Merck & Co., Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

Merck & Co., Inc. Summary: Several purported shareholder class action lawsuits have been filed against Merck and certain of its present and former executive officers during 2004.

The complaint filed alleges that defendant violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 by issuing a series of material misrepresentations to the market during the Class Period. More specifically, the complaint alleges that during the Class Period, defendants engaged in a marketing campaign which included false and misleading statements concerning the safety profile of Merck's painkilling drug, Vioxx, and Vioxx's superiority to its rival drug, Celebrex, manufactured by Merck's competitor, Pfizer. On November 16, 1999, the Food and Drug Administration ('FDA') sent a letter to defendants which stated that certain of Merck's promotional pieces of Vioxx were false and misleading and lacked fair balance. Moreover, during the Class Period, defendants failed to disclose material information concerning the degree of the serious adverse side-effects of Vioxx, including significantly increased risks of heart attacks in patients taking the drug. Specifically, in March 2000, defendants released the results of a Merck-sponsored study called the Vioxx Gastrointestinal Outcomes Research (the 'VIGOR study') which demonstrated 'significantly few heart attacks were observed in patients taking naproxen (0.1 percent) compared to the group taking Vioxx 50 mg (0.5 percent) in this study.' In September 2001, defendants received another letter from the FDA concerning Merck's marketing of Vioxx during which, the Agency warned, Merck minimized the potentially serious risk of increased heart problems discovered in the VIGOR study and downplayed the adverse effects of using Vioxx with the drug Coumadin. The FDA concluded in the letter that Merck's marketing of Vioxx was 'false, lacking in fair balance, or otherwise misleading(.)' Despite available information, defendants failed to adequately disclose the degree of the serious adverse risks of Vioxx, contending that the FDA Warning Letter and other studies were inaccurate and/or inconclusive, and instead, continued to tout the efficacy of the drug and the revenues derived from the sale thereof. As a result of defendants' false and misleading statements, the price of Merck's securities was artificially inflated during the Class Period, enabling Company insiders to sell their personally held shares of Merck for over $175 million in proceeds, and causing injury to plaintiff and other members of the Class.

The complaint further alleges that on October 22, 2003, an article was published on Reuters reporting Merck's third quarter 2003 results and confirming that Vioxx 'is suffering from clinical trial data suggesting it might slightly raise the risk of heart attacks, and the growing perception that its pain-fighting capabilities are no better than traditional painkillers.' On October 30, 2003, The Wall Street Journal explained that the above-mentioned data was derived from another study sponsored by Merck which demonstrated that within the first 30 days of taking Vioxx, the risk of a heart attack was increased 39% in comparison with Celebrex.

In October and November 2004 similar lawsuits were filed in the United States District Court for the Eastern District of Pennsylvania and in the United States District Court for the District of New Jersey.

The Pennsylvania lawsuits were filed on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Merck between October 23, 2003 and September 30, 2004. The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the class period, which statements had the effect of artificially inflating the market price of the Company's securities.

One of the New Jersey lawsuits was filed on behalf of all persons or entities that purchased or otherwise acquired Merck & Co., Inc. securities, including common stock, between October 30, 2003 and September 29, 2004. The other New Jersey lawsuit was filed on behalf of all persons and entities that purchased or otherwise acquired the common stock of Merck & Co., Inc. on the open market and/or through Merck's Stock Investment Plan between October 22, 2003 and September 29, 2004.

The Pennsylvania and the New Jersey actions allege that defendants failed to disclose material information concerning the safety profile of its arthritis drug Vioxx, and that a growing body of evidence demonstrated that patients who used the drug for more than 18 months were exposed to an increased risk of heart attack. More specifically, the complaints allege that on September 30, 2004, the Company announced that it was immediately withdrawing Vioxx from world markets after a data safety monitoring board, overseeing a long-term study of the drug, recommended that the study be halted because of an increased risk of serious cardiovascular events among members of the study group. The Company's sudden decision to withdraw Vioxx was in stark contrast to its prior public announcements during the Class Period touting the safety of Vioxx and other public disclosures by the Company and its representatives that specifically refuted criticism of the drug lodged by respected clinicians.

