Supreme Court: Merck Securities Fraud Lawsuit Can Proceed
In a 9-0 ruling, last week the Supreme Court upheld the ruling of a U.S. appeals court, allowing the billion dollar shareholders lawsuit against Merck & Company to proceed. As we discussed previously, the Merck lawsuit was brought on behalf of a group of investors. Merck is accused of knowingly misleading those investors about the health risks of the drug Vioxx, which they claimed artificially inflated their stock prices. Despite the arguments by attorneys for Merck, the justices found that the investors' claims were not prohibited by the statute of limitations.
In an opinion by Justice Breyer, the Court held that a securities fraud claim such as that filed by the plaintiffs against Merck could be filed within two years of either 1) the time that the plaintiffs discovered the facts constituting the violation they are suing over, or 2) the time that a reasonably diligent plaintiff would have discovered those facts, whichever come first.
Applying this standard, the Court affirmed the ruling below, that the plaintiffs had indeed filed their complaint in time.
In 2004, it looked like Merck successfully argued that the case was filed too late, when a federal judge dismissed the lawsuit. However, six years later, the case found itself before the U.S. Supreme Court which unanimously concluded that the shareholders lawsuit can go forward.
But this is not over yet. Now begins the fight over the allegations in the actual complaint (rather than the fight over whether the plaintiffs could even sue). As James Vicini of Reuters reported, Merck is far from giving up:
Merck is disappointed in today's decision, but believes that the allegations in the complaint are unfounded and will continue to defend itself vigorously, said Bruce Kuhlik, Merck Executive Vice President and General Counsel.
- US Top Court OKs Merck Vioxx Investor Suit (Reuters)
- Securities Law (FindLaw)
- Full Opinion (FindLaw)
- Merck Lawyers: Plaintiffs Should Have Known Merck Was Lying about Vioxx (FindLaw's Common Law)
- Fraud Explained (provided by Law Offices of Mark L. Horwitz, P.A.)
- Securities Litigation: Claims & Defenses (provided by Law Office of Lee H. Schillinger, P.A.)
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