Right around New Year’s Day 2018, Malncka alerted us to a suit filed by Edward Painter, the former head of Investor Relations for what was then Turing (now Vyera), in federal court, against Marty personally, and Vyera — as a company.
As that link suggests (do go read it for the backgrounder, here), the defense was likely going to invoke the arbitration clause in the employment agreement, between Mr. Painter and Vyera, to (it hoped) shove this dispute out of the public eye….
Well, overnight, that is exactly what Fox Rothschild has done — in a four page letter brief filing, with the able judge in the Eastern District of New York (Brooklyn). Personally, I might not have approached it in just this way.
You see, the Fox firm makes absolutely no peep — not a syllable, even — about the central gravamen of Mr. Painter’s complaint at law. It is more than a simple employment complaint. Much more.
It is (in the main) a securities fraud complaint. And the supposed arbitration clauses Fox talks about so passionately, cover only employment related matters, not not not investments in securities, of the company then called Turing, now called Vyera.
As I’ve long said (across a decade, and several blog properties), applicable and settled black letter law holds that those federal securities fraud claims radiate beyond the boundaries of the arbitration clauses, in almost any employment agreement (other than ones between SEC-registered broker/dealers and their employees) — and thus cannot be kept out of the federal courts. [Those claims by Mr. Painter include allegations that ole’ Marty was supposed to pay Mr. Painter a five per cent royalty on all Chagas drug program sales (confidential to Mr. Painter’s able counsel: that royalty payment arrangement is itself very-likely another, separate ’33 Act private securities offering, to him), and Marty was supposed to transfer all his KaloBios shares to Vyera (then called Turing), in order to make sure that Mr. Painter’s efforts in connecting Marty to the people at Savant were appropriately rewarded.] Instead, Marty ended up selling his shares in KaloBios for several million dollars in late summer 2016 — to an unaffiliated private investment company, to thus allow KaloBios to exit bankruptcy, free of his stink. If Mr. Painter has good evidence to back this up (and he says he has witnesses who heard Marty make all these promises), he may have a nice recovery in the offing.
Finally, while Vyera is also a “named party” here in the litigation, I strongly suspect it is Marty himself that Mr. Painter is gunning for. Marty does still have some $27 million, we are told. And even as Vyera lays off staff, it, like Marty, likely still has some real wherewithal. And based on my visitor traffic those days in early January 2018, I’d say some of the OTHER private investors in Vyera reside (or at least holiday) in and around… the Matterhorn. In sum, there is other money here — beyond Marty’s — to go after.
And so — this ought to be highly amusing.