According to the Notice of Voluntary Dismissal dated November 23, 2004, the action entitled Arnoff, et al. v. Merck & Co., Inc., et al., filed in the United States District Court for the District of New Jersey was voluntarily dismissed. The Plaintiff intends to refile the action in the United States District Court for the Eastern District of Louisiana with the consolidated action, Pringle, et al. v. Merck & Co., Inc., et al.

According to the Order entered on March 14, 2005, 14 actions, eight in the Eastern District of Louisiana and 6 actions in the District of New Jersey, are now centralized in the District of New Jersey under In Re Merck & Co., Inc. Securities, Derivative & “ERISA” Litigation, MDL 1658, Master Docket, 05-CV-01151. Docket 05-CV-02367 is the sub-master docket for the consolidated securities actions.

On June 9, 2005, a Consolidated and Fourth Amended Class Action Complaint was filed, and on June 14, 2005, a Corrected Consolidated and Fourth Amended Class Action Complaint were filed. The Consolidated and Fourth Amended Class Action Complaint added defendants and claims. The defendants responded by filing several motions to dismiss in August and December 2005 and one motion in August 2006.

On March 9, 2006, a Stipulation and Order was signed by Judge Stanley R. Chesler dismissing the complaint against the American Arbitration Insurers. On April 4, 2006, a Consent Order was signed dismissing the Foreign Arbitration Insurers. On January 25, 2007, a Stipulation and Order was filed withdrawing one of the individual lead plaintiffs and appointing the Public Employees' Retirement System of Mississippi as additional named lead plaintiff and approving their choice of co-lead counsel.

According to a press release dated April 13, 2007, drug maker Merck & Co. said Friday that a federal judge in New Jersey dismissed a class action investor lawsuit against the company related to its discontinued arthritis pain reliever Vioxx. In a ruling Thursday, Judge Stanley Chesler of the U.S. District Court in Newark ruled that investor claims should be dismissed because they were time-barred under statutes of limitations. The lawsuit was dismissed with prejudice, meaning investors cannot file the suit again. Investors who had bought Merck stock between May 21, 1999, and Oct. 29, 2004, alleged the company had defrauded them by concealing information about the drug's safety risks. Merck withdrew Vioxx from the market on Sept. 30, 2004, after it became associated with an increased heart attack risk. The earliest fraud complaint was filed in November 2003, according to court records. In his opinion, the judge said that a Food and Drug Administration warning letter from Sept. 21, 2001, and attention from the media and financial analysts thereafter made it "clear that storm warnings of fraud by the company existed more than two years before this complaint was filed," thereby time-barring from statutes of limitation.

On May 9, 2007, the Plaintiffs filed a Notice of Appeal in the U.S. Court of Appeals for the Third Circuit from the April 12, 2007 Order granting the motions to dismiss the complaint with prejudice. On October 27, 2008, the Court entered the Mandate from the U.S. Court of Appeal. According to the Mandate, the judgment of the District Court entered April 12, 2007, be and the same is hereby reversed and remanded.

On February 6, 2009, the lead plaintiffs filed a Consolidated Fifth Amended Class Action Complaint. On March 10, 2009, the lead plaintiffs filed a Corrected Fifth Amended Complaint. On May 1, 2009, the defendants responded by filing motions to dismiss the Corrected Consolidated Fifth Amended Class Action Complaint. On July 7, 2009, a Stipulation and Order was filed staying the proceedings in the Court pending the adjudication of the Supreme Court Appeal currently before the Supreme Court.

According to a press release dated dated April 27, 2010, Merck announced that it is disappointed with the U.S. Supreme Court’s decision to affirm a lower court’s ruling on when the statute of limitations began to run in a federal securities class action against the company and certain of its officers and directors. The effect of the ruling is to return the case to federal district court in New Jersey for further proceedings. The original suit, brought by investors, who allege that the company made material misstatements and omissions regarding the pain medication VIOXX®, was dismissed by the U.S. District Court for the District of New Jersey in 2007, on the ground that the claims were time-barred under the statute of limitations. In 2008, however, a divided Court of Appeals for the Third Circuit reversed the district court’s ruling. In May 2009, the Supreme Court agreed to hear Merck’s appeal.

