Supreme Court may loosen limits on investor suits
WASHINGTON - The Supreme Court, hearing arguments yesterday in a case involving Merck & Co.’s now-withdrawn Vioxx painkiller, signaled it may relax the deadlines for investor fraud lawsuits.
Most of the nine justices suggested they are prepared to let shareholders sue Merck for alleged deception about the risks posed by Vioxx, which the company pulled from the market in 2004 because of links to heart attacks and strokes.
The high court is considering how much of an indication investors must have of company wrongdoing to open the two-year window for lawsuits under federal law. Merck contends that the window was open by September 2001, when federal regulators said in a warning letter that the company was underplaying potential heart risks associated with Vioxx. The first investor suit was filed in November 2003.
Justice Ruth Bader Ginsburg questioned whether the 2001 warning gave investors reason to consider suing, saying the letter had no noticeable impact on the company’s stock price or the use of the drug.
Merck’s lawyer, Kannon Shanmugam, argued that a ruling letting the case go forward would “dramatically lengthen’’ the amount of time investors have to file suit, letting them wait to see how a stock performed.
The first public signs of a potential problem with Vioxx came in 2000, when a study released by Merck showed its treatment caused five times more heart attacks than a rival painkiller.
