* Lawsuit seeks billions of dollars in damages
* Statue-of-limitations at issue in ruling
* Merck shares slightly higher
(Adds case detail, Merck comment, share movement)
By James Vicini
WASHINGTON, April 27 The U.S. Supreme Court
ruled on Tuesday that a securities fraud lawsuit can proceed
against Merck & Co Inc (MRK.N) over the pharmaceutical
company's disclosures to investors about its withdrawn Vioxx
The justices unanimously upheld a ruling by a U.S. appeals
court that allowed the lawsuit seeking billions of dollars in
damages to go forward. The appeals court held the claims were
not time-barred under the statute of limitations.
The securities fraud lawsuit was unrelated to the $4.85
billion settlement in 2007 between Merck and plaintiffs who
filed personal injury lawsuits against the company over Vioxx.
Merck withdrew Vioxx in 2004 after a clinical trial showed
an increased risk of heart attacks and strokes. Merck shares
plunged 27 percent on the day of the withdrawal and fell
further in the following months.
A federal judge initially dismissed the lawsuit and ruled
the investors had waited too long, more than two years, to file
the lawsuit after the first warnings that Vioxx might be
But the appeals court in Philadelphia disagreed and ruled
the two-year limitations period does not begin to run until the
plaintiffs have actual knowledge the defendant intended to
Writing the Supreme Court's main opinion, Justice Stephen
Breyer agreed with the appeal court's determination and said,
"The complaint filed here was timely."
Merck has said the investors should have known from public
information there could be problems with Vioxx because the U.S.
Food and Drug Administration issued in September 2001 warnings
to the company about the drug's risks.
Merck said the intense public discussion of data
surrounding Vioxx had put investors on notice of the relevant
issues long before Merck announced new scientific information
that led to the withdrawal.
But Breyer rejected the company's arguments.
"Merck is disappointed in today's decision, but believes
that the allegations in the complaint are unfounded and will
continue to defend itself vigorously," said Bruce Kuhlik, Merck
Executive Vice President and General Counsel.
Kuhlik said the company has already made a motion to
dismiss the complaint on numerous other grounds, and will renew
that motion in district court in New Jersey.
The ruling was a victory for the investors who brought the
lawsuit and for the Obama administration, which had argued that
the lawsuit should be allowed to go forward.
Shares of Merck were up 0.6 percent to $35.21 in morning
trading on the New York Stock Exchange.
The Supreme Court case is Merck & Co. v. Reynolds, No.
(Reporting by James Vicini; Editing by Tim Dobbyn)