Peering through the Merck.

The law, lawyers, and the court.
Aug. 30 2005 5:53 PM

Peering Through the Merck

Deconstructing the strategy choices facing the Vioxx litigants.

(Continued from Page 1)

There are, by the way, mechanisms available to Merck to resolve its Vioxx problem short of litigating each case until they have all gone away, or paying out settlements until the company has wasted away. They include removing cases, where possible, from state court to federal court, then aggregating those cases in a single federal district court for consolidated pretrial proceedings. That has already happened in In re Vioxx Product Liability Litigation, MDL No. 1657, where there are already 1,106 actions pending in the Eastern District of Louisiana. These separate lawsuits will be driven through a uniform pretrial process of discovery that will tee up the cases for trial. At that stage, the MDL judge in Louisiana will send the cases back, for trial, to the federal district courts from whence they came.

Alternatively, Merck could just declare bankruptcy and force its creditors to work through a reorganization plan that would include some level of compensation fixed by the court for Vioxx-related injuries. A.H. Robins Co. did just that in Dalkon Shield-related litigation, which allowed that company to emerge from bankruptcy as an attractive takeover target for American Home Products, now Wyeth. And even if Merck does not actually declare bankruptcy, the threat of bankruptcy, and the possibility that many claimants will be left out in the cold or have small recoveries deferred for years, may drive even the most confident plaintiffs to the negotiating table.

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Merck may also seek to negotiate, in the context of a nationwide class-action lawsuit, a global settlement of all Vioxx claims. There are already 120 suits seeking class-action certification pending around the country, and the MDL Court in Louisiana would be the likely forum for such a resolution. Sulzer Orthopedics Inc., since bought by Zimmer Inc., a manufacturer of hip and knee prosthetics, negotiated just such a resolution when it was confronted with massive product-liability claims. That settlement—for about $1.1 billion—resolved the claims of more than 25,000 class members. (Full disclosure:I represent the claims administrator in that class-action settlement.) That process enjoys the virtues of buying nationwide settlement of claims while avoiding bankruptcy.

Regardless of whether Merck is responsible for the injuries it's accused of causing—and those accusations are serious—there isn't any question that the company plays an important role delivering health care to Americans and as an engine of our economy. And while uncertainty may be settlement's friend, too much uncertainty renders even settlement unlikely. Right now, there probably isn't enough empirical evidence from which to "thin-slice" a prediction about Merck's future. What we can be sure about, though, is that resolution of Merck's and Vioxx plaintiffs' litigation and economic woes won't come any time soon, and they definitely won't come cheap.

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