A Question Justice Breyer (Or Someone) Might Have Asked

I haven’t seen the transcript yet — or listened to the webcast stream of today’s Supreme Court oral arguments related to Merck’s certorari appeal, but it is being reported that the Justice asked what would “a reasonable person” have done, in connection with pursuing a securities fraud claim against Merck — related to its disclosures about Vioxx’s elevated heart attack risks.

If that is accurate, and we take as accurate that Merck’s position is that it believes there was enough information in the public domain by November 2001 for the plaintiffs to have been “on inquiry notice” about its Vioxx (alleged non-)disclosures, such that they should have filed a securities suit by two years from that date. . . What are we to make of this, from last Monday? I think the Supremes should find this troubling:

. . . .”We fundamentally disagree with their conclusions that there was an actionable signal before September 2004,” Doug Watson, PhD, senior director of medical science for Merck Research Laboratories, tells WebMD. . . .

The above is Merck’s supposed-refutation of the notion that Merck itself should have known that Vioxx was associated with cardiovascular problems much earlier — perhaps as early as January 2001.

Were I a Supreme, I might have asked, today, how it can be Merck’s public position that the securities plaintiffs should have had enough information/certainty that Merck’s overly-rosy view of Vioxx’s risks was actionable as securities fraud as early as November 2001 — when in the products liability cases, Merck itself (again!) claims that it was not in possession of enough information to necessitate acting on the Vioxx product until September 2004?

I wonder — is it Merck’s view that small stockholders should act with more vigilance, as to their investments — than Merck is (in its view) required to exercise, in protecting the public from elevated heart-attack risks, associated with Vioxx’s side-effects?

That seems an entirely untenable position. And that should be a question that the Supremes ask Merck’s lawyers, or themselves, as they instruct their clerks to prepare the opinions in this case.

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