The U.S. Supreme Court gave the go-ahead to a securities-fraud lawsuit against Merck over the company's communications with investors--or lack thereof--about Vioxx. The company had appealed a lower court's ruling, saying that the shareholders who brought the suit had waited too long to file it.
The statute-of-limitations argument hinged on whether the shareholders should have suspected fraud earlier; the company has said that there was plenty of Vioxx information in the public domain early on. But the investors claimed that their first clue was a 2003 Harvard University study about Vioxx links to heart attack risk; the second, a 2004 Wall Street Journal article that highlighted internal Merck emails discussing Vioxx safety issues well before those concerns were made public.
But that disagreement is a bit of a legal sideshow; now that the Supremes say the suit can proceed, the real debate can begin. Did Merck mislead investors about Vioxx's dangers? "[W]e look forward to litigating the merits in the district court," plaintiffs' attorney David C. Frederick tells the WSJ. For its part, Merck calls the allegations "unfounded" and says in a statement that it plans to ask the court to dismiss the case "on numerous other grounds."
- read Merck's release
- see the WSJ piece (sub. req.)
- get more from Reuters