Supreme Court Grants Cert in Vioxx Investor Class Action
The U.S. Supreme Court will consider whether investors filed a lawsuit too late to recover losses associated with the withdrawn painkiller Vioxx.
The suit could result in tighter deadlines in investor class actions, Bloomberg reports. At issue is how much notice is needed to trigger the two-year statute of limitations period.
The first investor suit against Merck & Co. for Vioxx losses was filed more than three years after a study released by the company showed Vioxx patients had five times more heart attacks than those taking naproxen. Merck said the differences were attributable to naproxen’s protective effect on the cardiovascular system.
The 3rd U.S. Circuit Court of Appeals based in Philadelphia, in a ruling for investors, had said the naproxen theory was considered plausible at the time. The court said the limitations period was not triggered by the study, nor by a Vioxx product liability suit, nor by a pronouncement by federal regulators that Merck marketing campaigns had downplayed the heart risks of Vioxx.
Merck says in its cert petition (PDF posted by SCOTUSblog) that the statutory requirement for inquiry notice has been construed “in inconsistent and irreconcilable ways.” The company says the 3rd Circuit ruling essentially says investors have no duty to investigate a possible claim until “evidence supporting specific elements of a fraud claim falls into an investor’s lap,” Bloomberg says.
The investors, on the other hand, say they should not have to “launch a wild-goose chase for evidence of securities fraud” simply because a company violated product safety rules, according to the story.
The case is Merck v. Reynolds.
