It’s been nearly a decade since Merck & Co. pulled the Vioxx from the market in 2004, after a study linked the blockbuster pain drug to increased heart attacks and other problems. It took years of bellwether trials before the company paid $4.85 billion to resolve more than 27,000 personal injury claims over the drug in 2007. Four more years passed before Merck pled guilty to criminal charges related to Vioxx in 2011, submitting a $321 million criminal fine and $628 in civil penalties.
Now plaintiffs in a securities class action against Merck have reached a milestone of their own in the Vioxx litigation saga–one that makes yet another settlement much more likely. On Wednesday a federal judge in Newark granted class certification in the eight-year-old case, which accuses Merck and certain executives of overstating the commercial promise of Vioxx despite its health risks.
In a 32-page opinion, U.S. District Judge Stanley Chesler certified a nationwide class of investors who bought their shares between May 1999 and September 2004. The judge rejected a host of arguments by Merck’s lawyers at Cravath, Swaine & Moore and Hughes Hubbard & Reed that the class didn’t pass muster, and he appointed Bernstein Litowitz Berger & Grossmann; Brower Piven; Milberg; and Stull, Stull & Brody to lead the case toward trial.
Much like the rest of the Vioxx docket, the securities case has long and tortuous history. A slew of investors sued shortly after Vioxx was pulled from the market and Merck’s stock tumbled. The litigation was consolidated before Judge Chesler in 2005, and he initially granted the company’s motion to dismiss after finding that the plaintiffs waited too long to bring their claims. According to Chesler, investors were on notice that Merck was understating the risks associated with Vioxx way back in 2001, when the Food and Drug Administration sent a warning letter to Merck raising concerns about the drug. (Fun fact: Ex-convict and former dean of the securities class action bar Melvyn Weiss handled oral arguments for the plaintiffs on that motion to dismiss back in 2007.)
The plaintiffs appealed to the U.S. Court of Appeals for the Third Circuit and managed to revive the case in 2008. Then, in a landmark 2008 opinion that clarified time limits for securities claims, the U.S. Supreme Court unanimously upheld the Third Circuit’s ruling. As we reported, the plaintiffs mostly survived a renewed motion to dismiss back at the district court in August 2011, and in December 2012 Judge Chesler ordered Merck to produce documents to the plaintiffs that the company had previously handed over to the government, even thought the Justice Department had agreed to keep those documents confidential.
When it finally came to fighting class certification, Merck cited the Supreme Court’s Wal-Mart v. Dukes decision to argue that the plaintiffs’ claims must be tackled individually. But Chesler threw out the defense arguments one by one and agreed to certify securities fraud claims against Merck, former head of research Edward Scolnick, and clinical research executive Alise Reicin. The judge also certified control person liability claims against individual board members and insider trading claims against Scolnick.
We reached out to Cravath partner Robert Baron, who represents Merck and Reicin, but didn’t immediately hear back. The company is also represented by counsel from Hughes Hubbard & Reed. Scolnick has counsel from Schulte Roth & Zabel and Lowenstein Sandler.
Salvatore Graziano of Bernstein Litowitz, co-lead counsel for the class, told us he was “very pleased” with the decision. “This was a motion that was aggressively fought by Merck and the defendants, and we’re very much looking forward to continuing,” he said.