In multidistrict securities litigation over the discontinued arthritis medication Vioxx, a federal judge has ordered Merck & Co. to turn over documents it produced earlier during a government investigation.

Because “Merck voluntarily disclosed these materials to the government, it cannot establish that these documents are privileged,” U.S. Magistrate Judge Cathy Waldor held in In re Merck & Co. Inc. Securities, Derivative & ERISA Litigation, 05-cv-2367.

Though a selective waiver approach — which preserves privilege for materials submitted under a protective order — has been adopted in the Second Circuit, the Third Circuit hasn’t deviated from a two-decade-old ruling that confidentiality attaching to a government investigation does not extend to later litigation.

In Westinghouse Elec. Corp. v. Republic of Philippines, 951 F. 2d 1414 (3d Cir. 1991), the court ruled that Westinghouse waived attorney-client privilege when it voluntarily turned over documents sought by the Securities and Exchange Commission and the Department of Justice during a probe into whether a bribe was used to obtain a lucrative power plant contract.

The panel rejected the company’s “argument that it did not waive the privilege because it reasonably expected that the SEC and the DOJ would maintain the confidentiality of the information that it disclosed to them.”

Merck contended that the Westinghouse court left open the possibility that an express confidentiality and non-waiver agreement — like the one it signed — could preserve privilege, and “essentially asks this Court to adopt a ‘compromise position’ with respect to selective waiver,” Waldor wrote.

That approach is much broader than what Westinghouse allows, Waldor said.

“This Court declines to draw an exception or distinction to Westinghouse at this juncture,” she wrote. “Accordingly, documents produced to the DOJ pursuant to Confidentiality and Non-Waiver Agreement must be turned over to Plaintiffs.”

Merck sold Vioxx, an anti-inflammatory drug used to treat arthritis, from May 1999 to Sept. 30, 2004, when it was taken off the market because of the risk of heart attack and other cardiac events that it posed.

The plaintiffs — who seek class certification for those who bought Merck stock in that five-year period — claim that the drug maker lied about Vioxx’s commercial viability, and intentionally or recklessly concealed evidence of the risks.

Last January, the plaintiffs requested discovery of several types of documents, including those Merck produced in connection with the government investigation—which culminated in a November 2011 settlement in which Merck agreed to pay the government $950 million.

As of June, the plaintiffs had obtained more than 24 million pages of documents related to Vioxx, though Merck contested discovery as to those documents.

Merck pointed to a July 15, 2008, agreement with the DOJ that required the government to maintain confidentiality of the materials and explicitly stated that the waiver was not extended to any third parties or private entities.

On Friday, Waldor ordered production of the documents previously submitted to the government, but denied the plaintiffs’ other discovery requests.

The plaintiffs sought documentation of Merck’s communications with the government in connection with a grand jury investigation. But Waldor cited the longstanding policy of keeping grand jury proceedings secret, noting that it doesn’t matter that Merck already has settled with the government and concluded the matter.

Waldor also denied the plaintiffs’ request for documentation identifying the Bates ranges, dates, search terms used and custodians of materials given to the government, noting that those materials “may reveal what occurred before the grand jury.”

Waldor denied discovery of documents related to the change in Merck’s stock price on Nov. 1, 2004, because it’s already been determined that the plaintiffs failed to causally link a Wall Street Journal article from that date — reporting that Merck executives knew about Vioxx’s risks — with the plaintiffs’ monetary loss.

“Any remaining relevance as to … scienter or intent, is outweighed by the burden production will impose upon the parties and the Court,” she wrote.

Waldor also declined to require production of documents created well beyond the end of the class period, noting that Merck already agreed to turn over documents created through Dec. 31, 2004, the end of the quarter following the end of the class period. She again said that additional discovery would impose an undue burden on Merck and the court.

The parties are to confer and discuss additional materials the plaintiffs seek, such as documents held by Merck statisticians and other employees.

Waldor scheduled a Nov. 2 status conference to address any remaining discovery disputes.

The plaintiffs are represented by James Cecchi of Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland and David Brower of Brower Piven in New York. Neither returned a call.

Neither did Merck’s counsel, Robert Baron of Cravath, Swaine & Moore in New York or William Stein of Hughes Hubbard and Reed in Washington, D.C.

David Gialanella is a reporter for the New Jersey Law Journal, a Legal affiliate