Merck/Schering-Plough ERISA Enhance Class Action -- Judge Cavanaugh's Patience Tested?

For the second time in three days, the very able Judge Cavanaugh (sitting in the federal District courts in Newark, N.J.) has issued an opinion, essentially admonishing lawyers for Merck (and previously, for Schering-Plough) not to make repetitive arguments -- especially ones he's already ruled against.

This afternoon, the opinion was handed down in the ERISA case -- Cobb v. Merck -- which arose out of the declines in Merck and Schering-Plough stocks, held in employees' (and retirees') retirement accounts. These declines were attributable to the delayed Enhance disclosures, the ERISA plaintiff-shareholders allege. [Yesterday, a ruling for all affected shareholders, not just employees/retirees, was handed down -- see here.]

Were I representing Merck and legacy Schering-Plough, I'd be very careful not to test the patience, and tax the resources, of the federal courts, here. Otherwise zealous defense of litigation becomes abusive, or "vexatious" with the mere stroke of a judge's pen. Counsel should keep that top of mind, from now on. In any event, here is the opinion, and a snippet:

. . . .[W]here a defendant asserts "that the complaint fails to state any claim," and "the Court already has expressly addressed and rejected this argument [i.e., found that Plaintiffs adequately stated a claim for relief]", Defendants are not permitted to reassert this argument. . . in the guise of an affirmative defense". . . . Similarly, here, Defendants’ Answer asserts that "[t]he Complaint, with respect to each and every claim stated therein, fails to state a claim upon which relief may be granted." (emphasis added). This Court has already stated that the Complaint has adequately plead certain claims, see Doc. No. 49, and the defense is, therefore, no longer appropriate.

The Court, in accordance with the discussion above, will strike Defendants’ first "affirmative defense". . . .

As to defenses numbered 7, 8, 11, 12, 16, 18, 20 and 22, the Court will strike them as being denials instead of affirmative defenses. A mere denial as to the sufficiency of Plaintiffs’ claims is not an affirmative defense. . . .

These are judicial "tea leaves" -- and Merck should read them, very carefully.