On June 18, 2010, the defendants filed two motions to dismiss the pending Corrected Consolidated Fifth Amended Class Action Complaint.

According to a press release dated August 10, 2011, Merck & Co. must defend a lawsuit claiming it violated securities laws by downplaying the cardiovascular risks of its Vioxx painkiller before the company pulled the drug from the market in 2004, a judge ruled. Merck, the second-biggest U.S. drugmaker, withdrew Vioxx after a study showed it doubled the risk of heart attacks and strokes. Investors adequately stated a case that Merck misrepresented the drug's safety profile, said U.S. District Judge Stanley Chesler in Newark, New Jersey. Investors also can pursue claims that Merck misled them about a 2000 study, known as Vigor, which reported that the medicine caused five times more heart attacks than another painkiller, naproxen, Chesler ruled. Merck said one explanation was that naproxen protected the heart. The judge ruled that investors "plausibly suggest that Merck had no reasonable basis for its public characterization of the Vigor results as 'likely' due to naproxen's cardioprotective quality," according to Chesler's Aug. 8 decision.

INDUSTRY CLASSIFICATION:
SIC Code: 2834
Sector: Healthcare
Industry: Major Drugs

COMPANY/ISSUER NAME:	Merck & Co., Inc.
COMPANY/ISSUER TICKER:	MRK
COMPANY WEBSITE:	http://www.merck.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Frank Pringle, et al. v. Merck & Co., Inc., et al.

COURT: E.D. Louisiana	DOCKET NUMBER: 03-CV-03125
JUDGE NAME: Hon. Kurt D. Engelhardt
DATE FILED: 11/06/2003	SOURCE: Business Wires
CLASS PERIOD START: 05/22/1999	CLASS PERIOD END: 10/22/2003
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Alfred G. Yates, Jr. 429 Forbes Avenue, Pittsburgh , PA, 15219 (voice) 412.391.5164, (fax) , Bernard M. Gross 1500 Walnut Street, Suite 600, Philadelphia, PA, 19102 (voice) 215.561.3600, (fax) 215.561.3000, bmgross@BernardMGross.com Law Offices of Charles J. Piven, P.A. World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202 (voice) 410.332.0030, (fax) , pivenlaw@erols.com Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , Wolf Haldenstein Adler Freeman & Herz LLP (New York) 270 Madison Avenue, New York, NY, 10016 (voice) 212.545.4600, (fax) 212.686.0114, newyork@whafh.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of Federal Securities Laws
Type: Complaint		Date on the document: 11/06/2003
First Amended Complaint
Type: Complaint		Date on the document: 11/20/2003
Consolidated And Second Amended Class Action Complaint
Type: Complaint		Date on the document: 8/9/2004
Stipulation Dismissing Mary McDonald
Type: Other		Date on the document: 09/20/2004
Consolidated and Third Amended Class Action Complaint
Type: Complaint		Date on the document: 11/08/2004
Transfer Order
Type: Order		Date on the document: 03/07/2005
U.S. District Court Civil Docket
Type: Docket		Date on the document: 03/07/2005

