The plaintiffs, led by (the unfortunately named) Wormwood Capital, have overnight filed a memo of law, to oppose the Phoenixus AG/Vyera motion to dismiss this state court litigation against among others, Martin and the Swiss domiciled company.
The plaintiffs cogently argue that the state courts of New York are a uniquely-appropriate forum to bring their claims, thus:
“…Phoenixus is a Swiss corporate shell that operates its pharmaceutical business through its wholly owned, New York City-based/New York State-registered subsidiary Vyera Pharmaceuticals LLC (“Vyera”). The Phoenixus and Vyera officers and directors named as defendants (the “Individual Defendants”) have misused investors’ capital, wasted corporate assets and disseminated false financial statements. They have done so in cahoots with the infamous, now-imprisoned “Pharma Bro” Martin Shkreli. Three of the four Individual Defendants, like Shkreli, are New Yorkers. Several of the Plaintiff-shareholders are New Yorkers. Vyera, the vehicle for the wrongdoing, is based in New York City.
Plaintiffs’ claims thus arise from facts and circumstances inexorably linked with New York — in particular, Vyera’s transacting business here. Plaintiffs allege that the Individual Defendants perpetrated their wrongdoing through their operational, financial-reporting and decision-making control over Vyera by conduct and decision-making occurring in New York. The Individual Defendants, as alleged, held their control positions because Shkreli put them there, manipulating his share-ownership voting power to get them “elected” to the Phoenixus Board and named as Vyera officers. They then breached their fiduciary duties and caused waste of corporate assets, acting in concert with Shkreli to benefit themselves (and Shkreli) at shareholder expense. Detailed factual allegations establish, directly and inferentially, that the locus of this conduct and the injury to Vyera were in New York.
Defendants nonetheless assert that this Court is the wrong forum. To Defendants, a Swiss court is better for achieving “substantial justice,” the touchstone of forum non conveniens. But Defendants cannot meet their heavy burden to negate Plaintiffs’ choice of New York in favor of Switzerland. (Point I.A). The applicability of Swiss law (Pt.I.B), the “suitability” of a Swiss forum plus balancing the New York vs. Swiss interests (Pt.I.C), and the “impediment” to gathering evidence from Switzerland (Pt.I.D) do not justify a Swiss forum. Rather, all the forum non conveniens factors weigh heavily for the Court’s retaining jurisdiction. (Pt.I., passim). Likewise, the Court has personal jurisdiction over Phoenixus and Walker based on long arm jurisdiction. (Pt.II). Defendants’ motion should be denied…
Fixating on one factor rather than the balancing analysis, Defendants claim that New York is an inconvenient forum because the “internal affairs doctrine” requires that Plaintiffs’ claims be decided under Swiss law. (Defs. Mem. 1-3, 8-12; Nobel Aff., passim). Defendants say that the case is “plagued” with “thorny questions” of Swiss law that will impose “an unwarranted burden on this Court.” (Defs. Mem. 8). Granted, foreign law is a factor that courts consider in the forum non conveniens calculus (and Plaintiffs do not dispute the applicability of Swiss law). But here the foreign-law factor merits little weight….”
We shall see — but one way or another, if Phoenixus AG is the parent entity of what is at least for now a public company called Regnum (see our weekend — and Monday — coverage; it also now lists 300 Third Avenue, Tenth Floor as its primary address), the mechanisms of the US federal securities laws may well be invoked (by amendment), and render the Swiss arguments… mooted. Then the proper forum might well be the US District Courts of New York — Manhattan or Brooklyn.
Stay tuned.
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