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Kentucky AG Can't Dodge Merck's Due Process Suit over Vioxx Contingency Counsel
The Litigation Daily
Kentucky Attorney General Jack Conway can't seem to shake Merck's constitutional challenge to his use of contingency fee lawyers in litigation over Vioxx. U.S. District Judge Danny Reeves in Frankfort, Ky., first rejected the AG's bid to dismiss the case back in March, sustaining Merck's claims that the use of contingency fee attorneys violates its due process right to an impartial tribunal under the Fourteenth Amendment. On Wednesday, Judge Reeves refused to toss the case yet again, handing another early-round victory to the company and its counsel at Skadden, Arps, Slate, Meagher & Flom and Frost Brown Todd.
The story of Merck's transition from defense to offense in this little slice of the massive Vioxx docket is a little bit complicated, but the procedural details were key to Wednesday's ruling. Conway filed suit against Merck in state court in September 2009, alleging that the company violated the Kentucky Consumer Protection Act by marketing and distributing Vioxx, the popular pain drug that was pulled from shelves in 2004 over risks of heart damage. Merck removed the case to federal court in October 2009, and it was transferred to the Vioxx multidistrict litigation in Louisiana in April 2010. In January of this year, the judge overseeing the MDL ruled that the case was improperly removed and granted the Kentucky AG's motion to remand it back to state court. Merck sought to appeal that decision, but the U.S. Court of Appeals for the Fifth Circuit denied the company's motion in February, and the case finally landed back in state court in Kentucky on March 20.
The AG's contingency fee counsel at Garmer & Prather and Hare, Wynn, Newell & Newton came into the case midstream. In September 2010, with the case pending on the MDL docket, Conway retained outside counsel to assist with the Vioxx litigation. Merck responded by suing the AG in federal court in August 2011, claiming the AG's contingency arrangement allowed the plaintiffs lawyers to pursue a "quasi-criminal enforcement proceeding" in violation of its due process rights. Merck sought a preliminary injunction barring the private lawyers from handling the case. But in March--just one day after the MDL had remanded the underlying dispute to state court--Judge Reeves ruled that the company "failed to establish a likelihood that the contingency fee counsel have actually assumed control over the Vioxx litigation" and denied the company's motion. Two days later, Reeves nevertheless denied the AG's motion to dismiss the case, finding that Merck had stated a plausible claim that its due process rights had been violated.
In light of the MDL's remand of the underlying case, the attorney general filed a renewed motion to dismissin April, arguing that the court should abstain from adjudicating the case. The motion cited the U.S. Supreme Court's decision in Younger v. Harris, which bars federal courts from interfering with ongoing state judicial proceedings. Merck's lawyers at Skadden, led by John Beisner, countered that the federal case posed no threat to the state court proceeding, that the Kentucky state court didn't provide an adequate opportunity for the company to raise its due-process claims, and that Younger doesn't permit abstention where cases have progressed significantly prior to remand.
Reeves concluded in Wednesday's ruling that the federal case involves an important state interest, and that Merck failed to show that the state court lacks a procedure for raising its due process claims. Still, he ultimately sided with Merck and denied the AG's motion to dismiss. The judge pointed to the progress in the federal case while the state was dormant at the MDL. "Because the state proceeding in Merck I was not 'ongoing,' abstention is not appropriate under the principles of Younger," he wrote.
In a statement, a spokesperson for the AG said the state disagrees with the ruling "and will continue to defend the position of the Office of the Kentucky Attorney General as this case continues."
We reached out Skadden's Beisner for comment, but a firm spokesperson said he was tied up in court on Thursday.