REFERENCE COMPLAINT

In Re Merck & Co., Inc. Securities, Derivative & ERISA Litigation

COURT: D. New Jersey	DOCKET NUMBER: 05-CV-02367
JUDGE NAME: Hon. Stanley R. Chesler
DATE FILED: 03/10/2009	SOURCE: Business Wires
CLASS PERIOD START: 05/21/1999	CLASS PERIOD END: 05/21/1999
TYPE OF COMPLAINT: Fifth Amended and Consolidated
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Bernstein Litowitz Berger & Grossmann LLP (New York, NY) 1285 Avenue of the Americas, 33rd Floor, New York, NY, 10019 (voice) 212.554.1400, (fax) 212.554.1444, blbg@blbglaw.com Brower Piven (Baltimore) The World Trade Center-Baltimore. 401 East Pratt Street, Suite 2525, Baltimore, MD, (voice) 410.332.0030, (fax) 410.685.1300, info@browerpiven.com Milberg Weiss Bershad & Schulman LLP (New York) One Pennsylvania Plaza, 49th Floor, New York, NY, 10119 (voice) 212.594.5300, (fax) 212.868.1229, info@milbergweiss.com Stull, Stull & Brody (New York) 6 East 45th Street, New York, NY, 10017 (voice) 310.209.2468, (fax) 310.209.2087, SSBNY@aol.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 4

DOCUMENTS FOR THE REFERENCE COMPLAINT
Pretrial Order No. 1
Type: Order		Date on the document: 05/06/2005
Consolidated And Fourth Amended Class Action Complaint
Type: Complaint		Date on the document: 06/09/2005
Corrected Consolidated And Fourth Amended Class Action Complaint
Type: Complaint		Date on the document: 06/14/2005
Stipulation And Order Dismissing The, Corrected Consolidated And Fourth Amended Complaint Against The American Arbitration Insurers
Type: Order		Date on the document: 03/09/2006
Consent Order Dismissing The Foreign Arbitration Insurers
Type: Order		Date on the document: 04/04/2006
Stipulation And Order Resolving The Motion Of The Public Employees' Retirement System Of Mississippi To Intervene And Modifying The Lead Plaintiff And Lead Counsel Structure
Type: Order		Date on the document: 01/25/2007
Opinion
Type: Other		Date on the document: 04/12/2007
Order
Type: Order		Date on the document: 04/12/2007
Notice of Appeal
Type: Notice		Date on the document: 05/09/2007
Judgment
Type: Other		Date on the document: 10/27/2008
Consolidated Fifth Amended Class Action Complaint
Type: Complaint		Date on the document: 02/06/2009
Corrected Consolidated Fifth Amended Class Action Complaint
Type: Complaint		Date on the document: 03/10/2009
Opinion
Type: Other		Date on the document: 08/08/2011
Order
Type: Order		Date on the document: 08/08/2011
U.S. District Court Civil Docket
Type: Docket		Date on the document: 08/11/2011

OTHER DOCUMENTS
Class Action Complaint
Case Name and/or Number: Ravnitsky, et al. v. Merck & Co., Inc., et al.
Type: Complaint		Date on the document: 01/16/2004
Class Action Complaint
Case Name and/or Number: Arnoff, et al. v. Merck & Co., Inc., et al.
Type: Complaint		Date on the document: 10/01/2004
Notice of Voluntary Dismissal
Case Name and/or Number: Arnoff, et al. v. Merck & Co., Inc., et al.
Type: Notice		Date on the document: 11/23/2004
U.S. District Court Civil Docket
Case Name and/or Number: Arnoff, et al. v. Merck & Co., Inc., et al.
Type: Docket		Date on the document: 11/24/2004
U.S. District Court Civil Docket
Case Name and/or Number: Ravnitsky, et al. v. Merck & Co., Inc., et al.
Type: Docket		Date on the document: 03/07/2005
U.S. District Court Civil Docket
Case Name and/or Number: Frank Pringle, et al. v. Merck & Co., Inc., et al.
Type: Docket		Date on the document: 08/08/2005
U.S. District Court Civil Docket, Master Docket 05-CV-1151
Case Name and/or Number: In Re Merck & Co., Inc. Securities, Derivative & “ERISA” Litigation
Type: Docket		Date on the document: 04/12/2007
Opinion from the Supreme Court of the United States
Case Name and/or Number: Merck & Co., Inc., et al. v. Reynolds, et al.
Type: Other		Date on the document: 04/27/2010
U.S. District Court Civil Docket
Case Name and/or Number: Merck & Co., Inc. Securities, Derivative & "Erisa" Litigation
Type: Docket		Date on the document: 10/19/2010

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