The Supreme Court today agreed to hear Merck & Co.’s challenge to a shareholder suit linked to litigation over the painkiller Vioxx. Company lawyers say the shareholder suit was filed outside the two-year statute of limitations and should not be permitted to go forward.
Last year, the U.S. Court of Appeals for the 3rd Circuit reversed a trial judge’s dismissal of the suit. U.S. District Judge Stanley Chesler of New Jersey had ruled that the investors had ample notice of alleged fraud involving Vioxx—through, among other things, scientific and press reports—and could have pursued a claim within a two-year window. The appeals court ruled 2-1 against Merck, driving lawyers for the drug maker to petition the Supreme Court for certiorari.
At issue in the case are so-called “storm warnings”—the point at which the investor has received notice of the alleged wrongdoing and the two-year window on bringing a suit begins. The 3rd Circuit panel noted there is disagreement among circuit courts about starting points.
Evan Chesler, presiding partner at Cravath, Swaine & Moore in New York, who argued for Merck in the district and appellate courts, said “the outcome should not depend on the circuit in which the case is litigated.” Chesler said there was sufficient public notice prior to 2001 and that the shareholder suit should be time-barred.
In September 2004, Merck announced the company was pulling Vioxx, an anti-inflammatory drug used in the treatment of arthritis, from the market due to concerns about a link between long-term use of the drug and an increased risk of heart attack and stroke. The first shareholder class action was filed in November 2003.
John Coffey, a partner at Bernstein, Litowitz, Berger & Grossman in New York, who argued for the shareholders, was not immediately reached for comment.