkreli facilitated 9

extensive research ; established at least two companies ; recruited and worked through others even 10
while in prison ; and took advantage of regulatory requirements designed to safeguard the 11
pharmaceutical industry to carry out his illegal scheme

. 12

The district court’s injunction was a reasonable measure to protect the public from the 13

risk of recurring anticompetitive conduct in the pharmaceutical industry by Shkreli

. In his direct 14
written testimony, Shkreli indicated that after release from prison, “ [i] f I do pursue employment 15
within the pharmaceutical industry... I hope to continue playing a role in the discovery of cures 16

and treatments for rare and life

- threatening diseases... and focus on experimental and research

17
based opportunities related to discovery of new medicines and new uses for existing medicines.” 18

App’x at 801. Given Shkreli’s pattern of past misconduct
, the obvious likelihood of its 19

recurrence, and the life

- threatening nature of its results, we are persuaded that t he district court’s 20

determination as to the proper scope of the injunction was well within its discretion

. 21

Shkreli fares no better in his challenge to Paragraph II(D) of the permanent injunction

. 22
Shkreli argued in the district court that imposing Paragraph II(D) without limits would infringe 236 his free speech rights by prohibit ing him entirely from, among other things, using social media to 1
discuss the pharmaceutical industry. In response to Shkreli ’s concerns , t he record reflects that 2
the district court added the following text to Paragraph II(D) : 3
Shkreli’s public statements about a Pharmaceutical Company will be 4 deemed an action taken to influence or control the management or business 5 of any Pharmaceutical Company if Shkreli intended the statement to have 6 that effect or if a reasonable person would conclude that the statement has 7 that effect. 8 9 Special App’x at 166. 10
The district court added this language to set limitations in light of Shkreli’s concerns
, 11
while also enjoining possible future antitrust violations

. In light of that addition, w e are 12
persuaded that Paragraph II(D)’s public statement ban is in the range of permissible decisions
, 13
preventing possible future antitrust violations without treading on Shkreli’s free

- speech rights

. 14

See Nat’l Soc ’y . of Pro

. Eng’rs v. United States , 435 U.S. 679, 697

- 9 8 (1978 ) (“ In fashioning a 15
remedy, the District Court may, of course, consider the fact that its injunction may impinge upon 16
rights that would otherwise be constitutionally protected, but those protections do not prevent it 17
from remedying the antitrust violations

. ” ) ; see also Jews for Jesus, Inc. v. Jewish Cmty Rel s. 18
Council of N.Y ., Inc., 968 F.2d 286, 296 (2d Cir. 1992) ( “ [T] he First Amendment provides no 19
defense to persons who have used otherwise protected speech or expressive conduct to force or 20

aid others to act in violation of a valid conduct

- regulating statute

. ” )

. 21
Lastly, we conclude that the terms of the district court’s injunction are sufficiently clear, 22
specific in terms, and described in reasonable detail to satisfy Fed eral R ule Civ il P rocedure 23

65 (d). W e review de novo whether the injunction complies with Rule 65(d)

. S ee City of New 24
York v. Mickalis Pawn Shop, LLC , 645 F.3d 114, 143 (2d Cir. 2011). “ To comply with the 25
specificity and clarity requirements ” of Rule 65(d), “ an injunction must be specific and definite 267 enough to apprise those within its scope of the conduct that is being proscribed. ” S.C. Johnson 1

& Son, Inc. v. Clorox Co ., 241 F.3d 232, 240

- 41 (2d Cir. 2001) ( quotation marks omitte d) ; see 2

also Fed. R. Civ. P. 65(d)(1)

. Shkreli contends that the injunction is vague because it lacks 3
definitions for two of its key terms: “participating” in the pharmaceutical industry and 4
“pharmaceutical industry

. ” But t he district court was not required to define unambiguous terms

. 5
Terms of an injunction are construed “ according to the general interpretive principles of contract 6

law. ” Mastrovincenzo v. City of New York , 435 F.3d 78, 103 (2d Cir. 2006)

. Therefore, 7

undefined terms should be given their plain meaning and construed in light of normal usage

. See 8

i d

. 9

To be sure, “p articipating ” is “ t aking part ” in an undertaking

. 3 In this case, t he 10
undertaking is the pharmaceutical industry

. And the district court’s injunction, read in context, is 11
sufficiently clear to put Shkreli on notice as to what the “pharmaceutical industry” consists of. 12

T he injunction even defines Pharmaceutical Company, and Pharmaceutical Companies 13

undoub ted ly make up the pharmaceutical industry

. Therefore, the plain language is hardly 14

vague

. It squarely forbid s Shkreli from directly or indirectly taking part in any manner in the 15
pharmaceutical industry
, including taking any action to directly or indirectly influence or control 16
the management or business of any Pharmaceutical Company

. 4 17
The language of the permanent injunction requires Shkreli to notify the Plaintiffs

18
Appellees if he wishes to accept “Qualified Employment ” in order to provide an opportunity to 19
object

. See Special App’x at 166

- 67. A s the district court made clear, if Shkreli feels that the 20

3 Merriam

- Webster Online Dictionary, https://perma.cc/W6FM

- G5PC (last visited January 5, 2024).
4 The injunction contains a few exceptions: “ Shkreli may retain an Ownership Interest in securities that are under the control of the receiver appointed in Koestler v. Shkreli

, 1:16cv7175; ” and may accept “Qualified E mployment ”

“ with a Pharmaceutical Company that is not primarily involved in the research, Development, manufacture, commercialization, or marketing of Drug Products or [active pharmaceutical ingredients] and ” derives less than 10% of its gross revenues from such activity. Special App’x at 165

- 66 (emphasis added).8 Plaintiffs

- Appellees have unreasonably objected to appropriate employment, he may apply for 1

relief. See Pasadena City Bd

. of Educ

. v. Spangler , 427 U.S. 424, 437 (1976) ( “ [S] ound judicial 2
discretion may call for the modification of the terms of an injunctive decree if the circumstances, 3
whether of law or fact, obtaining at the time of its issuance have changed, or new ones have since 4

arisen

. ” ) ( quoting Sys

. Fed ’ n No. 91, Ry

. Emps

. ’ Dep ’ t v. Wright , 364 U.S. 642, 647 (1961))

. 5



### * * * 6

We have carefully considered Shkreli’s remaining arguments and find them to be without 7

merit. For the foregoing reasons, we AFFIRM the judgment of the district court. 8

9 10 FOR THE COURT: 11 Catherine O ’ Hagan Wolfe, Clerk of Court 12